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Why Is Keryx Biopharma (KERX) Up 4% Since Last Earnings Report?

Keryx Biopharma (KERX) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

It has been about a month since the last earnings report for Keryx Biopharmaceuticals (KERX). Shares have added about 4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Keryx Biopharma due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Keryx's Loss Narrower Than Expected in Q3, Sales Lag

Keryx incurred a loss of 12 cents per share (excluding $2.2 million in non-cash interest expenses related to the amortization of a discount recognized in connection with the modification of the convertible senior notes) in the third quarter of 2018, narrower than Zacks Consensus Estimate of a loss of 13 cents. The loss was also narrower than the year-ago loss of 20 cents.

Revenues came in at $28 million in the reported quarter, missing the Zacks Consensus Estimate of $30 million but up from the prior-year quarter's $15 million.

Keryx's top line comprises revenues generated by its only marketed product Auryxia (ferric citrate). The drug is approved in the United States to control serum phosphorus levels in adults with chronic kidney disease (CKD) on dialysis. In September 2015, Keryx gained an EU approval for Fexeric (EU trade name for Auryxia) for the control of elevated serum phosphorus levels or hyperphosphatemia in adult patients with CKD including dialysis and non-dialysis dependent CKD.

In November 2017, the FDA granted an approval for an additional indication of Auryxia to treat adults with iron deficiency anemia (IDA) as well as chronic kidney disease, not on dialysis. The approval is boosting the company's sales, given the IDA market's great potential.

Quarter in Detail

Auryxia's net product sales in the United States totaled $26.6 million, up 96% from $13.6 million in the prior-year quarter.

Auryxia's prescription increased to 47,500 in the quarter, representing 9.4 million Auryxia tablets compared with about 25,200 prescriptions and 5.4 million Auryxia tablets in the third quarter of 2017.

During the quarter under consideration, more than 2000 additional physicians prescribed Auryxia compared with what was prescribed in the prior-year quarter.

There was a shift in channel mix for Auryxia during the third quarter of 2018, with 61% of prescriptions coming through IMS reporting channels and 39% coming through specialty pharmacies. The shift in mix is due to the closing of Davita???s specialty pharmacy business in September 2018.

Keryx recorded license revenues of $1.4 million during the third quarter, up 3.4% year over year.

Research and development expenses declined 14.9% to $7.8 million in the quarter.

Selling, general and administrative expenses were $26.5 million in the third quarter, up 16.3% from the year-earlier period???s figure of $22.7 million.

In June, Keryx signed a definitive merger agreement with Akebia Therapeutics (AKBA) to combine in an all-stock consideration. The deal is expected to close by the end of 2018, subject to shareholder's approval and customary closing conditions. The merger is intended to create a fully integrated renal company with a complementary portfolio, comprising Keryx's Auryxia and Akebia's product candidate, Vadadustat.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 8.33% due to these changes.

VGM Scores

At this time, Keryx Biopharma has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Keryx Biopharma has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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