Nice Data; Still a Long Wait for the Payoff

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I don't know if there are enough dialysis patients with hyperphosphatemia, high levels of phosphorus in the blood, to propel Keryx Biopharmaceuticals' (Nasdaq: KERX  ) Zerenex to blockbuster status, but the data from a phase 3 trial released today sure look good enough to get it on the market.

Keryx's shares opened up just 7% on the news, but the fairly muted response is likely because of the stellar run the stock has already had this year; shares are more than double where they were at the beginning of the year.

In the trial, patients taking six or eight pills a day were able to reduce their phosphorous levels by 25% to 28.8% after taking the drug for 28 days. The trial was conducted under a Special Protocol Assessment (SPA) with the Food and Drug Administration, so the agency shouldn't have any problems with trial design.

Six or eight pills a day may seem like a lot, but Genzyme's (Nasdaq: GENZ  ) Renagel and Renvela require nine or 10 doses to get patients' phosphorus levels under control. Drugmakers are always trying to decrease dosing because it's more convenient for patients. Just yesterday, Merck (NYSE: MRK  ) released data for a trial testing its HIV drug Isentress once a day instead of the current twice-daily formula. And Amylin Pharmaceuticals (Nasdaq: AMLN  ) and Eli Lilly (NYSE: LLY  ) probably have the most extreme example with their twice-daily Byetta injections getting down to just one shot a week for the extended-release formulation called Bydureon.

The more convenient dosing should help Keryx take market share away from Renagel and Renvela, which racked up just over $700 million in sales last year. But investors are going to have to wait awhile to see the revenue coming in. Keryx still needs to complete a long-term safety trial that isn't fully enrolled yet. The trial requires a year of dosing, so it'll be 2012 before Keryx will be able to submit a marketing application to the FDA.

At least it should be easier to sign up those patients now that we know the drug works.

Interested in keeping track of Keryx as it moves Zerenex closer to the market? Click here to add it to My Watchlist, which will help you keep track of all our Foolish analysis on Keryx.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.

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  • Report this Comment On December 02, 2010, at 4:21 PM, ConstantineX wrote:

    Gotta Love Speculators and Pople listening to Fools. At Closing on Mon. Nov 29th, 2010, Kerx announced that it would release its results on the Phase III Late Stage Trial of Zerenex. With the expectation of good news, in after hours trading, the price surged to $6.14 (Almost 14.5 Percent)!!! On Tues. Nov. 30th, 2010, the news was as expected: POSITIVE in ALL respects. However, Motley Fool wrote an article how this is a great company yet the realization of profits is still a year or so away as Kerx must now complete and longer study. Shares thus far have decreased and closed today (Thursday) more than 8 percent since the closing of Monday's Bell (BEFORE the news)

    So! The news was good, investors bought the stock thus the(14.5 percent increase in after hours trading), and despite being overbought, opened still higher than Monday's Close??? I'm not saying the stock should have even gone up because of the good news since it was expected and the price was already adjusted for the good results. HOWEVER!! There is no reason Speculators should dump their shares because Motley Fool writes that the stock has yet to realize its full potential (It's off the 15 -16 dollar range) how is it anywhere close to its potential price to justify a price drop of this magnitude?? I guess there are a LOT of FOOLS out there!!

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