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Keryx (KERX) Q3 Loss Wider Than Expected, Stock Declines


Shares of Keryx Biopharmaceuticals Inc. KERX were down almost 17% on Nov 7 despite receiving FDA approval for a label expansion of its lead drug Auryxia. Lower-than-expected sales of Auryxia in the third quarter led to the selloff.

Concurrent with the earnings release, the company announced that FDA granted an approval for an additional indication of Auryxia to treat adults with iron deficiency anemia (IDA) and chronic kidney disease, not on dialysis. Keryx claims that Auryxia is the only oral treatment option available for this indication. Auryxia is already approved to control serum phosphorus levels in adults with chronic kidney disease on dialysis. With the latest approval, Auryxia can treat two complications of chronic kidney disease.

The company posted a loss of 20 cents per share in the third quarter which was wider than Zacks Consensus Estimate of a loss of 17 cents. The loss was however narrower than the year ago loss of 39 cents per share.

Revenues came in at $15 million in the quarter, missing the Zacks Consensus Estimate of $19 million but surpassed the prior-year figure of $6.3 million. Further, revenues declined almost 1% from the sequentially prior quarter.

So far this year, Keryx’s share price has declined 12.1%, as against the industry’s growth of 3.3%.

Quarter in Detail

Auryxia net product sales in the United States came in at $13.6 million, down from $14.1 million in the prior quarter. The sales in the quarter were lower than management expectations. The decline in sales was because the growth in Medicare Part D prescriptions, aided by the two large payer contracts added in March and June of this year, led to an unfavorable change in the payer mix and lower-than-expected growth in prescriptions. Auryxia prescriptions grew 18% in the third quarter compared to the second quarter of 2017.

License revenues came in at $1.4 million, up 8.7% year over year. Keryx earns license revenues from royalties on net sales of Riona (Japan's trade name for Auryxia) from its Japanese partners.

Research and development expenses increased 6.9% year over year to $9.3 million, primarily owing to manufacturing and clinical activities to support the long-term growth of Auryxia.

Selling, general and administrative expenses were $22.7 million, up 10.8% backed by continued commercialization of Auryxia, and preparations related to the launch of the drug in IDA indication.

2017 Outlook

Keryx withdrew its 2017 financial guidance as it could not estimate its future demand from the recent label expansion of Auryxia.

Our Take

Keryx’s loss in the third quarter was wider than expected and sales missed estimates. The FDA approval for Auryxia for an additional indication might boost sales of the company, given that the IDA market holds great potential.

Zacks Rank and Other Stocks to Consider

Keryx carries a Zacks Rank #3 (Hold). Some better-ranked health care stocks in the same space include Ligand Pharmaceuticals Inc. LGND, Agenus Inc. AGEN and Adaptimmune Therapeutics plc ADAP. While Ligand sports a Zacks Rank #1 (Strong Buy), Agenus and Adaptimmune carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings per share estimates have moved up $3.68 to $3.70 for 2018 over the last 30 days. The company pulled off positive earnings surprises in two of the trailing four quarters, with an average beat of 6.19%. The share price of the company has increased 44% year to date.

Agenus’ loss per share estimates have narrowed from $1.40 to $1.36 for 2018 over the last 30 days. The company delivered positive earnings surprises in three of the trailing four quarters, with an average beat of 4.27%.

Adaptimmune’s loss per share estimates have narrowed from 96 cents to 76 cents for 2017 and from 90 cents to 74 cents for 2018 over the last 60 days. The company came up with positive earnings surprises in two of the trailing four quarters, with an average beat of 24.79%. The share price of the company has increased 101.7% year to date.

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