The price of Keryx Biopharmaceuticals Inc.’s stock has dropped almost $4 a share since last week over what the company said was a misinterpretation by investors of a label indication to its new phosphate binder.
Keryx won U.S. Food and Drug Administration approval for ferric citrate on Sept. 5, when shares were hovering near 52-week highs. In its press release that day announcing the approval, Keryx noted under a section labeled “Monitoring Iron Parameters” that iron absorption from ferric citrate may lead to increased stored iron. “Iron parameters should be monitored prior to and while on Ferric Citrate. Patients receiving IV iron may require a reduction in dose or discontinuation of IV iron therapy,” the statement said. The information is part of the FDA-approved product labeling, and company officials believed it was a positive for the dialysis market: ferric citrate would reduce dosing needs of supplemental IV iron. During clinical trials, iron use dropped 85% in patients who received ferric citrate, the company said.
Some analysts who read that information, however, saw the warning as a negative. FBR Capital Markets analyst Dr. Andrew Berens downgraded shares to underperform from market perform. “Accordingly, we have adjusted our peak ferric citrate U.S. dialysis revenues down from $951 million to $476 million,” Berens said in a note to clients. He had told Associated Press on Friday that, "The expectations were that the label would have an indication for anemia management. Instead where it appeared was in the warning section, which is kind of strange because it's like turning a benefit into a warning."
Trading of Keryx shares were halted Friday, then spiked downward more than 12%. They ended the day off nearly 6%. Shares fell by as much as 12% again Monday and were down more than 11% in recent activity. Today, share price was at $14.20, off from the $18.48 price seen before the FDA approval.
“I think [the warning label] is grossly misunderstood and misinterpreted,” Keryx chief executive Ronald Bentsur said in an interview with the online newsletter MarketWatch in response to Wall Street’s reaction.
In contrast to Berens’ reaction to the warning, Brean Capital’s Jonathan Aschoff gave the drug a favorable review for investors, saying the reduced iron needs would save money for the health care industry. “We are not concerned by the warning for iron overload in the label, since ferric citrate alone did not show any iron overload in its trials, and we see the warning as rather for potential iron overload associated with the use of IV iron on top of ferric citrate, which makes perfect sense. Consistent with this view is the fact that nowhere does the label say that ferric citrate itself causes iron overload. Only 1 patient in all of the ferric citrate trials had elevated iron in the liver, and that patient was on both IV iron and ferric citrate.
“We see this label as little more than a highly conservative blanket statement on the part of the FDA to cover itself,” said Aschoff. “Physicians are simply advised to assess and monitor iron parameters when using ferric citrate and IV iron, and they may need to reduce the dose of, or discontinue, IV iron therapy, which is the whole point with this differentiated drug. The ferric citrate label warning is not a call to perform extra monitoring of patients, since these patients are already routinely monitored.”
Keryx said it plans to make Ferric Citrate available to U.S. dialysis patients within approximately 12 weeks.