May 13, 2015
By Riley McDermid and Alex Keown, BioSpace.com Breaking News Staff
Short sellers have taken a lively interest in the fate of Keryx Biopharmaceuticals , after months of decline in the company’s share price have begun to push shareholders into betting the company will fail, the Boston Business Journal reported this week.
Short investing is when stakeholders bet a company will do poorly, and make money in a firm’s losses instead of gains. That appears to be the case with Keryx, whose new drug Auryxia (ferric citrate) has shown disappointing sales so far. Auryxia was approved in September of 2014 for the control of serum phosphorus levels and iron levels in chronic kidney disease patients on dialysis
The company has some staunch allies, however. Its primary champion also happens to be Keryx’s biggest investor, Boston-based hedge fund The Baupost Group, which owns 17.7 percent of Keryx’s outstanding shares, worth around $260 million. Baupost is now agitating for a renewed commitment to the company, led by legendary value investor Seth Klarman, who has been dubbed “the smartest man in finance” and whose stake in Keryx, Baupost’s second-largest biotech holding, could signal a fight for the long run.
“Klarman is one of the best-known ‘value investors’ in finance,” wrote the Wall Street Journal last year. “He makes large, long-term investments in assets he believes to be undervalued.”
Either way, the company is on the move. Last week Keryx said it would move to Boston’s Seaport area from the company’s current headquarters in New York City.
Keryx is moving into a 25,000 square-foot facility, 150 percent larger than current space used by the company, to accommodate a growing staff. The company currently employs 55 people, but has plans to hire additional 10 staff members by the end of the year, Greg Madison, Keryx’s chief executive officer told the Journal. Most of the company’s executives will be headquartered in Boston, although the company plans to keep a manufacturing facility in New York that will have about 15 employees.
Boston has exploded as the central pharmaceutical hub on the East Coast and more companies are locating there to take advantage of the area’s resources, including the large number of private and academic research institutions as well as the proximity to hundreds of innovative companies. The close proximity of so many pharmaceutical and university laboratories provides researchers and scientists easy access to clinical studies and building partnerships between companies.
According to the Massachusetts Biotechnology Council, which makes its home in Cambridge, Mass., the heart of the state’s biotech industry, the biotech and pharmaceutical presence in the state grew by 41 percent between 2004 and 2013. Across the state the industry employed 57,642 in 2013, the most recent year with complete data. Recent growth in the Boston area includes IBM’s new Watson Health Unit, which will employ 2,000, as well as GlaxoSmithKline ‘s new innovation center in Boston.
Sparking Keryx Biopharmaceuticals’ expansion is Auryxia. Madison told the Journal the U.S. patient population is 450,000, which amounts to about $1.1 billion in sales. He said he plans on capturing about 80 percent of that market. In its first three months, the drug earned $42,000 in revenue, a slower pace than some analysts were expecting.
Auryxia is currently the only drug the company has on the market, which means it is the company’s primary potential for growth. The company is seeking approval to market Auryxia in Europe and expects a ruling from the Union’s regulatory authorities sometime in mid-2015. The company is conducting additional clinical trials to expand the reach of the drug to anemia patients with stages III to V chronic kidney disease, who have previously not responded to oral iron therapy.
The study will evaluate changes in hemoglobin levels in 230 patients over the course of the trial. The study is expected to be completed by the end of 2015. Assuming successful completion, Keryx intends to file a supplemental new drug application with the U.S. Food and Drug Administration (FDA), Smartanalyst.com reported .
