Keryx Biopharmaceuticals, Inc. (NASDAQ: KERX) spiked to a six-month high of 5.12 on Monday following a article claiming an FDA approval for the cancer drug Perifosine was all but guaranteed but by Tuesday morning the buying frenzy slowed and shares have since fallen to a more reasonable 4.22 level while trading volume for the biopharmaceutical company remains strong.
Of particular interest concerning KERX’s surge on Monday is the fact that the company itself had little to do with the jump, instead it was an independent writer expressing their own opinion, an opinion that was surely swayed by the fact that they are long on KERX as well as AEterna Zentaris (NASDAQ: AEZS), the other piece of the Perifosine puzzle.
That being said, many investors are now rethinking their position and doubt has crept in regarding the results of a highly anticipated Phase III study centering on Perifosine, described by KERX as “a novel, potentially first-in-class, oral anti-cancer agent that inhibits Akt activation in the PI3K pathway, and also affects a number of other key signal transduction pathways, including the JNK pathway, all of which are pathways associated with programmed cell death, growth, differentiation and survival.”
KERX has been optimistic about the prospects of Perifosine yet they haven’t gone as far as declaring FDA approval “practically a done deal,” a statement found in the title of the recent article. As it stands Perifosine is in Phase III clinical development for both refractory advanced colorectal cancer and relapsed / refractory multiple myeloma, nothing about this clinical development has suggested FDA approval as imminent.
It should be remembered by investors that KERX has yet to receive approval for the sale of any of their drug candidates in any market and, therefore, have not generated any product sales from our drug candidates. Yes KERX has immense potential but a number of biopharmaceutical companies have fallen by the wayside despite that characteristic.
Until KERX releases clinical information about the Phase III study the reality is nobody knows the direction of the company. They have invested a considerable sum of money in the development of Perifosine, more than $20 million in research and development expenses since 2009, and without a product on the market any negative news could severely hamper the company’s progress.
Perifosine isn’t the only drug KERX is trying to advance, they also have Zerenex(ferric citrate), an oral, ferric iron-based compound that has the capacity to bind to phosphate in the gastrointestinal tract and form non-absorbable complexes. Zerenex is currently in Phase III clinical development in the United States, under an SPA agreement, as a treatment for hyperphosphatemia (elevated phosphate levels) in patients with ESRD on dialysis.
Zerenex is essentially the only money-making drug that KERX has at the moment as they have received license fees and milestone payments related to their agreement with JT and Torii in Japan. Under the terms of the license agreement with JT and Torii, KERX received a non-refundable milestone payment of $5.0 million in April 2011 from JT and Torii for the achievement of the Phase 3 commencement milestone.
KERX stated “We expect to recognize additional license revenue in future periods from our sublicense agreement with JT and Torii, provided their Phase 3 program is successful.” Obviously that would take some pressure off of KERX but the reality is Perifosine is the drug that shareholders are basing their investment.
Despite Tuesday’s slide shares of KERX remain above their 50-day moving average of 3.07 and their 200-day moving average of 3.54 and yes, they can climb higher if they Perifosine is able to navigate its way through the FDA approval process but that’s not exactly right around the corner. In the meantime KERX will likely have to rely on the sale of securities to proceeds from various private placements of equity securities, option and warrant exercises, public offerings of their common stock in addition to their licensing revenue to keep their operations flowing.