This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Biotech Stock Mailbag: Keryx, Amarin, ImmunoCellular

Stocks in this article: KERX AMRN IMUC IMGN

Unfortunately, Zerenex is likely coming to market in late 2013 or early 2014 at the same time as generic phosphate binders. Both Sanofi's (SNY) Renagel/Renvela (the market leader with $537 million in sales) and Shire's (SHPGY) Fosrenol will be largely replaced by cheap generic versions just as Zerenex tries to compete. Phoslo, another phosphate binder, is already generic.

Going up against generics is tough enough, but Keryx faces an even more impossible challenge with Zerenex because dialysis providers (the primary users of phosphate binders) only receive a single, fixed or "bundled" fee from Medicare that covers all ancillary products involved in providing dialysis to patients. Under a bundled reimbursement system, dialysis providers can only increase their profits by reducing costs. One way to reduce costs, obviously, is to spend less on phosphate binders. The likelihood that dialysis providers will eschew cheap, generic phosphate binders in favor of a premium-priced product like Zerenex is low to nil.

Medicare set up bundled payments for drugs and services tied to the treatment of end-state, chronic kidney disease patients in 2011 but delayed the inclusion of oral drugs into the payment bundle until 2014.

Zerenex is an iron-based phosphate binder that Keryx claims may allow dialysis clinics to reduce patients' use of iron supplements and/or costly red blood cell boosting drugs like Epogen that treat anemia. The ongoing phase III study is measuring IV irons and anemia drugs to determine whether Zerenex reduces their use compared to non iron-based phosphate binders. FDA will determine whether any "iron benefit" observed is clinically meaningful enough to make it into the Zerenex label. It will be up to the bean counters at dialysis clinics to determine whether buying Zerenex over cheaper generic phosphate binders lowers overall costs and boost profits.

Color me skeptical. AMAG Pharmaceuticals (AMAG) tried to market a better, premium-priced IV iron to dialysis clinics and failed fairly miserably. Dialysis clinics preferred lower cost IV irons. And don't for a second believe Keryx is going to convince dialysis clinics to eschew Epogen for Zerenex without Amgen (AMGN) fighting back with its considerable expertise and marketing muscle. A fight between Amgen and Keryx is a mismatch.

@amlewis4 asks, "If a delay was to occur in the $AMRN PDUFA date, what would be the typical time frame that delay could occur within."

The FDA decision date (PDUFA) for Amarin's (AMRN) AMR101 is July 26. My sense is that most investors expect full approval. While at ASCO, I did speak to an investor with a dissenting view. She believes FDA will reject AMR101 on July 26, or technically, delay approval. And this investor suspects Amarin knows bad news is coming and has even dropped some clues to investors. At this point, she has no position in Amarin but may open a position in next few weeks, she told me.

2 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs