Keryx Biopharmaceuticals (NASDAQ:KERX) could get an unexpected boost from a bill introduced by House Republicans this week. Keryx produces an oral medication called Zerenex that is used in the treatment of end stage renal disease (ESRD) and which is currently going to be included in the ESRD bundled payment system starting 2016, putting pressure on its price.

Keryx Biopharmeceuticals

The House bill, which is still being negotiated by House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NE), is focused on larger matters such as the extension of Medicare Advantage plans for people with special needs, but it contains a provision that would push back the inclusion of oral medications in the ESRD bundled payment system until 2024.

Chances of inclusion in final bill 50-50

“On one hand, it would be an easy bargaining chip to offer up in the event of further negotiations, and on the other hand it may be insignificant enough to not bother debating as some of the more high profile provisions are considered,” writes J.P Morgan analyst Cory Kasimov, who is Overweight on Keryx, in a March 26 report.

Until the bill was introduced, Kasimov had been assuming that Keryx Biopharmaceuticals (NASDAQ:KERX) would have to make a roughly 33% gross-to-net discount once it became part of the ESRD bundle, but if distribution continues through normal channels he thinks the gross-to-net could be closer to 12%, boosting ESRD revenues from $500 million to $680 million in 2018.

Keryx Biopharmaceuticals (KERX) up 140% since last year

Keryx Biopharmaceuticals (NASDAQ:KERX) saw its stock price shoot up 90% early last year when early testing showed Zerenex to be a promising drug with the potential to become a market leader, and its stock price has only continued to rise, gaining another 140% over the last year. Zerenex is used for treating hyperphosphatemia in patients with chronic kidney disease who are on dialysis, and for treating iron deficiency anemia and elevated phosphorus in patients with Stage 3 to 5 non-dialysis-dependent chronic kidney disease.

Keryx Biopharmaceuticals (NASDAQ:KERX) has already completed its phase 3 Federal Drug Administration (FDA) trials for Zerenex and filed its new drug application (NDA) with the FDA. It has also filed a marketing authorization application (MAA) with the European Medicines Agency, and it has already gained approval to be manufactured and marketed in Japan. While investing in companies based on the promise of not yet approved drugs is usually risky, there isn’t much chance that Zerenex won’t get approved in the US at this point.