Keryx Biopharmaceuticals' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Keryx Biopharmaceuticals, Inc. (KERX)

Q2 2012 Earnings Call

August 8, 2012 8:30 am ET

Executives

James F. Oliviero – Chief Financial Officer

Ron Bentsur – Chief Executive Officer

Analysts

Matthew Kaplan – Ladenburg Thalmann & Co. Inc.

Jonathan Aschoff – Brean Murray Carret & Co.

Charles Duncan – JMP Securities

Michael King – Rodman & Renshaw, LLC

Luca Pancratov – Roth Capital Partners

Ed Arce – MLV & Co.

Stephen Willey – Stifel Nicolaus

Presentation

Operator

Greetings, and welcome to the Keryx Biopharmaceuticals’ Investor Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded (Operator Instructions).

It is now my pleasure to introduce your host, James Oliviero, Chief Financial Officer for Keryx Biopharmaceuticals. Thank you, sir. You may begin.

James F. Oliviero

Thank you. Good morning, and welcome to our conference call regarding Keryx Biopharmaceuticals’ Second Quarter 2012 Financial Results. I’m James Oliviero, Chief Financial Officer at Keryx, and I welcome you to our conference call today. Following our Safe Harbor statement, I will provide a brief overview of our financial results, and then turn the call over to Ron Bentsur, Company’s Chief Executive Officer, who will provide the business update on the Company.

Before we begin, I would like to remind everyone that various remarks that we make about our future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Keryx cautions that these forward-looking statements are subject to risks and uncertainties that may cause our actual results to differ materially from those indicated.

Factors that may affect Keryx Biopharmaceuticals’ operations include various risk factors and uncertainties that can be found in our SEC filings. This conference call is being recorded for audio rebroadcast on Keryx’s website, keryx.com, where it will be available for the next 15 days. All participants on this call will be in listen-only mode.

Now I’d like to briefly discuss the financial results for the second quarter ended June 30, 2012 as well as the Company’s overall financial condition. Our financial results were released yesterday evening and can be viewed on the Investor Information section of our website at keryx.com.

At June 30, 2012, the Company had cash, cash equivalents, interest receivable and investment securities of $27.2 million, as compared to $39.5 million at December 31, 2011. Of note, during the second quarter of 2012, we received an award of approximately $1.5 million after fees and legal expenses, resulting from a FINRA arbitration against a broker-dealer registered with the SEC.

The net loss for the second quarter ended June 30, 2012 was $1.5 million, or $0.02 per share, compared to a net loss of $3.1 million, or $0.05 per share for the comparable quarter in 2011, representing a decrease in net loss of $1.6 million. The second quarter ended June 30, 2012 included a non-cash extraordinary gain of $2.6 million related to the write-off of contingent equity rights liability following the termination of the license agreement for KRX-0401, and the $1.5 million arbitration award included in interest and other income, net, which I previously discussed.

Other research and development expenses for the second quarter ended June 30, 2012, decreased by $2.6 million, as compared to the second quarter of 2011, primarily related to the termination of the KRX-0401 clinical development program; the second quarter ended June 30, 2011, included license revenue of $5 million related to a milestone payment from our Japanese partner for Zerenex JT/Torii for their commencement in April 2011, of the Phase III clinical program in Japan.

The net loss for the six months ended June 30, 2012 was $10.6 million, or $0.15 per share, compared to a net loss of $9.5 million, or $0.15 per share, for the comparable period in 2011, representing an increase in net loss of $1.1 million. The six months ended June 30, 2012 included the $2.6 million non-cash extraordinary gain and the $1.5 million arbitration award I previously discussed. The six months ended June 30, 2011 included the $5 million milestone payment from JT/Torii.

As I discussed on the last conference call, on May 4, 2012, the Company executed a License Termination and Technology Transfer Agreement with Aeterna Zentaris, whereby the license agreement for KRX-0401 or perifosine was terminated, and in exchange for the transfer of the U.S. IND, development data, IP and contracts to Aeterna, Keryx will receive a royalty on future net sales if any, of perifosine in the U.S., Canada and Mexico. Zentaris has assumed all costs, related to the Perifosine program going forward.

In terms of our financial guidance for the remainder of 2012, we expect the cash burn rate to remain well control at approximately $4 million per quarter due to the pending completion of the Zerenex Phase III clinical program under the SPA in the fourth quarter of this year, and the preparation for our expected NDA filings in the first quarter of 2013. We believe that our financial position remains strong and that our cash will be sufficient to take us well beyond the potential NDA filings for Zerenex and hyperphosphatemia for dialysis patients.

I’ll now turn the call over to Ron.

Ron Bentsur

Thank you, James and good morning everybody. In the second quarter, all resources were allocated towards Zerenex, as we continue to focus on the pending completion of the long-term Phase III study and the anticipated NDA and MAA filings, which will follow suit.

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