On November 9, 2016 Keryx Biopharmaceuticals, Inc. (Nasdaq:KERX), a biopharmaceutical company focused on bringing innovative medicines to people with renal disease, reported its financial results for the third quarter ended September 30, 2016 and provided a corporate update (Press release, Keryx Biopharmaceuticals, NOV 9, 2016, View Source;p=RssLanding&cat=news&id=2220890 [SID1234516568]).
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"Our second contract manufacturer is successfully producing Auryxia," said Greg Madison, president and chief executive officer of Keryx Biopharmaceuticals. "We are ready to promptly make Auryxia available to pharmacies, pending approval of this manufacturer, which has a November 13, 2016 PDUFA date. Since August, we have been working closely with the kidney community to support them through the supply interruption. We are committed to maintaining a consistent supply of Auryxia, and we are working to ensure that the renal care teams will confidently prescribe Auryxia again."
BUSINESS UPDATE
The company reported Auryxia net U.S. product sales for the third quarter of 2016 of $5.1 million compared to $3.2 million in the third quarter of 2015. Third quarter 2016 product sales reflect approximately 9,700 reported prescriptions of Auryxia during the period. In addition, Keryx announced it will change its method of revenue recognition from the sell-through (deferred) method to the pull-through (ex-factory) method beginning in the fourth quarter of 2016.
On August 1, 2016, Keryx announced a temporary interruption in the supply of Auryxia was imminent due to a production-related issue at its existing manufacturer in converting active pharmaceutical ingredient (API) to finished drug product. Keryx is working with its existing manufacturer to resolve the issue and resume production. Keryx filed a post-approval supplement application with the U.S. FDA for approval of a second contract manufacturer to supply finished drug product. The application has a Prescription Drug User Fee Act, or PDUFA, action date of November 13, 2016. The company is prepared to promptly supply Auryxia to pharmacies, pending FDA approval of its second contract manufacturer. In October 2016, Keryx entered into a long-term agreement with its second contract manufacturer for the manufacture of commercial supply of finished drug product.
Keryx announced that it has completed the sNDA seeking an additional indication for the treatment of iron deficiency anemia in adults with stage 3-5 non-dialysis dependent chronic kidney disease (CKD), and is ready to submit the application to the FDA, pending final agreement on its pediatric plan.
Five abstracts related to ferric citrate have been accepted for poster presentation at the upcoming American Society of Nephrology’s (ASN) 2016 Kidney Week taking place November 15 – 20, 2016. Four of the five abstracts describe data from the pivotal Phase 3 trial evaluating ferric citrate for the treatment of iron deficiency anemia in adults with stage 3-5 non-dialysis dependent CKD. The accepted abstracts are available online on the ASN conference website. In addition, the company plans to submit Phase 3 results for publication in a peer reviewed medical journal.
FINANCIAL SECTION
Third Quarter Ended September 30, 2016 Financial Results
"In the third quarter, we focused on rebuilding supply of Auryxia while at the same time continuing to invest appropriately in future growth areas, including pre-launch activities for the potential label expansion of ferric citrate for the treatment of adults with IDA and stage 3-5 NDD-CKD," said Scott Holmes, chief financial officer of Keryx. "As we look ahead, we will be focused on how quickly we can return Auryxia to patients who had previously been prescribed our medicine, and on bringing Auryxia to new patients who could potentially benefit from treatment."
At September 30, 2016, the company had cash and cash equivalents of $132.2 million.
Total revenues for the quarter ended September 30, 2016 were approximately $6.3 million, compared with $4.2 million during the same period in 2015. Total revenues for the third quarter of 2016 consisted of Auryxia net U.S. product sales of $5.1 million, and license revenue of $1.3 million associated with royalties received on ferric citrate net sales from Keryx’s Japanese partner. Beginning in the fourth quarter of 2016, the company will change its revenue recognition policy from the sell-through method based on patient prescription fulfillments to the pull-through or ex-factory method based on sales of Auryxia to wholesalers and pharmacy customers. This decision was made following the company’s ability to reasonably estimate product returns. Under the ex-factory method, revenue will be recognized when wholesalers and direct customers receive orders of Auryxia.
Cost of goods sold for the quarter ended September 30, 2016 was $18.2 million as compared with $3.1 million during the same period in 2015. Cost of goods sold during the third quarter of 2016 included $13.8 million in write-offs of work-in-process inventory that was determined to no longer be suitable for commercial manufacture. Additionally, cost of goods sold during the quarter also included $2.3 million related to manufacturing charges incurred as a result of not fully utilizing planned production at the company’s existing third-party drug product manufacturer.
Research and development expenses for the quarter ended September 30, 2016 decreased by 22 percent to $8.7 million as compared to $11.2 million during the same period in 2015. The decrease was primarily due to a reduction in clinical expenses associated with the company’s completed Phase 3 clinical trial evaluating ferric citrate for the treatment of IDA in adults with stage 3-5 non-dialysis dependent CKD.
Selling, general and administrative expenses for the quarter ended September 30, 2016 were $20.5 million as compared with $20.2 million during the same period in 2015.
Net loss for the third quarter ended September 30, 2016 was $41.7 million, or $0.39 per share, compared to a net loss of $30.7 million, or $0.29 per share, for the comparable quarter in 2015.