Drug Development

Sidelined at the FDA, AstraZeneca watches as new team seizes rival drug in $1.5B Relypsa buyout

Back in April, the M&A buzz in biotech swung its spotlight to Relypsa, a company that had fielded Veltassa (patiromer), a hyperkalemia drug that grabbed an approval by the FDA last fall. At the time the latest rumors surfaced, it sounded like the frustrated bidders for rival ZS Pharma – outbid at the auction by AstraZeneca — were driving the chatter. But this morning we hear that it’s Relypsa’s European partners at Galenica who were the most motivated to complete a deal.

The acquisition deal itself is a straight, one-drug specialty pharma pickup. Galenica is buying Redwood City, CA-based Relypsa $RLYP for $1.53 billion, a hefty 59% premium for a stock that had been pumped up already by the buyout rumors. The therapy will be used to bolster its specialty pharma group Vifor, just ahead of a corporate split. And it’s attractive to Vifor because they get the commercial operations already set up to sell the drug in the U.S.

But this story isn’t being played out in a vacuum.

Vifor has an opportunity to get itself better established in the new market as AstraZeneca restlessly deals with a setback at the FDA. The pharma giant, looking at the near-term collapse of its big Crestor franchise as generics await a green light, bought out ZS Pharma for $2.7 billion so it could get its hands on ZS-9, the rival hyperkalemia drug that quite a few analysts had tapped as an easy winner over Veltassa.

Veltassa comes with a black box warning. But Relypsa, which struggled to build sales, has scored some new safety data that may significantly improve the drug’s appeal to doctors and patients. While sales have been slow to pick up, there are also signs of growing acceptance for Veltassa as the market gains some experience with the first new drug in this field in decades. And they have a chance to position the first-mover ahead of a ZS-9 rollout because AstraZeneca’s application was rejected back in May due to some problems that came up on the manufacturing side.

Now we have to wait through the delay to see what kind of label ZS-9 will get – assuming approval.

AstraZeneca described the delay to me as a “bump in the road,” with any new decision postponed until six months after a resubmission. Some analysts made that out to be a year-long delay, so probably sometime in 2017.

AstraZeneca, though, may find that its market opportunity has eroded somewhat. The company pegged ZS-9 as a drug that could earn blockbuster revenue of $1 billion-plus, while most projections on Veltassa initially slid well below $1 billion. Those projections, though, have now been creeping ever higher.

That manufacturing delay couldn’t have come at a worse time for AstraZeneca.

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