What’s Next for Affymax, Inc. (AFFY)?

Affymax, Inc. (NASDAQ:AFFY) received its first Food and Drug Administration approval last spring with Omontys for anemia in dialysis patients. The drug enters a war against Amgen, Inc. (NASDAQ:AMGN)‘s Epogen, which has held a near monopoly for over 20 years.

As its lone product enters the market, what’s next for Affymax?

Let’s make a deal
Why would doctors prescribe Omontys over the better-known Epogen? Omontys’ once-monthly injection offers dosage advantage over the older drug, which has a regimen that can exceed a dozen doses per month. Epogen has also drawn safety concerns as of late. And Omontys offers a better price for treatment providers pressed by the new Medicare reimbursement rules.

Affymax, Inc. (NASDAQ:AFFY)

But victories in this market come from deals with dialysis centers. The companies have to slash prices to obtain the deals but in exchange have their drug easily distributed to the core patient group.

Fresenius Medical Care AG & Co. (NYSE:FMS) and DaVita HealthCare Partners Inc (NYSE:DVA) combined form about 60%  of the dialysis center market. Amgen has a “multi-year” deal in place with Fresenius and a seven-year deal with DaVita. Neither blocks Affymax getting its foot in those doors, but that’s less likely for the near future.

Affymax secured a short-term deal with Fresenius last year that expires in April. The company hopes to expand that contract for the longer term, but we’ll see if that happens and what percentage of customers would end up on Omontys rather than Epogen.

Amgen’s DaVita contract stipulates that the center will use Epogen for 90% of its patients. Affymax still plans to evaluate its chances. But Omontys does better with the mid-sized dialysis organizations, or MDOs. The company has deals in place with five of the six MDOs, including the newly struck agreement with DSI Renal.

The road ahead
Affymax will kick off a series of post-market studies this year with data reporting beginning in 2016. These will include a series of pediatric trials and an observational study tracking long-term efficacy and safety.

The European Medicines Agency accepted Omontys’ marketing authorization application last year, but Affymax and partner Takeda await a final decision. Takeda bears the responsibility of development abroad,  with Affymax in for half of the royalties.

On the financial front, Affymax will split U.S. profits with Takeda. Affymax will book commercialization expenses and a profit equalization payment from Takeda that come from Takeda booking the top-line sales. The third quarter report — the drug’s first full commercial quarter — showed $15 million in sales.

Foolish bottom line
Affymax’s up more than 200% in the past 12 months. That kind of growth can’t continue long-term, but there’s still potential with Omontys. Epogen falls off patent in 2013, and Roche already has a biosimilar in development. The big signs of confidence for Affymax will arrive via long-term contracts with Fresenius and/or DaVita. But those could be years down the line.

The article What’s Next for Affymax? originally appeared on Fool.com.

Fool contributor Brandy Betz has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

The Best B-Boy Movies

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!