After peaking at nearly $25, Relypsa (RLYP) plunged below $15 but is recovering. Morgan Stanley’s ratings upgrade helped fuel a rally in the stock, but the 50% downside target on Relypsa is disconcerting. After the ZS-9 rejection by the FDA for AstraZeneca (AZN), the outlook is looking better for Relypsa. The market still fails to recognize the market potential for Relypsa’s Veltassa. Veltassa is the only drug that is available for treating hyperkalemia. Operationally, Relypsa issued debt to raise $150 million. By comparison, AZN’s $2.7 billion buyout of ZS Pharma now looks like a waste. Catalysts ahead Multiple catalysts suggest Relypsa may continue moving higher. Short interest is absurdly high at a short float of 36.74%. Unfortunately, bears may continue driving the stock lower, limiting the premium should RLYP get a buyout offer. Relypsa is applying for a three-hour window. The six-hour label appears unnecessary, based on the DDI data. Investors have ignored RLYP getting awarded from the AKF – American Kidney Foundation – for bringing Veltassa to market. This is the first time any company was given this reward. Since its treatment does not bind and create high sodium levels in patients, the lethality of the drug is greatly diminished.