Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Keryx Biopharmaceuticals (NASDAQ:KERX)

Q4 2013 Earnings Conference Call

March 13, 2014 08:30 AM ET

Executives

James Oliviero - CFO

Ron Bentsur - CEO

Greg Madison - EVP and COO

Analysts

Whitney Ijem - JPMorgan

Jonathan Aschoff - Brean Capital

Boris Peaker – Oppenheimer

Matt Kaplan - Ladenburg Thalmann

Stephen Willey - Stifel

Reni Benjamin - H.C. Wainwright

Operator

Greetings and welcome to the Keryx Biopharmaceuticals Investor Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions). As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host James Oliviero, Chief Financial Officer for Keryx Biopharmaceuticals. Thank you sir, you may now begin.

James Oliviero

Good morning and welcome to our conference call regarding Keryx Biopharmaceuticals fourth quarter and year-end 2013 financial results. I’m James Oliveira, Chief Financial Officer of Keryx, and I welcome you to our conference call today. Following our Safe Harbor statement, I’ll provide a brief overview of our financial results and then turn the call over to Ron Bentsur, the Company’s Chief Executive Officer, who will provide the business update on the company. Also with us on the call today is Greg Madison, our recently hired Chief Operating Officer, who also heads up the commercial team at Keryx.

Before we begin, I would like to remind everyone that various remarks that we make about our future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Keryx cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated.

Factors that may affect Keryx Biopharmaceuticals operations include but are not limited to risks related to whether our marketing authorization application in Europe will be accepted for review by the EMA. Acceptance of the NDA filing for review by the FDA which occurred in October 2013 represents only a preliminary evaluation of the application and is not indicative of deficiencies that may be identified during the FDA's review. A PDUFA goal date is subject to change and does not guarantee that the review of the NDA will be completed on a timely basis.

The ongoing NDA review process involves questions and requests from FDA that pertain to various sections of the NDA application. While we believe to date we have answered those questions and requests satisfactorily and expect to continue to do so, we cannot guarantee that the FDA will concur or be satisfied with our answers and clarifications. The risk that the FDA, and/or EMA ultimately deny approval of the U.S. NDA, and/or MAA respectively; the risk that SPAs are not a guarantee that the FDA will ultimately approve a product candidate following filing acceptance or the FDA and EMA will concur with our interpretation of our Phase 3 study results, supportive data, or the conduct of the studies; whether Riona will be successfully launched and marketed by our Japanese partner, Japan Tobacco and Torii Pharmaceutical; or if Zerenex, if approved by the FDA and/or EMA, will be successfully launched and marketed; and other risk factors and uncertainties that can be found in our SEC filings. This conference call is being recorded for audio rebroadcast on Keryx’s website, keryx.com, where it will be available for the next 15 days. All participants on this call will be listen-only mode.

Now I’d like to briefly discuss the financial results for the fourth quarter and year ended December 31, 2013. At December 31, 2013 the Company had cash and cash equivalents of $55.7 million. Subsequent to December 31, 2013, the Company completed an underwritten public offering of common stock which provided proceeds for the company of approximately $107.6 million, net of underwriting discounts and operating expenses of approximately $7.5 million, and also received a $10.0 million milestone payment from Japan Tobacco and Torii Pharmaceutical related to their marketing approval of ferric citrate in Japan. Pro forma for this public offering in the JT - Torii milestone payment, the Company’s cash and cash equivalents at December 31st was approximately $170 million.

The net loss for the fourth quarter ended December 31, 2013 was $17.7 million, or $0.21 per share, compared to a net loss of $6.6 million or $0.09 per share for the comparable quarter in 2012, representing an increase in net loss of $11.1 million. For the fourth quarter ended December 31, 2013, other research and development expenses increased by $4.1 million, as compared to the fourth quarter of 2012, primarily related to the Company's Zerenex program, including costs associated with the preparation of our MAA submission for Zerenex, and manufacturing of pre-launch inventory and capacity expansion.

Other general and administrative expenses during the fourth quarter of 2013 increased by $3.5 million, as compared to the fourth quarter of 2012, primarily related to pre-commercial activities related to Zerenex. The three months ended December 31, 2013, included $4.0 million of non-cash compensation expense related to equity incentive grants.

The net loss for the year ended December 31, 2013, was $46.7 million, or $0.58 per share, compared to a net loss of $22.7 million, or $0.32 per share, for the year ended December 31, 2012, representing an increase in net loss of $24 million. In January 2013, the Company recorded license revenue of $7 million for a milestone payment received from JT - Torii, related to JT's January 2013 filing of a New Drug Application in Japan.

For the year ended December 31, 2013, other research and development expenses increased by $13 million, as compared to the year ended December 31, 2012, primarily related to the cost associated with the filing of our U.S. NDA, the preparation of our MAA filing and manufacturing of pre-launch inventory.

Other general and administrative expenses for the year ended December 31, 2013, increased by $10.2 million, as compared to the year ended December 31, 2012, primarily related to pre-commercial activities related to Zerenex. The net loss for the year ended December 31, 2012 included a non-cash extraordinary gain of $2.6 million related to a write-off of a contingent equity rights liability following the termination of the license agreement for KRX-0401, and a $1.5 million arbitration award included in interest and other income, net, resulting from a FINRA arbitration against a broker-dealer registered with the Securities and Exchange Commission. The year ended December 31, 2013 included $6.0 million of non-cash compensation expense related to equity incentive grants. With pro forma year-end cash of approximately $170 million, we believe that our financial position will allow us to carry out our business plan, including the potential launch and commercialization of Zerenex.

I’ll now turn the call over to Ron.

Ron Bentsur

Thanks James and good morning everybody. Over the past several months the company has been significant progress across a number of fronts including regulatory, clinical and infrastructure. In August 2013 we filed our NDA for Zerenex which was accepted for review by the FDA in October, and assigned a target PDUFA date of June 7, 2014; now just three months away.

Earlier this week we announced that we submitted our marketing authorization application to the European Medicines Agency, seeking the approval of Zerenex as a treatment for hyperphosphatemia in patients with chronic kidney disease or CKD, including both dialysis and non-dialysis dependent CKD patients. The MAA review will be conducted under the centralized authorized procedure, meaning that one single EMA marketing approval would apply to all 27 member states of the European Union as well as Norway, Liechtenstein and Iceland.

In January, it was particularly gratifying for us to see the Japanese Ministry of Health, Labor & Welfare grant marketing approval in Japan of ferric citrate as an oral treatment for the improvement of hyperphosphatemia in patients with CKD, both dialysis and pre-dialysis. We congratulate our Japanese partner JT-Torii on this monumental achievement which marks the first approval of Zerenex in a major market.

The drug will be marketed by Torii under the brand name Riona. Torii will soon have its pricing committee meeting in Japan. This is expected to set the reimbursement for the drug in Japan on a national level. The launch is expected to occur soon thereafter and it is currently being projected by Torii that Riona could be launched in the second quarter of this year. We wish our partner JT-Torii much success with the commercialization of the drug in Japan.

On the clinical side, last November we announced positive top line data from our U.S. based phase 2 study in pre-dialysis CKD patients. Later in the call I will discuss the highlights of the data and our expected path forward in non-dialysis CKD following our recent meeting with the FDA. Around the same time last November we also announced encouraging preliminary unaudited interim data within October 15, 2013 cut-off from our ongoing 48 week open-label extension study for Zerenex or OLE for short.

Now let’s spend the next several minutes discussing the U.S. marketplace. With a focus on the potential Zerenex approval in the U.S. in June, we have been building out the organization as we move from a development stage company to a fully commercial stage organization. We have significantly strengthened the Company by attracting top candidates with proven competencies in the launch and commercialization of drugs in the renal space.

Some of these recent hires are former leaders of successful billion dollar renal product teams at global pharmaceutical organizations, and we believe that they process a strong understanding of the pillars of a successful launch in product commercialization. We are very pleased to have them on board and look forward to leveraging their expertise towards the potential launch of Zerenex.

We are now focused on preparing the organization for the U.S. launch of Zerenex, pending regulatory approval by the end of the third quarter. We're currently undergoing all of the prelaunch activities to put ourselves in the best position possible; market research, advisory boards, KOL interactions, pricing and reimbursement, patient access programs to name a few. In parallel, we continue to aggressively build out our supply chain in preparation to the potential launch of Zerenex in the U.S.

And as we approach this potential launch, we plan to have significant presence at important upcoming industry conferences such as the National Kidney Foundation Meeting in late April, and from a publication and abstract perspective, we expect to see a steady stream of publications related to Zerenex over the next several months. This will include some pharmacoeconomic publications and abstracts conducted by third parties that have analyzed the potential savings due to the ESA and IV iron sparing and savings related to Zerenex’s safety profile. Upon publication we would expect such information to be included in the payer dossiers for reimbursement discussions.

I will now briefly speak about our ongoing open label extension study in dialysis. As a reminder, this open label extension study is not a regulatory requirement and is expected to be completed in the second quarter of this year. Importantly, this study provides us safety and efficacy information for Zerenex for up to two years of exposure and notably for the preliminary data cut off that we were putted on last November, serum phosphorus appears to be well controlled, Sheraton and TSAT go up in flattop with Sheraton starting to come down slightly after week 36.

In addition, with IV iron use prohibited in the study as long as Sheraton is above 500 or TSAT is above 30, as of this preliminary data cut off the IV iron use in the study appears to be very low with close to 70% of the patients not receiving even a single dose of IV iron and the use of ESA also appears to be considerably lower in the national average, and this while hemoglobins are being maintained. In summary, we believe that this preliminary data reinforces the long term Phase 3 data and the notion that Zerenex can potentially eliminate IV iron use in most patients for extended periods of time, lower ESA use and maintain hemoglobin.

Now let me shift gears and talk about the non-dialysis CKD market opportunity. In the recently completed double blind placebo controlled Phase 2 pre-dialysis CKD study, which enrolled 149 patients, Zerenex met all the primary and key secondary endpoints, demonstrating highly statistically significant differences versus placebo and the control of serum phosphorus, TSAT, Sheraton, hemoglobin and FGF-23. Importantly, this was achieved without any IV iron or ESA background therapy as those were prohibited in the study.

Moreover, Zerenex appeared to be safe and well tolerated in the study. We believe that the data generated in this Phase 2 study is encouraging and suggests a potentially compelling and differentiated product profile in non-dialysis dependent chronic kidney disease versus standard of care.

Focusing on hemoglobin, which is an approvable endpoint for iron deficiency anemia in pre-dialysis, Zerenex increased hemoglobin by 0.5 grams per deciliter versus baseline in the Phase 2 study while placebo went down by 0.2, a clinically meaningful and statistically significant result.

To put this in perspective, the hemoglobin increase observed with Zerenex is of similar magnitude as compared to the increases observed for IV iron as a single agent in the IV iron clinical studies, meaning for the sub-populations that did not receive concomitant ESAs in those studies, which makes it more of an apples-to-apples comparison to our study.

In these IV iron studies, the hemoglobin increase achieved by IV iron without ESA in the background was less than 0.6 grams per deciliter on average, which appears to be similar to our hemoglobin result. Also worth mentioning is that in these IV iron studies, the oral iron supplement controls, which are mostly ferrous sulfate achieved only marginal hemoglobin increases of approximately 0.15 grams per deciliter on average as single agents meaning for the subgroups that did not receive any ESA in the background.

We believe that iron deficiency anemia and CKD represents a potentially significant market expansion opportunity for Zerenex. The addressable patient population of iron deficiency anemia in CKD stages three to five is believed to be well over 1.5 million people in the U.S. alone. Currently, this is a patient population which is underserved as IV iron and ESAs have limited use in the setting due to logistical convenience and safety issues including the boxed warnings, a warning for ESAs and the anaphylaxis and hypersensitivity concerns for IV irons. Also, no oral iron agents are currently FDA approved. So we believe that this represents a potentially tremendous market opportunity for an effective oral iron agent with a label and we believe that Zerenex can potentially become the first such drug.

We view the pre-dialysis CKD opportunity as a well-defined highly concentrated specialty market focused on [indiscernible] which can be covered very effectively by a relatively small specialty sales team. As we’re building out that capability for the dialysis market, we see the CKD opportunity as a natural add-on for the commercial team.

Lastly, I would like to provide an update on the regulatory path forward for Zerenex in pre-dialysis CKD in the U.S. I'm very pleased to report that several weeks ago we had a face-to-face meeting with the FDA to discuss the potential path forward for Zerenex and CKD. At this meeting, we were advised by the FDA that only one additional study would be required to submit an sNDA for the indication of iron deficiency anemia. More specifically and similar to our successfully completed Phase 2 study, we’re advised that a single Phase 3 study of approximately 150 to 200 patients with an approximately 12 week treatment period and the short safety follow up period of three to six months evaluating hemoglobin as the primary endpoint without the use of background IV iron or ESA therapy would be acceptable.

We are encouraged by this outcome as we believe that this provides Zerenex with a viable and straight forward regulatory path forward in pre-dialysis CKD to potentially become the first approved oral iron agent for the treatment of iron deficiency anemia in CKD. From a timing perspective, we believe that this study can start in the third quarter and with potential completion in the third quarter of 2015.

With respect to our NDA filing and upcoming milestones, as our target PDUFA date of June 7, 2014 approaches, we remain optimistic that our NDA filing will support FDA approval, planning for a successful outcome as described before we continue to expand our commercial infrastructure, with the goal of building a world class commercial renal organization at Keryx. In addition to an FDA decision.

Here are some projected milestones which inventors can anticipate during 2014. So first off in the second quarter we expect the launch of Riona in Japan, in the third quarter of 2014 the potential launch of Zerenex in the U.S., and also in the third quarter of 2014 the initiation of the Zerenex U.S. Phase 3 study in pre-dialysis.

These are certainly exciting times for the Company. There is much work to be done but the team is keenly focused and highly motivated and I believe poised for success. We’re enthusiastic about the opportunity we see in Zerenex and in our organizational transformation, which is currently underway. Following our recent capital raise, our balance sheet is strengthened and we believe provides us with the ability to effective carry out our business plan.

With that I thank you and I would like to turn it over to the moderator for a brief Q&A session.

Question-And-Answer Session

Operator

Thank you. Ladies and gentlemen, at this time, we will be conducting the question-and-answer session. [Operator Instructions] Our first question is coming from the line of Cory Kasimov with JPMorgan. Please proceed with your question.

Whitney Ijem - JPMorgan

This is Whitney on for Cory today. Congrats on the non-dialysis [indiscernible] from the FDA. Just wanted to double check, it sounds like that trial is going to look substantially the same as the Phase 2 but are there any differences we should be thinking about between the two?

Ron Bentsur

Right now we’re focused on a trial that will be substantially the same with the main difference being the primary endpoint. So in the Phase 2, as you recall the primary endpoint, it was actually a co-primary endpoint of TSAT and phosphate and in the Phase 3, obviously it will be hemoglobin.

Whitney Ijem - JPMorgan

Great. And then in terms of U.S. launch prep, can you just kind of give us an update -- a more detailed update I guess and in terms of the sales force, just remind us how many reps you plan to go out with and maybe the timing of bringing them onboard?

Ron Bentsur

Whitney I’ll let Greg Madison address that.

Greg Madison

Yes. Good question Whitney. So as Ron mentioned in his prepared remarks, we’re undergoing all of the classical type of research we need to do right now to get us ready for launch by the end of the third quarter. So market research, advisory boards, KLO [ph] interactions, we’re undergoing pricing evaluation determining what our pricing and contracting strategy might look like, as well as evaluation of the marketplace to better understand exactly how many sales people we’d like to put on the ground. At this point we’re probably in the 45 to 50 range as far as number of total reps but again we’re just going through the work just to ensure that that’s the optimal number of people to have out there in the field.

Whitney Ijem - JPMorgan

And then do you plan to bring them on ahead of time or will you sort of start hiring post approval?

Greg Madison

So we’re kind of going through those timelines right now but if you think about a launch that we’re preparing by the end of the third quarter, most of those sales people could probably be brought on just after PDUFA.

Operator

Thank you. Our next question is coming from the line of Jonathan Aschoff with Brean Capital. Please proceed with your question.

Jonathan Aschoff - Brean Capital

Actually I just had some of the exactly same questions about how you’re thinking about the commercial rollout which I think you substantially addressed. Thanks a lot.

Operator

Thank you. Our next question is coming from the line of Boris Peaker with Oppenheimer. Please proceed with your question.

Boris Peaker – Oppenheimer

I have a question on the pre-dialysis. Specifically you’ve provided an update from your discussion with the FDA. I'm just wondering if you actually discuss the potential label with the FDA, what it may look like based on the study? And also, could you add phosphate level as a secondary endpoint in this trial to somehow get that included in the pre-dialysis label?

Ron Bentsur

Yes. So, regarding a label I mean, we didn’t have specific discussions about that but to us it’s pretty clear that the label that we’re talking about is iron deficiency anemia. So basically a label that would be similar to the IV irons for example. Regarding phosphate, we would like to have that as a secondary endpoint and obviously would ultimately like to have it included in the package insert, but there is no guarantee that that will happen. But we would want to include it as a secondary endpoint in this Phase 3 study.

Boris Peaker – Oppenheimer

Got it. My next question is just on Europe. I’m just curious in terms of how do the European balances practice vary country by country and in the same context if you have any estimate on what fraction of pre-dialysis patients right now in Europe actually get a phosphate binder?

James Oliviero

So Boris that’s a good question; we don’t have this information updated to provide you today. This is something that we’re actually working on right now, basically doing a marketing study of Europe and assessing, basically truing up the information for Europe and we’ll have that ready in a few months. It’s just not available today.

Boris Peaker – Oppenheimer

And my last question also I guess on Europe, maybe its part of the study. In terms of the quality calculation, I'm trying to understand the value versus potential pricing. Do you have any sense of that or is that also part of this analysis?

James Oliviero

Again this will be part of the marketing analysis. Obviously if we’re able -- the more we’re able to include in the label and describe in the package insert in the clinical trial section et cetera, I think the more negotiating power we will have with the pricing authorities within the various countries. So this is something that we’re assessing right now.

Operator

Thank you. Our next question is coming from the line of Matt Kaplan with Ladenburg Thalmann. Please proceed with your question.

Matt Kaplan - Ladenburg Thalmann

Congratulations on the feedback with respect to the CKD market -- CKD indication in the Phase 3 that you have to do there, that’s great news. In terms of the commercialization plan, can you talk a little bit about how the structure of the sales force potentially changes as you bring CKD -- if the CKD indication gets approval pre-dialysis how does that change your sales force and working strategy?

Greg Madison

Matt, this is Greg. So the interesting thing if we think about the label potentially that we would receive for pre-dialysis. As Ron mentioned it’s likely to be for iron deficiency anemia. So a vast majority of these patients, even though it's pre-dialysis are still treated under the care of nephrologists. So the same people that are treating the dialysis patients are for the most part the ones treating the patients with iron deficiency anemia with CKD. So as we look at the market opportunity, again this is a really small targetable type of specialty with approximately 6,000 nephrologists in the U.S.

So as we get closer to understanding what our label will look like and the opportunity for CKD, we’ll evaluate where we are from a commercial structure and decide if we have to have a small modest expansion, but I don’t expect any type of significant changes to our infrastructure based on getting the CKD label, because again it’s the same exact nephrologist that treats both dialysis and CKD.

Matt Kaplan - Ladenburg Thalmann

Okay great. And in terms of the 6,000 nephrologists, what percentage I guess are, let’s call them the high prescribers?

James Oliviero

Yes so let me go into those analysis right now, we’re just getting all that data into ensure that we’ve got the optimal structure set up for our commercial teams. So let me move on that for a couple of months but all that is part of our evaluation going as we speak.

Matt Kaplan - Ladenburg Thalmann

Okay fair enough. I guess Ron, a question for you in terms of, can you provide any color in terms of your interaction with the FDA, so far going into the PADUFA date of June 7, how that’s going?

Ron Bentsur

The only color I can share is that, it appears to me that it appears to me that this is a relatively straight forward interaction process. Essentially as they go through sections; we receive questions and requests for clarifications and things like that. From what I can see and from what I understand this is quite conventional. And I'm not seeing anything alarming but again I do want to caution that that’s not a guarantee that we’re free and clear. But I am not seeing anything alarming from my perspective.

Matt Kaplan - Ladenburg Thalmann

And I guess with respect to the EMA filings, what’s the typical timeline for the review period now at EMA, European timeline?

Ron Bentsur

So we could get accepted for review within the next two to three months. Again there are no set timelines necessarily as they exist here with a 74 day letter and things like that. And the review process is typically anywhere between 12 months and 15 months.

Matt Kaplan - Ladenburg Thalmann

And last question I guess for James, any guidance you can provide us for R&D and SG&A for this year?

James Oliviero

So we haven’t put out official guidance on expenses or potential revenue in the future. But you would expect to see R&D increasing due to the continuous build-up of pre-launch inventories since we expense that prior to approval and G&A will obviously increase some as well as we continue with the pre-commercial activities for Zerenex.

Operator

Thank you. Our next question is coming from the line of Mike King with JMP Securities. Please proceed with your question.

Mike King - JMP Securities

Mostly follow ups from some other questions before. Maybe you can have us understand little bit more about, actually about Japan. Are there dynamics, similar different to the U.S.? Should we think about Japan, the Japanese launch as a proxy for what Ron might consider for the U.S. in CKD?

Ron Bentsur

Greg, you want to address that?

Greg Madison

Mike, this is Greg. So, difficult to say right now. I don’t know if I would actually use it proxy from what you might see in the U.S. Obviously the patient population is different over there. The dietary habits are perhaps a little bit different. The way that they take oral medications, a bit driven there. So I caution you to potentially not use that as a pure proxy overall. As far as going a little bit more in-depth with all the Japanese market and specific differences, I'm going to hold off; maybe we can talk about that offline as we get into a little bit more depth and understand that marketplace.

Mike King - JMP Securities

Okay, fair enough. And then are you guys, you had a question just before that, your regulatory interactions. What’s your thought about the potential for any kind of panel meeting?

Greg Madison

Again, the FDA technically still has a few weeks to announce that there will be a panel. So I mean theoretically it could still happen. Again from my advantage point, I don’t think there will be a panel but there is no assurance of that of course.

Mike King - JMP Securities

Okay. And with regard to the pre-dialysis population, how should we think about things like dose duration. I assume there will be no difference in pricing but will dosing be different or I would assume duration could be tend to be quite long but I don’t want to set the conclusions.

Ron Bentsur

We believe that dosing generally will be a little bit lower than dialysis. Again it’s hard to say exactly by how much. But obviously in pre-dialysis also, it's obviously -- one of the secondary goals is to try to control phosphate which we think will be an added benefit of course. So, the drug will be given with meals and so therefore you are not going to be in the position where you dose considerably lower than dialysis but we do believe that it will be somewhat lower than dialysis on average.

Mike King - JMP Securities

And duration?

Ron Bentsur

Duration, so again the phase 3 that we're looking to conduct will be approximately 12 months in duration with probably a three to six month safety follow-up. But, so the duration of treatment in the real world will probably be what’s called intermittent. People will use it for 12 weeks or somewhere thereabouts, maybe take a break come back on the drug and so on. But again the label can only go as far as the treatment duration period in the study. So from that perspective we purposely don’t want a long duration treatment period in the study because that will obviously lengthen the study and we don’t feel that there is a need for. So.

Mike King - JMP Securities

Yes, I know Ron, I was thinking about, more about in the real world. I think you know…

Greg Madison

I am thinking about the real world. As Ron said it’s a study duration and things like that and that obviously we'll be limited by what we will be able to do based on what that label says, whoever though, if you think about typical patients there CKD progressing say late stage for, then moving towards dialysis, as they enter dialysis, they will likely need to continue to have their iron stores depleted, their phosphorus managed as well. So, really this sets out Zerenex in a really unique position where assuming we get a label iron deficiency anemia in pre-dialysis marketplace, as they approach dialysis and they transition to dialysis, phosphorus levels go up or iron deficiency anemia needs to be still treated and Zerenex will have a really interesting juxtaposition around that pre-dialysis opportunity. So the duration question is an excellent one and we believe we have a really unique opportunity here to get them treated and treat their iron deficiency anemia pre-dialysis and then transition them in a better state of health into the dialysis marketplace too.

Mike King - JMP Securities

Okay, that’s helpful. And then just one final question. And it’s always something I get asked about, so I figured I'd put it to you guys. Is there any update on NCE status and just give us your thoughts on what expectations might be or should be?

Ron Bentsur

No, there is no update on NCE. As you know the NCE decision should be made upon approval or possibly after approval. It’s not going to happen before approval but again let me just go back to our fundamental thesis here, which is -- the NCE for us -- again I just want to reiterate is a nice to have, not a need to have. We think our core protection extends to 2024 and possibly beyond. So again would we like to have NCE? Of course. Who wouldn’t? But we don’t think that it’s fundamental to our protection. People who are interested should do work on the existing patent portfolio and we'd be happy to help with that exercise. And I think most people who do this kind of deep dive into the patent portfolio come out with the same conclusion that we have, which is that our patent portfolio should carry us into 2024 and possibly beyond.

Operator

Thank you. The next question is coming from the line of Stephen Willey with Stifel. Please proceed with your question.

Stephen Willey - Stifel

Just wondering how you are thinking about dosing the drug in the Phase 3 CKD study. I know in prior studies you've only titrated the drug as a function of phosphate reductions. So would we be look at fixed dose or would you be trying to titrate towards some kind of specific hemoglobin correction?

Ron Bentsur

We view titration based on hemoglobin. We do view titration type of dosing if designed.

Stephen Willey - Stifel

And then, as you think about commercializing dialysis, I think we've seen historically that new product launches generally consist of some kind of pilot program with the larger providers. And just kind of wondering if you've initiated any kind of conversations on those front and maybe just kind of some color around where you are in that process and what our expectations should be?

Greg Madison

Sure Steve, this is Greg. So as you know currently right now phosphate binders are not part of the bundle payment system, so they flow more through the retail channels. So access in terms of payers such as Part D organizations, commercial organizations becomes critically important and because it’s all part of the bundle, dialysis providers allow their physicians to prescribe what they believe is most beneficial for their patients.

But that being said we've started to discuss the Zerenex opportunity with some of the organizations, whether it be large dialysis or medium size, and if they decide that they would like to work with us on a pilot in some of their centers, we're open for those discussions. But a pilot program with those organizations is not contingent on us being successful in our launch of Zerenex.

Stephen Willey - Stifel Nicolaus

I guess I asked the question because I know that some of these large providers are fairly protocolized across their various clinics and centers. So I guess would you envision kind of uptake say by divida as being kind of an all or none situation or do you think that you’ll be able to kind of just selectively gain traction in individual clinics?

Ron Bentsur

One of the thing I would point out is that this -- so is not an injectable. So it’s an oral drug and it’s not in the bundle. So a lot of the protocols and the things you're referring to are for more injectable and things that they control directly via direct purchases that are in the bundle. This is not in the bundle therefore it’s important to ensure that they understand the clinical benefits of Zerenex the potential IV and ESA sparing aspects of it overall. But again it’s not or nothing with any of these organizations, it will be much more important from a physician perspective on what kind if coverage you have from the payer organizations. And again the dialysis organizations don’t dictate to them what type of medicine they need to use from an oral perspective.

Stephen Willey - Stifel Nicolaus

Understood, and do you guys have any insight right now into I guess CMS is thinking with respect to what happens to orals in ‘16, from a bundling perspective?

Ron Bentsur

No we’re seeing very closely on top of what’s going on down with CMS and the potential of if products like this going in to the bundle in 2016, we do believe based on the clinical profile of Zerenex that we'd be well positioned, should that occur, but again we’ll keep close tabs on that as we approach the next year and a half.

Operator

Thank you. The Company has time for one final question, which is coming from the line of Reni Benjamin with H.C. Wainwright. Please proceed with your question.

Reni Benjamin - H.C. Wainwright

Just very quickly with -- can you give us a little bit more color on the Japanese launch, how many sales force do they have and I guess related to that, is there any lead through from the price that they determine as to what the price may eventually be here in the U.S.?

Ron Bentsur

So with respect to their launch effort, we don’t have all the details. We’ll get those soon. So we’ll be able to provide more of an update on that as we get closer. But one thing I would like to mention is that they already have an existing sales force in dialysis for the anti-itching indication. So they already have an established a sales force in that setting which obviously hopefully will help them and they’ll be able to leverage that experience. So to some extent -- they’re not going to be starting from scratch. With respect to pre-dialysis, keep in mind that they are only the second branded approval in pre-dialysis. The first one was Fosrenol about six months ago. So it is a relatively new area for phosphate binders. So on one hand obviously they need to be aggressive and creative there. On the other hand it is a wide open market essentially.

So they can really, if they do things right, create a fairly substantial markets for themselves there. With respect to pricing, we don’t view that there's going to be correlation necessarily. When you think about the Japanese pricing you go through a national pricing agency with a certain range or band around a set price. If you do your job well you can be on the upper end of the range and if you are unsuccessful, you may be towards the bottom end of the range. Obviously with their product profile, we believe that they'll be certainly above the inflection point or the midpoint but I don’t think it’s any potential reflection what would happen here in the U.S. The pricing dynamics and the discussions are quite different.

Reni Benjamin - H.C. Wainwright

Okay. And then I guess just one question regarding the marketing message, especially when we are looking at dialysis CKD versus non-dialysis. Should we be thinking about two different formulations of Zerenex and different names and clearly different labels to different prices or how does this unfold as we hope this gets approved in non-dialysis?

Ron Bentsur

You are talking about the U.S. marketplace?

Reni Benjamin - H.C. Wainwright

Yes, the U.S. marketplace.

Greg Madison

This is Greg. So, no I mean you should not expect to see different price or different pill or different name for those patients that have non-dialysis CKD versus those that have dialysis. And again, if you think about the patient journey, many of these patients as they develop later stages of chronic kidney disease, they'll go under the care of a nephrologist and these again are the same nephrologists that will treat their care as they go from late stages of chronic kidney disease. If they need to transition to dialysis it’s all under the same kind of care continuum if you will. Therefore from a consistency perspective, it’s important that we have a consistent brand, a consistent marketing message. The indications maybe slightly different as we discussed overall but the disease etiology lends itself to such that it will be a very smooth transition for us.

Reni Benjamin - H.C. Wainwright

And so when I think about labeling discussions upon the PDUFA, we should be thinking about a hyperphosphatemia label which then will get supplemented I guess with this sNDA to include iron deficiency or will this first label already have some sort of iron deficiency anemia label?

Ron Bentsur

So, we don’t want to discuss the label, the labeling or the labeling discussions and so on in detail right now. Suffice it to say that given the attributes that we saw in the clinical trials, obviously we're looking at things that are more than just hyperphosphatemia but I don’t want to go into detail on this call.

Operator

Thank you. This concludes our question-and-answer session. I would now like to turn the floor back over to management for any additional concluding comments.

Ron Bentsur

So, thank you all very much for taking the time this morning to be on our call. Thank you for your support as we embark on what believe is a very exciting time in the Company’s history. And please feel free to call us with any questions. We would be happy to discuss those offline. Thank you and have a good day.

Operator

Thank you. Ladies and gentlemen, this does conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Keryx Biopharmaceuticals' CEO Discusses Q4 2013 Results - Earnings Call Transcript

Check out Seeking Alpha’s new Earnings Center »

This Transcript
All Transcripts