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It's hard to forgive or forget a stock that dropped 65% in one session of trading (April 2nd to be exact) but it seems that investors have renewed interest in Keryx Biopharmaceuticals (NASDAQ: KERX).

The huge drop that occurred at the start of April was due to the failure of the drug perifosine, which was being developed for the treatment of colon cancer. The drug was put in a phase II study with 468 patients in an attempt to demonstrate the drug's statistically significant impact on overall survival, but fell short miserably. With perifosine dead in the water, both Keryx and AEterna Zentaris (NASDAQ: AEZS) were left with very empty looking pipelines.

While AEterna Zentaris struggled to break its downtrend until September, Keryx saw immediate relief and has recovered about half of the damage since. The 6-month returns on KERX are over 100%, so any investors who bought into KERX in its moment of crisis were handsomely rewarded for bravery.

The KERX rally continues on the prospects of its one and only pipeline drug Zerenex (ferric citrate), which is in phase III trials under SPA (Special Protocol Assessment) designated by the FDA. This allows Zerenex a chance at FDA approval before the completing of its phase III trials. The likely approval of Zerenex is giving Keryx shareholders something to cling to in the wake of the disaster of perifosine's phase II failure.

KERX shares moved up 5.4% to $2.93/share by afternoon trading, due to an upgraded price target of $5.00/share (from $3.00/share) issued by Landernburg Thalmann, bringing the shares to a new post-perifosine high. This is a textbook example of a "breakout", which may get some technical traders interested.

Keryx is also benefiting from a significantly reduced R&D budget (which has declined about 40% relative to 2011), which reflects that the company has only one responsibility at this point - to bring Zerenex to market for treatment of elevated phosphate levels. It's hard to say how far the market's momentum will take the stock as we wait for an FDA decision, but an approval could probably send this breakout stock closer to the $5.00 target pained by Landernburg.

Since the stock has already come so far, however, it may be a good idea to take a conservative bite if you're not a fast-paced kind of investor.

Source: Keryx Continues Its Lengthy Bull Run