What happened

After the biotech issued an update on its first-quarter progress in May, investors continued buying Keryx Pharmaceuticals (NASDAQ:KERX) shares in June, sending them 11.6% higher last month, according to S&P Global Market Intelligence.

So what

Keryx Biopharmaceuticals was once a high-flying biotech star, but its reliance on one commercial drug caused shares to crash when sales were slow to grow and production difficulties crimped prescriptions in 2016.

Rising stock chart superimposed on digital map of world

Image source: Getty Images.

Now, it appears Keryx Biopharmaceuticals is regaining some of its luster. The company's lone drug is Auryxia, a treatment that removes excess phosphorous from chronic kidney disease patients on dialysis. Phosphorous can build up in these patients, stripping away calcium from bones, weakening them, and potentially creating calcium deposits that can cause heart disease.

Auryxia launched to nine-figure sales projections, but net product sales totaled only $27.2 million in 2016. This year, however, Auryxia may begin to get closer to analysts' rosy outlook. In Q1, net product sales in the U.S. were $10.5 million, and management thinks that full-year 2017 net product sales will come in between $56 million and $60 million.

Sales could grow much bigger than that in 2018, however, if the FDA approves Auryxia's use in stage 3 to 5 chronic kidney disease patients not on dialysis. In phase 3 trials, Auryxia helped treat anemia in these patients, and the FDA has set a target action PDUFA date of Nov. 6 to decide on whether to expand the drug's label. If it does, then it will significantly increase Auryxia's addressable patient population. An estimated 1.6 million Americans with stage 3 to 5 non-dialysis dependent chronic kidney disease have iron deficiency anemia.

Now what

Despite revenue gaining momentum, Keryx Biopharmaceuticals continues to lose money. In Q1, spending led to a loss of $23 million and cash burn of $21 million. As a result, the company's balance of cash and cash equivalents has fallen to $90.9 million. There isn't a cash crunch yet, but Keryx could end up tapping equity markets with a stock offering later this year if sales fall shy of projections or the FDA passes on approving the expanded label.

Nevertheless, Keryx Biopharmaceuticals is an intriguing stock for bargain hunters to consider buying. The company's $850 million market cap isn't too rich of a valuation (assuming the FDA allows expanded use of Auryxia), and an argument can be made that a suitor could come knocking on its door if the FDA gives it a green light in November.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.