Keryx Leaps One Hurdle But Regulators And Payers Await

Keryx Biopharmaceuticals (NASDAQ:KERX) got the win it needed to improve its chances of accelerating Auryxia sales. The phosphate binder showed that it could significantly increase haemoglobin levels in kidney disease patients not yet on dialysis versus placebo, a finding that executives estimate could nearly triple its potential market.

Proving safety and efficacy to regulators could be just half the battle, however. Keryx might need to justify to payers that Auryxia is worth its nearly $800-a-month price tag even in those patients who do not see a benefit with the alternative treatment, oral iron supplements.

More patients

With Auryxia struggling for traction in its approved population of dialysis patients, Keryx has been hoping that expanding into the pre-dialysis population would help kick sales above their current disappointing levels – $10.1m in 2015, following launch in 2014 (Interview – Keryx hopes for second chance to make first impression, January 22, 2016).

Yesterday’s data suggest that it might fit into a niche in treating chronic kidney disease, delivering a 1g/dl or greater increase in haemoglobin for 52% of the patients taking Auryxia, significantly more than the 19% of placebo recipients who saw the same increase, after 16 weeks.

The patients enrolled in this trial could not tolerate or did not respond adequately to oral iron supplements, so the main alternative would be intravenous iron like Feraheme or Venofer, or erythropoietin-stimulating agents. A study comparing Venofer versus oral iron has shown that oral iron can raise haemoglobin levels by that 1g/dl threshold in 28% of patients, although that was over a shorter, 56-day trial, so some caution should be exercised in making comparisons.

On safety, Keryx said adverse events were consistent with earlier trials, with diarrhoea the most common side effect. Two patient deaths were reported, but one was the result of an unrelated abdominal surgery and the other pneumonia.

Keryx's chief executive, Greg Madison, said the company would ask the FDA for a label expansion in the third quarter of 2016. While the study was in patients who cannot take oral iron, Mr Madison said the group would seek a label that allowed for first-line use. The group estimates that 650,000 people with chronic kidney disease have anemia in the US, nearly double the 350,000 dialysis patients who may be eligible for treatment.

Investors were pleased, although a 25% increase at yesterday’s open had fallen back to 9% at close. This is perhaps a reflection of how much Auryxia has yet to prove.

How much?

The main sticking point is Auryxia's price, which even on the discounted Medicaid program comes up as $784 per 200-tablet bottle, enough for slightly more than a month at the starting dose in dialysis patients.

Answering a question during an analyst call yesterday, Mr Madison said Auryxia was not subject to payer step therapy in its current indication of hyperphosphataemia in dialysis patients, but this is an indication where alternatives like Renagel are equally expensive.

However, even if it were to win first-line use in the anamia population, there is no doubt that payers would want patients first to fail on oral iron supplements before progressing to Auryxia. Mr Madison said Keryx was already preparing pharmacoeconomic analyses for eventual payer negotiations, and they could take some persuading.

Mr Madison has acknowledged that the group made mistakes in the dialysis launch, and it will not want to repeat them with this second chance. Auryxia has many questions to answer, and it might take a clear inflection in sales before investors begin recognizing that it has bigger potential.