To say Keryx Biopharmaceuticals’ (NASDAQ:KERX) launch of the phosphate binder Auryxia has fallen well short of expectations is to be unusually kind. Recording sales of $5m in the first nine months after launch caused shares to tumble nearly two thirds throughout 2015, prompting a commercial shake-up.
Now with lessons from the early months of the launch having been learned, the Massachusetts-based group is looking ahead to trial data that could expand Auryxia’s use into the pre-dialysis population, a move that would improve uptake even in those patients who move on to dialysis. “It has a dual effect of getting them early, and then they stay on a product all the way to dialysis,” its chief executive, Greg Madison, tells EP Vantage.
If the phase III trial returns positive data it would increase the potential market for Auryxia from the 350,000 US dialysis patients on phosphate binders to 650,000 pre-dialysis patients with iron deficiency anaemia. As an oral iron product, Auryxia in phase II showed a statistically significant benefit in anaemia, and the 230-patient pivotal test aims to confirm an effect on the number of patients whose haemoglobin rises by 1g/dl over 16 weeks; data are expected in the second quarter.
This is where Keryx believes that it has a differentiated product. “If we’re successful we’ll be the first and only FDA-approved oral iron for treatment of iron deficiency anaemia,” Mr Madison said in an interview at the JP Morgan healthcare conference in San Francisco. The current options are non-FDA approved over-the-counter oral irons, which have tolerability issues, and injected irons, which because of the risk of anaphylaxis are typically administered only in infusion centres or hospitals.
The advantage of this approach is that this product extension might require limited additional sales efforts – these pre-dialysis patients are frequently under the care of the same nephrologists on whom Keryx sales representatives already call. It is this effort, however, that was subject to scrutiny in 2015.
Harder than it looked
Starting with a 60-strong sales team, the group expanded to 95 as 2015 progressed. The expansion was necessary, Mr Madison says, because the “selling cycle” was longer in the dialysis setting. “You need to spend time in the dialysis centre, primarily with the dietitian and the social worker.
“So the amount of time that our sales reps are spending in the dialysis centre to identify patients, see who has reimbursement, and actually turn that into a prescription was longer than we anticipated,” he says. The group had targeted 5,000 US nephrologists but was able to reach significantly less.
Achieving widespread payer coverage also took longer, although the majority of patients were covered by August. One thing that worked in Keryx’s favour was pricing – at only a 9% premium to the market leader, Renvela – which has led to Auryxia being subject to unrestrictive coverage at low patient cost-sharing levels. “The feedback we got from payers was, ‘Your pricing seems responsible,’” Mr Madison says.
The enhanced sales effort and expanded coverage yielded results towards the end of the year, he says, with prescriptions rising 45% between the second and third quarters, and physician adoption up 50%. Third-quarter sales were $3.2m, up from $1.8m in the second quarter.
And so far the group has had the good fortune of having no generic entrants for Renvela, which saw its patent expire in 2014.
The downside of the intellectual property situation in this sector is that because Auryxia, because of its similarity to Baxter's anti-anaemia agent Ferrlecit, has yet to achieve new chemical entity status in the US, which could make it vulnerable to competition sooner than many newly introduced agents. This is an issue that also has affected Galenica’s rival drug Velphoro.
As if to underscore the issues facing Keryx, more than a fifth of its free float is held in short positions, suggesting that many investors are betting on the group continuing to struggle.
Keryx remains a long way from profitability, having spent nearly $600m since its 2000 IPO and making a loss of $86m through the first nine months of 2015. It looks like it has a big mountain to climb – a second indication could help it scale the lower slopes, but it still faces significant risk.