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Keryx (KERX) Stock Down on Wider Q2 Loss, Supply Issues
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Keryx Biopharmaceuticals Inc.’s shares plunged 35.9% after the company announced an imminent interruption in the supply of its only marketed product, Auryxia. We note that Auryxia is approved as tablets for the control of serum phosphorus levels in patients with chronic kidney disease (CKD) on dialysis.
The company has thus withdrawn its guidance for 2016 in anticipation of a supply interruption of Auryxia.
Auryxia Supply Disruption
On its second-quarter earnings call, Keryx stated that its contract manufacturer had issues related to the conversion of the active pharmaceutical ingredient into the finished product, which will lead to a disruption in the supply of Auryxia. The company has exhausted its reserve of Auryxia and is currently working with the manufacturer to restock its inventory. Keryx expects to restore normal supply of Auryxia and make the drug available to patients by the fourth quarter of 2016.
Meanwhile, the company has filed for an approval of a secondary manufacturer in the U.S. for supplying the finished product. The FDA has assigned a Prescription Drug User Fee Act (PDUFA) action date of Nov 13, 2016.
Second-Quarter Results
The company reported a second-quarter 2016 loss of 42 cents per share, which was significantly wider than both the Zacks Consensus Estimate of 29 cents and the year-ago loss of 26 cents.
On the other hand, revenues came in at $9.3 million during the quarter, slightly above the Zacks Consensus Estimate of $9 million. Reported revenues were also higher than the prior-year figure of $2.5 million.
Net sales of Auryxia in the U.S. were $8.3 million, up from the year-ago figure of $1.8 million. The increase is attributable to a rise in prescriptions, which were up 44% sequentially to approximately 13,150 in the quarter.
License revenues were recorded at $1 million, up 33.5% year over year. Keryx earns license revenue associated with royalties on net sales of Riona (Japan trade name for Auryxia) from its Japanese partners, Japan Tobacco Inc. and Torii Pharmaceutical Co. Ltd.
Research and development expenses declined 11.7% year over year to $7 million primarily due to a decrease in costs associated with the company’s recently completed phase III study on ferric citrate (the compound name for Auryxia in additional indications).
Selling, general and administrative expenses were $20.2 million, down 2.8%.
Keryx is working on expanding ferric citrate's label. The company expects to file a supplemental new drug application with the FDA to include the treatment of iron-deficiency anemia stage III–V non-dialysis dependent chronic kidney disease late in the third quarter of 2016.
Our Take
Keryx’s second-quarter results were disappointing, with the company reporting a wider-than-expected loss. Nevertheless, revenues surpassed estimates.
Going forward, we remain concerned about the future sales of Auryxia, which will see a significant decline due to the supply disruption. We expect investors to focus on further updates by the company related to the supply of Auryxia.
Keryx carries a Zacks Rank #2 (Buy). Other favorably placed stocks in the health care sector include Zoetis Inc. (ZTS - Free Report) Innoviva, Inc. (INVA - Free Report) and ANI Pharmaceuticals, Inc. (ANIP - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
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Keryx (KERX) Stock Down on Wider Q2 Loss, Supply Issues
Keryx Biopharmaceuticals Inc.’s shares plunged 35.9% after the company announced an imminent interruption in the supply of its only marketed product, Auryxia. We note that Auryxia is approved as tablets for the control of serum phosphorus levels in patients with chronic kidney disease (CKD) on dialysis.
The company has thus withdrawn its guidance for 2016 in anticipation of a supply interruption of Auryxia.
Auryxia Supply Disruption
On its second-quarter earnings call, Keryx stated that its contract manufacturer had issues related to the conversion of the active pharmaceutical ingredient into the finished product, which will lead to a disruption in the supply of Auryxia. The company has exhausted its reserve of Auryxia and is currently working with the manufacturer to restock its inventory. Keryx expects to restore normal supply of Auryxia and make the drug available to patients by the fourth quarter of 2016.
Meanwhile, the company has filed for an approval of a secondary manufacturer in the U.S. for supplying the finished product. The FDA has assigned a Prescription Drug User Fee Act (PDUFA) action date of Nov 13, 2016.
Second-Quarter Results
The company reported a second-quarter 2016 loss of 42 cents per share, which was significantly wider than both the Zacks Consensus Estimate of 29 cents and the year-ago loss of 26 cents.
On the other hand, revenues came in at $9.3 million during the quarter, slightly above the Zacks Consensus Estimate of $9 million. Reported revenues were also higher than the prior-year figure of $2.5 million.
Net sales of Auryxia in the U.S. were $8.3 million, up from the year-ago figure of $1.8 million. The increase is attributable to a rise in prescriptions, which were up 44% sequentially to approximately 13,150 in the quarter.
License revenues were recorded at $1 million, up 33.5% year over year. Keryx earns license revenue associated with royalties on net sales of Riona (Japan trade name for Auryxia) from its Japanese partners, Japan Tobacco Inc. and Torii Pharmaceutical Co. Ltd.
Research and development expenses declined 11.7% year over year to $7 million primarily due to a decrease in costs associated with the company’s recently completed phase III study on ferric citrate (the compound name for Auryxia in additional indications).
Selling, general and administrative expenses were $20.2 million, down 2.8%.
KERYX BIOPHARMA Price and EPS Surprise
KERYX BIOPHARMA Price and EPS Surprise | KERYX BIOPHARMA Quote
Pipeline Update
Keryx is working on expanding ferric citrate's label. The company expects to file a supplemental new drug application with the FDA to include the treatment of iron-deficiency anemia stage III–V non-dialysis dependent chronic kidney disease late in the third quarter of 2016.
Our Take
Keryx’s second-quarter results were disappointing, with the company reporting a wider-than-expected loss. Nevertheless, revenues surpassed estimates.
Going forward, we remain concerned about the future sales of Auryxia, which will see a significant decline due to the supply disruption. We expect investors to focus on further updates by the company related to the supply of Auryxia.
Keryx carries a Zacks Rank #2 (Buy). Other favorably placed stocks in the health care sector include Zoetis Inc. (ZTS - Free Report) Innoviva, Inc. (INVA - Free Report) and ANI Pharmaceuticals, Inc. (ANIP - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>