Is Keryx Still A Good Buy After Weak Prescription Data?

Keryx Biopharmaceuticals KERX reported first quarter 2015 earnings on May 4. All eyes were on Auryxia, Keryx’s lead product for patients with chronic kidney disease on dialysis.

Keryx posted total revenue of $1.175 million, including 1,218 prescriptions filled for Auryxia in the quarter. Keryx ended the quarter with $168.8 million in cash and cash equivalents because the company completed an underwritten public offering of common stock in January. The biopharmaceutical company finished the quarter with a net loss of ($0.28) per share, compared to a loss of ($0.15) per share in the same quarter of last year.

CEO Greg Madison commented, “With the first full quarter of launch behind us, we have made great progress in securing formulary wins for Auryxia™ (ferric citrate), which is a critical catalyst for future success.” Keryx has not given guidance for the second quarter or full-year 2015 and does not plan to.

Keryx also announced two more Medicare Part D formulary wins, marking approvals at 8 of the 15 top Part D plans. Medicare Part D is a federal program that provides subsidies for prescription drugs for Medicare beneficiaries. Madison emphasized in a conference call the crucial “role access plays in the uptake of a new drug in this market particularly.” Keryx’s goal is to reach 80 percent unrestricted access for Auryxia.

On May 4, analyst Cory Kasimov of J.P. Morgan reiterated an Overweight rating on Keryx with a $19 price target. Kasimov was unimpressed by Auryxia’s script data and instead focused on “mgmt. commentary around progress with reimbursement/uptake as we look for more significant acceleration in 2H15.”

Kasimov is bullish, though hesitant, on the overall company noting, “We think Auryxia’s dual benefit on phosphorus and iron (and the associated pharmacoeconomic benefits) should ultimately lead to more meaningful market share and the pending Ph3 CKD data offers an important clinical catalyst.” However, he continued, “we will be keeping a close eye on weekly/monthly scripts over the next couple of months to see if progress KERX is discussing actually does translate into scripts.”

Cory Kasimov has rated KERX 6 times since June 2013. Although he only has a 33 percent success rate recommending the stock, he has a +9.0 percent average return per KERX rating.

Separately, Jonathan Aschoff of Brean Capital reiterated a Buy rating on Keryx with a price target of $26. Aschoff explained that the “gross-to-net adjustment of 56% was mainly driven by the voucher program,” but KERX will reduce the amount of vouchers thus “rendering the gross-to-net adjustment to normalize into the range of 35-40% by YE15.”

The analyst added, “We emphasize that at this point, Keryx should still be judged on its timeliness of formulary wins rather than on weekly prescription data, as most nephrologists are comfortable prescribing Auryxia only when their patients are likely covered for the drug.” Aschoff looks forward to “Auryxia sales inflection points” in the second half of 2015 and EU approval in the drug in mid-2015.

Jonathan Aschoff has rated Keryx Biopharma 13 times since April 2012. Although he only has a 23 percent success rate recommending the stock, he has a +16.6 percent average return per KERX rating.

On average, the top analyst consensus for Keryx Biopharmaceuticals on TipRanks is Strong Buy.