BOSTON ( TheStreet) -- The Biotech Stock Mailbag is open. @Ted_Sand asks: "What do you think the outcome will be for $KERX phase III trial? Do you think there will be good iron results as well?" Keryx Pharmaceuticals ( KERX) is expected to announce, any day now, results from a long-term safety and efficacy study of its experimental phosphate binder Zerenex in kidney dialysis patients. The Zerenex data are actually past due already ... tick tock. I'm fundamentally bearish on Keryx because I doubt the company's ability to turn Zerenex into a commercial success. For the traders out there, this means I'm assuming the Zerenex long-term study yields enough positive data for the drug to be approved. The recent pop in Keryx's stock price is unsurprising but it's also unsustainable because Zerenex sales will eventually disappoint. I want to make this distinction clear because so many of you are short-term biotech traders.
G-d forbid Keryx announces negative results from the Zerenex study. Ouch. My opinion of Keryx has been consistent for some time. Here's what I wrote last June: A phase III study is under way with results expected before the end of the year ... there is a good chance that Zerenex works, based on previous studies. ... Unfortunately, Zerenex is likely coming to market in late 2013 or early 2014 at the same time as generic phosphate binders. Both Sanofi's Renagel/Renvela (the market leader with $537 million in sales) and Shire's Fosrenol will be largely replaced by cheap generic versions just as Zerenex tries to compete. ... The likelihood that dialysis providers will eschew cheap, generic phosphate binders in favor of a premium-priced product like Zerenex is low to nil. Biotech investors: Click here to visit TheStreet's 2013 FDA and EMA drug approval decision calendar. Let's go over the design of Keryx's long-term safety study because it's a bit complicated. The study starts with a two-week washout period in which kidney dialysis patients are taken off their current phosphate binder. The study then moves into the Safety Assessment Period in which patients are randomized to treatment with either Zerenex or an "active control" consisting of currently approved phosphate binders -- PhosLo or Sanofi's ( SNY) Renvela. Patients are then followed for 52 weeks, during which compliance and serum phosphorous levels will be monitored. Remember, these drugs are designed to bind to and lower serum phosphorous, which is elevated to unsafe levels in dialysis patients. Once the 52-week safety period of the study is complete, patients enter the Efficacy Assessment Period. Patients are randomized to Zerenex or a placebo for four weeks. The primary endpoint of the study will be a change in serum phosphorous levels from week 52 to week 56. Since this is a "withdrawal" study, we should expect to see serum phosphorous levels in placebo patients rise over the four weeks of the efficacy stage while patients who remain on Zerenex should maintain the lowered phosphorous levels observed during the 52 weeks of the safety stage.