KERX: reasons to avoid – part 2

Part 2 – science talk

Summary:
a. Iron supplemental effects are not ideal, and may be undesired;
b. Pending ANDA approval of generic Renvela is a killer.

  1. The dual action of Auryxia may be undesired.

Keryx has been promoting the dual action of reducing serum phosphate and increasing iron intake. The additional benefits, comparing to Renvela, differentiate Auryxia as less ESA or IV iron administration is needed and thus reduces medical costs.

Below is Phase 3 clinical trial results. In the trial, doctors have a target serum phosphate and  hemoglobin level, they use Auryxia and ESAs simultaneously.  Notice ferritin increases lot from mean of 595 ng/mL to 897 ng/mL.

Indications Mean change from baseline at the end of study Mean value at the end of study
Ferritin (ng/mL) +302 897
TSAT (%) +8 39
Hemoglobin (g/dL) -0.2 11.4

According to a Nature paper[1],

  1. Patients with a stable target hemoglobin level had less risk for adverse events compared with other maintenance hemodialysis patients;
  2. …a high risk of death and/or adverse events is associated with hypo responsiveness to ESA, a consistently high ferritin level, and large fluctuations in ferritin level.
  3. Special attention: the risks of hospitalization and death were significantly higher in the L-H (change from a low to high ferritin level) ferritin group than all the other groups.

What’s applicable to Auryxia:

  1. Auryxia significantly increased serum ferritin level, but not hemoglobin. It makes sense because ferritin is a protein that captures iron and stores and releases in a controlled fashion, and Auryxia releases ferric ion through systemic absorption, hemoglobin couldn’t increase as much even when serum ferritin is saturated.
  2. It is a significant risk for patients with higher ferritin level, especially those showing a change from low to high, and those have a large fluctuations in ferritin level: patients taking Auryxia exhibit exactly this risky pattern.
  3. Doctors are targeting a hemoglobin level when planning a treatment. This is also confirmed with many other sources. For example, the FDA recommendation is to initiate ESA therapy when hemoglobin is <10g/dL with a target of 10‐11g/dL for dialysis CKD patients; and for CKD patients not on dialysis, the recommendation is to initiate ESA therapy when hemoglobin is <10g/dL and reduce or interrupt ESA dose when ESA exceeds 10g/dL.
    Auryxia dosing might be difficult to quantify. 
  4. Which is better, Auryxia + ESA/IV iron or Renvela + ESA/IV iron?
    Regardless of cost, I think Renvela is superior. The reason is because Auryxia is one drug does two jobs but the job of iron supply is not quantifiable or measurable. On the other hand, being a polymer, Renvela is non-absorbable, and does only job of phosphate binding. Practitioner could set targets for both serum phosphorus and hemoglobin range, and tackle each target separately.Currently Auryxia actually sells at a discount to Renvela, the reason could be a). Renvela will lose exclusivity soon; b). Promotion from Auryxia.
  1. If and when will generic Renvela come to market?

In 2012, Impax settled with Genzyme and started to ship generic version from April 2014 under an allotment. I don’t have the detail of the settlement agreement, but I’m thinking the trade could be Impax promises to forfeit its 180 exclusivity in exchange for the allotment sales. So there is no uncertainty regarding the quality or chemistry or manufacturing with generic Renvela.

The only holdup is a huge generics application backlog with FDA. The median ANDA approval time was edging close to 30 months. And the most recent approval generic drug as of March 2015 submitted ANDA in 2010, and settled patent complaints in 2013, showing ~2 years for FDA application review.

If we use the 30 month median waiting time, we are close to March 2015 approval for generic Renvela. As of now, FDA is believed to be reviewing the application. We don’t know when it will come.

To note, Teva UK has launched generic Renvela in early 2015.

Summary:

I’m overall bearish of future of KERX and Auryxia. And my financial model yields $18 for each share in the most bullish scenario, regardless of all discussion above. If above argument is valid, the stock share could be worth to close to cash value or even less as the company is doing something worthless.

In my model 2015 sales are $85m. Auryxia recorded 160 prescriptions in January. On average, they need 590 Rx per month to reach the sales target. It is slow launch, hiring 5000+ sales rep didn’t help.

In addition, watch out for the FDA approval of generic Renvela. I don’t doubt Auryxia is better than Renvela, but Auryxia will be in a very difficult situation facing generics.

[1] http://www.nature.com/ki/journal/v86/n4/full/ki2014114a.html

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