|New Threads Only:|
|New Threads & Replies:|
Forum List » Value Ideas and Strategies|
Share and discuss value investing ideas and investing strategies.
Keryx Still Has High Potential from Zerenex
Posted by: InvestmentUnderground (IP Logged)
Date: April 12, 2012 05:18PM
The genius marriage of biology and pharmaceuticals has spawned many amazing offspring. Keryx Biopharmaceuticals (KERX) is among them. This company is a forerunner in the arena of treatments for cancer and renal diseases. Its activities revolve around acquiring, developing and making commercially available the drugs used in the treatment of the aforementioned conditions. Think Keryx, and the word “perifosine” immediately comes to mind.
Lately, there has been a lot of news floating about its work on this orally administered anti-cancer agent. Perifosine or KRX-0401 was expected to be big, though it failed phase 3 trials. If you are interested in the exact science, please read more here. Keryx is also developing Zerenex which forms non-absorbable complexes by binding to phosphates in the gastrointestinal tract. Something to look forward to for stock-holders and patients alike always means good things for share price.
Trading at around $1 right now in between a 52-week range of $2.27 and $5.55, this stock is very reasonably priced. Recently as on Friday, it was $4.98. With a market cap of 353.69 million, its average trading volume for three months has been 2,287,590.
Despite feeling favorably towards this stock, I have to give you a complete picture: Its return on asset and equity figures are not the most impressive at negative 47.53% and 104.5%, respectively. But biotech companies are known to have high capital expenses. The great news is the debt is zero, always a huge plus for me. And it does have a cash balance of $39.46 million which is heartening.
In terms of competitors, take a look at Baxter International (BAX). It has a higher market cap of $33.5 billion, and it yields a dividend of 2.2%, being priced at around $59. A lot of its vital statistics are more impressive on paper than those of Keryx. For instance, it has a revenue of 13.89 billion while Keryx has $5 million.
Check this out: The gross margin of Baxter is 51.4% and that of Keryx is 100%. When it comes down to operating margin, we see ratios of 23.16% and negative 574.98% respectively. That tells us what we need to know: I trust this company will get a handle on its expenses. Honestly, looking at the trials it is involved in, I am not surprised at the figures.
I personally don’t pay too much attention to five-year figures. This moment is all that truly counts and one cannot tell from one day to the next what will happen, let alone in five years, especially with companies and the stock market.
Back to Keryx’s competitors, let us assess Shire (SHPGY). Priced at $94 or thereabouts, its market capitalization is $17.39 billion. It has an impressive quarterly revenue growth of 22.70% versus that of Baxter which is 2.7%, and Keryx doesn’t show figures for this. Its operating margin is 27.58%. Its dividend is .8%. Keryx does not give a dividend. But that can always change, eh? (I guess you have figured by now that I am pretty bullish on this company!)
Shire recently slipped after sub-par drug results were announced about the two-year testing of MMX mesalamine drug which treats diverticulitis. This brought the share down 11% after it had hit an all-time high of around $108 in February. Bad news for Shire, but good news for Keryx.
Pfizer (PFZ) is a top drug manufacturer and a major company in terms of its market capitalization of $175.42 billion. It is priced around $22. This company has its own niche with drugs like the well-known Viagra, Lipitor and Celebrex. Recently, this company was able to stop trials early because its drug Lyrica was proven to be effective in treating epilepsy. Sales of Lyrica were $3 billion last year. (You may find out more here if you are interested.)
I don’t see this as a threat to Keryx. In fact, the two companies can co-exist happily with no overlap. Healthy competition is a good thing, in my books.
Here it is, the part you have been waiting for: my thoughts on Keryx. But by now, you surely have a good idea about what I am going to say as I have been building up to just this moment.
Keryx is not a company that needs its competitors to fair poorly in order for it to shine itself. It is a winner in its own right. Yes, some of its figures could use some boosting, but I trust that they will get the injection they need. In the meantime, I would have called this a pretty good buy. It is obvious that a lot of analysts agreed with me. But based on the latest news, I would have to hold my tongue on that and say hold on to your money as potential investors too!
If you own the stock, also, hold on for a bit. If you don’t, then some caution is advised. It is a cheap stock compared to the others. And I love the news about its activities and its dedication to improving the quality of life in general. In most recent news, Perifosine did not meet the main goal. This is what made share prices plummet, both for Keryx and for its associate involved in the trial, Aeterna Zentaris (AEZS). The company is yet to report about whether their trial will continue.
I wouldn’t be swayed by this latest news. I still have faith in this company. Companies such as Keryx are never defeated by occasional negative reports. It is that constant urge to better people’s lives that enables them to get back in and keep fighting. Bottom Line? Put this company on your list and watch.
Keryx has that service motive which resonates so well with me. Perifosine, its strength, proved to be its stumbling block as well. There is still Zerenex. I am sure there will never be a dearth of reasons to consider buying or continue owning this stock.
Tip for the Day: If you are considering buying this stock, you have got to believe in it. Give it love, give it time and let it surprise you as it so often has me! Don’t be swayed by daily news. Your feelings play a huge role in your company’s performance. So eschew fear in favor of optimism. Good luck and happy investing![b][/b]
Stocks Discussed: KERX, SHPGY, PFZ, BAX, AEZS,
Disclaimers: GuruFocus.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on GuruFocus.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The gurus may buy and sell securities before and after any particular article and report and information herein is published, with respect to the securities discussed in any article and report posted herein. In no event shall GuruFocus.com be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on GuruFocus.com, or relating to the use of, or inability to use, GuruFocus.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. The gurus listed in this website are not affiliated with GuruFocus.com, LLC. Stock quotes provided by InterActive Data. Fundamental company data provided by Morningstar, updated daily.