Keryx Biopharmaceuticals (NASDAQ:KERX), a biopharmaceutical company focused on bringing innovative therapies to market for people with renal disease, today announced that it has entered into an agreement to raise $125 million through the private placement of Convertible Senior Notes (the “Notes”), due 2020, with funds managed byThe Baupost Group, L.L.C. With the additional capital, Keryx has a pro-forma cash position of approximately $225 million as of September 30, 2015. In conjunction with the financing, Keryx will increase the number of directors on its Board to eight, as Baupost will have the right to appoint a director to Keryx’s Board by the end of 2015. Baupost will also appoint an observer to Keryx’s board.
The company also announced the implementation of a cost reduction plan to re-align its operating expense structure. The plan is expected to significantly decrease the company’s cash operating expenses, excluding cost of goods sold, in 2016 to between $87 million and $92 million. Keryx plans to provide further 2016 financial guidance in early 2016.
“We have a significant opportunity with Auryxia and, as we previously outlined, have adapted our strategy to improve the launch of Auryxia in the U.S., including the planned increase of our field-based sales force by approximately 50 percent,” said Greg Madison, chief executive officer of Keryx. “We continue to be focused on critical activities to drive increased revenue from Auryxia and to advance our label expansion efforts, with data expected early in the second quarter of 2016 from our phase 3 trial in pre-dialysis patients with iron deficiency anemia.”
“We recently completed a comprehensive review of our financial and business objectives and determined that we should strengthen our balance sheet and implement a plan to reduce our operating expenses,” said Scott Holmes, chief financial officer of Keryx. “We are pleased to enter this financing agreement that, we believe, provides all of the capital required to support our efforts to position Auryxia as a market leader. This transaction is a validation of the potential of Auryxia and reflects continuing support by Baupost. Taken together with our plan to re-align our expense structure, we are now well positioned to achieve our commercial and development objectives for Auryxia.”
Keryx expects to use proceeds from the financing for working capital and other general corporate purposes, including efforts to expand the utilization of Auryxia™ in the U.S. in the current indication and support label expansion opportunities.
The zero-coupon notes will mature in October 2020 unless converted in accordance with their terms prior to such date. Keryx does not have the right to redeem the notes prior to maturity. The conversion price of the notes shall be equal to the closing price of Keryx’s common stock on the day prior to closing, October 14, 2015, or $3.74 per share, subject to certain adjustments under the terms of the notes. Keryx has agreed to file future registration statements for the resale of the notes and the shares of Common Stock issuable upon conversion of the notes.
This announcement does not constitute an offer to sell, or the solicitation of an offer to buy, any of these notes or the shares of Keryx’s common stock issuable upon conversion of the notes, if any, in any state or jurisdiction in which the offer, solicitation, or sale of the notes would be unlawful prior to the registration or qualification thereof under the securities laws of any such state or jurisdiction. (Original Source)
Shares of Keryx Biopharmaceuticals closed yesterday at $3.74. KERX has a 1-year high of $17.97 and a 1-year low of $3.04. The stock’s 50-day moving average is $4.42 and its 200-day moving average is $8.39.
On the ratings front, Keryx has been the subject of a number of recent research reports. In a report issued on October 5, Morgan Stanley analyst Andrew Berens upgraded KERX to Hold, with a price target of $3, which reflects a potential downside of -19.8% from last closing price. Separately, on September 25, J.P. Morgan’s Cory Kasimov reiterated a Buy rating on the stock and has a price target of $16.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Andrew Berens and Cory Kasimov have a total average return of 11.3% and -6.0% respectively. Berens has a success rate of 58.8% and is ranked #988 out of 3773 analysts, while Kasimov has a success rate of 37.8% and is ranked #3619.
Overall, one research analyst has rated the stock with a Sell rating, 4 research analysts have assigned a Hold rating and 3 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $3.00 which is -19.8% under where the stock closed yesterday.
Keryx Biopharmaceuticals Inc is a biopharmaceutical company focused on therapies for patients with renal disease. Its first product is the AuryxiaTM (ferric citrate), an oral, absorbable iron-based compound.