Keryx Biopharmaceuticals (NASDAQ:KERX) is a small firm with market cap of around $486 million focused on bringing the advantages of its exclusive offering Auryxia to patients suffering from chronic kidney disease. The drug was approved by the FDA in September 2014 and introduced in December same year.

Auryxia was previously reported in Japan in January 2014 and then in last September by the European Commission. On August 1, Keryx reported that a disruption in the drug supply, which resulted in a one-day stock price decline of 36% and an extended drop of 10% in the coming period. Although Auryxia’s takeoff momentum was dull and many potential or current subjects have been mandated to switch to rival products, the outlook of one or two quarters of missed sales wasn’t worth the subsequent more than $200 million loss in total valuation.

The highlights

The current Auryxia scarcity is due to a production-related concern at Norwich Pharma Services, which is Keryx’s CMO. Though Auryxia is being produced and marketed in Japan by associate Torii Pharmaceutical Co., Ltd (OTC:TRXPF), its materials are not permitted for use here. The problem was related to changing active pharmaceutical ingredient to finished product.

It was never safety associated and no medication was recalled. Keryx has also submitted an application for approval of another CMO, Patheon. For now, the FDA has given a PDUFA action date of next month. Patheon has been generating Auryxia at risk without making into the same technical problems at Norwich. Keryx projects a resumption of an acceptable Auryxia supply in current quarter, likely freeing the stored medication by the PDUFA date.

As Auryxia will be available, it will still relish access to the most of Medicare subjects, as validated in a poll of the top health insurers. Auryxia is suggested to cure hyperphosphatemia in patients suffering with CKD on dialysis and a big percentage of patients with CKD are entitled for Medicare benefits, irrespective of age.

The lowest analyst projection for 3Q2016 revenues is $3.43 million, dropping to $2 million in 4Q2016, although the mean for each quarter remains around $5 million. Sales were not impacted in July, and there was three weeks’ inventory, which probably have been exhausted in 3Q2016.