Affymax, as one analyst put it last week, is “not dead yet.”
That may not sound like a ringing endorsement, but given what has happened to the Palo Alto, CA-based biotech company (NASDAQ: [[ticker:AFFY]]) this summer, it has to count as some kind of progress. Affymax spent years of concentrated effort, and hundreds of millions of dollars, on a quest to create an anemia drug for kidney patients that could compete with Amgen’s multi-billion dollar franchise treatment. On June 21, the dream appeared to fall apart.
That was when Affymax and its partner, Japan-based Takeda Pharmaceutical, released their results from four pivotal clinical trials. The studies showed that patients on the Affymax anemia drug had a higher rate of heart-related adverse events, such as congestive heart failure and unstable angina, if they had chronic kidney disease that hasn’t yet required dialysis. The stock plummeted 69 percent from $23.01 before that data release, to $7.18 after investors had a full day to chew on the results. A company pursuing a multi-billion dollar market opportunity suddenly was given a stock market value of less than $200 million.
While a lot of investors clearly decided to cut bait and move on, Affymax isn’t ready to give up, as analyst Chris Raymond wrote last week. Affymax had said all along that its drug, peginesatide (Hematide) had reached its goal of showing that it is at least equal in effectiveness to the Amgen’s epoetin alfa (Epogen), and that it didn’t see any increased heart risk in kidney patients in the final stage of disease, those who are getting dialysis treatments. Last Thursday, Affymax announced that after combing through the data with Takeda, the companies plan to discuss the results of the studies for dialysis patients with the FDA, and that it plans to submit a new drug application to the agency in the first half of 2011.
That show of confidence sent Affymax stock up 26 percent.
“People were looking for some more hand-holding,” says Affymax CEO Arlene Morris, meaning that investors needed assurance that the company still had a viable way to seek FDA approval. She added that the company’s fundamental business plan is still intact. “All the same conditions still exist for us in the market. We have a great opportunity to move forward.”
Plenty of companies have tried to challenge Amgen’s dominance in the treatment of anemia for patients undergoing kidney dialysis, and nobody has yet landed a glove on biotech’s biggest company. Amgen’s big breakthrough, which dates back to the 1980s, was to create a genetically engineered drug that could stimulate the body to make more oxygen-carrying red blood cells, and help combat the deep fatigue caused by anemia. The worldwide market for anemia drugs for kidney patients is worth about $7 billion in sales each year. That encompasses patients with early forms of kidney disease and patients who have worsened all the way to dialysis.
Affymax’s drug is designed to work to stimulate red blood cells in a different way than Amgen’s, but it is really aiming to compete from a business standpoint on convenience and price. There are currently about 400,000 patients in the U.S. on dialysis therapy, who have failing kidneys, and go in 13 times per month to facilities that perform the procedure to filter out impurities from the blood that the kidneys otherwise do. Each visit, most patients also get an injection of Amgen’s epoetin alfa. The Affymax drug is designed
