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Key details about the Affymax IPO. Proposed ticker: (OTCPK:AFFY). All excerpts are from the full SEC filing filed July 28th:

Company Description

We are a biopharmaceutical company creating novel peptide-based drugs to improve the treatment of serious and often life-threatening conditions. Our lead product candidate, Hematide, is designed to treat anemia associated with chronic kidney disease and cancer. Anemia is a serious condition in which blood is deficient in red blood cells and hemoglobin. It is common in patients with chronic kidney disease, cancer, heart failure, inflammatory diseases and other critical illnesses as well as in the elderly. If left untreated, anemia may increase the risk of other diseases or death. A major cause of anemia is insufficient production of, or insufficient response to, erythropoietin, or EPO, a naturally occurring hormone that stimulates the production of red blood cells.

Hematide is a synthetic peptide-based erythropoiesis stimulating agent, or ESA, designed to stimulate production of red blood cells. Hematide is designed to be longer acting than currently marketed ESAs, and therefore has the potential to offer both better care for patients and reduced cost and complexity for healthcare providers. We are currently conducting Phase 2 clinical trials in patients suffering from end-stage renal disease who are on dialysis, as well as in earlier stage chronic kidney disease patients, or predialysis patients. If the results of our ongoing Phase 2 trials for Hematide continue to be positive, we would expect to commence separate pivotal Phase 3 trials in both dialysis and predialysis patients during the first half of 2007. In oncology supportive care, we have begun Phase 2 clinical trials evaluating Hematide in cancer patients who suffer from anemia as a consequence of their chemotherapy treatment. We are also building a proprietary pipeline of other novel drug candidates which are designed to offer advantages over first generation recombinant protein therapeutics currently addressing large markets.

Key Financial Data: From inception in July 2001 through March 31 2006, the company has recorded revenues of $561k. Operating expenses for the period were $135.3 million, with expenses growing from $7.6 million in Q1 05 to $10.8 million in the same period of 06.

Key Competitors

  1. Amgen (NASDAQ:AMGN) through its products EPOGEN and Aranesp
  2. Orthogen, a J&J subsidiary (NYSE:JNJ) through its PROCRIT product
  3. Roche (OTCQX:RHHBY) through its NeoRecormon product outside the US, and CERA, which is the closest competitor to AFFY, for which marketing approval has been filed in the US and Europe in April.

Notable Issues To Watch For

Collaboration with Takeda:

In February 2006, we entered into a collaboration to develop and commercialize Hematide in Japan with Takeda Pharmaceutical Company Limited, or Takeda, the largest pharmaceutical company in Japan. Pursuant to this agreement, Takeda paid us approximately $27 million, consisting of $17 million in upfront licensing fees and approximately $10 million for the purchase of our Series E preferred stock. In addition, we are eligible to receive clinical and regulatory milestone payments up to an aggregate of $75 million upon Takeda's successful achievement of clinical development and regulatory milestones in Japan. Assuming Hematide is approved and launched in Japan, we will receive a royalty from Takeda on Hematide sales in Japan. We do not expect to recognize revenue relating to this collaboration agreement until 2007.

In June 2006, we extended our collaboration with Takeda to develop and commercialize Hematide worldwide. Under our collaboration, the companies will co-develop and co-commercialize Hematide in the U.S. Takeda received an exclusive license to develop and commercialize Hematide outside of the U.S. Beginning January 1, 2007, Takeda will bear the first $50 million of third-party expenses related to clinical development in pursuit of U.S. regulatory approval of Hematide. Thereafter, Takeda will bear 70% of the third-party U.S. clinical development expenses, while we will assume 30% of these expenses. Under the June 2006 agreement, Takeda paid us an upfront license fee of $105 million, and we are eligible to receive from Takeda up to an aggregate of $280 million upon the successful achievement of clinical development and regulatory milestones. Further, we may receive from Takeda up to an aggregate of $150 million upon the achievement of certain worldwide annual net sales milestones. We and Takeda will share equally in the net profits and losses of Hematide in the United States. Takeda will pay us a variable royalty based on the annual net sales of Hematide outside the United States. We are currently analyzing the appropriate revenue recognition for this licensing transaction.

J&J Intellectual Property Dispute:

We have initiated binding arbitration and related litigation with certain subsidiaries of Johnson & Johnson, or J&J, over ownership of intellectual property related to erythropoietin receptor, or EPO-R, agonists (compounds capable of binding to and activating the EPO-R). This intellectual property is the subject of a number of U.S. and international patents and patent applications assigned to Affymax and J&J, including a U.S. patent currently assigned to J&J, several U.S. patents currently assigned to us and a European patent application currently assigned to J&J... We believe that we are the sole owner or co-owner of the intellectual property in dispute, including a European patent application currently naming J&J as sole owner that may issue in the near future and relates to specified ESA peptide compounds. J&J, on the other hand, alleges that they are the sole owner or co-owner of the intellectual property in dispute, including several U.S. patents on which we are currently named as sole owner that relate to specified peptide compounds.

Underwriters: Morgan Stanley, Cowen & Co., Thomas Weisel, RBC Capital Partners

Offering Details AFFY is looking to raise up to $115 million in its IPO.

Source: Pharma IPO: Affymax Files S-1