KERYX BIOPHARMACEUTICALS INC - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to _________.

Commission File Number 000-30929

___________________

KERYX BIOPHARMACEUTICALS, INC.

(Exact name of registrant as specified in its charter)

Delaware (State or other jurisdiction of incorporation or organization)	13-4087132 (I.R.S. Employer Identification No.)

750 Lexington Avenue

New York, New York 10022

(Address including zip code of principal executive offices)

(212) 531-5965

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes x No o

There were 31,504,180 shares of the registrant’s common stock, $0.001 par value, outstanding as of April 29, 2005.

KERYX BIOPHARMACEUTICALS, INC.

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2005

TABLE OF CONTENTS

		Page

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS		1

PART I	FINANCIAL INFORMATION

Item 1	Financial Statements	2

	Consolidated Balance Sheets as of March 31, 2005 (unaudited) and December 31, 2004 (audited)	2

	Interim Consolidated Statements of Operations for the three months ended March 31, 2005 and 2004 (unaudited)	3

	Interim Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004 (unaudited)	4

	Notes to Interim Consolidated Financial Statements as of March 31, 2005 (unaudited)	6

Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	9

Item 3	Quantitative and Qualitative Disclosures About Market Risk	26

Item 4	Controls and Procedures	26

PART II	OTHER INFORMATION

Item 5	Other Information	27

Item 6	Exhibits	27

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS

Certain matters discussed in this report, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate,” and similar expressions are intended to identify such forward-looking statements. Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, those discussed under the captions “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report, as well as factors which may be identified from time to time in our other filings with the Securities and Exchange Commission, or the SEC, or in the documents where such forward-looking statements appear. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements. Such forward-looking statements include, but are not limited to, those relating to:

·	our expectations for increases or decreases in expenses;

·	our expectations for the development, manufacturing, and approval of KRX-101, KRX-0401, and our additional product candidates or any other products we may acquire or in-license;

·	our expectations for incurring additional capital expenditures to expand our research and development capabilities;

·	our expectations for generating revenue or becoming profitable on a sustained basis;

·	our expectations or ability to enter into marketing and other partnership agreements;

·	our expectations or ability to enter into product acquisition and in-licensing transactions;

·	our estimates of the sufficiency of our existing cash and cash equivalents and investments to finance our operating and capital requirements;

·	our expected losses; and

·	our expectations for future capital requirements.

The forward-looking statements contained in this report reflect our views and assumptions only as of the date this report is signed. Except as required by law, we assume no responsibility for updating any forward-looking statements.

We qualify all of our forward-looking statements by these cautionary statements. In addition, with respect to all of our forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

ITEM 1. FINANCIAL STATEMENTS

Keryx Biopharmaceuticals, Inc. (A Development Stage Company)

Consolidated Balance Sheets as of March 31, 2005, and December 31, 2004

(in thousands, except share and per share amounts)

	March 31, 2005			December 31, 2004
	(Unaudited)			(Audited)
Assets
Current assets
Cash and cash equivalents	$	23,093		$	29,699
Short-term investment securities		15,156			20,035
Accrued interest receivable		58			144
Other receivables and prepaid expenses		1,097			622
Total current assets		39,404			50,500
Long-term investment securities		6,509			--
Property, plant and equipment, net		268			145
Other assets (primarily intangible assets), net		195			217
Total assets	$	46,376		$	50,862

Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued expenses	$	3,400		$	3,079
Accrued compensation and related liabilities		186			743
Deferred revenue		134			140
Total current liabilities		3,720			3,962
Contingent equity rights		4,004			4,004
Other liabilities		75			92
Total liabilities		7,799			8,058
Stockholders’ equity
Common stock, $0.001 par value per share (60,000,000 and 60,000,000 shares authorized, 31,560,280 and 31,373,280 shares issued, 31,504,180 and 31,317,180 shares outstanding at March 31, 2005, and December 31, 2004, respectively)		32			31
Additional paid-in capital		133,896			132,643
Treasury stock, at cost, 56,100 shares at March 31, 2005 and December 31, 2004, respectively		(89	)		(89	)
Unearned compensation		(2,877	)		(2,228	)
Deficit accumulated during the development stage		(92,385	)		(87,553	)
Total stockholders’ equity		38,577			42,804
Total liabilities and stockholders’ equity	$	46,376		$	50,862

The accompanying notes are an integral part of the consolidated financial statements.

Keryx Biopharmaceuticals, Inc. (A Development Stage Company)

Interim Unaudited Consolidated Statements of Operations for the

Three Months Ended March 31, 2005 and 2004

(in thousands, except share and per share amounts)

	Three months ended March 31,						Amounts accumulated during the development
	2005			2004			stage
Revenue:
Service revenue	$	157		$	95		$	966
Management fees from related party		--			--			300
Total revenue		157			95			1,266

Operating expenses:
Cost of services		181			80			1,016

Research and development:
Non-cash compensation		176			202			7,316
Non-cash acquired in-process research and development		--			18,800			18,800
Other research and development		4,042			1,652			43,754
Total research and development expenses		4,218			20,654			69,870

General and administrative:
Non-cash compensation		185			185			4,851
Other general and administrative		645			1,093			22,315
Total general and administrative expenses		830			1,278			27,166

Total operating expenses		5,229			22,012			98,052

Operating loss		(5,072	)		(21,917	)		(96,786	)

Interest and other income, net