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Keryx Biopharmaceuticals Posts In-line Loss, Revenue Beat (KERX)

Keryx Biopharmaceuticals (NASDAQ:KERX) reported a loss of 28 cents per share in the first quarter of 2015, in line with the Zacks Consensus Estimate.  The year-ago quarter figure was a loss of 15 cents.

Keryx generated $1.2 million of revenues in the first quarter of 2015, compared to the Zacks Consensus Estimate of $1 million.

Quarter in Detail

Research and development expenses decreased 41.4% from the year-ago quarter to $9.6 million primarily due to the capitalization of inventory and decrease in regulatory and clinical study expenses.

In Sep 2014, the FDA approved Keryx’s Auryxia for controlling serum phosphorus levels in patients suffering from chronic kidney disease (CKD) on dialysis. The approval was however accompanied by a few warnings. The drug was launched by the company during the end of 2014.

Selling, general & administrative expenses came in at $18.9 million, up from $7.3 million in the year-ago quarter primarily due to increase in commercial activities and associated personnel costs in preparation for the commercialization of Auryxia.

Pipeline Update

We remind investors that Keryx has already submitted a marketing authorisation application filing to the European Medicines Agency (EMA) seeking the approval of Auryxia for the treatment for hyperphosphatemia in patients with CKD, including dialysis- and non-dialysis-dependent CKD. The review process is ongoing and Keryx has responded to the EMA’s 120-day questions and expects a decision by mid-2015. In Apr 2015, Keryx requested for a two-month extension to provide adequate time to respond to the final questions from the EMA. The company expects an opinion from the Committee for Medicinal Products for Human Use by mid-2015 and a subsequent regulatory approval from the EMA.

Keryx is also working on the label expansion of Auryxia. The company has initiated a phase III study on Auryxia for the treatment of iron-deficiency anemia in patients with stages III to V CKD, who have previously not responded to oral iron therapy in Sep 2014. The study will enroll 230 patients and will evaluate changes in hemoglobin levels as the primary endpoint. The study is expected to be completed by the end of 2015. Assuming successful completion, Keryx intends to file a supplemental new drug application with the FDA.

2015 Outlook

Keryx expects to see meaningful growth in prescription trends in the second half of the year as it finalizes reimbursements and continue to pull through prescriptions. The company expects gross margins to remain between 80% and 85% over the course of 2015.

Our Take

Keryx Biopharmaceuticals currently carries a Zacks Rank #3 (Hold). First-quarter results came in line with expectations. Apart from Auryxia, Keryx currently has no other approved products. Hence, the company will have to depend solely on Auryxia for growth. However, quite a few limitations and warnings have restricted its sales potential substantially. We expect investor focus to remain on the drug, going forward.

Some better-ranked stocks in the healthcare sector include Horizon Pharma PLC (NASDAQ:HZNP), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA) and Actelion Ltd (OCT MKTS:ALIOF). All three carry a Zacks Rank #1 (Strong Buy).

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