The stock price of Keryx Biopharmaceuticals (NASDAQ:KERX) suffered a steep decline after analysts at FBR Capital Markets downgraded their rating from to Underperform from Market Perform.
The shares of Keryx Biopharmaceuticals (NASDAQ:KERX) were trading at $15.20 per share, down by more than 10% at the time of this writing around 2:25 in the afternoon in New York.
FDA issued restrictive label for Zerenex
Analysts at FBR Capital Markets explained that the downgrade was primarily due to the restrictive label given by the U.S. Food and Drug Administration (FDA) for its newly approved ferric citrate called “Zerenex.” Keryx Biopharmaceuticals (NASDAQ:KERX) is expected to face difficulty in marketing Zerenex given its restrictive label.
FBR Capital Markets also reduced its peak ferric citrate U.S. dialysis revenue estimate from $951 million to $476 million, and lowered its price target for the shares of Keryx Biopharmaceuticals (NASDAQ:KERX) from $16 to $14 per share.
Keryx Biopharmaceuticals: Three major problems of Zerenex label
Separately, Adam Feuerstein of TheStreet opined that the Zerenex label has three major problems aside from the fact that Keryx Biopharmaceuticals (NASDAQ:KERX) need to think of a new and acceptable brand name.
Feuerstein noted that the missing link from the Zerenex label is it does not mention any beneficial effects on anemia or anything about the reduction in the usage of anemia drugs. According to him, Keryx Biopharmaceuticals (NASDAQ:KERX) had been promoting the idea that kidney disease specialists and dialysis providers would use Zerenex because of potential cost-saving benefits.
The iron absorption of kidney dialysis patients would increase using Zerenex, but the FDA cited the benefit as a safety warning as it may lead to excessive elevation in iron stores. The FDA advised doctors prescribing off-label of outside their specialty that patients treated with Zerenex may require a dose reduction or discontinuation of IV iron.
In addition, Feuerstein noted that the FDA has no decision on New Chemical Entity (NCE) market exclusivity for Zerenex.
Leif Peterson of the Center for Biostatistics, Houston Methodist Research Institute explained that the “safety warning is not a problem since ESRD and HD patients are already under iron management by their nephrologist. It’s for doctors who might prescribe off-label, or prescribe outside their specialty.”
He added that the label for Zerenex “does not have to say that ferric citrate reduces costs for anemia management drugs,” and warnings are intended for safety and not the economic impact of the a drug.
The management of Keryx Biopharmaceuticals (NASDAQ:KERX) emphasized that even if FDA does not provide market exclusivity for Zerenex, its patents offers enough protection against the early introduction of generic drugs.
Meanwhile, analysts at JP Morgan commented the Zerenex label is incrementally negative because there is no clear articulation regarding ESA/IV iron sparing data. The investment research firm maintained its Overweight rating for the shares of Keryx Biopharmaceuticals (NASDAQ:KERX) with a price target of $24 per share. JP Morgan said the company’s 2024 patents are strong.
