Affymax's Anemia Drug Will Create Added Competition For Amgen

| About: Affymax, Inc. (AFFY)

By Michael Fitzhugh

The U.S. Food and Drug Administration has approved a new drug co-developed by Affymax (NASDAQ:AFFY) and Takeda (OTCPK:TKPHF) to treat anemia in adult dialysis patients who have chronic kidney disease.

The drug, Omontys, is the first new therapy in its class to be approved for the condition since 2001 and gives Affymax access to an estimated $3 billion U.S. market for anemia drugs used for kidney dialysis patients, $2 billion of which are dominated by Amgen's (NASDAQ:AMGN) Epogen.

Omontys, like Epogen, is a once-monthly injectable erythropoiesis-stimulating agent, or ESA. The drug aids in the formation of red blood cells, stimulating bone marrow to produce more red blood cells and reducing the need for transfusions in patients with chronic kidney disease. Chronic kidney failure, which commonly causes anemia, affects as many as 26 million Americans.

"This new drug offers patients and health care providers the convenience of receiving ESA therapy just once per month instead of more frequent injections," says Richard Pazdur, director of the Office of Hematology and Oncology Products in the FDA's Center for Drug Evaluation and Research.

Two randomized, active-controlled, open-label, multi-center clinical trials demonstrated the safety and efficacy of Omontys in patients with chronic kidney disease who were on dialysis. The most common side effects observed in 10 percent or more of dialysis patients treated with Omontys were diarrhea, vomiting, high blood pressure and joint, back, leg, or arm pain.

Despite the good news, Affymax and has a tough road ahead. In November 2011, Amgen sealed a seven-year Epogen supply agreement with DaVita, one of the nation's largest kidney dialysis services providers. In January it entered into a three-year non-exclusive agreement to supply Epogen to Fresenius Medical Care. Together, the companies account for approximately two-thirds of outpatient dialysis patients in the United States. Furthermore, a new bundled payment system instituted in January by the Centers for Medicare and Medicaid Services may depress sales for all ESAs in the United States by creating incentives for significantly lower utilization or dosing of the drugs by dialysis centers.