Please ensure Javascript is enabled for purposes of website accessibility

Why Relypsa Inc Fell 16% Today

By Brian Orelli, PhD - Apr 15, 2016 at 8:51PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is the biotech still looking to be sold?


What: Relypsa (RLYP) fell 16% on Friday after Benzinga reported that the biotech was no longer working with investment bank Centerview Partners Holdings, as reported by Reuters last week.

So what: In the M&A world of he said, she said, the latest report is always going to be the one that investors focus on. But even with today's drop, shares in the company are considerably higher than where they were before the Reuters' report that the company was exploring a sale.

RLYP Chart

RLYP data by YCharts.

Now what: Hopefully, investors who bought shares solely because they hoped Relypsa would sell itself for a higher price learned their lessons. It's OK to buy a takeout target, but you have to believe it can go up even if the sale doesn't materialize. Clearly, that's not the case here.

Just because Relypsa isn't working with Centerview Partners -- if the report is even true, because Benzinga just cites "a source familiar with the matter" -- doesn't mean that Relypsa won't find a buyer in the near future. Companies sometimes work with multiple investment bankers to cast the widest net.

If you're going to buy shares now, do it because you have confidence in Veltassa, Relypsa's drug to treat high potassium levels in the blood, or hyperkalemia -- not because you're hoping another company likes the drug.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Relypsa, Inc. Stock Quote
Relypsa, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/23/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.