Keryx (KERX) found itself floundering at the beginning of April after its phase 3 clinical trials for Perifosine failed. The drug was intended to be used to treat advanced colorectal cancer. Keryx was down about 66%, falling to less than $2, following a fairly strong March. Shares were bid up substantially last month on speculation that the study results would be positive. So where does Keryx go from here?
According to the company, it will focus on the only other drug in its pipeline, Zerenex. Zerenex is an oral, iron-based compound that will be used to treat chronic renal failure. Part of the reason why Zerenex has gotten so little attention so far is because hopes were so high for Perifosine. Optimists who are banking on Zerenex to perform well will be delighted to hear Perifosine will no longer be a distraction. This, of course, is a bit of a double-edged sword. Zerenex is a phosphate binder, which is nothing new in the pharmaceutical field. Zerenex already has several competitors capable of performing just as well. This is why many believed the future of Keryx hinged on the performance of Perifosine.
What should investors do now? There are two different approaches I would take here. The first would be to run as far away from Keryx as possible if I do not already own the stock. The price is tantalizingly low, but I do not believe an investment will ever pay off at this point now that Perifosine has failed. The second approach, intended to put minds at ease for those who are already shareholders, is to sit tight. At less than $2, Keryx has nowhere to go but up. Even a mild bump from Zerenex will boost prices, so do not panic because of the Perifosine results. Stick around until more results are released for Zerenex and you might see a jump to $5 or $6.
For those who are not already in the Keryx game, there are much better options out there in the biotech industry. Achillion Pharamceuticals (ACHN) was up at the end of March after a competitor released disappointing study results for its hepatitis C treatment. Achillion focuses on treatments for infectious diseases, specifically hepatitis C and resistant bacterial infections. Achillion has six drugs in its pipeline, five of which are intended to treat HCV and which treats bacterial infection. There are four things on which to focus concerning Achillion:
- Achillion is advancing a proprietary compound that targets the HCV NS3 protease, ACH-1625, a potent HCV inhibitor with an excellent safety profile, unique pharmacokinetics, and once-per-day dosing.
- Achillion is advancing ACH-2684, a compound with excellent potency in the pico-molar range focused on emerging resistant HCV variants.
- Achillion is developing NS5A inhibitors that possess pan-genotypic activity and picomolar potency including ACH-2928, a first generation NS5A inhibitor which demonstrated proof-of-concept activity in Phase 1b, and ACH-3102, a second generation NS5A inhibitor in preclinical development that has enhanced in vitro activity against resistant mutants.
- Achillion has developed ACH-1095, a candidate that specifically recognizes the HCV target, NS4A.
Achillion is also addressing concerns over resistant infections and developing anti-infective drugs. They acknowledge the need for new drugs to combat new strains of existing diseases and they understand the infectious disease market. Development cycle times are shorter for infectious diseases and early trial results are often better predictors of long term results than they are when dealing with other diseases, so it is easier for investors to predict eventual outcomes and invest during the early stages of clinical trials.
In addition to drug treatments, Achillion has also developed discovery tools that make management of its compounds more efficient and advance its discovery programs. Two of the most notable tools include the Achillion Automated Chemistry Platform, a software program that facilitates the synthesis of thousands of small molecules in parallel by automating several cumbersome steps, and the Compound Acquisition and Repository Tracking, a software tool that streamlines scientists' ability to select and acquire compounds for lead identification.
Other tools include CHEM-ACH, which is data-mining software that allows proprietary compounds synthesized at Achillion to be cross-referenced against biological activities associated with them, and Competitive Intelligence & Data Mining, a web application that is used to analyze publicly available information to display competitive information including clinical and preclinical development activities, intellectual property, and scientific literature.
Vertex Pharmaceuticals (VRTX) also saw a bump after the failed study. Vertex had positive phase 2 studies on its hepatitis C treatment Incivek. Incivek is a prescription medication used in combination with other hepatitis C drugs to treat chronic issues and stable liver problems for those who have not been treated before. The drug tested in the failed study was viewed as a major competitor for Vertex, so the failed study put investor minds at ease concerning Vertex.
Dendreon (DNDN) is another biotech stock I would consider ahead of Keryx, especially if you are interested in cancer research and treatment. Dendreon faced competition when Johnson & Johnson (JNJ) released Zytiga, thus creating instant competition for Dendreon's prostate cancer treatment Provenge. Zytiga was sent to trials as a first-line treatment, which essentially acknowledges it is working in its current use. However, Dendreon still has a number of positives and I would not discount it just because of the Zytiga studies.
Dendreon's pipeline includes DN24-02, an ACI targeted at the HER 2/neu receptor, D-3263 HCl, a small molecule compound that activates the ion channel receptor TRPM8 (also known as TRPP8) in clinical development for the potential treatment of patients with solid tumors, and two additional antigen targets, carbonic anhydrase IX (CA9) and carcinoembryonic antigen (CEA), for the development of ACI candidates.
My final advice is to avoid Keryx if you are looking to buy. Hold onto Keryx if you already own in hopes of at least a small jump based on the Zerenex trials. Keryx is essentially done for the time being, but investors can recoup some losses if they are patient.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.