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On January 28 Keryx (NASDAQ:KERX) announced topline results from its Phase III study of Zerenex, a patented formulation of ferric citrate it has licensed, for the treatment of hyperphosphatemia in end stage renal disease [ESRD] patients on dialysis. Hyperphosphatemia refers to abnormally high levels of phosphate (a normal component of biological systems) in the blood. A day after this, KERX announced that it had commenced a secondary public offering pursuant to a previously files Form S-3 shelf registrations statement with the SEC. That secondary offering was priced at $8.49 as prices peaked to just under $10 on January 31 and February 1. Since then, the stock has pulled back. The company has another related ongoing clinical study on patients not undergoing dialysis.

The reported study "was conducted pursuant to a Special Protocol Assessment" [SPA] with the FDA, so that if safety and efficacy have been clearly demonstrated (as announced by the company) it should get approval.

Two previous posts on SA including one by this author, while acknowledging the success of the company, have nevertheless questioned whether the value of KERX's achievement justify the valuations subsequently attained in the buying frenzy following the Phase III success announcement.

What I seek to do here is to take a closer look at the announced results.

First of all, the company states that the full results will be published at a later a scientific meeting. It reports positively about safety, but many details about dosage and adverse effects have yet to be published. All it says about dosage, for instance, is that "Zerenex was administered using a 1 gram oral caplet formulation." The SPA states a range of 1 to 8 grams as dosage, and the initial Phase III study also has some dosage information.

The partial data which the company chose to release in connection with this study may lead some to jump to false conclusions about what was demonstrated. First of all, the study for the FDA was not a comparison of efficacy between the company's product and existing therapies. Although the side-by-side safety study went on for 52 weeks, all that they have reported about the comparison of efficacy is "non-inferiority" at 12 weeks. "As agreed to with the European Medicines Agency [EMA], the treatment difference between Zerenex and Renvela® (sevelamer carbonate) at Week 12 of the Safety Assessment Period in terms of change from baseline (Day 0) in serum phosphorus was analyzed. Zerenex successfully achieved the non-inferiority endpoint versus Renvela.®" So, although for 52 weeks one group received the experimental drug ferric citrate, and the other group received either Renvela (sevelamer carbonate) or Phoslo (calcium acetate), we do not know how ferric citrate performed compared to the other two. I wonder if the comparisons were obviously favorable, one would not crow about it. Of course, superiority to existing therapies was not necessary in this case to show efficacy in treating to hyperphosphatemia. All that was needed is to show that it works, which they have. But if you think a better anti-hyperphosphatemia drug has been discovered, that conclusion is not warranted by the released Phase III evidence.

What the company has reported is that if you treat patients with ESRD using ferric citrate for 52 weeks and then for half of them stop the ferric citrate (and give a placebo, i.e., a medically ineffectual substance) for a full four weeks, their serum phosphate levels go up. This is enough for the FDA to be convinced that ferric citrate can be therapeutic for hyperphosphatemia, but tells investors little about how good it is in relation to existing drugs. I misinterpreted the results initially in this regard, wrongly concluding that ferric citrate is so much better than the control drugs, and suspect many other readers did as well.

The company also reported data related to secondary efficacy endpoints. The data are impressive. However, there is a twist to that story as well. Iron deficiency anemia is a significant problem for ESRD patients and a huge one for those on dialysis. They are in need of iron supplementation, often provided intravenously. The company reports significant improvements in regard to iron status among patients on ferric citrate treatment. However, this is a really curious claim to highlight. It is like conducting a martial arts contest where the controls have their hands tied behind their back and then presenting data about how much the experimental group landed more punches and blocked attacks, as useful measures of skill. The way the Phase III study was designed, "Oral iron therapy was not permitted during the course of the study. IV iron therapy was not permitted if a subject's serum ferritin level was greater than 1,000 ng/mL or the transferrin saturation (TSAT) was greater than 30%. The use of ESAs was at the physician's discretion." Ferritin is an iron binding protein in the body and indicates iron storage levels. Transferrin transports iron. ESA is used for stimulating red blood cell (which contains hemoglobin, which contains iron) production.

So here we have a experimental drug which is iron, and those who are in the control group do not receive iron, and then you measure how much more the experimental group has improved in iron levels and tout that as an achievement.

Surely, it is good to have a double advantage from the same therapy to reduce both phosphate levels and improve anemia. Still, there is one way to present data, and another way to spin it.

As far as I understand it, the strategy behind anti-hyperphosphatemia therapy is to tie up the phosphate in food (they are present in all plant and animal tissue as components of DNA and other substances) by making them highly insoluble salts and thus very poorly absorbed, and excreted. What the Phase III results from the Keryx study show is that although the ferric salt is normally absorbed poorly here the mega doses push the levels absorbed to significant levels.

So there it is. Before you buy the stock, make sure you are not buying hype. Even before the full release of data, the company has attempted to make a case for market advantage based on the costs connected with iv iron therapy and how this will lower it. Will some of those advantages for the company disappear if higher dose oral iron therapy is to be attempted along with other hyperphosphatemia drugs, in view of the demonstrated safety (if FDA so concludes) of oral iron as (generic) ferric citrate? A maker of a product available "over the counter" could also produce one to be available only through prescription, according existing rules. That could be an option for iron supplement makers if the one gram pill is a better option for ESRD patients, since iron overdose through taking OTC iron pills is a concern. The secondary efficacy endpoints shown by the company seem to provide an argument against the value of ultrapure ferric citrate since having some ferrous in there is good if that gets absorbed better.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. The author has a trivial position in the form of puts on KERX. What is presented here are sincere observations, but judgments are fallible, and you may assume whatever possible about the motives of the writer and make decisions only based on any facts that you are able to verify. Author is not an investment advisor and has no business or other connections with any publicly traded company or brokerage.

Source: A Closer Look At Keryx Biopharmaceuticals' Phase III Result Announcement