Keryx BioPharmaceuticals (NASDAQ:KERX) updated investors Thursday morning on both its Zerenex development program and its 3Q financials, reiterating that pivotal Phase 3 data for the drug will be released by the end of the year. The company ended the third quarter with $20.2M in cash, equivalents, interest receivable, and invested securities, which management says will be sufficient to take Zerenex through its major regulatory milestones. Management anticipates cash use through early next year of around $4-5M quarterly. Rather than a financing as money gets tight, however, we speculate that the company will rely on a high single-digit million dollar milestone payment (<$10M) from Japanese partner JT Torii, payable when Torii files for Japanese approval most likely in the first quarter of next year. Following that, Keryx will receive another low double-digit million dollar milestone if Zerenex receives Japanese approval, which should come within a year after the filing. KERX reported a net loss of $5.5 million, or $0.08 per share, in the third quarter, representing a decrease of $4.7 million year-over-year; net loss per diluted share missed analyst estimates by $0.01.
Beyond the financials, which seem stable for the time being, Keryx has a series of value-driving milestones upcoming, and today’s conference call suggests that late-stage trial data could come from JT Torii any time, with Keryx’s own Phase 3 trial set to release top-line data by the end of the year. That sets up no less than four potential Zerenex-related data reports still to come in 2012 between Keryx and its partner: the long-term Phase 3 ESRD trial from Keryx; a similar trial from Torii; a Japanese trial in CKD patients on peritoneal dialysis; and Torii’s pre-dialysis CKD trial. You can read more about Zerenex, and what it means for Keryx, in PropThink’s previous report, which explains in full the chances for Zerenex success. After perifosine’s failure early this year (Keryx’s previous lead candidate), KERX plummeted, creating an entrance opportunity for contrarian investors who noted the company’s second late-stage candidate, Zerenex. After rising 100% in the following six months, KERX pulled back in mid-October, making for a second cheap opportunity with a catalyst-laden biotech. If all goes well, Keryx plans to file a New Drug Application for Zerenex in the first quarter of next year.
