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Is a Beat in Store for Keryx (KERX) This Earnings Season?

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Keryx Biopharmaceuticals, Inc.  is expected to report second-quarter 2018 results on Jul 26, before the market opens.

Last quarter, the company reported a positive earnings surprise of 5.26%. However, Keryx’s performance over the last four quarters has been disappointing. The company’s average surprise over the trailing four quarter is -20.09%.

Keryx’s shares have lost 7.3% year to date, compared with the industry’s 2.4% decline.

What Does the Zacks Model Unveil?

Our proven model shows that a company is likely to beat on earnings if it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). The model shows that Keryx has higher chances of beating estimates in the to-be-reported quarter.

Earnings ESP: Keryx has an Earnings ESP of +23.25% as the Most Accurate Estimate is pegged at a loss of 11 cents and the Zacks Consensus Estimate is at a loss of 14 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Keryx’s Zacks Rank #2, when combined with a positive ESP, makes us reasonably confident of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that Sell-rated stocks (Zacks Rank #4 or 5) that are going into an earnings announcement are best avoided.

Let’s see how things are shaping up for this announcement.

Factors Influencing This Quarter

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

In November 2017, the FDA granted an approval for an additional indication of Auryxia to treat adults with iron deficiency anemia (“IDA”) and chronic kidney disease, not on dialysis. Moreover, Keryx claims that Auryxia is the only oral treatment option available for this indication. Auryxia is already approved to control serum phosphorus levels in adults with chronic kidney disease on dialysis. With the approval, this drug can treat two complications of chronic kidney disease.  It also represents a significant opportunity for physicians to treat their patients at an earlier stage of the disease before their anemia becomes more severe. Hence, the approval should significantly boost Auryxia’s sales.

Meanwhile, the company is looking for potential partners to commercialize the drug in the EU.

The company also remains focused on creating rapid awareness for the new indication and differentiating Auryxia from existing treatment options along with communicating the favorable insurance access to Auryxia that prescribers and patients can expect to see.

In June 2018, Keryx signed a definitive merger agreement with Akebia Therapeutics, under which the companies will combine in an all-stock merger. The companies are to form a new, fully integrated company focused on chronic kidney diseases called Akebia Therapeutics. The deal is expected to close by the end of 2018. With this deal, Keryx shareholders will gain access to an innovative phase III product candidate- Vadadustat with the potential to compete in a complementary multi-billion-dollar market upon successful completion of its development program. Vadadustat has the potential to become a new standard of care for patients with anemia due to CKD who currently rely on injectable erythropoietin-stimulating agents (ESAs), a multi-billion-dollar market.

However, with Auryxia being the only approved product in Keryx’s portfolio, the company is entirely dependent on the drug for its growth. 

Keryx is likely to provide updates on the merger along with the updates on Auryxia at the second quarter call.

Other Stocks That Warrant a Look

Here are some other stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this quarter.

Gilead Sciences, Inc. (GILD - Free Report) is scheduled to report earnings on Jul 25. The company has an Earnings ESP of +0.15% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Amgen Inc. (AMGN - Free Report) is scheduled to report earnings on Jul 26. The company has an Earnings ESP of +1.46% and a Zacks Rank of 3.

Pfizer Inc. (PFE - Free Report) is scheduled to release results on Jul 31. The company has an Earnings ESP of +0.89% and a Zacks Rank #3.

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