On April 2, shares of New York-based Keryx Pharmaceuticals (NASDAQ: [[ticker:KERX]]) fell a stomach-churning 65 percent to $1.74 after the company announced that a late-stage trial of its colon cancer drug failed. But CEO Ron Bentsur was unfazed. In fact, he was so confident in the company’s other drug candidate—a treatment for kidney dialysis patients—that he turned around and bought 90,500 shares of Keryx on the open market. He now owns a total of 479,476 shares, according to SEC filings, making him the largest individual shareholder of the company. “I wanted to show I truly believe in the company,” Bentsur says of his stock purchase. “I wanted people to know there is still someone answering the door here.”
Investors would be forgiven for fearing that the doors might be shutting at Keryx. In March 2008, the company’s shares plummeted 81 percent in a day after it announced that what was then its lead product, a drug to treat diabetic neuropathy, failed in a late-stage trial. And now, with the failure of the colon cancer drug, called perifosine, the company has only one product candidate left in its pipeline, the dialysis treatment, ferric citrate (Zerenex). It’s no wonder that in the words of Bentsur, his company remains “deep in the penalty box.” Analysts expect Keryx to report a $34 million loss this year.
Keryx’s most recent troubles began in the pivotal trial of perifosine. In an earlier trial with 38 patients, the drug looked promising in combination with a Roche product called capecitabine (Xeloda): It extended median survival from seven to 17 months compared with capecitabine alone. But those results couldn’t be repeated in the larger trial, which enrolled 468 patients. Keryx abandoned the drug, returning the development rights back to the original owner, Quebec-based Aeterna Zentaris.
Some influential prognosticators were predicting perifosine’s demise long before the April announcement of the trial’s failure. Last September, TheStreet.com’s biotech scribe Adam Feuerstein teamed with University of Chicago oncologist and professor Mark Ratain to publish an article in the Journal of the National Cancer Institute demonstrating that 59 late-stage trials of cancer drugs performed in the last 10 years by microcap companies had all failed. If the pattern were to continue, Feuerstein suggested a month later, perifosine would also fail.
Feuerstein proposed that a primary reason for the failure of so many cancer drugs developed by small companies is, well, the smallness of the companies. In other words, he contended, if the drugs had shown any promise in earlier trials, big pharma companies would have bought them or their developers long before the pivotal trials were completed. Bentsur had expressed an interest in attracting a buyer, but perifosine remained unclaimed well into the late-stage trials. “What’s more likely to have happened already, says Ratain (and I agree with him) is that larger companies have already vetted the previous perifosine data and found it lacking,” Feuerstein wrote.
Bentsur declines to comment on TheStreet.com’s coverage, saying only, “People are entitled to their opinion.” As for the perifosine trials, he says, “Based on the information we had, we ran the best study we could.”
Keryx was founded in 1997 and went public three years later on two assets: the diabetes drug, which it licensed from Eli Lilly, and a technology it developed and hoped to apply to immune disorders. The company licensed perifosine from Aeterna Zentaris in 2003 and ferric citrate from Taiwan-based Panion & BF Biotech in 2005. Bentsur had been the company’s CFO, but left in 2006, after which time
