Keryx: Lessons From a Drug Failure

NEW YORK (TheStreet) -- Observations and lessons from the blowups in Keryx Pharmaceuticals(KERX) (down 65% to $1.75 per share) and Aeterna Zentaris(AEZS) (down 65% to 74 cents per share) due to the failure of the colon cancer drug perifosine:

1. Let's look ahead before we look back. With perifosine essentially dead, Keryx must fall back on its second pipeline drug, the phosphate binder Zerenex. Unfortunately, Zerenex has very little value.

Keryx is developing Zerenex as a treatment for treat kidney disease patients with excess phosphate in their blood. A phase III study is underway with results expected before the end of the year. Unlike perifosine, 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(SNY) Renagel/Renvela (the market leader with $537 million in sales) and Shire's(SHPGY) Fosrenol ($167 million in sales) will be largely replaced by cheap generic versions just as Zerenex tries to compete.