Keryx Biopharmaceuticals, Inc. KERX is scheduled to report its first-quarter 2015 results on May 4.
Keryx’s track record has been dismal in 2014 with the company reporting wider-than-expected losses in all of the last four quarters. The average negative earnings surprise over the last four quarters stands at 22.7%. Let’s see how things are shaping up for this announcement.
Factors at Play This Quarter
Keryx’s Auryxia (ferric citrate) is approved for the control of serum phosphorus levels in patients with chronic kidney disease (CKD) on dialysis. The drug was approved by the FDA in Sep 2014 and the company launched it in December. The approval was however accompanied with a few warnings.
Keryx is also working on the label expansion of Auryxia. The company initiated a phase III study on Auryxia in Sep 2014 for the treatment of iron-deficiency anemia in patients with stages III to V CKD, who had previously not responded to oral iron therapy. The study will enroll 230 patients and evaluate changes in hemoglobin levels as the primary endpoint. Keryx currently expects top-line data from the study by 2015-end and if successful, the company will file a supplemental new drug application with the FDA in early 2016 for its indication expansion. We expect updates on the same on the first-quarter call.
However, apart from Auryxia, Keryx currently has no other approved products in its portfolio, making the company solely dependent on Auryxia for growth. Moreover, a number of limitations and warnings have restricted its sales potential substantially.
Earnings Whispers?
Our proven model does not conclusively show that Keryx is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Keryx is -10.7%. This is because both the Most Accurate Estimate currently stands at a loss of 31 cents while the Zacks Consensus Estimate is a loss of 28 cents.
Zacks Rank: Keryx carries a Zacks Rank #3 (Hold). Although Keryx’s Zacks Rank #3 is favorable, we need to have a positive ESP as well to be confident of an earnings beat.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Stocks You May Consider
Here are some companies you may want to consider as our model shows that they have the right combination of elements:
Impax Laboratories Inc. IPXL has an Earnings ESP of +15.00% and a Zacks Rank #3. The company is scheduled to release first-quarter results on May 11.
Tetraphase Pharmaceuticals, Inc. TTPH has an Earnings ESP of +6.06% and carries a Zacks Rank #3. It is expected to report first-quarter results on May 11.
Actavis plc ACT has an Earnings ESP of +1.04% and a Zacks Rank #2. The company is scheduled to release first-quarter results on May 11.
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