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Three Things You Need to Know From Keryx Biopharmaceuticals (KERX)’s Q2 Earnings

Keryx Biopharmaceuticals (NASDAQ:KERX) announced its second-quarter results before the market opened on Thursday. Shares fell slightly as investors reacted to the biotech’s worse-than-expected loss of $0.14 per share. Analysts had estimated Keryx’s loss at $0.10 per share. The more important news for Keryx Biopharmaceuticals (NASDAQ:KERX) isn’t earnings, though. Here’s what you really need to know.

Keryx Biopharmaceuticals (NASDAQ:KERX)1. Zerenex NDA is on track.
The best news from Keryx Biopharmaceuticals (NASDAQ:KERX)’s update is that the New Drug Application, or NDA, for Zerenex in treating hyperphosphatemia in patients with end-stage renal disease is on track. CEO Ron Bentsur said that the company plans to submit the NDA within the next two weeks.

Investors have been eagerly awaiting the filing of this NDA ever since Keryx Biopharmaceuticals (NASDAQ:KERX) announced great results from its phase 3 study of Zerenex. In that study, the drug reduced patients’ mean serum phosphorus levels significantly compared to placebo.

Adding icing to the cake, patients taking Zerenex didn’t have as much need for intravenous iron and erythropoiesis-stimulating agents compared to other patients taking Sanofi SA (NYSE:SNY)‘s Renvela and Shire‘s Fosrenol. Zerenex’s safety profile also seemed to stack up favorably against Renvela and Fosrenol.

If Zerenex gains regulatory approval (which I suspect it will), the drug could hit peak annual sales of $300 million or more for the hyperphosphatemia indication. One wild card, though, could be the impact of Renvela and Renegal going generic next year. Sanofi SA (NYSE:SNY) reached an agreement with Impax Laboratories Inc (NASDAQ:IPXL) in September 2012 that allows Impax to market generic versions of both drugs.

2. Cash isn’t a problem.
Keryx Biopharmaceuticals (NASDAQ:KERX)’s earnings miss isn’t a big deal in my view. The main culprit was increased expenses related to gearing up for submitting the Zerenex NDA.

How much cash the company has is key, though. On that front, things look pretty good for now. Keryx Biopharmaceuticals (NASDAQ:KERX) reported total cash, cash equivalents, interest receivable, and short-term investments of $80.4 million. That’s a big jump from the end of 2012 thanks to a secondary offering issued in the first quarter.

CFO James Oliviero said that the company’s cash position should take it through an expected mid-2014 U.S. commercial launch of Zerenex. That’s good news for now, although Keryx will need to generate more cash not too far down the road.

3. Mid-stage study results are on the way.
An even larger carrot dangling before Keryx’s eyes is the possibility of marketing Zerenex for pre-dialysis patients with chronic kidney disease, or CKD. The company expects a top-line data readout from its phase 2 study for CKD at the American Society of Nephrology conference scheduled in November.

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