Keryx's Auryxia Supply Issues Overshadow 'Strong' Q2 Earnings

Although Keryx Biopharmaceuticals (NASDAQ: KERX) reported higher-than-expected sales for 2Q, Auryxia supply issues may significantly impact the company’s US revenues from mid-August onward, Ladenburg Thalmann’s Matthew L. Kaplan said in a report. He maintained a Buy rating on the company, while reducing the price target from $10 to $9.

2Q16 Results

Keryx reported a net loss of $0.42 per share, or $44.7 million. Excluding non-cash expenses or charges, the company’s net loss came to $22.4 million, broadly in-line with expectations. Revenue came in at $9.3 million, ahead of Ladenburg Thalmann’s estimate of $8.5 million.

“KERX ended 2Q16 with $155.8 million in cash and believes its current cash position is sufficient to reach profitability,” analyst Matthew Kaplan wrote.

Auryxia Supply Issue

In 2Q16, Auryxia sales were recorded at $8.3 million, significantly higher than the estimate of $7.0 million. Kaplan mentioned that there would likely be a supply interruption “based on an issue related to the conversion of the API to the finished product,” and that the issue resulted in variable finished product yields.

The analyst added that Auryxia supply would likely be interrupted from mid-August until the supply issue is resolved in 4Q16. With this happening, physicians may become more hesitant to prescribe Auryxia.

The US Auryxia revenue estimates for 3Q16, 4Q16 and YE16 have been reduced from $9.1 million to $3.3 million, from $11.8 million to $4.3 million and from $33.6 million to $21.5 million, respectively.

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