Why Keryx Biopharmaceuticals' Stock Is Cratering Today

By Markets Fool.com

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What: Shares ofKeryx Biopharmaceuticals (NASDAQ: KERX),a biopharma developing therapies for patients with kidney disease, dropped by approximately 34% at the start of trading today after the company pulled itsfull-year forecast as a result of supply issues for its only approved drug, Auryxia.Auryxia is a treatment forhigh serum phosphorus levels in patients with chronic kidney disease who are on dialysis.

So what: This supply issue is only the latest hiccup in Keryx's quest to steal market share away fromSanofi's (NYSE: SNY) rivaldrugs Renagel and Renvela. For instance, Auryxia generated a meager $8.3 million innet U.S. sales for the second quarter of 2016, compared to a far more impressive $232 million (at current exchange rates) for Sanofi's market-leading drugs during the same period -- despite Auryxia being on the market for over a year and a half at this point. Put simply, Keryx doesn't appear to be convincing doctors to switch patients to its drug at a significant rate, and a supply interruption could make things even worse moving forward.

Now what:Per its press release, Keryxexpects this supply issue for Auryxiato be resolved sometime during the fourth quarter of 2016. That's not exactly a reassuring assessment of the situation, and investors should probably expect short-sellers to pile into this stock as a result. After all, there aren't any major near-term catalysts on the calendar to scare off short-sellers right now,perhaps aside from the forthcoming supplemental NDA forAuryxia as a treatment foriron deficiency anemia in stages 3-5 non-dialysis dependent chronic kidney disease (CKD) patients. As such, bargain hunters may want to steer clear of this falling knife for the time being.

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George Budwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.