Affymax (AFFY) earned FDA approval for OMONTYS (peginesatide) for the treatment of anemia due to chronic kidney disease on March 27, 2012 and launched April 24. OMONTYS competes directly with Amgen's (AMGN) Epogen, which has held a monopoly on the dialysis erythropoietin market. Last night we saw the first prescription data for this product; sales for the month of May were reported as $17k. Additionally, we recently surveyed nephrologists in our expert network on their usage of OMONTYS. Only 1 of 40 nephrologists reported using the product in total of 2 patients, which is compares poorly to other drug launch surveys we have done. Hence, appears OMONTYS is off to a slow start. At a stock price of $13.23, cash of $151MM, the company has an enterprise value of $326MM. We worry that they will have a difficult time penetrating this market, much in the way AMAG Pharmaceuticals (AMAG) did for Feraheme, particularly before the introduction of competitive products in the 2014-2015 timeframe, namely Roche's Micera, which is FDA approved and EPO biosimilars, currently in Phase III.
In contrast to AFFY, Pacira Pharmaceuticals (PCRX) is experiencing a strong launch for EXPAREL for post-surgical pain, which was approved in October of 2011, but launched April 9, 2013. Sales of EXPAREL for May were reported as an impressive $638k. This comes as a pleasant surprise given the slow launch of OFIRMEV from Cadence Pharmaceuticals (CADX). PCRX serves as a good comparator to AFFY, who had sales of $17k during the same month and also launched in April. At a price of $15.00, cash of $133MM, debt of $26MM, PCRX has an enterprise value of $365MM. Given the similar valuation to AFFY, we think this is a stronger story.
We have long been following the prescription data for Spectrum Pharmaceuticals' (SPPI) Fusilev. Sales were reported at a record $24.9MM in the month of May. This bodes very well for the continued growth of this product. At a price of $13.67, cash of $186MM, the company has an enterprise value of $679MM and is heavily undervalued given the short view that generic leucovorin will erase FUSILEV sales, which we think is incorrect. We predict another record quarter of sales for SPPI.
The poster child for terrible drug launches, and arguably corporate mismanagement, remains Savient Pharmaceuticals (SVNT), which appears headed towards bankruptcy given their massive debt position ($171MM of secured notes due 2019 and $122MM of unsecured notes due 2018). Sales for their gout drug, KRYSTEXXA, were reported at $1.04MM for the month of May. KRYSTEXXA was launched in February of 2011. Net sales for KRYSTEXXA were $3.1MM for 1Q12 and the company had a net loss of $34.2MM in that period. Equity holders should understand that because of the debt position, the equity stands to be worthless in the event of default. At a share price of $0.76, cash of $131MM and debt of $293MM, the company has an enterprise value of $217MM. Again, because of the debt, this equity value is at risk of going to zero.