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What happened
After reporting third-quarter results, shares of Keryx Biopharmaceuticals (KERX), a commercial-stage biopharma focused on renal disease, climbed higher, ultimately ending the day up 13.4%.
So what
Keryx's quarterly financial results were mixed. Here's a quick look at the highlights:
- Revenue was $6.4 million, which was up 50% over the year-ago period. It was also ahead of the $5.5 million that analysts were expecting. However, sales were still down 31% sequentially because of the previously announced supply disruption for Auryxia.
- Auryxia's quarterly script volume tumbled to 9,700. That was far shy of the 13,150 scripts that were written in the previous quarter, which suggests that physicians pulled back on their use of the drug in response to the supply issues.
- Management booked a $13.8 million inventory charge during the quarter, which was partially offset by lower spending on R&D. Taken together, the company's quarterly net loss came in at $41.7 million, or $0.39 per share. That was far worse than the $0.20 loss that the pros had projected.
- The company ended September with $132 million in cash.
Financials aside, the company provided investors with a handful of business updates that appear to be the primary reason that the stock is on the move today:
- The company announced that the FDA has approved a second contract manufacturer for Auryxia, which should put an end to its supply disruption.
- Keryx completed its sNDA application that is seeking a label expansion claim for Auryxia. Management plans on submitting it for review once the FDA has agreed to its plan for the pediatric market.
When you combine this news with the fact that the biotech sector in general had a terrific day -- the iShares Nasdaq Biotechnology ETF (IBB 0.12%) climbed 9% -- it is no wonder why shares of Keryx roared higher.
Now what
While it is good to hear that Auryxia's supply problems are a thing of the past, it is still too early to know how providers will respond to the drug's supply disruption in the long term. This quarter's declining script volume suggests that some physicians are taking a wait-and-see approach, so it is possible that the company will have a hard time convincing them to start writing prescriptions again. I suggest that investors should take a similar approach to the company's stock until we see definitive signs that providers are back on board.
