Keryx Biopharmaceuticals (NASDAQ:KERX)
UBS Global Life Sciences Conference
September 11, 2012 11:00 am ET
Ron Bentsur - Chief Executive Officer
Good morning, and thank you for coming to the 2012 UBS Global Life Sciences Conference. My name is (Inaudible). I am happy to be your host for the session. Our next presenter will be Ron Bentsur, Chief Executive Officer of Keryx Biopharmaceuticals. A breakout session in Julliard will follow immediately after the presentation. Thank you.
Thank you very much. Thank you all for coming to see the presentation. I want to thank UBS for inviting us to present at the conference. I will be making some forward-looking statements, so I do encourage anyone who is interested in the Keryx story, to read our disclaimers that are available on the internet, in particularly the risk factors which can be found in the 2011 10-K as well as our second quarter 2012 10-Q.
By way of some key investment highlights, Keryx is developing a compound called Zerenex. I may also refer it to as ferric citrate, so as that suggests it's an iron-based phosphate binder. We believe it will be a highly differentiated a phosphate binder for the treatment of hyperphosphatemia or elevated phosphate levels in dialysis patients. I'll talk about what the condition means in a couple of slides.
The Phase 3 program that we are conducting and that is nearing completion, is being conducted pursuant to a special protocol assessment, and that Phase 3 program calls for two studies, a short-term study which is already behind us and a long-term study, for which the last patient will be out by the end of October.
And as I said, the short-term Phase 3 is already behind us, so we already have very good visibility as to the way the drug has performed in the Phase 3 setting. Our partner in Japan, JT Torii has also completed their short-term Phase 3 study in Japan with very compelling data, so we now have two Phase 3 studies that have been completed across two different patient populations and continents showing very strong data and there are some very significant milestones coming up for the company, which I'd like to talk about.
So, first and foremost by the end of the year, we should have the top line results from our long-term Phase 3 study which is nearing completion and this will be the last remaining piece under the special protocol assessment. After that, we will look forward to file the NDA for the drug.
In addition to that, there are several studies that are being conducted by our partner in Japan which are nearing completion. All of those should be completed this quarter, so they are also completing the last remaining obligation that they have for their filing in dialysis and hemodialysis and that is their long-term study in hemodialysis patients similar to what we're doing here. In addition to that, they are also running two studies. One is in peritoneal dialysis patients, essentially home dialysis patients. In Japan, you need to run a separate study in order to get the label for peritoneal dialysis patients. In the U.S. that's not the case.
In addition to that, they are also running a chronic kidney disease or pre-dialysis study. Again, all of those studies should be completed in the fourth quarter, so there should be some news flow coming from that direction.
We are also very intrigued about the drug's potential in pre-dialysis, not just in dialysis and it is our goal to initiate a Phase 2 study here in the U.S. to study Zerenex in pre-dialysis, so that study should get off the ground in the fourth quarter. And finally I mentioned before, the all important filings, NDA, MAA in Europe and the PMDA filing in Japan for Zerenex, in dialysis, although should occur in the first quarter of 2013, so as you can see, it's going to be a very eventful upcoming six months and should be pretty exciting.
Little bit about hyperphosphatemia, so hyperphosphatemia is a condition where the phosphate levels in dialysis patients start to go up, because the kidneys are malfunctioning so there is no cleansing out of the excess phosphate. And if left unchecked, the hyperphosphatemia causes cardiovascular complications and risks, so it must be controlled and maintained in these patients.
The worldwide sales of phosphate binders are about $1.5 billion. There are three phosphate binders that are on the market today. There's PhosLo, there's Renagel/Renvela and there is a drug called Fosrenol.
I am going to talk about all three of them in a little more detail, but it's important to remember that all three have very clear disadvantages and shortcomings that we are going to try to take advantage of. Renagel/Renvela which is the Genzyme Sanofi franchise is the market leader with global sales of approximately $735 million.
In terms of the dialysis patient population, as you can see by this chart that segment is not going away, unfortunately, anytime soon. In fact, it's expected to double within the next decade driven by our demographic trends, the aging of the population the diabetes epidemic et cetera. So, again, we are talking about close to 4 million patients on dialysis worldwide by the turn of the next decade.
It's also very important that dialysis patients suffer from anemia quite ubiquitously, so we're talking about a condition, a situation where these patients lose the blood during the dialysis procedure. In addition to that, because the kidneys are not functioning, there is reporting in the red blood cell production that is impaired in these patients, and therefore all of them essentially end up requiring IV iron and/or EPO injections to combat their anemia.
As you can imagine, that is very costly to the healthcare system and becomes very cumbersome for the patients, so what we're saying is that, intuitively in iron-based phosphate binders such as Zerenex, could over time increase the all important iron storage parameters in these patients the ferret and TSAT scores et, cetera, and quite possibly even generate reductions in the use or the need for IV iron and ESAs. That is what were saying on a theoretical basis, and I'm going to delve into that a little bit more.
First let's look at that the competitive landscape slide, so this table lays out the three phosphate binders that are on the market. There's PhosLo, Renagel/Renvela and Fosrenol. When you think about these drugs, typically the first-line therapy is PhosLo. It's been generic for several years now. The biggest problem associated with PhosLo, and the reason it's not used for extended periods of time is the fact that it's calcium-based, so patient start to encounter hypercalcemia very quickly, and the patients typically need to get switched off of PhosLo after several months.
Typically, second line will be Renagel/Renvela, the market leader. The problems there is that it comes with a very high pill burn. Pill burn essentially means the number of pills patients need to take to get adequate control with Renagel/Renvela. We're talking about 10 to 12 pills per day to get adequate control and that's just the average. There are many patients out there taking 18, 20, 24 pills of Renagel/Renvela, so as you can imagine that can become very chaotic quickly for these patients. In fact, the pill burn is the number one cause of non-compliance associated with Renagel/Renvela.
Lastly, we have a drug called Fosrenol. That is a drug marketed by Shire, and the issue there is the fact that it's lanthanum-based, and there is the risk of lanthanum accumulation. And, keep in mind that up until about 10 or 12 years ago, standard of care in this market was aluminum phosphate binders. It ended up that the aluminum phosphate binders cause neural toxicities in many of these patients and lanthanum is believed to be a next of kin of aluminum, so that's why doctors are very concerned about prescribing a Fosrenol for extended periods of time, particularly in the U.S.
So, you see that the three drugs that are out there have significant shortcomings, and we believe that we can come in there and really capitalize on all of those. For example, with regard to the pill burn, we think we can drop the pill burn quite significantly versus Renagel/Renvela. We've seen it across several clinical trials already. We certainly don't believe we are going to have the safety overhangs associated with PhosLo and Fosrenol, the hypercalcemia and the risk of lanthanum accumulation. Finally, it's the far right column that could really be the major differentiator for our drug, and that is the ability to increase iron storage parameters in these patients and cause drops in the use of IV iron and ESAs in these patients.
We are the only drug that has shown that clinically in the past, and quite frankly we are the only drug that mechanistically is capable of doing that. So, what were saying for the base case is really as follows. You need to think about the dialysis market for phosphate binders as a revolving door. Patients will go on a drug. For example, they will go on PhosLo, they will get switched off because of hypercalcemia concerns. They will go on Renagel, and very quickly they will start to encounter a high pill burn and many patients will get frustrated with that and they will look for the third option.
The third option nowadays is Fosrenol, but Fosrenol is far from a perfect third option, because of the lanthanum accumulation issue, so despite having a safety overhang and incidentally it's also chewable, which is a major disadvantage in this marketplace which is primarily an oral type of market. This is a drug that still generates $325 million worldwide as essentially a third-line option. So, what were saying for the base case is, very simply we want to at a minimum displace Fosrenol as the third-line option. Again, we want to capture the bulk of that $325 million, a market that they have generated for themselves.
In addition to that, because some of the other attributes that I talked about, obviously, the iron story notwithstanding, the better pill burn et cetera, we think we can also chip away at some of the entrenched market share that Renagel/Renvela has in that second-line setting. That's all were saying for the base case, and we believe it's quite realistic, but the reality is that we want to create a new paradigm for the way phosphate binders are used, and that really comes via the iron story, so we are the only drug today that has clinically demonstrated the ability to increase the iron storage parameters TSAT ferritin serum iron et cetera.
We are the only drug today that has clinically demonstrated the ability to reduce the need for IV iron and EPO in patients, and these are all predefined secondary endpoint in our ongoing long-term Phase 3 study, and I think if we are successful, we will become the phosphate binder of choice first-line therapy if you will.
To talk a little bit about the Phase 3 program, so as I mentioned it's comprised of two studies, the short-term study and a long-term study. The short-term study was a six-week study. Two-week washout followed by 28-day treatment period. That was successful completed. And, the long-term study which is now ongoing is a 58-week predominantly a safety study and the last patient will be out by the end of October, and we do expect to have top line data from this study by the end of the year.
So, let me talk a little bit about what we saw in the short-term Phase 3 study, saw 146 patients were enrolled across 15 U.S. sites, and essentially these patients went into a two-week washout followed by 28-day treatment period and they were randomized 1:1:1 to receive one of three doses of Zerenex, 1 gram, 6 grams or 8 grams per day. Since we are talking about 1 gram caplet formulation, we are essentially talking about 1, 6, or 8 pills per day. That's important to remember in the context of demonstrating a pill burn advantage, which I am going to talk about on the next slide.
The primary endpoint for the study was to show a dose response. You can see that we passed that flying colors. You see the p value there, but I want to show you some of the data in more granularity to show you the actual drops in serum phosphorus that we saw, so what you see here is basically the population divided up by treatment arm, so you see the 1 gram, 6 gram and the 8 gram dose groups, and you see that after the washout, the baseline scores were all hovering around 7.5 milligrams per deciliter. That's way above the normal range and that's expected after a two-week washout, but look what happens after day 28, essentially not much happens in the 1 gram dose group which incidentally was arbitrarily chosen by the FDA in lieu of placebo. That's a sub-therapeutic that you wouldn't expect to see anything, and in fact there was really no change, but in the 6 gram and the 8 gram dose groups, we saw very robust drops in serum phosphorus about 2 and 2.2 in the 6 gram and the 8 gram dose groups, respectively, and you can see the percentage changes versus baseline about 26% and 30%, respective. And, essentially, you are normalizing the overwhelming majority of these patients, which is obviously a very positive outcome.
One thing I will mention about the drops that we are seeing versus baseline, we've looked at all the package inserts, where the other phosphate binders that are on the market and the numbers are just not that robust when you look at the percentage change versus baseline. We believe that these results are certainly the highest that we've seen, and I urge all of you to look at the package inserts for our competitors. Then finally, the pill burn issue, so keep in mind that the 6 gram and the 8 gram dose groups are essentially six and eight pills per day for these patients and that needs to be comparative to the 10 to 12 pills of Renagel/Renvela, that the Renagel/Renvela patients were taking in the real world to get adequate control, so. We think we are talking about another clinical manifestation of a pill burn advantage, which we certainly hope to see in the long-term Phase 3 study.
Let me talk a little bit about the long-term Phase 3 study. Again, the last patient is going to be out next month. 441 patients were randomized. They all went into a two-week washout, similar to what we did in the short-term study. After that they were randomized 2:1 to either receive our drug, Zerenex versus an active control, and in the active control group, we are allowing Renvela and/or PhosLo, so we purposely chose to have an active control group in this long-term study to be able to demonstrate head-to-head superiority across some of the key parameters that we are looking for, and particularly the iron parameters.
After the randomization, the patients go onto a 52-week safety assessment period. That is the period in which we collect the iron information on these patients. After the 52-week safety assessment period, only those patients who are on Zerenex during the 52-week safety assessment period, so essentially two-thirds of the patient pool get randomized for another four weeks to either stay on Zerenex or receive a placebo, so that is the four-week efficacy tale that we have in the study. Again, let me just remind everyone that the iron storage parameters ferritin TSATs serum iron et cetera and the use of IV iron and EPO are all predefined secondary endpoints in the study, so again we very much look forward to generating that data.
Let me switch to regulatory and where we stand with respect to Europe and the Japan, so we have received formal guidance from the EMA, that if our Phase 3 program here in the U.S. is successful that should be sufficient for approval in Europe, so it is our goal to file the European MAA simultaneously with our NDA filing here in the U.S. So essentially in the first quarter of 2013, phosphate binders in Europe are also approved pre-dialysis not just dialysis unlike the U.S. where phosphate binders or not approved for pre-dialysis, and EMA has also given us we believe is a very doable roadmap for getting the drug approved in pre-dialysis in Europe as well. And essentially what that will entail, is to take the studies that Renvela and Fosrenol did in Europe to get their pre-dialysis label and to clone those designs and basically to do that, and want to start that study in the first half of next year.
On the Japanese front, this gives you a flavor as to the magnitude of the partnership that we have with the Japan Tobacco & Torii. There are still $72 million in remaining milestones. The next milestone payment will be received by us and that's a high single-digit million dollar payment when they file their NDA Japan expected in the first quarter of 2013. We're also due royalties, obviously, on sales in Japan. And as I mentioned before, they've already reported positive Phase 3 data from their short-term study, and their long-term study is nearing completion. It will also be completed by the end of the year and their NDA submission will be in the first quarter of 2013, so that's all dialysis but we also believe that there is a terrific opportunity for Zerenex to become the first phosphate binder to make it onto the market in the U.S. for pre-dialysis or CKD chronic kidney disease.
So, essentially the FDA has viewed phosphate binding in pre-dialysis as important, but not important enough to warrant a label in pre-dialysis, so you have to give them more than just phosphate. And since we believe, we are going to have this iron story, we think that we can kill two birds with one stone and possibly become the first phosphate binder to get a label in pre-dialysis in the U.S. So, needless to say that many nephrologists, obviously, the overwhelming majority of nephrologists believe that it's very important to treat serum phosphorus early on. You don't want to wait until the patient is on dialysis. There is clinical sequela to waiting, so obviously you want to treat that earlier.
So, I think there is clear consensus that certainly nephrologists would be happy to have a phosphate binder at their disposal with an official label. And iron deficiency anemia in CKD, in pre-dialysis is also extremely prevalent. We're talking about approximately 1.5 million people that fall into the iron deficiency anemic category in the chronic kidney disease stages three to five pre-dialysis, and also many of you I am sure are familiar with the whole bundling environment. Chronic kidney disease or pre-dialysis is completely unencumbered by bundling. There is no bundling in the pre-dialysis setting, so obviously that could bode very well for pricing.
This gives you a flavor as to the prevalence of iron deficiency anemia in the various stages of chronic kidney disease is actually lasered out related out from right to left, starting at chronic kidney disease sage-one, all the way up to chronic kidney disease stage-five pre-dialysis, and you can see that the prevalence is quite high. Little bit higher in women than it is in men, but pretty much 50% to 60% across the board, so we are talking about millions of people who are essentially by definition iron deficient anemic that fall under that category, but just to discount that we are going to call it 1.5 people, which we think is very conservative.
So, again, one would think that why wouldn't these patients be treated with ESAs and IV iron, a lot more frequently to address the iron deficiency anemic situation that they are in. Fact of the matter is that a pre-dialysis at doctors' offices are very different from dialysis centers. Dialysis centers are essentially small hospitals. They can address any acute problem that may arise for any patient, whereas pre-dialysis doctors' offices are essentially that they are doctors' offices, they are ill-equipped to deal with extreme situations, and certainly the overwhelming majority of them do not have IV iron or IV administration type of equipment.
So, essentially what happens is, the patients come in for the regular quarterly check up, but these doctors do not have the logistics to provide IV solutions for these patients and therefore it's only when patients become very extreme in terms of their hemoglobin scores or other parameters when they get a referral by the nephrologist to go to a hematologist or to a hospital to get the IV iron or EPO injection. In addition to that, EPO also has a warning label on pre-dialysis, which obviously limits the use of EPO in that setting on top of the lack of logistics in many of these pre-dialysis settings. So consequently, we believe that Zerenex as an oral iron solution could be ideal and there are no oral iron supplements that are approved. There are some that are used, I think most nephrologists believe them to be un-efficacious and they cause a lot of GI toxicities in these patients, something that we haven't seen with our drug, so we truly believe that we have something in the making here that could be ideal for the treatment of not just dialysis, but also for pre-dialysis patients.
We want to test this in Phase 2 U.S. setting, and essentially what we want to do is try to go after essentially a hybrid endpoint of phosphate, and also looking at some of the iron parameters, so some of the end points that we'd be looking at would be serum and urinary phosphate ferritin TSAT hemoglobin and some of the other parameters that people have been gravitating towards recently like FGF23, and we expect to start the study by the end of the year, so we could have data by the middle of next year in CKD, in the U.S.
Financial update. As of the last quarter, we reported about $27 million of cash, primary shares outstanding of $72 million, average daily trading volume about $1.2 million. One thing I will say about our burn rate going forward, it will be about $4.5 million per quarter, so we believe that we have cash to take us well into probably the fourth quarter of 2013, and certainly once we receive the milestone payment from our Japanese partner when they file their NDA in Japan, that should take us into 2014.
Let me just recap the near-term milestones that we have. Again, all this should occur within the next six months. So, first and foremost, the generation of top line data from our ongoing long-term Phase 3 study that is the last remaining piece under the SPA. Data readouts from the Japanese programs that are nearing completion, the initiation of the U.S. pre-dialysis or CKD study, and of course the filings across all three major regions, the NDA in the U.S., MAA in Europe, PMDA in Japan, all that should occur in the first quarter.
So again, just to recap the investment highlights, we are talking about a program that is nearing completion. The Phase 3 program is being conducted pursuant to a special protocol assessment. We've had positive Phase 3 data from both, essentially from U.S. and Japan, from both territories. Data is very compelling and we truly believe that this could be a highly differentiated phosphate binder, and we talked about all the milestones or certainly several milestones that are pending. That are just around the corner, and let's not forget about CKD or pre-dialysis, because this drug could eventually become the first phosphate binder in the U.S. to get approval CKD.
With that, I end the formal part of the presentation. Thank you very much, and I think there is a breakout session in one of the rooms across the hall. Thank you.
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