Keryx Biopharmaceuticals Inc. (NASDAQ: KERX) announced on Friday that it had received approval from the FDA on its most recent drug Ferric Citrate, formerly known as Zerenex. The drug is designed to treat low phosphorus levels in patients who are on dialysis and it will enter the U.S. market in 12 weeks. But the question is, even with successful clinical trials and FDA approval, why did the Keryx stock price fall so much after the approval?

While treating low phosphorus levels in patients, Ferric Citrate also boosts iron levels which is beneficial to patients because often they are supplementing their dialysis with anemia drugs. However, this drug can also cause an overdose of iron so it must be closely monitored by doctors.

Other reports suggest that competition could play a role in how Keryx has behaved. The French drugmaker Sanofi SA developed Renvela, which also treats Chronic Kidney Disease and currently holds a market share of roughly 50%. However, the Renvela patents are expected to expire in September, potentially leading to a generic version of the drug which could compete against Ferric Citrate. Another point of contention may be an issue with the safety warning on the drug’s labeling.

Ferric Citrate does apparently have an advantage over other drugs in its field; it is said to be the only drug that increases iron stores while helping to mitigate the phosphorus. This allows for a lower total cost of care. The Keryx company website shows that nearly 450,000 Americans live with end-stage renal failure and require dialysis.

The drug is expected to be priced in the range of $5,000 to $7,000 per year. The total market for Ferric Citrate is expected to be valued at $1.2 billion, according the Keryx CEO, Ron Benstur.

With about 1 hour until close the stock has been trading at $17.14 which is a 4.7% loss from the previous close of $17.99. The stock had been as low as $14.80 on the day but the lows on the chart indicate that the low was still above $15 in earlier trading after being re-opened from the stock halt. The big standout news, on top of the drop, was that Keryx had seen more than 12.5 million shares trade hands with more than an hour to go before the close. That puts it on track to trade more than or close to ten-times normal trading volume.

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Keryx has a consensus price target of $23.42 and it has a 52-week trading range of $8.61 to $18.48. Ferric Citrate was Keryx’s lead product candidate. Thomson Reuters expects only $16.45 million in 2014 sales, but the consensus estimate for 2015 is to have just over $100.5 million in revenue. Keryx has a market cap of just over $1.5 billion.

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