Please ensure Javascript is enabled for purposes of website accessibility

Why Keryx Biopharmaceuticals Stock Jumped Today

By Brian Feroldi – Nov 9, 2016 at 4:45PM

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

News of a resolution to its supply disruption issue caused shares to climb higher.

Image source: Getty

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.

Brian Feroldi has no position in any stocks mentioned. Like this article? Follow him on Twitter where he goes by the handle @Longtermmindset or connect with him on LinkedIn to see more articles like this.

The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

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