BOSTON (TheStreet) -- Boston Business Journal healthcare reporter Don Seiffert believes short sellers are manipulating Keryx Biopharmaceuticals (KERX) - Get Report, causing its stock price to falI. Seiffert speaks to Keryx executives regularly, and they insist the company is doing great, he writes Monday. But despite all the good news, Keryx's stock price just keeps dropping.
"I can find no other explanation for those stock drops than the manipulation of short sellers," he says. In case you weren't clear on where he stands on short selling, Seiffert adds, "The fact that they [Keryx, Sarepta and Ovascience] are developing products that stand a good chance of saving or improving lives that [sic] makes the actions of short sellers morally indefensible in my mind."
Let's just say I have issues with Seiffert's blame game. Short sellers -- "manipulative" or otherwise -- are not responsible for Keryx's withering stock price. The problem is Auryxia, the company's kidney dialysis drug. Dialysis clinics aren't buying Auryxia. The drug's commercial launch -- now six months old -- is a total bust. Investors track Auryxia prescriptions reported weekly via services like IMS Health. The Auryxia prescription numbers are tiny, worse even than the commercial launch of MannKind's (MNKD) - Get Report inhaled insulin Afrezza, if you can believe it.
How awful is the Auryxia launch? When Keryx secured the drug's approval last September, analysts, on average, forecast total revenue of approximately $100 million in 2015 and $213 million in 2016, according to S&P Capital IQ. Today, the analyst consensus estimates for Keryx total revenue are cut to to $25 million and $118 million for 2015 and 2016, respectively.
Sell-side analysts, by nature, are bullish, so when they're forced to chop revenue estimates, investors run for the hills.
At Monday's $9.68 close, Keryx shares are down 32% year to date and 46% since FDA approved Auryxia. Seiffert might be scratching his head over the decline in Keryx's stock price but investors aren't similarly confused.
They see a company losing money because of a drug failing to generate meaningful sales. Even with the big drop in its stock price, Keryx still retains a market value of $1 billion, or more than eight times projected 2016 revenue.
Instead of accusing short sellers of manipulating Keryx's stock price (without any evidence) or preventing doctors from prescribing Auryxia (how would they go about doing that, exactly?), Seiffert should be criticizing company executives for their poor performance.
Keryx, and no one else, is responsible for the stock's decline. Other than getting Auryxia approved, essentially nothing former Keryx CEO Ron Bentsur promised about Auryxia has proven true. [Bentsur exited Keryx prior to Auryxia's disastrous launch, but not before selling company stock worth millions of dollars -- another red flag.]
In contrast, the Keryx bear thesis has proven to be remarkably prescient.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.