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Keryx (KERX) recently declared successful results from its phase II study of renal disease drug "Zerenex" in non-dialysis dependent chronic kidney disease, or NDD-CKD patients, who are suffering with elevated serum and phosphorus and iron-deficiency anemia. In this trial, 149 patients suffering with stage 3 to stage 5 NDD-CKD were treated with a placebo or Zerenex in a ratio of 1:1 for 12 weeks. Zerenex was able to achieve both the primary and secondary endpoints, and it has demonstrated significant changes in the serum phosphorus and transferrin saturations, or TSAT, and brought them at an optimum level compared to the placebo. TSAT measure the iron status in the patient's body.

Zerenex was also successful in increasing the ferritin and hemoglobin, and reducing fibroblast growth factor-23, or FGF-23 versus placebo. FGF-23 is a protein that regulates phosphorus and vitamin D metabolism. Based on the superior phase II results, Keryx is planning to discuss this Phase II data with the FDA. A positive discussion will help the company gain the labeled indication for the treatment of iron-deficiency anemia in patients suffering with NDD-CKD. After analyzing the safety and tolerability of Zerenex in this phase II, only 19% of patients discontinued the treatment compared to 32% patients treated with the placebo.

Achieving superior efficacy in CKD patients

On November 8, 2013, the company declared preliminary data for its ongoing 48-week safety extension study of Zerenex for the treatment of hyperphosphatemia in the patients with CKD on dialysis. This study commenced in August 2012, and it is expected to complete in the first half of next year. In this 48-week non-regulatory required open-label extension, or OLE, study, patients who successfully completed the 58-week phase III trial were enrolled. The objective of the OLE is to evaluate the long-term safety and tolerability of patients under the review.

This OLE study supported the data observed in the completed phase III trial. Zerenex was able to control the serum phosphorus level within normal range of 3.5mg/dL-5.5mg/dL and increasing the TSAT level. Zerenex reduces intravenous, or IV, iron use by 85%, and patients maintain their ferritin and hemoglobin levels. This demonstrates Zerenex's ability to significantly reduce the need for IV iron, while maintaining hemoglobin in dialysis patients.

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In August 2013, Keryx submitted a New Drug Application, or NDA, for the marketing and commercialization of Zerenex under the Special Protocol Assessment, or SPA, agreement with the FDA. The application was based on the safety and efficacy profile in treating elevated serum phosphorus levels, or hyperphosphatemia, in the patients with chronic kidney disease, or CKD, on dialysis.

After analyzing the response from its previous studies, including the four phase III trials conducted in Japan with CKD patients on dialysis, the FDA accepted the NDA for filing and assigned the Prescription Drug User Fee Act, or PDUFA, target date of June 7, 2014. The PDUFA target date is when the FDA will complete its review of the NDA and may approve the drug based on its trial phase results.

Market for Zerenex

In the U.S. around 10%-15%, or over 26 million, of the adult population is affected with CKD. Out of these, more than eight million patients suffer with moderate (stages 3 and stage 4) and severe (stage 5) forms of CKD. The elevated serum phosphorus became more prevalent in moderate-to-severe NDD-CKD patients. According to the American Society of Nephrology, it is estimated that there are over 1.5 million adults with stage 3 to stage 5 NDD-CKD in the U.S. alone. These patients are frequently diagnosed with iron deficiency anemia and require an iron replacement therapy to increase iron stores, like ferritin and TSAT levels, and hemoglobin levels.

Worldwide, approximately 2.8 million patients suffer with severe CKD and the majority of patients, or around two million, require dialysis or a kidney transplant surgery for survival. In the U.S. around 630,000 patients suffer with severe CKD, or End Stage Rental Disease, or ESRD, and more than 400,000 require dialysis, and this number is expected to rise in future.

It is expected that the growth in this renal disease market will generate huge opportunities for Keryx, which will supports it future earnings prospects and creating competition for Sanofi's (SNY) "Renagel" and "Renvela." Before filing the NDA, analysts estimate Zerenex could generate peak sales of around $800 million; however, I believe after posting strong results in trial phases, it may become the blockbuster drug for the company and generate revenue higher than its expected peak sales.

Competition for Keryx in renal disease drug market

There are multiple phosphate agents, including OTC products like TUMS and prescription products Renagel/Renvela and Shire's "Fosrenol" that are already entrenched in the market. Sanofi's Renagel/Renvela generated the year-to-date revenue of more than $700 million with the year-over-year growth of 15.3%, and it will to lose patent protection in 2014. This is expected to generate growth opportunities for Zerenex in the initial years, as it is anticipated that Zerenex will hit the market next year. Additionally, according to Maxim Group analyst Jason Kolbert in his interview with Reuters, he expects big companies like Sanofi, Johnson & Johnson, and Amgen could partner to develop or market Zerenex. If these big pharmaceutical companies join hands with Keryx, then I can expect Zerenex to become the leading renal disease drug on the market. On the other side, the patent expiration of Renagel will allow generic drug manufacturers to enter this market. However, the generic drug manufacturers will have to receive FDA approval to market the generic equivalent of Renagel.

Opko Health emerging as a strong competitor

Opko Health (OPK) has also initiated the phase III study of "Rayaldy", its CKD drug, and completed the patient enrollment for this study. This drug will be used for the treatment of secondary hyperparathyroidism, or SHPT, moderate CKD, and vitamin D insufficiency. This is the first of two identical trials, which will evaluate the safety and efficacy of Rayaldy compared to the placebo. In this trial, Rayaldy will treat patients suffering with SHPT and the second study will be conducted simultaneously to observe the change in the Vitamin D status and serum phosphorus in around 210 patients at 40 sites in the U.S. The patients will be treated for six months with Rayaldy or a placebo in ratio of 2:1, and the company expects to declare the topline data of both these studies in the first half of 2014.

This will provide Opko with a good opportunity as SHPT affects 40%-60% of patients suffering with moderate CKD and around 90% of patients with severe CKD. Prolor Biotech President Shai Novik expects that if Rayaldy is able to capture half of the CKD and SHPT drug market, then it may generate a potential market of around $6 billion for the company. This amount is much higher than the peak sales of Zerenex, and I expect it is one of the strong competitors for Keryx, so Keryx may look to partner with big pharmaceutical players to build a strong presence for Zerenex in the CKD drug market. Further, to compete with Rayaldy, Zerenex has to demonstrate superior phase trial results with less side effects, as Rayaldy is expected to avoid side effects related to accumulation of calcium, which can further damage the kidneys.


On November 4, Keryx declared its third quarter results; it reported the net loss of $15.7 million compared to loss of $5.5 million in the same period last year. This was mainly attributed to its research and development, which increased $6.6 million in this quarter compared to the third quarter last year, to develop and evaluate Zerenex's efficacy and safety profile. It includes the cost associated with filing the NDA, Marketing Association Application submission, pre-launch inventory, and capacity expansion to maintain the future supply of Zerenex.

Further, Keryx received $7 million as the milestone payment from its Japanese partners Japan Tobacco and Torii Pharmaceutical related to the NDA filing with the Japanese Ministry of Health, Labour, and Welfare for receiving marketing approval of Zerenex for the treatment of hyperphosphatemia in patients with CKD.

The company also issued stock of worth $74.8 million to the general public, and it ended-up with the cash equivalent of $67.9 million compared to $14.7 million balance as on December 31, 2012. Keryx can use these funds to further its development program related to Zerenex and its capacity expansion.

Additionally, most of the research firms like J.P. Morgan and JMP Securities, based on their valuations on Zerenex's future sales prospects in CKD and ESRD, have increased their price target for Keryx to $22 per share. Looking at the past achievement of the company, like milestone payments and filing of the NDA with Japanese regulatory authority, approval for filing NDA with the FDA, its trial phase results, its stock price respond significantly to such events. I expect, if Keryx is able to receive FDA approval for Zerenex, then further upside may also be seen in the stock.

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.