West Coast Editor

Keryx Biopharmaceuticals Inc.'s handsome deal for Japanese rights to its Phase II phosphate binder - $100 million potential, with $20 million near term - left Wall Street lukewarm, as investors wait to find out whether iron-based Zerenex can be made in a non-pill form that could provide a competitive edge in a busy market.

The company's stock (NASDAQ:KERX) closed Wednesday at $9.75, up 1 cent, on word of the deal with Japan Tobacco Inc.'s subsidiary, Torii Pharmaceutical Co. Ltd., which also will pay royalties on Zerenex, for which New York-based Keryx paid about $1 million in its worldwide license deal with the Panion & BF Biotech Inc., of Taiwan.

Michael Weiss, chairman and CEO of Keryx, could not say whether Zerenex might be approved in Japan before the U.S.

"We are hopeful that since a good portion of the early clinical trials were conducted in Asian populations through [Panion], Japan Tobacco will be able to use that data to move quickly into the clinic," he told investors during a conference call. "They're still going to have to do a full Phase II program and beyond."

Designed for end-stage renal disease patients on dialysis, Zerenex could take a piece of the 300,000-patient U.S. market. Japan's opportunity is the world's second largest, with about 250,000 such patients.

But if approved, the drug would find itself up against calcium-based phosphate binders already available, as well as Cambridge, Mass.-based Genzyme Corp.'s Renagel (sevelamer hydrochloride), the most commonly prescribed phosphate binder in the U.S., where Genzyme is awaiting word from the FDA on an improved formulation called Renvela.

High blood phosphorus is common in dialysis patients and has been linked to increased risk of cardiovascular death, so phosphate binders often are prescribed to clear the excess phosphorus in food from the body.

But the hydrochloride in Renagel tablets also is difficult for the kidneys to clear and can bind with carbonate and lower bicarbonate levels in the blood, resulting in acidosis - hence Renvela (sevelamer carbonate), in powder form, targeting chronic kidney disease (CKD).

Keryx has shown practically gram-for-gram potency with the leading products, Weiss pointed out, with a side effect profile that's comparable as well. "It looks like it's right in the ballpark of what you want, what you'd expect to see," he said.

Since Zerenex uses iron, and ESRD patients tend to be iron deficient, "that ought to be a net benefit," he said.

Iron, though, is known for causing gastrointestinal toxicity. "We did see some GI tox at super-high doses" in dogs, but not in rats, he said. Dogs are hypersensitive to iron, and once the dose was reduced, the dogs tolerated the drug well, and titration seemed to solve the problem.

"If you look at the product labels for the calcium products and for the polymer-based products [such as Renagel], you'll see that the GI tox for all the drugs is around the 30 to 35 percent range," Weiss said, noting that Zerenex results in animals "fall pretty much in line" with that.

Data from the toxicity tests were submitted to the FDA. "We're basically waiting on that information to start our 30-day high-dose study," which will be followed by others, Weiss said. The start date for Phase III trials will be decided later.

Getting a leg up in the busy market "really comes down to convenience," he said. "We're not going to be able to reduce the pill burden," because of the similar efficacy profile to existing drugs. So Keryx is casting for a new formulation, such as powder, liquid or gel.

"We're playing that pretty close to the vest," he said, declining to speculate on which delivery route might prove the most promising. If Renvela wins approval - the PDUFA date is Oct. 21 - then the market door would swing open to a powder form, but whether Keryx would try some other form remains to be seen.

Jonathan Aschoff, analyst with Brean Murray, Carret & Co., sounded upbeat in a research report Wednesday.

"In our view, the phosphate-binder market addressed by Zerenex is relatively fragile, as demonstrated by Fosrenol's taking 10 percent of the market from Renagel due in part to lower pricing," he wrote, speculating that "an inexpensive, differentiated and safer Zerenex would compete well in this market." Fosrenol, a carbonate salt of the rare-earth metal lanthanum from Shire Pharmaceuticals Group plc, of Basingstoke, UK, won approval in fall 2004. (See BioWorld Today, Oct. 28, 2004.)

Weiss projected end of year cash, as a result of the Japanese deal, will reach between $60 million and $65 million, up from original estimates between $50 million and $55 million. Would Keryx consider partnering Zerenex in the U.S.? "If the right deal came along, the answer is yes, with the caveat that we set extremely high hurdles for deals in the U.S.," he said. In Europe, too, the company "remain[s] in an opportunistic stance."

Keryx's lead compound is Sulonex (sulodexide), previously referred to as KRX-101, a first-in-class, oral heparinoid compound for the treatment of diabetic nephropathy. Phase III results are due in the first quarter of next year. Keryx plans to launch Sulonex on its own, but would evaluate "offers regarding strategic relationships," Weiss said.

He called the JT deal "comparable to some of the best Japanese-only deals that have been consummated recently."

Tokyo-based Astellas Pharma Inc. this spring signed a deal worth up to $92 million for Japanese marketing rights to ILY101, the oral, non-absorbed, polymeric phosphate binder from Ilypsa Inc., of Santa Clara, Calif., which then had completed Phase II dose-ranging trials in CKD patients on dialysis. Later in the year, Thousand Oaks, Calif.-based Amgen Inc. jumped strongly into the game, agreeing to buy Ilypsa for $420 million. (See BioWorld Today, June 6, 2007, and April 28, 2007.)

No Comments