Take one look at Affymax’s stock chart and you’d never guess the most important day in its history, a classic make-or-break moment, is coming up Dec. 7. It looks like nobody is giving the company a snowball’s chance in you-know-where to succeed.
The big event coming up for Palo Alto, CA-based Affymax (NASDAQ: [[ticker:AFFY]]) will be on Dec. 7 when an advisory committee to the FDA will meet. The panel will weigh the risks and benefits of Affymax’s peginesatide as a new anemia treatment for patients on kidney dialysis. If the panel likes what it sees, and the FDA ultimately clears the product for sale by its March 27 deadline, then the company could start marketing its first drug in the U.S. If that happens, Affymax will be in position to fight for a share of a $2.5 billion dollar annual market, and it will be the first direct challenger in the U.S. to a 22-year-old monopoly held by Thousand Oaks, CA-based Amgen.
Amgen is the big guy in this story, the world’s most valuable biotech company with a market valuation of about $49 billion. Affymax, with a stock price of $4.89 at yesterday’s close, is a relative pipsqueak, worth about $175 million. Given that Affymax had about $116 million in the bank at the end of September, investors are basically saying the company’s technology is only worth a piddling $60 million—hardly an expression of confidence that it’s about to wrestle away market share from Amgen. And even though Affymax’s stock is already low at below $5, an increasing number of investors are betting that Affymax will fall further, according to data on short-selling compiled by NASDAQ.
Affymax CEO John Orwin, who started at the company in January, isn’t making any predictions, but he says the efficacy of his company’s drug is “well-established” and that his team is ready to field questions about the safety of its drug candidate. “This was the largest and most comprehensive clinical trial program ever done,” in this class of anemia drugs he says.
Most investors wrote off Affymax in June 2010, when the company announced the results from a quartet of pivotal clinical trials that enrolled 2,600 patients. The studies showed that kidney patients who aren’t yet on dialysis had a increased rate of heart-related serious adverse events, such as heart attack, stroke, congestive heart failure, and death, when they got the Affymax drug instead of the usual Amgen treatment. About 21.6 percent of patients on the Affymax drug had those serious adverse events, compared with 17.4 percent on the Amgen drug. Affymax stock crashed immediately, and hasn’t recovered.
Making matters worse, regulators have been on high-alert for years about serious adverse events with anemia drugs. Amgen suffered through its worst year ever in 2007, losing $29 billion in market value, as studies showed heart risks associated with its anemia drugs when used in high doses. That damaging information emerged as Affymax was beginning its quartet of clinical trials. The new evidence about the Amgen drugs prompted the FDA to insist on a rigorous set of studies that were designed to look for heart troubles from the start—unlike other studies which discovered heart trouble through retrospective analysis, which can introduce bias into clinical results.
Given the heightened anxiety at the FDA about heart risks with anemia drugs, many investors obviously concluded that Affymax’s drug would be dead on arrival. But Affymax, and its partner Takeda Pharmaceuticals, have continued their push to bring the new drug to the market.
The reason, Orwin says, is that when you look
