By Amrutha Penumudi

Sept 5 (Reuters) - Keryx Biopharmaceuticals Inc won the U.S. Food and Drug Administration approval for its drug to lower phosphate levels in patients with chronic kidney disease who are already on dialysis.

Chronic kidney disease (CKD) is a debilitating illness characterized by an ever-worsening loss of kidney function.

It affects more than 20 million adults in the United States, according to the U.S. Centers for Disease Control and Prevention.

Patients with CKD are at risk of eventual organ failure. Their damaged kidneys are unable to flush out waste products from the body, resulting in abnormally high levels of phosphate in the blood, a condition known as hyperphosphatemia.

The disease can also cause severe iron deficiency in the body.

Keryx's drug, ferric citrate - previously known as Zerenex - treats hyperphosphatemia by binding to any phosphate ingested with food, making it impossible for the body to absorb it. The company expects to launch the drug within the next 12 weeks.

"In terms of dollars, the total U.S. market size for phosphate binders is about $1.2 billion, which has been growing on a year-over-year basis," said Keryx CEO Ron Bentsur told Reuters.

"We believe, over the years, ferric citrate has the potential to be a dominant product in the market," Bentsur added.

The drug is currently the only one in its class to increase iron stores in the body, giving it an edge over the competition, according to analysts.

"It's also user-friendly, with a small number (2-3) of tablets required per meal," JMP Securities analyst Michael King said.

However, the drug is likely to face stiff competition from French drugmaker Sanofi SA's Renvela, which has captured about half the market for CKD, according to Maxim Group Analyst Jason Kolbert.

"The patents covering Renvela expire in September, prompting concern that a generic version with a lower price will compete against ferric citrate. However, ferric citrate reduces total patient care cost by its ability to control iron levels and increase red blood cell count," Kolbert said.

Analysts expect ferric citrate to be priced at between $5,000 and $7,500 a year, and Kolbert expects it to corner about 8 percent of the market by 2015.

Ferric citrate is also being tested in pre-dialysis patients, with late-stage tests expected in the fourth quarter.

(Reporting By Amrutha Penumudi in Bangalore; Editing by Simon Jennings)