Keryx Pharma Could Turn into a Real Winner Down the Road

In an early Tuesday press release, Keryx Pharmaceuticals (KERX) announced positive information regarding the continued "impressive" efficacy of its treatment for Advanced Metastatic Renal Cell Carcinoma, Perifosine. This news followed the recent announcement of positive Phase II trials for Zerenex, the company's treatment for developing kidney disease.

While I do believe that KERX, based on the Phase II results of both of the above mentioned drugs, is a good pick for the long term, we're still only talking about Phase II trial results and both drug candidates are still a long ways off before they have a chance to make it to market. That is why, in my opinion, the stock could see a slide back down to the $2 level - or below - once again.

A recent stock offering was announced for $2.50/share - in a move that the company says will raise $20 million towards funding Phase III trials - but it's common in the biotech sector to see a stock price drop below an offering price in the weeks following the offering.

I still like KERX as an accumulation play, but I would temper accumulation at these prices and see if it drops at all.

That being said, KERX could turn into a real winner later on down the road if Perifosine and Zerenex continue to impress. It also may be worth looking out for a partnership deal - I'm not so sure that the recently raised $20 million will be enough to carry both drugs through Phase III trials. With positive Phase II already in the basket, a larger pharma may wish to take a chance on one or both of the drugs and offer Keryx an up front payment to do so.

Accumulate KERX for the long term, but don't be surprised if it dips to the $2 level again.

Disclosure: Sold position for just over $3.

Comments

[pcstock:]

What are near future catalysts for KERX?
I want to increase my holdings in 1 or 2 of the following stocks:

ANDS, CBAI, CVM, CYCC, CYTR, DVAX, HEB, HLCS, INO, KERX, LXRX, NEPH, RGN, SPPI

Which of them will you recommend?

Oct 04 08:35 PM