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What to Expect from Keryx (KERX) This Earnings Season?

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Keryx Biopharmaceuticals, Inc. is expected to report third-quarter 2017 results on Nov. 6 after the market closes.

Last quarter the company witnessed a negative earnings surprise of 23.53%. Markedly, Keryx’s performance over the last four quarters has been disappointing. The company reported a wider-than-expected loss in all the trailing four quarters, with an average negative surprise of 34.00%.

However, Keryx’s share price has increased 6.6% year to date, outperforming the industry’s 3.9% rally.

Factors Influencing This Quarter

Apart from license fees, Keryx’s top line comprise revenues generated by its only marketed product Auryxia (ferric citrate). Auryxia is used to treat patients with chronic kidney disease (CKD) on dialysis.

In March 2017, the nation’s largest Medicare Part D plan sponsor added Auryxia to its Medicare Part D plan formularies. With these formulary additions, 95% of the patients taking a phosphate binder across Medicare Part D and commercial plans now have unrestricted access to Auryxia.

The company believes that recent formulary additions at two major Part D providers will continue to support and drive the future growth of Aurexia. This, in turn, should lead to increased sales in the third quarter of 2017. The Zacks Consensus Estimates for Auryxia sales in third quarter is expected to be $17.48 million.

Currently, Keryx is working on expanding Auryxia’s label for additional indications to include the treatment of iron-deficiency anemia (IDA) in adults with stage III–V non-dialysis dependent (NDD) CKD. Notably, the company’s supplemental New Drug Application (sNDA) for Auryxia is under review by the FDA.  In fact, the FDA is expected to give its decision on Nov 6, 2017, the same day as its third quarter release. 

If approved for this indication, Auryxia could be the first FDA-approved oral medicine to treat IDA in this patient population. We believe, a potential approval should significantly boost sales of the drug.

What Our Model Indicates

Our proven model does not conclusively show an earnings beat for Keryx this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. However, that is not the case here as you will see below.

Zacks ESP: Keryx’s has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at a loss of 17 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Keryx’s has a Zacks Rank #3, which increases the predictive power of ESP. However, 0.00% ESP makes surprise prediction difficult for the quarter.

Conversely, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into an earnings announcement.

Stocks to Consider

Here are some health care stocks that you may want to consider, as our model shows that it has the right combination of elements to post an earnings beat this quarter.

Clovis Oncology, Inc. is scheduled to release results on Nov 1, after market close. The company has an Earnings ESP of +2.01% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agenus Inc. (AGEN - Free Report) has an Earnings ESP of +8.11% and a Zacks Rank #2. The company is scheduled to release results on Nov 7.

ACADIA Pharmaceuticals Inc. (ACAD - Free Report) has an Earnings ESP of +3.20% and a Zacks Rank #3. The company is scheduled to release results on Nov 6.

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