Keryx's Opportunity Just Got a Lot Bigger

One great opportunity powered shares of Keryx Biopharmaceuticals (NASDAQ: KERX  ) to almost quadruple so far in 2013. After an announcement by Keryx on Tuesday, you can add an even bigger opportunity to the mix.

Keryx's shares jumped around 18% in early trading on Tuesday following the release of mid-stage study results for Zerenex in treating patients with non-dialysis dependent chronic kidney disease, or NDD-CKD, with elevated serum phosphorus and iron deficiency anemia. The company submitted a New Drug Application, or NDA, for Zerenex in treating patients with CKD on dialysis earlier this year.

Results
The phase 2 study included 149 patients with NDD-CKD, with serum phosphorus levels of 4 mg/dL and above and with iron deficiency anemia. The patients were divided into two groups, with one group receiving placebo and the other receiving Zerenex. None of the patients in the study were given intravenous iron, oral iron treatments, or erythropoiesis-stimulating agents, or ESAs.

Patients in the group receiving Zerenex demonstrated significant reduction in mean serum phosphorus levels after 12 weeks of treatment -- from 4.5 mgdL to 3.9 mg/dL. The placebo arm of the study showed a small reduction -- fro 4.7 mg/dL to 4.4 mg/dL.

Zerenex also proved to be quite effective in the second primary endpoint -- change in transferrin saturation, or TSAT, levels. The TSAT level for patients taking Zerenex increased from 22% to 32% after 12 weeks of treatment compared to a small drop in TSAT levels for patients taking placebo.

What it all means
Analysts peg peak annual sales for Zerenex at around $300 million, assuming the drug receives FDA approval for the dialysis CKD indication. If Zerenex can gain approval for the pre-dialysis indication, though, that changes the ball game dramatically.

On the low end, we're probably looking at annual sales for the two indications of $500 million. At the high end, peak sales of around $1 billion aren't out of the question. With a market cap currently at the $1 billion mark, Keryx could go much higher.

That depends, of course, on FDA approval in 2014 for the dialysis CKD indication and success in moving forward with the second indication. At this point, approval for the first indication seems to be likely (although anything can happen with the regulatory approval process). And the mid-stage study results suggest tremendous potential for winning on the second count as well.

The other thing that this week's news could mean is that larger companies begin seriously eyeing Keryx. Several organizations could be possible suitors.

Amgen (NASDAQ: AMGN  ) would likely be on the short list. The big biotech already stands as a major player in the kidney disease market with Epogen and Sensipar. Amgen had more than $22.5 billion socked away in cash and short-term investments as of the end of last quarter. That's plenty available to fund a buyout of an up-and-coming company like Keryx.

Another possibility is AstraZeneca (NYSE: AZN  ) . The British pharmaceutical company has already spent some money on picking up kidney disease drugs. Not long ago, AstraZeneca bought the rights to Fibrogen's CKD anemia drug FG-4592. While its pockets aren't as deep as Amgen's, the company does claim over $8 billion in cash and liquid investments -- enough to shop if needed.

Whatever happens or doesn't happen with respect to acquisitions, Keryx should be one that investors watch closely. After a sizzling performance thus far in 2013, the latest news points to another hot year for this biopharmaceuticals company.

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Read/Post Comments (4) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On November 05, 2013, at 2:23 PM, byzeev wrote:

    I hold kerix for the oast 20 months and still maintain it. I got in after it collapsed due to Perifzon failure.

    Management is doing an excellent job and bought more shares during those rough times. Still, as a fool member I would NOT advise anyone to buy at these levels, as no NCE is expected.

  • Report this Comment On November 05, 2013, at 2:53 PM, Kleeno65 wrote:

    First off, the failed drug was Perifosine, not Perifzon, and secondly, YOU are not advising anyone to buy at these levels, despite numerous upgrades prior to today and after the results were released this morning regarding Zerenex???? Please don't give advice.

  • Report this Comment On November 05, 2013, at 3:34 PM, cameron12x wrote:

    Another short-term catalyst not even baked into the current price movement is impending approval in Japan.

    That's probably worth at least $200M in future annual sales and a corresponding bump upwards in market cap.

    This company is on the fast-track to stardom and is definitely a strong take-out candidate.

  • Report this Comment On November 05, 2013, at 9:57 PM, Kleeno65 wrote:

    And another thing for byseev. It's Keryx not Kerix. Yeah, I'll be taking advice from you. How's your short position working out for you????

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