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Keryx (KERX) Q4 Loss Wider than Expected, Revenues Beat

Zacks Equity Research

Keryx Biopharmaceuticals Inc. KERX reported fourth-quarter 2016 loss of 32 cents per share, narrower than the year-ago loss of 36 cents. However, the loss was wider than the Zacks Consensus Estimate of a loss of 27 cents per share.

Revenues came in at $9.53 million in the quarter, marginally exceeding the Zacks Consensus Estimate of $9.5 million. Further, reported revenues improved from the prior-year figure of $5.8 million.

Keryx’s share price fell 4% following its fourth-quarter earnings release. In fact, so far this year, the company’s price has decreased 17.8%, while the Zacks classified Medical-Medical Services industry has witnessed a gain of 6.6% in the same time frame.



Quarter in Details

Net sales of Auryxia in the U.S. were $8.2 million, up 70.8%, despite the three-month supply interruption from Aug to Nov 2016. We remind investors that in August 2016, Keryx announced an interruption in the supply of Auryxia, as its contract manufacturer had issues related to the conversion of the API into the finished product, leading to a disruption in the supply of Auryxia.

Consequently, the company withdrew its guidance for 2016. However, in Nov 2016, Keryx announced that the FDA has approved a second drug product manufacturer, Patheon Manufacturing Services, for supplying Auryxia as a finished product.

Auryxia’s prescriptions were filled during the quarter were 8,700, which included about 4,500 prescriptions written in the month of December. Notably, it was the first full month of sales post resupply of Auryxia. In Jan 2017, Auryxia prescriptions increased 3.3%, even though the overall market for phosphate binder prescriptions declined by 2.6%.

License revenues came in at $1.3 million, up 30% year over year. Keryx earns license revenues from royalties on net sale of Riona (Japan trade name for Auryxia) from its Japanese partners, Japan Tobacco Inc. and Torii Pharmaceutical Co. Ltd.

Research and development expenses declined 22.5% year over year to $6.2 million, primarily due to a decrease in development work at the company’s contract manufacturers following approval of a second drug product contract manufacturer. Further, it was affected by a decline in clinical costs following the completion of phase III clinical trial in early 2016.

Selling, general and administrative expenses were $23 million, up 6.5% due to expansion of sales force to support commercialization of Auryxia.

Meanwhile, Keryx is working on expanding Auryxia's label to include the treatment of iron-deficiency anemia (IDA) in adults with non-dialysis dependent chronic kidney disease. The company filed a supplemental new drug application (sNDA) with the FDA in Jan 2017. Auryxia is expected to be approved for the label expansion and launched in late 2017. If approved for this indication, Auryxia could be the first FDA-approved oral medicine to treat IDA in this patient population.

2016 Results

For 2016, loss was $1.52 per share, as compared with $ $1.19 in 2015. The loss was wider than the Zacks Consensus Estimate of a loss of $1.47 per share.

Revenues in 2016 came in at $32 million, up whopping 133.8% from $13.7 million in 2015. Further, revenues beat the Zacks Consensus Estimate of $31.95 million.

Our Take

Keryx posted wider-than-expected loss in the fourth quarter. Nevertheless, revenues surpassed the estimates. The company intends to continue growth of Auryxia in the U.S. dialysis market. The company remains positive as it expects to get an approval for Aurexia’s label expansion and its launch it in late 2017.

Keryx Biopharmaceuticals, Inc. Price, Consensus and EPS Surprise

 

Keryx Biopharmaceuticals, Inc. Price, Consensus and EPS Surprise | Keryx Biopharmaceuticals, Inc. Quote

Zacks Rank & Key Picks

Keryx currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector include Sunesis Pharmaceuticals SNSS, Celgene Corp. CELG and GlaxoSmithKline plc GSK. All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Sunesis’ loss estimates narrowed by 5.06% and 8.80% for 2016 and 2017, respectively, in the past 30 days. The company recorded a positive earnings surprise in three of the last four quarters, the average being 0.54%.

GlaxoSmithKline’s earnings estimates increased from $2.66 to $2.76 for 2017 and from $2.80 to $2.85 for 2018 in the last 30 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 11.03%. Its share price increased 4.4% year to date.

Celgene’s earnings estimates increased from $6.52 to $6.60 for 2017 and from $8.15 to $8.16 for 2018 in the last 60 days. The company posted a positive earnings surprise in three of the four trailing quarters with an average beat of 5.08%. Its share price increased 4.4% year to date.

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