UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
_____________
FORM
8-K
_____________
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of
report (Date of earliest event reported): December 27, 2005
Keryx
Biopharmaceuticals, Inc.
(Exact
Name of Registrant as Specified in Charter)
|
Delaware
(State
or Other Jurisdiction
of
Incorporation)
|
000-30929
(Commission
File Number)
|
13-4087132
(IRS
Employer Identification No.)
|
750
Lexington Avenue
New
York, New York 10022
(Address
of Principal Executive Offices)
(212)
531-5965
(Registrant's
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
| £ |
Written
communications pursuant to Rule 425 under the Securities
Act.
|
| £ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange
Act.
|
| £ |
Pre-commencement
communications pursuant to Rule 14d-2b under the Exchange
Act.
|
| £ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange
Act.
|
Item
1.01. Entry
into a Material Definitive Agreement.
On
December 27, 2005, the Compensation Committee of the Board of Directors of
Keryx
Biopharmaceuticals, Inc. (the “Company”) approved base salaries for fiscal 2006
for each named executive officer. The table below indicates each named executive
officer’s base salary for fiscal 2006:
|
Executive
officer
|
|
Base
salary for
2006
|
|
Michael
S. Weiss, Chairman and Chief Executive Officer
|
|
$
|
375,000
|
|
|
I.
Craig Henderson, President
|
|
$
|
300,000
|
|
|
Ron
Bentsur, Vice President, Finance and Investor Relations
|
|
$
|
225,000
|
(1)
|
_____________
(1)
As
previously announced, Mr. Bentsur has accepted the position of Chief Executive
Officer of XTL Biopharmaceuticals, Ltd. He will remain as Vice President,
Finance and Investor Relations of the Company until a successor is named.
As a
result, his base salary will be prorated in accordance with the amount of
time
he dedicates to his position at the Company.
Item
8.01. Other
Events.
(a) Rule
10b5-1 Plan
On
December 30, 2005, Michael S. Weiss, Chairman and Chief Executive Officer
of the
Company, adopted a Rule 10b5-1 trading plan (the “Plan”) with a brokerage firm
to exercise stock options issued to Mr. Weiss pursuant to his employment
agreement and the Company’s stock option plans and to sell the common stock
underlying such options. Mr. Weiss entered into the Plan to facilitate
the
exercise of stock options and as part of his personal long-term investment
strategy for asset diversification and liquidity. Mr. Weiss will have no
control
over the timing of the option exercises or stock sales under the
Plan.
Pursuant
to the Plan, the brokerage firm may exercise employee stock options of
up to
1,000,000 shares of common stock (representing approximately 15% of Mr.
Weiss’s
holdings) beginning in February 2006. The Plan is scheduled to terminate
in
February 2008, whether or not the total number of shares is sold. The stock
options will be exercised monthly and the shares of common stock will be
sold on
a monthly basis pursuant to the following formula:
|
Share
price on date of sale
|
Number
of shares to be sold in month
|
|
$0
- $7.49
|
0
|
|
$7.50
- $12.49
|
10,000
|
|
$12.50
- $17.49
|
40,000
|
|
$17.50
- $22.49
|
80,000
|
|
Equal
to or greater than $22.50
|
120,000
|
Any
transactions under the Plan will be reported by Mr. Weiss through Form
4 filings
with the Securities and Exchange Commission (the "SEC"). The Plan is intended
to
comply with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended
(the
"Exchange Act"), and the Company’s insider trading policy.
| (b) |
Annual Report for the year ended December 31, 2004 on Form
10-K
|
As
part
of the
the
SEC's regular review of reports filed under the Exchange Act, the
SEC
requested that the Company revise the disclosure provided in its annual report
on Form 10-K regarding the Company’s significant assumptions used in valuing
in-process research and development and the estimated costs and time to complete
the current stage of the Company’s products under development.
The
Company and the SEC agreed that such disclosure would be made in the Company’s
annual report on a going forward basis and that the Company would also file
the
disclosure on a Form 8-K to make the revised disclosure immediately available
to
investors. References to the relevant section of Form 10-K have been made
for
each disclosure item for the reader’s convenience.
Revised
Disclosure for the “Critical Accounting Policies” portion of the Management’s
Discussion and Analysis of Financial Condition and Results of Operations
section
of the Company’s annual report on Form 10-K (Item 7):
Accounting
Related to the Valuation of Acquired In-Process Research and
Development.
As
required by Financial Accounting Standards Board Interpretation No. 4,
“Applicability of Financial Accounting Standards Board Statement No. 2 to
Business Combinations Accounted for by the Purchase Method," or FIN 4,
we
recorded a charge of $18,800,000 for the estimate of the portion of the
ACCESS
Oncology, Inc., or ACCESS Oncology, purchase price allocated to acquired
in-process research and development.
A
project-by-project valuation using the guidance in Statement of Financial
Accounting Standards No. 141, “Business Combinations” and the AICPA Practice Aid
“Assets Acquired in a Business Combination to Be Used In Research and
Development Activities: A Focus on Software, Electronic Devices and
Pharmaceutical Industries” was performed with the assistance of independent
valuation specialists to determine the fair value of research and development
projects of ACCESS Oncology which were in-process, but not yet
completed.
The
fair
value was determined using the income approach on a project-by-project basis.
This method starts with a forecast of the expected future net cash flows.
These
cash flows are then adjusted to present value by applying an appropriate
discount rate that reflects the project’s stage of completion and other
risk factors. These other risk factors can include the nature of the product,
the scientific data associated with the technology, the current patent situation
and market competition.
The
forecast of future cash flows required the following assumptions to be
made:
| · |
revenue
that is likely to result from specific in-process research and
development
projects, including estimated patient populations, estimated selling
prices, estimated market penetration and estimated market share
and
year-over-year growth rates over the product life
cycles;
|
| · |
cost
of sales related to the potential products using industry data
or other
sources of market data;
|
| · |
sales
and marketing expense using industry data or other market
data;
|
| · |
general
and administrative expenses; and
|
| · |
research
and development expenses.
|
The
valuations are based on information that was available as of the acquisition
date and the expectations and assumptions deemed reasonable by our management.
No assurance can be given, however, that the underlying assumptions or events
associated with such assets will occur as projected. For example, the following
changes in our assumptions would have yielded the indicated change in the
total
amount of the acquired in-process research and development charge:
| · |
if
the growth rate regarding the revenue assumptions for the three
drugs
under development and included in the assumptions on future cash
flows
were increased by 10%, the result on the aggregate amount of the
charge
would have been approximately $4,500,000, yielding a total charge
of
approximately $23,300,000, or if the growth rate were decreased
by 5%, the
result on the aggregate amount of the charge would have been approximately
$2,200,000, yielding a total charge of approximately
$16,600,000;
|
| · |
if
the discount rate used to bring the estimated future cash flows
to a
present value amount (which was based on a 55% rate) were reduced
by 10%,
the total charge would have increased to approximately $33,000,000,
and if
the discount rate were increased by 10%, the total charge would
have
decreased to approximately $11,000,000.
|
Additionally,
if it was assumed that the research and development activity of the least
developed of the three drugs under development acquired with ACCESS Oncology
was
going to be terminated for any reason and had no alternative future use,
including inconclusive clinical results, the amount of the in-process research
and development charge would have been reduced, possibly creating
a
situation where the Company would have recognized goodwill.
In
each
of the above scenarios, the change in the in-process research and development
charge would have required an equal change in contingent equity rights, or
if a
significant decrease, goodwill would have been recorded. Contingent
equity
rights represent the lesser of negative goodwill and the maximum value of
the
contingent consideration at the date of the acquisition. Changes
in the
acquired in-process research and development charge do not change the amount
or
the value of the contingent consideration that could ultimately be paid.
Additional
Disclosure for the “Overview” portion of the Management’s Discussion and
Analysis of Financial Condition and Results of Operations section of the
Company’s annual report on Form 10-K (Item 7):
Research
and development expenses consist primarily of salaries and related personnel
costs, fees paid to consultants and outside service providers for clinical
and
laboratory development, facilities-related and other expenses relating to
the
design, development, testing, and enhancement of our product candidates and
technologies, as well as expenses related to in-licensing of new product
candidates. We expense our research and development costs as they are incurred.
Other research and development expenses, which excludes non-cash compensation
and acquired in-process research and development expenses, for the years
ended
December 31, 2004, 2003 and 2002 were $9,805,000, $5,996,000 and $9,523,000,
respectively.
The
following table sets forth the other research and development expenses per
project for the periods presented.
| |
|
Years
ended December 31,
|
|
| |
|
2004
|
|
2003
|
|
2002
|
|
Cumulative,
as
of
December
31, 2004
|
|
|
KRX-101
|
|
$
|
6,064,000
|
|
$
|
2,074,000
|
|
$
|
2,215,000
|
|
$
|
14,204,000
|
|
|
KRX-0401
|
|
|
2,230,000
|
|
|
N/A
|
|
|
N/A
|
|
|
2,230,000
|
|
|
Other
clinical stage oncology compounds
|
|
|
623,000
|
|
|
N/A
|
|
|
N/A
|
|
|
623,000
|
|
|
Other
|
|
|
888,000
|
|
|
3,922,000
|
|
|
7,308,000
|
|
|
22,655,000
|
|
|
Total
|
|
$
|
9,805,000
|
|
$
|
5,996,000
|
|
$
|
9,523,000
|
|
$
|
39,712,000
|
|
Revised
Disclosure for the “Products Under Development” portion of the Business section
of the Company’s annual report on Form 10-K (Item 1):
PRODUCTS
UNDER DEVELOPMENT
KRX-101
Overview
Our
lead
compound under development is KRX-101 (sulodexide). We own the exclusive
rights
to use KRX-101 for the treatment of diabetic nephropathy in North America,
Japan
and certain other markets outside of Europe. Diabetic nephropathy is a long-term
complication of diabetes in which the kidneys are progressively damaged.
KRX-101, our lead drug candidate, is a glycosaminoglycan compound with
structural similarities to the broad family of marketed heparins and low
molecular weight heparins. Specifically, KRX-101 is comprised of heparan
sulfate, also referred to as fast-moving heparin, dermatan sulfate and
slow-moving heparin. This drug has been marketed in a number of European,
Asian
and South American countries for many years by our licensor for certain
cardiovascular conditions and has a well established safety profile at the
doses
used for such indications. Additionally, it has been demonstrated in multiple
clinical trials conducted in Europe and the U.S., including two randomized,
double-blind, placebo-controlled Phase II studies, that KRX-101 can reduce
urinary protein excretion in patients with diabetic nephropathy. KRX-101
is in a
pivotal Phase III and Phase IV clinical program under a Special Protocol
Assessment, or SPA, with the Food & Drug Administration, or FDA. These
trials are being conducted by the Collaborative Study Group, or the CSG,
the
world’s largest standing renal clinical trial group.
We
plan
to develop KRX-101 in the United States, and possibly other countries where
we
have exclusive rights under our license, for the treatment of diabetic
nephropathy and potentially for other indications.
Market
Opportunity
According
to the American Diabetes Association, or the ADA, there are 18.2 million
people
in the United States, or approximately 6.3% of the population, who have
diabetes. Of this population, approximately 13 million have been diagnosed,
of
whom approximately 90-95% have been diagnosed with Type II diabetes. Type
II
diabetes results from the combination of insulin deficiency and the body's
relative insensitivity to the insulin present, as opposed to Type I diabetes,
in
which severe insulin deficiency results from destruction of the
insulin-producing beta cells of the pancreas. Moreover, an August 2003 study
published by Datamonitor estimates that approximately 50% of all diabetics
in
the U.S., or approximately nine million people, have diabetic nephropathy.
Diabetes is the most common cause of End Stage Renal Disease, or ESRD, in
the
United States and in many other developed nations and represents approximately
45% of all new cases of ESRD in the United States. Despite advances in clinical
care, including improvements in glycemic or blood sugar control and blood
pressure control, the number of Type I and Type II diabetes-related cases
of
ESRD continues to rise. In particular, the incidence of Type II diabetes-related
ESRD is rapidly increasing. Approximately 20% of diabetics on dialysis in
the
United States survive for five years, making the mortality of end-stage renal
failure in this group higher than most forms of cancer. Unfortunately, renal
transplantation is an option for less than 15% of diabetics with ESRD, as
compared to 35-40% of non-diabetics, principally due to age and concomitant
vascular disease. Despite recent advances, diabetic nephropathy remains a
potentially catastrophic illness for which partial but insufficient treatment
is
currently available.
Scientific
Background
Both
Type
I and Type II diabetes are characterized by insufficient insulin effect upon
insulin-requiring tissues. As insulin is required for normal metabolism of
glucose, fat and protein, diabetes is accompanied by abnormal blood levels
of
these substances. In the short term, hyperglycemia, or elevated blood glucose,
causes the classic symptoms of diabetes: excessive thirst, frequent urination
and weight loss. In the long term, hyperglycemia, as well as other effects
resulting from insufficient insulin effect, can progressively damage critical
anatomic structures resulting in chronic diabetic complications. We are
developing KRX-101 for the treatment of diabetic nephropathy, a long-term
complication of diabetes in which the kidneys are progressively damaged.
This
progressive damage results in diminished kidney function progressing to ESRD,
which ultimately leads to death unless treated by dialysis and/or renal
transplant.
The
kidney consists of two anatomically and functionally distinct components
placed
in serial configuration. The first component is the glomerulus, which performs
the critical filtering function of the kidney. Blood is passed through delicate
microscopic glomerular capillary loops, which, acting as sieves, allow waste
chemicals and excess water to pass through into the glomerular filtrate while
retaining desirable components, such as blood cells and albumin, within the
blood. One of the key components of the glomerular capillary filtering membrane
is highly anionic, or negatively charged, glycosaminoglycan molecules that
are
similar to the chemical components of KRX-101. The glomerular filtrate, which
is
the precursor of what will eventually be excreted as urine, flows into the
next
serial component, the tubular interstitial structure. In the tubules, further
water is extracted from the filtrate and minerals and other body chemicals
are
absorbed from or secreted into the filtrate.
In
diabetic nephropathy, it is the delicate glomerular loops that first sustain
damage as a result of the diabetic state. These harmful effects
include:
| · |
The
delicate filtering membranes of the glomerular loops thicken and
their
crucial anionic glycosaminoglycan molecules are either depleted
or altered
and lose some or all of their negative charge. As the glycosaminoglycan
negative charge provides normal filtering selectivity to the glomerular
membranes, their loss of negative charge results in the release
of
protein, usually albumin, from the blood into the filtrate and
urine. The
releases of abnormal amounts of protein or albumin into the urine
are
called proteinuria and albuminuria,
respectively.
|
| · |
In
addition, hyperglycemia induced overproduction of TGF beta, a regulatory
protein, by the kidney induces scar formation in the area surrounding
the
glomerular capillaries. Over time, the extrinsic pressure of this
scar
tissue causes collapse of individual glomeruli, loss of functionality
and
release of albumin into the filtrate and
urine.
|
In
normally functioning kidneys, interstitial structures are not exposed to
albumin. It is believed that the exposure of the interstitial structures
to
albumin ultimately leads to a potent inflammatory and scarring response
(mediated in part by TGF beta) in the tubules, as well as in the surrounding
interstitial tissues. This scarring results in progressive diminution in
kidney
function. As might be expected, increasing urinary albumin excretion closely
parallels this drop in kidney function. In ESRD, kidney function declines
to the
point where dialysis or transplantation becomes necessary to sustain
life.
KRX-101
belongs to a proposed new class of nephroprotective, or kidney protecting,
drugs, known as the glycosaminoglycans. A variety of members of this chemical
family have been shown to decrease pathological albumin excretion in diabetic
nephropathy in humans. Some of the members of this chemical family include
the
following approved drugs: standard heparin, low molecular weight heparin
and
danaparoid. However, these agents all require therapy by injection and are
all
potent anticoagulants, which are blood thinners capable of inducing bleeding.
KRX-101, on the other hand, is given orally and, in this form, has demonstrated
little, if any, anticoagulant effects to date.
Pre-Clinical
and Clinical Data
Pre-Clinical
Data
In
pre-clinical studies, glycosaminoglycan components similar or identical to
those
that make up KRX-101 have been evaluated using well accepted rodent models
of
diabetic nephropathy, in both preventive protocols where the drug was given
at a
time when diabetes was induced and prior to kidney damage, and treatment
protocols, where the drug was given after diabetic kidney damage was already
present. These glycosaminoglycans diminished the thickening of glomerular
capillary filtering membranes, replenished the crucial anionic, or albumin
repelling, charge, lowered urinary albumin leakage and decreased kidney
expression of the specific scar protein collagen IV, both in the preventive
and
the treatment protocols, returning these parameters nearly to their normal
levels. In addition, data demonstrated that KRX-101 suppresses the
hyperglycemia-induced, or high glucose-induced, overproduction of TGF beta,
one
of the most specific inducers of kidney scarring in diabetic and other kidney
diseases. Thus, glycosaminoglycans similar or identical to the components
of
KRX-101 in pre-clinical models have prevented or reversed the hallmark
“upstream” pathological abnormalities that drive the engine of progressive
kidney dysfunction. Furthermore, data was presented at the 2005 American
Society
of Nephrology’s Renal Week that demonstrated that KRX-101 inhibited heparanase,
an enzyme that is over-expressed in diabetic nephropathy patients and is
believed to be a contributing factor to the long-term damage to the kidneys
as a
result of diabetes.
European
Clinical Data
There
have been approximately 20 studies published assessing the safety and efficacy
of KRX-101 in humans. KRX-101 has been administered to more than 3,000 patients
in clinical trials conducted in Europe for the treatment of certain diabetic
and
non-diabetic conditions and, to our knowledge, has not demonstrated any
significant side effects at the doses tested for those uses.
European
researchers, with the support of a grant by Alfa Wassermann S.p.A., or Alpha
Wasserman, the licensor of KRX-101, conducted a randomized, double-blind,
placebo-controlled, Phase II study of the use of KRX-101 to treat diabetic
nephropathy in 223 patients in Europe between 1996 and 1999. In this study,
also
known as the DiNAS study, Type I and Type II diabetics with diabetic nephropathy
were treated daily for four months with 50, 100 and 200 milligram gelcaps
of
KRX-101. These patients showed substantial dose-dependent reduction in
proteinuria or pathological urinary albumin excretion rates. In this study,
the
higher the dose administered daily, the greater the demonstrated decrease
in
albumin excretion. The DiNAS study was published in the June 2002 issue of
the
Journal of the American Society of Nephrology.
U.S.-based
Clinical Data
Our
recently completed, U.S.-based Phase II multi-center clinical trial study
was
conducted by the CSG. This randomized, double-blind, placebo-controlled study
compared two doses (200mg and 400mg daily) of KRX-101 versus placebo for
the
treatment of diabetic nephropathy in 149 patients between 2003 and 2005.
We
announced the positive results of this study at the American Society of
Nephrology’s Renal Week in November 2005. Interim positive results from this
study had been previously announced at the National Kidney Foundation’s Spring
Clinical Meeting in May 2005. The results of the study are presented
below.
Design
of the Phase II Study
The
Phase
II study was designed as a pilot for the fully-powered pivotal Phase III
study,
which is currently ongoing. In this Phase II study, two doses of KRX-101
(200 mg
and 400 mg) were compared to placebo in patients with diabetic microalbuminuria
on maximal therapy with an angiotensin converting enzyme inhibitor, called
an
ACEi, or a angiotensin receptor blocker, known as an ARB. Patients were treated
with KRX-101 or placebo for six months and followed for an additional two
months
post-treatment. Patients were randomized 1:1:1, placebo, 200mg and 400mg
of
KRX-101, respectively.
In
this
Phase II study, the primary endpoint for the study was the percentage of
patients achieving “Therapeutic Success” at six months. This is also the
endpoint in the protocol for the KRX-101 Phase III clinical trial now recruiting
patients, and which was agreed to with the FDA under a SPA. A patient is
considered a “Therapeutic Success” if they achieve one of the following outcomes
following the six months in the study:
| (1) |
50%
reduction in albumin to creatinine ratio or “ACR”— ACR is a standard
measurement used to assess the level of kidney disease in these
patients.
ACR measures the level of albumin protein in urine, also referred
to as
“albuminuria,” or
|
| (2) |
Normalization
of ACR with at least a 25% reduction in ACR—in this study the normal
laboratory range for albuminuria was defined as less than 20mg
of albumin
to 1g of creatinine.
|
Phase
II Data Analysis
A
total
of 149 patients were randomized into the study. All patients evaluable for
Therapeutic Success at six months (i.e. all patients with a baseline ACR
and a
six-month ACR) were included in the Intent to Treat analysis, for a total
of 136
patients. All patients in the Intent to Treat population that at baseline
were
within the target eligibility range of microalbuminuria as defined in the
protocol (ACR 20mg/G to 200mg/G) were included in the Per Protocol analysis,
for
a total population of 117 patients.
All
of
the primary and secondary analyses shown were pre-specified. For the primary
endpoint analysis, statistical nominal p values have been provided for
informational purposes only since this Phase II study, as a pilot study,
had
less than a 20% power to show statistically significant results for these
endpoints.
The
data
is being presented in two ways. First, the 200mg arm is compared to placebo
because the 200mg is the dose in our Phase III and Phase IV protocols, as
agreed
to with the FDA under the SPA. Next, the data is presented as Active (200mg
and
400mg) vs. Placebo; this was the primary endpoint defined by the Phase II
protocol. Information on the effects of the 400mg arm alone can be found
in the
footnotes to the tables. The dose response relationship of KRX-101 previously
demonstrated up to 200mg was not observed from 200mg to 400mg in this study.
Table
1—Primary Endpoint Analysis (Therapeutic Success at six months) (200mg vs.
Placebo)
| |
Number
of Patients
(Placebo/200mg)
|
Placebo
|
200mg
|
p
value
Fisher’s
Exact Test (2-sided)
|
|
Per
Protocol
|
36/36
|
11.0%
|
33.0%
|
P=.045
|
|
Intent
to Treat
|
42/44
|
14.0%
|
32.0%
|
P=.074
|
Table
2—Primary Endpoint Analysis (Therapeutic Success at six months) (200mg and
400mg(1)
vs.
Placebo)
| |
Number
of Patients
(Placebo/Active)
|
Placebo
|
Active
(200mg
and 400mg)1
|
p
value
Fisher’s
Exact Test (2-sided)
|
|
Per
Protocol
|
36/81
|
11%
|
25%
|
P=.136
|
|
Intent
to Treat
|
42/94
|
14%
|
26%
|
P=.180
|
_____________
1
For the
400mg group alone, the Therapeutic Success was 18% on a per protocol basis
and
20% on intent to treat basis.
Table
3—Secondary Endpoint Analysis at Six months (Intent to Treat)
| |
Placebo
n=42
|
200mg
n=44
|
Active
(200mg
and 400mg1)
n=94
|
|
>50
% reduction in ACR
|
12.0%
|
27.0%
|
22.0%
|
|
Normalization
of ACR
|
9.0%
|
23.0%
|
17.0%
|
_____________
1
For the
400mg group alone, the 50% reduction and normalization were 18% and 10%,
respectively.
Table
4—Average Changes of ACR Over Time (Intent to Treat)1
| |
200mg
vs. Placebo
|
Placebo
vs. Baseline
|
200mg
vs. Baseline
|
|
Two
months
|
-17.00%
|
-4.0%
|
-21.00%
|
|
Four
months
|
-25.78%
|
7.5%
|
-18.28%
|
|
Six
months
|
-28.03%
|
12.57%
|
-15.46%
|
|
Eight
months
(Two
months off therapy)
|
-28.98%
|
18.5%
|
-10.48%
|
_____________
1
The
average changes from baseline over time for the 400mg dose group were 3.4%,
3.24%, 5.59% and 12.59%, respectively.
There
were no serious adverse events, or SAEs, that were deemed by the investigators
to be related, probably related or possibly related to the study drug. A
full
analysis of the safety database will be conducted in the coming
months.
Development
Status
In
June
2000, we filed an investigational new drug application, or IND, with the
FDA for
permission to conduct a clinical trial for the treatment of patients with
diabetic nephropathy. In 2001, KRX-101 was granted Fast-Track designation
for
the treatment of diabetic nephropathy, and, in 2002, we announced that the
FDA
had agreed, in principle, to permit us to avail ourselves of the accelerated
approval process under subpart H of the FDA’s regulations governing applications
for the approval to market a new drug. Generally, subpart H allows for the
use
of surrogate endpoints in Phase III trials to support the approval of an
NDA
with confirmatory studies completed post-approval, and could greatly reduce
the
development time to market.
In
the
fourth quarter of 2003, we initiated the Phase II portion of our Phase II/III
clinical program for KRX-101, and in the third quarter of 2004, we completed
the
target enrollment for the Phase II portion of the clinical program.
In
January 2005, we announced that the CSG recommended that we proceed to the
Phase
III portion of our Phase II/III clinical program of KRX-101. This recommendation
was based on the completion, by an independent Data Safety Monitoring Committee,
or DSMC, on January 4, 2005, of a safety evaluation of the first interim
analysis from the 149 patient, randomized, double-blind, placebo-controlled
Phase II clinical trial of KRX-101 discussed above, and an efficacy assessment
of the same data set conducted by the CSG.
In
March
2005, we announced that we had finalized a SPA agreement with the FDA for
the
Phase III and Phase IV clinical trials of KRX-101.
In
June
2005, we announced the initiation of our pivotal Phase III and Phase IV clinical
program for KRX-101. We are conducting both of these trials under our SPA
with
the FDA. This clinical plan consists of: a single Phase III trial in patients
with microalbuminuria based on the surrogate marker of regression of
microalbuminuria as the primary endpoint; supportive data from previously
conducted clinical studies; and substantial recruitment into our Phase IV
confirmatory study that will measure clinical outcomes in patients with overt
nephropathy, or macroalbuminuria. The Phase III portion of the program is
a
randomized, double-blind, placebo-controlled study comparing a 200 milligram
daily dose of KRX-101 versus a placebo in patients with persistent
microalbuminuria. The Phase IV portion of the program is a randomized,
double-blind, placebo-controlled study comparing a 200 milligram daily dose
of
KRX-101 versus a placebo in patients with persistent macroalbuminuria. The
CSG
is conducting the pivotal Phase III and Phase IV clinical program of KRX-101
for
the treatment of diabetic nephropathy.
In
November 2005, we announced positive final results from our Phase II study
of
KRX-101 for diabetic nephropathy at the American Society of Nephrology’s Renal
Week. As discussed in detail above, the Phase II study compared two oral
doses
of KRX-101, 200 and 400 milligrams, versus a placebo in patients with diabetic
microalbuminuria who were receiving an ACE inhibitor or ARB. In this study,
patients were treated with KRX-101 or a placebo for six months and were
monitored for an additional two months post-treatment. The primary endpoint
for
the study was “therapeutic success” of the two dose levels combined versus a
placebo at six months. Therapeutic success was a binary composite endpoint
defined as: conversion from microalbuminuria to normoalbuminuria (with at
least
a 25% reduction in microalbuminuria) as measured by the ACR; or at least
a 50%
reduction in the ACR level relative to baseline.
KRX-0401
Overview
We
are
also developing KRX-0401 (perifosine), which is a novel, first-in-class,
oral
anti-cancer agent that modulates Akt, a protein in the body associated with
tumor survival and growth, and a number of other key signal transduction
pathways, including the JNK and MAPK pathways, which are pathways associated
with programmed cell death, cell growth, cell differentiation and cell
survival. This
compound has demonstrated preliminary single agent anti-tumor activity and
is
currently in a Phase II clinical program where it is being studied both as
a
single agent and in combination with other anti-cancer treatments for multiple
forms of cancer.
KRX-0401
is the prototype of a new group of anti-cancer drugs referred to as
alkylphosphocholines that block proliferation and induce the apoptosis of
cancer
cells. This effect is relatively specific for cancer cells compared to normal
cells. The mechanism of action for these drugs is not clear. They are known
to
modulate signaling in a number of pathways known to function abnormally during
the development of cancer. One of the pathways inhibited by the
alkylphosphocholines is Akt, a pathway associated with tumor survival and
growth. Akt is considered to be one of the most important cancer targets
being
researched today.
In
September 2002, ACCESS Oncology, which we acquired in February 2004, entered
into an exclusive commercial license agreement with Zentaris AG, a wholly
owned
subsidiary of AEterna Zentaris Inc., to acquire a license to a series of
U.S.
and foreign patents and patent applications relating to the composition of
matter and use of KRX-0401 in the treatment of cancer and other conditions.
This
license agreement covers the United States, Canada and Mexico.
Pre-Clinical
and Clinical Data
In
vitro,
KRX-0401 inhibits the growth of a variety of human tumor cell lines and has
substantial activity in vivo against a number of murine tumor models and
human
xenografts. In model systems the drug appears to be synergistic with
radiotherapy and additive or synergistic with cytotoxics such as cisplatin,
adriamycin, and cyclophosphamide. In these experiments, the combination regimens
were superior to chemotherapy alone and were well tolerated.
Pre-clinical
studies presented at the American Society of Hematology Annual Meeting in
December 2005 demonstrated KRX-0401’s potential utility in the treatment of
multiple myeloma and possibly other forms of hematological tumors. These
studies
demonstrated that KRX-0401 has activity in a variety of in
vitro
and
in
vivo
multiple
myeloma models and is synergistic with a number of agents used in the treatment
of multiple myeloma including bortezomib (Velcade®) and dexamethasone.
Six
Phase
I studies of KRX-0401 have been completed, three in Europe by Zentaris and
three
in the U.S. by the National Cancer Institute, or NCI, a department of the
National Institutes of Health, or NIH, as part of a Cooperative Research
and
Development Agreement, or CRADA, and by the Company. These trials demonstrated
that KRX-0401 can be safely given to humans with an acceptable toxicity profile
and no observed myelosuppression, or bone marrow suppression. The dose limiting
toxicity in the Phase I studies was gastrointestinal: nausea, vomiting and
diarrhea. In addition, some patients experienced fatigue, especially with
prolonged administration. In these Phase I studies, there was single agent
activity as evidenced by two durable partial responses (one of which lasted
more
than six months and the other more than 18 months) out of 10 patients with
previously treated, evaluable soft tissue sarcomas, a tumor type relatively
unresponsive to chemotherapy. In addition 21 patients were considered by
the
investigators to have had disease stabilization for two or more months,
including patients with sarcomas (2), prostate cancer (3), non-small cell
lung
cancer (2), breast cancer (2), colon cancer (2), melanoma (2), renal cancer
(2),
ovarian cancer (1), salivary gland cancer (1), mesothelioma (2) and hepatoma
(2). The meaning of disease stabilization in an individual patient in a Phase
I
study is difficult to assess because the time to progression is variable
and may
give a false impression of stabilization in individual patients.
The
NCI
has completed a number Phase II clinical trials studying KRX-0401 as a single
agent, including studies in prostate, breast, head and neck and pancreatic
cancers, as well as melanoma and sarcomas. In total, nine NCI clinical trials
have been conducted across the six tumor types mentioned. The NCI and its
collaborators have presented and/or published data from seven of their Phase
II
studies, including from Phase II studies involving prostate (2), sarcoma,
head
and neck, melanoma, pancreas and breast cancers. Findings from these studies
led
the investigators to conclude that the drug was safe and well-tolerated at
the
Phase II dose utilized. The studies used dosing schedules in which a large
“bolus” dose was given on day one or once every 28 days followed by daily doses
either continuously or on days two to 21 of a four-week cycle. Bolus doses
ranged from 300 mg to 900 mg followed by daily doses of 100 - 150 mg. These
studies confirm the safety profile of the bolus plus daily regimens, which
had
limited grade 3 and no grade 4 gastrointestinal toxicity, the dose limiting
toxicity in most of the Phase I trials. However, studies using a single bolus
dose of 600 mg to 900 mg on day one and continuous daily KRX-0401 at a dose
of
100 mg per day appeared to be better tolerated than studies that used 150
mg per
day on days two to 21 in each four-week cycle. In the one published Phase
II
sarcoma study, the investigators reported a partial response (greater than
50%
decrease in tumor mass) as well as several disease stabilizations. With the
responses seen in the Phase I trials, there are now three sarcoma patients
with
durable partial responses. This has led us to consider exploring additional
studies in sarcoma. On the Phase II breast cancer study, the investigators
scored three of 15 evaluable patients as having stable disease. One of these
patients had measurable tumor regression which failed to reach the level
of a
partial response by the time the patient elected to withdraw from the study
because of gastrointestinal toxicity. The breast cancer trial utilized the
more
toxic of the regimens employed in these NCI Phase II studies. In the melanoma
trial published by the National Cancer Institute of Canada, one patient with
a
primary mucosal melanoma of the vagina and inguinal adenopathy had a 50%
reduction in the size of the palpable nodes after 4 cycles but developed
new
disease after cycle 5.
In
May
2005, we announced that Phase II data presented at the annual meeting of
the
American Society of Clinical Oncology in Orlando, Florida demonstrated the
tolerability and potential efficacy of KRX-0401 in the treatment of patients
with biochemically recurrent hormone-sensitive prostate cancer, or HSPC.
The
investigators concluded that KRX-0401 in the treatment of HSPC patients is
feasible, well-tolerated and has been shown to reduce prostate-specific antigen,
or PSA, levels in some patients. Because of its inhibitory effects on the
Akt
and related pathways, we believe that further studies of KRX-0401 in combination
with androgen ablation and chemotherapy are warranted. In a second study
published by investigators at the NCI, there were no radiographic responses
or PSA declines of 50% or greater related to KRX-0401, but four patients
had stable PSA values for 12 weeks or longer. Eleven of 14 patients, or 78%,
in
whom circulating tumor cells were measured pre- and post-treatment, showed
a
decreased number of circulating tumor cells after treatment.
Development
Status
During
the second quarter of 2004, we announced the initiation of a Phase II program
utilizing KRX-0401 as a single agent and in combination with a number of
standard anti-cancer therapies in multiple tumor types. To date, we have
initiated a number of trials under this program, including single agent studies
in lung cancer and sarcoma, and combination studies with a number of standard
anti-cancer treatments, such as gemcitabine, paclitaxel, docetaxel, Herceptin®
and endocrine therapy. We have also initiated an “all-comers” Phase II clinical
trial evaluating KRX-0401 as a single-agent, administered either weekly or
daily
in a variety of tumor types. We plan to commence additional Phase II trials
in
2006.
The
ultimate clinical timeline, and consequent cost, for further development
of
KRX-0401 will depend, in part, on the successful completion of our Phase
II
trials, and ultimate approval by the FDA.
ADDITIONAL
PRODUCT CANDIDATES
KRX-0402
KRX-0402
(O6-benzyl guanine or O6-BG) is a small molecule that was specifically designed
to block the repair protein, AGT. AGT confers resistance to 06-alkylating
agents, such as temozolomide and BCNU, that are commonly used to treat brain
cancer, melanoma and non-Hodgkin’s lymphoma. Recent research has shown that
KRX-0402 can also potentiate the activity of other alkylating agents, such
as
cisplatinum and carboplatinum, through an as of yet unconfirmed mechanism.
These
drugs are some of the most widely used chemotherapy drugs and are commonly
used
to treat breast cancer, non-small cell lung cancer and ovarian cancer.
Accordingly, we believe that KRX-0402 may have an important role in making
cells
more susceptible to the damaging effects of alkylating agents, and that KRX-0402
may have utility in the treatment of multiple forms of cancer. KRX-0402 is
usually administered intravenously. To date, approximately 400 patients have
received KRX-0402 in multiple clinical studies. Dose limiting toxicity for
KRX-0402 in combination with chemotherapy was bone marrow suppression. KRX-0402
alone has no identified dose limiting toxicity. Currently, we have plans
to
conduct additional company-sponsored clinical trials for KRX-0402.
KRX-0403
During
2005, we terminated development of KRX-0403.
KRX-0404
KRX-0404,
currently in pre-clinical development, is an alkylphosphocholine, but, in
contrast to KRX-0401, it is suitable for intravenous
administration.
KRX-0501
KRX-0501,
currently in pre-clinical development, is an orally available small molecule
in
pre-clinical development with the potential to treat neurological disorders
via
its unique ability to enhance nerve growth factor, a naturally occurring
protein
which is essential in the development and survival of certain sympathetic
and
sensory neurons in both the central and peripheral nervous systems.
COSTS
AND TIME TO COMPLETE PRODUCT DEVELOPMENT
The
information below provides estimates regarding the costs associated with
the
completion of the current development phase and our current estimated range
of
the time that will be necessary to complete that development phase for KRX-101.
We also have provided information with respect to our other drug candidates.
We
also direct your attention to the risk factors which could significantly
affect
our ability to meet these cost and time estimates found in this report in
Item
1A under the heading “Risk Factors Associated with Our Product Development
Efforts.”
KRX-101
is currently in Phase III and Phase IV clinical trials. We estimate that
the
cost to complete the Phase III will be approximately $20 million to $30 million
and we believe that the Phase III will be completed in 2007.
With
respect to KRX-0401 and KRX-0402, we are unable to estimate the cost to complete
the current phase of each drug and also unable to project a time for the
completion of the current phase. Each of KRX-0401 and KRX-0402 are in Phase
II
studies. Phase II clinical trials are highly unpredictable and their length
and
results will vary based on patient enrollment, response rates in the trials,
and
the potential need for additional trials or increases in patients included,
among other factors. Due to the nature of a Phase II and our inability to
predict the results of such studies, we cannot estimate when such a program
will
end, and it is equally difficult to project the cost to complete such
phase.
KRX-0404
and KRX-0501 are currently pre-clinical drug candidates. The timing and results
of pre-clinical studies are highly unpredictable. Due to the nature of
pre-clinical studies and our inability to predict the results of such studies,
we cannot estimate when such pre-clinical development will end, and it is
equally difficult to project the cost to complete such development.
Revised
Disclosure for the “Risk Factors” portion of the Business section of the
Company’s annual report on Form 10-K (Item 1A):
Risk
Factors Associated with Our Product Development
Efforts.
If
we
are unable to successfully complete our clinical trial programs, or if such
clinical trials take longer to complete than we project, our ability to execute
our current business strategy will be adversely affected.
Whether
or not and how quickly we complete clinical trials is dependent in part upon
the
rate at which we are able to engage clinical trial sites and, thereafter,
the
rate of enrollment of patients. Patient enrollment is a function of many
factors, including the size of the patient population, the proximity of patients
to clinical sites, the eligibility criteria for the study, the existence
of
competitive clinical trials, and whether existing or new drugs are approved
for
the indication we are studying. We are aware that other companies are planning
clinical trials that will seek to enroll patients with the same diseases
as we
are studying. In addition, one of our current trials for KRX-101 is designed
to
continue until a pre-specified number of events have occurred to the patients
enrolled. Trials such as this are subject to delays stemming from patient
withdrawal and from lower than expected event rates and may also incur increased
costs if enrollment is increased in order to achieve the desired number of
events. If we experience delays in identifying and contracting with sites
and/or
in patient enrollment in our clinical trial programs, we may incur additional
costs and delays in our development programs, and may not be able to complete
our clinical trials on a cost-effective basis.
Additionally,
we have finalized with the FDA our SPA regarding a subpart H clinical
development plan for the clinical development of KRX-101 for diabetic
nephropathy. This clinical plan consists of: a single Phase III trial in
patients with microalbuminuria based on the surrogate marker of regression
of
microalbuminuria as the primary endpoint; supportive data from previously
conducted clinical studies; and substantial recruitment into our Phase IV
confirmatory study that will measure clinical outcomes in patients with overt
nephropathy, or macroalbuminuria, before filing a NDA with the FDA. The subpart
H process is complex and requires careful execution and no assurance can
be
given that we will be able to meet the requirements set forth in the SPA.
Even
if we meet those requirements, the FDA is not obligated to grant approval
of our
NDA for KRX-101. If the FDA approves KRX-101 for marketing on the basis of
our
SPA, our Phase IV clinical trial may yield insufficient efficacy data or
give
rise to safety concerns, which could result in withdrawal of such approval
or
could cause us to withdraw the product from the market. Many companies who
have
been granted the right to utilize an accelerated approval approach have failed
to obtain approval. Moreover, negative or inconclusive results from the clinical
trials we hope to conduct or adverse medical events could cause us to have
to
repeat or terminate the clinical trials. Accordingly, we may not be able
to
complete the clinical trials within an acceptable time frame, if at
all.
If
Our Drug Candidates Do Not Receive The Necessary Regulatory Approvals, We
Will
Be Unable To Commercialize Our Drug Candidates.
We
have
not received, and may never receive, regulatory approval for the commercial
sale
of any of our drug candidates. We will need to conduct significant additional
research and human testing before we can apply for product approval with
the FDA
or with regulatory authorities of other countries. Pre-clinical testing and
clinical development are long, expensive and uncertain processes. Satisfaction
of regulatory requirements typically depends on the nature, complexity and
novelty of the product and requires the expenditure of substantial resources.
Data obtained from pre-clinical and clinical tests can be interpreted in
different ways, which could delay, limit or prevent regulatory approval.
It may
take us many years to complete the testing of our drug candidates and failure
can occur at any stage of this process. Negative or inconclusive results
or
medical events during a clinical trial could cause us to delay or terminate
our
development efforts.
Furthermore,
interim results of preclinical or clinical studies do not necessarily predict
their final results, and acceptable results in early studies might not be
obtained in later studies. Drug candidates in the later stages of clinical
development may fail to show the desired safety and efficacy traits despite
having progressed through initial clinical testing. There can be no assurance
that the results from the Phase III study will track the data from the Phase
II
study, or that the results from the Phase IV study will yield sufficient
efficacy data. Moreover, the recommendation to move into our pivotal program,
as
well as the announced Phase II data, may not be indicative of results from
future clinical trials and the risk remains that the pivotal program for
KRX-101
may generate efficacy data that will be insufficient for the approval of
the
drug, or may raise safety concerns that may prevent approval of the
drug.
Clinical
trials also have a high risk of failure. A number of companies in the
pharmaceutical industry, including biotechnology companies, have suffered
significant setbacks in advanced clinical trials, even after achieving promising
results in earlier trials. If we experience delays in the testing or approval
process or if we need to perform more or larger clinical trials than originally
planned, our financial results and the commercial prospects for our drug
candidates may be materially impaired. In addition, we have limited experience
in conducting and managing the clinical trials necessary to obtain regulatory
approval in the United States and abroad and, accordingly, may encounter
unforeseen problems and delays in the approval process.
Because
All Of Our Proprietary Technologies Are Licensed To Us By Third Parties,
Termination Of These License Agreements Would Prevent Us From Developing
Our
Drug Candidates.
We
do not
own any of our drug candidates. We have licensed the patent rights to these
drugs candidates from others. These license agreements require us to meet
development or financing milestones and impose development and commercialization
due diligence requirements on us. In addition, under these agreements, we
must
pay royalties on sales of products resulting from licensed technologies and
pay
the patent filing, prosecution and maintenance costs related to the licenses.
If
we do not meet our obligations in a timely manner or if we otherwise breach
the
terms of our license agreements, our licensors could terminate the agreements,
and we would lose the rights to our drug candidates.
We
Rely On Third Parties To Manufacture Our Products. If These Third Parties
Do Not
Successfully Manufacture Our Products, Our Business Will Be
Harmed.
We
have
no experience in manufacturing products for clinical or commercial purposes
and
do not have any manufacturing facilities. We intend to continue, in whole
or in
part, to use third parties to manufacture our products for use in clinical
trials and for future sales. We may not be able to enter into future third-party
contract manufacturing agreements on acceptable terms to us, if at
all.
Contract
manufacturers often encounter difficulties in scaling up production, including
problems involving production yields, quality control and assurance, shortage
of
qualified personnel, compliance with FDA and foreign regulations, production
costs and development of advanced manufacturing techniques and process controls.
Our third-party manufacturers may not perform as agreed or may not remain
in the
contract manufacturing business for the time required by us to successfully
produce and market our drug candidates. In addition, our contract manufacturers
will be subject to ongoing periodic, unannounced inspections by the FDA and
corresponding foreign governmental agencies to ensure strict compliance with,
among other things, current good manufacturing practices, in addition to
other
governmental regulations and corresponding foreign standards. We will not
have
control over, other than by contract, third-party manufacturers' compliance
with
these regulations and standards. Switching or engaging multiple manufacturers
may be difficult because the number of potential manufacturers is limited
and,
particularly in the case of KRX-101, the process by which multiple manufacturers
make the drug substance must be identical at each manufacturing facility.
It may
be difficult for us to find and engage replacement or multiple manufacturers
quickly and on terms acceptable to us, if at all. Moreover, if we need to
change
manufacturers, the FDA and corresponding foreign regulatory agencies must
approve these manufacturers in advance, which will involve testing and
additional inspections to ensure compliance with FDA and foreign regulations
and
standards.
If
third-party manufacturers fail to deliver the required quantities of our
drug
candidates on a timely basis and at commercially reasonable prices, we will
not
be able to commercialize our products as planned.
We
have
entered into a relationship with a U.S.-based contract manufacturer for KRX-101
which we believe will be adequate to satisfy our current clinical and initial
commercial supply needs; however, as we scale-up
for commercial manufacturing, we will need to ensure that the manufacturing
process matches the established process on a larger scale. As with all
heparin-like compounds, the end product is highly sensitive to the manufacturing
process utilized. Accordingly, as we scale-up, reproducibility will be required
for the successful commercialization of KRX-101. There can be no assurance
that
we will be successful in this endeavor. Additionally, as we scale-up, we
will
incur capital expenditures to enable larger scale production.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
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|
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Keryx
Biopharmaceuticals, Inc.
(Registrant)
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|
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| Date: December
30, 2005 |
By: |
/s/
Ron Bentsur |
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Ron
Bentsur |
| |
Vice
President, Finance and Investor
Relations |