Keryx Biopharmaceuticals (NASDAQ:KERX) announced that it is facing a challenge producing Auryxia tablets. The company specifically cited that the problem lies in the converting Auryxia active pharmaceutical ingredient (API) into finished drug product. Auryxia is a medicine that targets chronic kidney disease market.
But Keryx Biopharmaceuticals warning over production interruption of Auryxia has stirred protests against the company. An equity research firm has moved to downgrade the stock while shareholder rights attorneys at Khang & Khang LLP, a California law firm, have filed a class action lawsuit against the company.
Why class action?
In light of what Keryx just said about difficulties to convert Auryxia API into finished drug product, the law firm holds that Keryx may have misled investors through the statements it made in the past about its business, prospects and operations.
Note that the news about Auryxia production challenge triggered a selloff in the stock of Keryx that ended destroying value for many investors in the stock. As such, Khang & Khang is trying to pursue justice for the affected investors who acquired the stock of Keryx between Feb. 25 and August 1(the Class Period).
Khang & Khang is encouraging investors who purchased shares of Keryx during the Class Period to contact it. Though the firm has already made class action filing, the case has not been certified and it says that the affected investors are not represented until the case gets certification.
As shareholder rights attorneys at Khang & Khang pursue Keryx in court, the analysts at Brean Capital have decided to downgrade the stock to a HOLD from a BUY. But Brean didn’t suggest a price target for the stock of Keryx.
Main revenue product
The reason Auryxia production challenge is getting many people talking is that the drug is the main revenue product for Keryx Biopharmaceuticals. In the just reported 2Q2016, Keryx reported total revenue of $9.3 million with Auryxia contributing $8.3 million of that revenue amount.
Therefore, production challenge with Auryxia would have a huge adverse impact on the financial performance of Keryx.