Keryx Biopharmaceuticals, Inc. KERX announced that it has entered into an agreement to raise $125 million through the private placement of convertible senior notes with funds managed by The Baupost Group, L.L.C.
The zero-coupon notes will mature in Oct 2020. The notes carry conversion feature. Price of the notes on conversion shall be equal to the closing price of Keryx’s common stock on the day prior to closing, Oct 14, 2015, or $3.74 per share, subject to certain adjustments under the terms of the notes. As per the terms of the deal, Baupost will have the right to appoint a director to Keryx’s board by the end of 2015. Keryx will increase the number of directors on its board to eight.
Keryx intends to use the net proceeds from this offering for working capital and general corporate purposes including ongoing commercialization and development of Auryxia in the U.S.
We note that Auryxia was approved by the FDA for the control of serum phosphorus levels in patients suffering from chronic kidney disease (CKD) on dialysis. Fexeric (EU trade name for Auryxia) was cleared in the EU last month, for the control of serum phosphorus levels, or hyperphosphatemia, in patients suffering from CKD (both non-dialysis and dialysis-dependent).
Meanwhile, the company completed patient enrolment in a phase III study on Auryxia for stages 3-5 non-dialysis dependent CKD and iron-deficiency anemia in patients who showed no response to prior treatment or were intolerant to oral iron therapy. Data from the study is expected to mature early in the second quarter of 2016.
Meanwhile, the company also announced the implementation of a cost reduction plan to significantly reduce the company’s cash operating expenses. Excluding cost of goods sold, the company expects 2016 cash operating expenses to be in between $87 million and $92 million. Keryx plans to provide further details on 2016 financial guidance in early 2016.
Apart from Auryxia, Keryx currently has no other approved products. Currently, AMAG Pharmaceuticals Inc. AMAG, Sanofi SNY and Roche RHHBY have a presence in the CKD market.
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