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Keryx Biopharmaceuticals (KERX)

I actually wrote about Keryx just last week, as I noted that investors were buying the stock quite heavily (as indicated by ~6x the normal volume and an increasing price on KERX). As a result, the stock nearly hit $4/share again and seems to be quite strong despite the 4.5% retreat made last Friday.

By the time this article is published, Keryx should have held a conference call regarding the top-line results from the phase III study for Zerenex (ferric citrate) as described in this press release.

Although I don't have the phase III results at this point (and you will), I do believe that investors will take the data for Zerenex very seriously - whether its good, bad, or mixed. The study can be checked out at this linked url.

As you can see, the main thing that everyone is looking for regarding this phase III trial is statistically significant reduction in blood serum levels of patients' phosphorous levels versus placebo, as well as a solid safety profile (meaning no adverse events related to the treatment's effects).

Zerenex's competitors: calcium acetate and sevelamar carbonate. These compounds work through the same mechanism, but may (or may not) prove to be more effective.

If Zerenex fails its primary endpoint in this trial, I wouldn't be surprised to see KERX fall $1/share quickly (if not immediately) due to the lack of viable pipeline alternatives. If it succeeds, upside could bring the stock above $5/share in coming months. It's difficult to determine exactly how the market will react to the company's upcoming conference, although I will say that investors should be paying a lot of attention to KERX's market cap in the wake of the news event.

Although it's a "binary" event that should produce a large pool of winners and losers and should probably drive the stock either up or down big-time, I think that KERX has high risk of becoming overpriced due to the market's recent hype over the stock.

The company has been eager for good news since the failure of its partnered drug perifosine last year (which shaved about 65% of the company's value off in a single trading session.) It has already reached a market cap of about $250 million, which is optimistic for Zerenex at this point. I wouldn't want to buy KERX above $5/share for this reason - even with successful phase III top-line data.

2.) Celsion Corporation (NASDAQ: CLSN)

Before the end of the month (Friday), Celsion is set to announce the data from the phase III "HEAT" study for Thermodox in the treatment of hepatocellular carcinoma - the most prevalent form of liver cancer out there.

Since liver cancers are so hard to treat, oncologists (and investors, of course) are hoping that Thermodox's unique mechanism of action might be the solution.

Thermodox really does work in an interesting way. What it does is that it keeps a chemotherapeutic agent doxorubicin "contained" in a molecule that allows the doxorubicin payload to become heat-activated. In patients, the release of the doxorubicin payload is triggered by targeted radiofrequency ablation (RFA) at the site of patients' tumors.

Hypothetically, this will deliver doxorubicin locally, and very efficienty. It's also hypothesized that the actual heat from the RFA will make it easier for doxorubicin to penetrate tumor tissue, which will kill more cancer cells.

Clearly, if the idea works, there is potential for Thermodox to improve a wide variety of chemotherapy regimens. The problem is that there is major skepticism over the idea that Thermodox will outperform standard chemotherapy due to its supposed advantages.

I think Celsion's HEAT trials should make or break the company, since Thermodox is the product that constitutes their pipeline. If it really is as amazing as it could be, CLSN could double in value very easily. If it fails, CLSN will probably get cut in half (or worse).

Note that these ideas were taken from "Bio-Wire Weekly", a newsletter written by myself for biotech traders.

Source: Phase III Data Will Rock These 2 Bio Stocks