Please ensure Javascript is enabled for purposes of website accessibility

Why Keryx Biopharmaceuticals Stock Soared 11.6% Higher in June

By Todd Campbell - Jul 8, 2017 at 6:31AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Sales are finding their footing at this biotech, and optimism is increasing ahead of an important FDA decision later this year.

What happened

After the biotech issued an update on its first-quarter progress in May, investors continued buying Keryx Pharmaceuticals (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.

Todd Campbell has no position in any stocks mentioned. His clients may have positions in the companies mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Keryx Biopharmaceuticals, Inc. Stock Quote
Keryx Biopharmaceuticals, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.