Health and Healthcare

Why the Relypsa Merger Is a Great Idea

Chris Lange

Published: July 21, 2016 10:10 am

Last Updated: January 13, 2020 5:28 am

Relypsa Inc. (NASDAQ: RLYP) made a splash in the markets on Thursday after the company announced an acquisition agreement. Although the biotech and pharma industries have been hit hard in 2016, there are still some bright spots in the health care sector from FDA trials and merger and acquisitions.

The company announced that it has entered into a definitive agreement in which Galenica will acquire Relypsa for $32 per share in an all cash agreement. The total deal is valued up to $1.53 billion. Through this acquisition, Galenica’s business unit, Vifor Pharma, will gain a fully-integrated commercial organization in the United States and significantly strengthen its presence in the U.S. cardio-renal market, its key area of focus.

Accordingly, this transaction will further strengthen Vifor Pharma as the company will gain full global rights to the potassium binder Veltassa (patiromer) for oral suspension and enhance its growing position as a global specialty pharmaceutical company.

With the combination of the assets and products of Vifor Pharma, Vifor Fresenius Medical Care Renal Pharma (VFMCRP) and Relypsa, the combined company will be positioned to become a major player in the United States in its core therapy areas.

Keep in mind that both boards of directors have approved this deal, but it is still subject to shareholder approval.

Etienne Jornod, executive chairman of Galenica, commented on the move:

The combination of Vifor Pharma and Relypsa is an important step towards achieving our goal of building a world-leading specialty pharmaceutical company focused on nephrology, cardiology and gastroenterology medicines. This acquisition will give Vifor Pharma direct access to the key U.S. market, enabling us to maximize the potential of our compelling product portfolio and enhancing our growing attraction as an international partner of choice. This transaction demonstrates the commitment of the Galenica Board of Directors to achieve the separation of Vifor Pharma and Galenica Santé, with both businesses in the strongest possible position. We look forward to welcoming Relypsa to Vifor Pharma.

Shares of Relypsa were up nearly 60% at $31.87 Thursday morning, with a consensus analyst price target of $32.00 and a 52-week trading range of $10.26 to $35.97.