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Executives

Sylvia Wheeler - Vice President of Corporate Communications

John A. Orwin - Chief Executive Officer and Director

Jeffrey H. Knapp - Chief Commercial Officer

Herbert C. Cross - Chief Financial Officer

Anne-Marie Duliege - Chief Medical Officer

Analysts

M. Ian Somaiya - Piper Jaffray Companies, Research Division

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

Ed Arce - McNicoll, Lewis & Vlak LLC, Research Division

Affymax (OTCPK:AFFY) Q3 2012 Earnings Call November 8, 2012 4:30 PM ET

Operator

Good day, everyone, and welcome to Affymax's Conference Call. This call is being recorded. At this time, I would now like to turn the call over to Sylvia Wheeler, Vice President of Corporate Communications for Affymax. Ms. Wheeler, please go ahead.

Sylvia Wheeler

Thank you. And good afternoon. Welcome to our Third Quarter 2012 Financial Results Call. Leading today's call is John Orwin, Chief Executive Officer of Affymax. And joining us on the call today are Jeff Knapp, our Chief Commercial Officer; and Herb Cross, our Chief Financial Officer.

Before turning the call over to John, I remind you that we will be making forward-looking statements. Our actual results may differ materially from the results described, in particular, with respect to our financial forecast, our time lines, our commercial expectations and collaboration with Takeda. We also include non-GAAP financial measures in our call and encourage you to review our press release and the risk factors in our most recent quarterly report on Form 10-Q.

I will now turn the call over to John.

John A. Orwin

Thank you, Sylvia. Good afternoon, everyone, and thank you for joining us today as we share our continued excitement and progress in this first full quarter from actualizing [ph] OMONTYS. As we anticipated, we believe once-monthly OMONTYS is being received as an attractive ESA alternative in the dialysis market, and we're excited to provide access to this new treatment option to dialysis providers and, importantly, their patients. We are very pleased with our progress thus far, and we believe we have the right teams and infrastructure in place supporting the product through our marketing and sales organizations, in addition to those on the medical affairs side who are helping centers with conversion.

I'd like to take a few moments to highlight our significant commercial accomplishments since launch. At the beginning of July, approximately 3 months following approval, we secured a product-specific Q-code to facilitate timely reimbursement. Around the same time, we successfully deployed a well-trained and experienced field-based team of approximately 80 sales professionals. Shortly thereafter, we secured a supply agreement with Fresenius Medical Care North America, the largest dialysis provider in the United States which represents approximately 35% of the $2 billion net ESA market in the U.S. Fresenius is well underway in gaining clinical and operational experience with converting centers to OMONTYS, and we believe that they are pleased with their overall experience so far. We look forward to potentially expanding our relationship with Fresenius for the longer-term broader contract in the future.

Importantly, we are excited to report that we now have supply agreements with 4 of the 6 medium dialysis providers, 2 new agreements since our last call. In the remaining market segment, we have seen good progress with early penetration within small chains and independent dialysis providers. Approximately 4 months into active promotion, we are very pleased with the number of contracts we signed and the number of customers that are in the process of evaluating the conversion of their patients to OMONTYS. Based on initial customer feedback, we are optimistic that we will see significant continued market penetration in 2013.

I will now ask Jeff to review additional details on our commercial progress. Jeff?

Jeffrey H. Knapp

Thank you, John. And good afternoon, everyone.

We continue to be very pleased with the progress we're making on the commercial front, with established relationships across all segments of the dialysis market.

In the third quarter, OMONTYS generated approximately $15 million in net sales, which are gross sales less discounts and rebates. With a sales organization now fully deployed into the field at the end of June and a Q-code in effect on July 1, we saw a significant increase in utilization in the third quarter. The skill and experience of our field sales force was quickly evident and their outreach has generated significant interest in trial and conversion to OMONTYS.

Additionally, as John will detail later on in the call, I would like to recognize our field-based medical affairs organization for their outstanding work helping dialysis centers with the conversion process. We now have customers who are reordering and in their second, third and even fourth month of treating patients with OMONTYS.

Before going into greater detail on our customer progress, I am pleased to report that CMS has issued a permanent J-code for OMONTYS effective January 1, 2013. While the Q-code supported the efficient reimbursement of OMONTYS shortly after launch, the permanent J-code should help close any remaining gaps with payers who have remained with the miscellaneous code.

Now let me spend a few moments discussing details by customer segment. In the large dialysis organization segment, we entered into a supply agreement with Fresenius North America for our corporate initiatives that runs through April of 2013. Fresenius today is treating approximately 10,000 patients in this program. It is our expectation that they will proceed to treat these patients under our existing supply agreement until this agreement ends or we execute a new agreement.

With thousands of patients having now received OMONTYS, Fresenius and Affymax-Takeda have been gathering data and are beginning our collective evaluation. In addition to being focused on the essentials like efficacy and safety, we believe other areas of interest will include understanding dosing, potential reductions in administrative burden on staff and costs. Throughout this process, we and Takeda will continue our discussions with Fresenius and will explore possible ways to expand the relationship, including both broader utilization and a longer-term agreement.

In the MDO segment of the marketplace, we now have supply agreements with 4 of the 6 MDOs which we define as those organizations treating over 4,000 patients a year. We believe executing an agreement with these additional MDOs highlights the continued interest by this segment. Each of these 4 customers is looking to gain operational experience through pilot programs with the drug before making a final determination to expand usage. While we did not disclose the details of the MDO contract terms, the contracts are for longer periods than our existing Fresenius contract and do not limit the number of patients that can be treated with OMONTYS.

We are particularly pleased with our progress in the small and independent segment of the market since our last conference call. To date, in this segment, over 90 different dialysis organizations have purchased OMONTYS and are either implementing pilots or have chosen to make complete conversions.

The amount of time required to make the decision to fully convert will vary by customer and will, in many cases, require assessment of their experience, including clinical, operational and financial. We will be working closely with these organizations to help them fully evaluate their experience.

Sales in the quarter, as you might imagine, are dominated by orders from Fresenius, followed by sales from independents, SDOs and, finally, the pilot work being done by the MDOs. Altogether, there over 300 different dialysis centers across more than 35 states, as well as in Puerto Rico, that have begun to treat patients with OMONTYS in their clinics.

It's worth a reminder that the dialysis market is made up of a heavily concentrated customer base, especially at the LDO level, which can result in lumpiness or choppiness of sales depending on the timing of the specific large orders or the timing and speed at which a whole chain may decide to convert.

In summary, at this early stage of our launch, we have supply arrangements with the largest dialysis customer in the U.S., Fresenius, 2/3 of the MDOs and a meaningful portion of the SDOs and independent organizations. While there's no guarantee of expanded business, we continue to be very encouraged by the ongoing high level of interest and the overall rate of adoption. Over the coming months, we expect to see many of the organizations that decided to pilot OMONTYS begin making a decision to move forward with full or close to full-scale conversions.

I'll now turn the call over to Herb for a review of our financials.

Herbert C. Cross

Thanks, Jeff.

Collaboration revenue for the third quarter was $13.6 million and was primarily comprised of the $10.4 million profit equalization payment earned as well as a $2.25 million commercial milestone earned as a result of progress on the OMONTYS launch. The increase in collaboration revenue for the period was primarily due to growth in the profit equalization payment driven by OMONTYS net sales. We have included a new table in our earnings release this quarter, which should provide additional clarity into how OMONTYS net sales and the other components of the profit equalization payment will impact our collaboration revenue each period. As you can see from the table, the profit equalization payment due to Affymax from Takeda each period is not only impacted by the net sales of OMONTYS but also incorporates the net reimbursement due to Affymax for collaboration costs and expenses.

For the third quarter, the $10.4 million profit equalization payment was comprised of $14.6 million in net reimbursement of costs and expenses, reduced by our $4.2 million share of the collaboration loss for the period. We expect to continue these disclosures in future periods in order to provide clarity into the drivers of our collaboration revenue.

Total operating expenses for the third quarter, excluding $2.8 million of stock-based compensation, was $34.8 million. Research and development expenses, excluding stock-based compensation, were $10.3 million for the quarter as we continue to support regulatory and API manufacturing activities, as well as our ongoing Phase IIIb trial. Selling, general and administrative expenses in the third quarter, excluding stock-based compensation, increased to $24.5 million as this was the first full quarter with the entire commercial infrastructure in place to support OMONTYS.

In the aggregate, we reported a net loss of $24.6 million for the third quarter of this year compared to a net loss of $9.8 million for the same period in 2011.

Moving to the balance sheet. Cash and investments totaled $100 million as of September 30, 2012. With respect to guidance, Affymax now expects to incur $130 million to $135 million in total 2012 operating expenses, excluding stock-based compensation. This reduction from the previously issued 2012 operating expense guidance of $135 million to $145 million is primarily driven by cost savings in our selling, general and administrative expenses which reduced the expected increases in those areas.

As a reminder, these operating expense numbers are gross and do not include reimbursement by Takeda, which is reflected in the collaboration revenue line item on our income statement. Expense guidance for 2013 will be provided on our next call when we report year-end 2012 financial results.

I will now turn the call back over to John.

John A. Orwin

Thank you, Herb. In summary, we are happy with the progress we have demonstrated but even more excited about the potential that remains for OMONTYS. Fresenius is solidly in the midst of gaining operational experience in over 100 of their centers across the U.S. and Puerto Rico. In addition, we now have supply agreements with 4 of the 6 MDOs, all of which are precursors to potential expansion in usage assuming all goes well. And we are particularly pleased with the number of pilots and/or full conversions in the small and independent provider segment.

Since launch, thousands of patients have received OMONTYS in a post-marketing setting. As anticipated, this broad experience has been helpful in further informing real-world use of the compound, but infrequent but sometimes serious allergic reactions have been reported. To that end, we have proposed to the FDA and have now updated our label to include additional language regarding allergic reactions similar to that which is found in the existing labels for other ESAs. Under the leadership of our Medical Affairs group, we have been working very closely with medical directors and anemia nurses to address questions they might have to support their utilization and integration of OMONTYS. Our conversion specialist nurses, who have previous in-center dialysis experience, have been a key resource in ensuring an operationally smooth experience with OMONTYS. Anecdotal feedback from some medical directors has been that the operational challenges of converting from EPO to OMONTYS have been minimal and, in many cases, easier than expected.

Just last week, during the American Society of Nephrology Kidney Week meeting in San Diego, 8 OMONTYS data sets were highlighted, including an oral presentation. In the oral presentation, Dr. Provenzano reviewed post-hoc data from the EMERALD Phase III studies on intravenous iron utilization for U.S. patients on OMONTYS versus EPOGEN. We were pleased with our strong leading presence, including the significant interest in OMONTYS and the high traffic of medical professionals at our booth.

In conclusion, this is truly an exciting time in the company's evolution. Early feedback from our customers, including providers, nephrologists, nurses and anemia managers, is that their overall clinical and operational experience has been very good.

I will now open the call to questions and would like to welcome Dr. Anne-Marie Duliege, our Chief Medical Officer, who will also be available for questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from Ian Somaiya from Piper Jaffray.

M. Ian Somaiya - Piper Jaffray Companies, Research Division

On the Fresenius pilot program, I think you mentioned, John, that Fresenius is very pleased with their overall experience. Can you just -- given your close relationship with Fresenius in helping them kick off this pilot program, can you just share with us what exactly is Fresenius monitoring as they've initiated this pilot program, what aspects of the switch and what exactly they're pleased by?

John A. Orwin

Sure. Well, there's a lot of information that's collected in the course of treating dialysis patients, as you know, and they're collecting a lot of information, including utilization, dose efficiency but also safety and efficacy endpoints as well. I will let Anne-Marie speak to any specifics that we may know of beyond that, but there's a lot of information being collected. And fortunately, we're sharing that information and working together in the analysis of it.

Anne-Marie Duliege

So indeed, John, you've mentioned both utilization of OMONTYS, hemoglobin stability, overall safety profile, dosing.

John A. Orwin

And I think we'll also be also looking, Ian, at -- given the dose efficiency and the nonlinear dose conversion between EPOGEN and OMONTYS to be sure that the level of savings that we were shooting for in this program are actually achieved when the product is in use in their patients.

M. Ian Somaiya - Piper Jaffray Companies, Research Division

Okay. And as we think about, I guess, the 4 deals that you have signed to date, the 4 medium dialysis providers and potential for Fresenius, can you -- is there a way to prioritize -- or help us prioritize what exactly they're looking for in a product before switching?

Jeffrey H. Knapp

Ian, this is Jeff. I'm happy to take that. I think many of the things that Anne-Marie and John just described are not all that dissimilar from what the -- in this case, the medium dialysis organizations that we referred to are also looking for. I do think there's always this wanting to make sure they get some experience in their hands with it, which includes, again as we've described before, confidence around the fact that the drug works as a once-a-month drug, can maintain hemoglobin, is titratable, all those sorts of things. I think, from a commercial perspective, they also want to see if in fact the amount of drug that they expected to use is in fact the amount of drug they needed to use to maintain that hemoglobin. And that really speaks to the conversion table in RPI, and insofar that those are accurate in a larger population, then they'll end up getting what I think -- getting at least economically what they anticipate. And I think that's an important piece of it. The needs vary across each one of the MDOs. Some put a little bit more weight on some factors than others, but they're all built in there. And I feel very confident with what we've seen today that there won't be surprises at the end of this.

John A. Orwin

Yes. And as to what they're particularly pleased about, I would say that they've remarked that they're pleased with the overall level of experience, so I think it would include all of those things. But again, we're early in the collection and analysis of the data.

M. Ian Somaiya - Piper Jaffray Companies, Research Division

Okay. And if I could just ask one last question and then I'll get back in queue. The 2 additional dialysis providers that you've signed a deal with now, I know you haven't mentioned them by name in the press release, but can you give us a sense of their patient numbers? Is it more than 10,000 patients that are under their care, or fewer than 10,000 patients?

John A. Orwin

Unfortunately, I believe there's only one MDO that would meet the criteria, or maybe 2, so that makes this difficult for us, Ian. As you know, some of the MDOs were fine with us issuing a press release and citing them by name, others were -- prefer that we did not, and so I want to continue to respect that. But I will say that I'm very pleased with the customers that we've signed so far and with the potential that exists with them for significant uptake for OMONTYS.

Operator

Our next question comes from Chris Raymond from Robert W. Baird.

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Dialysis organizations that have between 5,000 and 6,000 patients? I'm just kidding. No, so actually, just on a -- actually, more immediate note, you -- so I think, at the end of your commentary, John, you mentioned an update to the label. Just looking at the OMONTYS label, as it is right now, in your website, the March edition which is on the website, does call out allergic reactions. Can you maybe just give us a flavor for how that language is going to change? What, is it more descriptive? Is there a table, for example, with incidents?

John A. Orwin

No table, but I will have Anne-Marie comment on the specific language. And you're right, allergic reactions are mentioned but they're not described in the same sort of fulsome way that they are in other ESAs, which is what led us, based on the experience in reported events, however infrequent, to look at that against what was in the label and decide that it made sense for us to bring the language in our label in line with what exists for the other ESAs. But I'll let Anne-Marie speak specifically to the language.

Anne-Marie Duliege

Sure, John. I would be glad to add to this and reinforce what you just mentioned, which is, our label at launch, the one that you mentioned, March label, reflected the clinical trial experience with approximately 1,500 dialysis patients. Now that we have thousands of patients, literally more than 10,000 patients, we felt it was prudent to update our label with the new information that we have accumulated as part of our pharmacovigilance to various programs. Specifically, the reported allergic reactions that you mentioned in the label continues to be infrequent and a result of treatment. However, some of these reactions have been more serious. Some of the most recent reactions we have observed have been more serious, and this is what we have included as an informational label to bring, as you said, John, our label in line with the existing label of other ESAs. So there is now a new, a contraindication in our label which has been added, and its -- OMONTYS is contraindicated in patients with serious allergic reactions to OMONTYS. And that's also reflected in the warning and precaution section of our label.

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Just like the EPOGEN label?

Anne-Marie Duliege

That's right, so the serious allergic reactions.

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

And then maybe shifting gears. I know everyone wants to sort of understand, look around the next corner here with Fresenius, but we were kind of struck at ASN by some of the comments from Fresenius that -- sort of long term that they have in mind a system where they would have 2 ESAs systemwide, really over the long term. From your experience now with the 4 MDOs and the many smaller organizations, can you sort of talk about how this kind of arrangement could project over a system that perhaps isn't quite as big as Fresenius is? Meaning, do you think it's optimal for people to have 2 regardless if they're a medium dialysis organization or a large?

John A. Orwin

Yes. I'm not sure it will be optimal from an operational standpoint or a pricing standpoint to have a significant amount of the minority products used within a system. I think having a preferred product and using it in the vast majority of patients is what's going to make the most sense. Fresenius, given their size, has indicated that they will make room for a second product. That doesn't surprise us given the relationship that we've seen between Amgen and DaVita. I don't know, Jeff, if you want to comment particularly on the smaller and medium-sized and where do you think this will play for them as well.

Jeffrey H. Knapp

I do. Thanks, John. I think it's worth maybe clarifying a particular point: When organizations -- and I don't want to speak for Fresenius specifically, but when we think about kind of the broader dialysis community, when organizations talk about having alternatives, whether it's a second ESA or another -- second drug as another class of agent, what they're really saying by and large, is they will convert a dialysis center to the majority of one product. They always need to have available an alternative product in the event, for whatever reason, if a patient or a number of patients aren't able or willing to go to the new therapy. We, by and large, as I said, think that when somebody goes, they're going to go all the way into the dialysis center level. There may be, in the future, some dialysis centers that will be all OMONTYS and -- or the vast majority of OMONTYS and there'll be some centers that will be all EPOGEN and maybe just a little bit of OMONTYS. The way we've structured many of the arrangements -- but not all of the arrangements, many of the arrangements, with the smaller MDO community is driven really to try to encourage utilization across the majority of the patients not only in their centers but in their organization overall.

Christopher J. Raymond - Robert W. Baird & Co. Incorporated, Research Division

Great. And then one final question, Jeff, you mentioned net sales. I don't suppose you'd be willing to tell us what gross sales were.

Jeffrey H. Knapp

Herb is saying I can't, so no, we can't comment on that, for the reasons I think you know already, Chris.

Operator

[Operator Instructions] And this questioning comes from Joel Sendek from Stifel, Nicolaus.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

[Audio Gap]

a couple of questions about that. My first question has to do with the total expenses, at $23 million. It would seem to me that the majority of that is yours. And is the second part of the table -- the $14.6 million net reimbursement, is that effectively the part of the $23.4 million that is yours? Or is that not a direct -- am I not looking at that correctly?

Herbert C. Cross

The -- that's a good question, Joel. So the $23.4 million of expenses, that is the aggregate of expenses in the collaboration and so that's inclusive of cost of goods -- both the product cost of goods, which is on the Takeda side of the ledger, as well as on our side of the ledger, as we've talked about. We have royalties to Nektar that we will record as well. It also is inclusive of our operating expenses, both FTEs and out-of-pocket costs, and as well as Takeda's FTE and out-of-pocket costs. And as we have in the past, once we get our 10-Q on file, which I think we're expecting to be on file tomorrow, you'll -- the table -- tabular disclosure that we've provided in the past around how much of our operating expenses are reimbursable into the collaboration will be included in that document. So you will have that number tomorrow and be able to start to try and get on that a little bit. As to the $14.6 million of net reimbursement, that number is actually some of our expenses less our reimbursable portion of Takeda's expenses. So it's not a direct dollar-to-dollar kind of comparison. And again, I think once the 10-Q is on file and you have that additional disclosure around reimbursable expenses, I think you'll be able to draw that line.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

And then the other question I have has to do with guidance, which is, if you reduced your spend guidance, it would seem to me that -- since you only have one quarter left, that SG&A is not necessarily going to go up that much. And if that's the case, then the overall OMONTYS collaboration could be profitable pretty soon, unless, of course, Takeda is going to start spending a lot more. So my question is, am I going down the right track here if I were to look at this, on the collaboration, as a standalone? Or should we -- and then if that would -- is that kind of the message you're sending with the change in the guidance? Or is there any piece I'm missing?

Herbert C. Cross

So I think, yes. I think the overarching statement that the collaboration on a quarterly basis is not that far from profitability, I mean, sure. There's validity in that statement; simple math would tell you that another $8.4 million of revenue would've had us profitable this quarter. And I think we've -- given the revenue growth that we're expecting, I think that's achievable in the near term. But with regards to the operating expenses, I do think that, from a commercial perspective, one of the primary reasons why we lowered our guidance this quarter is we've obviously always looking to manage our spend on the SG&A side. And I think, while -- our commercial expenses and our Medical Affairs expenses, I think this is the first quarter where you've really seen them at a more sustainable run rate. I do think, as we ramp up, we've always talked about the fact that we might need to scale in the Medical Affairs side in order to support conversions as additional centers or additional chains sign up. So I think there probably isn't a ton of growth left on the SG&A side, but the one thing I would caution you longer term, and I think we've talked about this as well on the overall collaboration cost and expenses, is don't lose sight of the post-marketing commitments. As we've talked about previously, we do have a large randomized controlled trial as well as an observational study that will be starting in 2013 that we're already starting to plan for and starting to ramp up for. And so while I think, on the commercial and med affair side, we are pretty much fully staffed, fully built out at this point. I think, on the R&D side, there is some ramp that you should expect right into 2013 and beyond.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

And just real quick, last, when -- can you tell us when you got those third and fourth MDOs signed up? Was that end of last quarter, was that this month, or...

Jeffrey H. Knapp

The -- in the case of one of the MDOs, I would say it was in the last few weeks. And the other one was near term to today.

John A. Orwin

If your question is to sort of understand what impact those MDOs may have on the current quarter, I would say it's minimal.

Joel D. Sendek - Stifel, Nicolaus & Co., Inc., Research Division

The current quarter, meaning the one you just reported?

John A. Orwin

Correct.

Operator

Our next question comes from Ed Arce from MLV & Company.

Ed Arce - McNicoll, Lewis & Vlak LLC, Research Division

So some of the questions I had have already been asked and answered, but I do want to get a little more clarity on the further progress with some of the smaller accounts, the MDOs and SDOs. So for example, the -- what -- if you could say, what would be the average time frame or duration of the pilot trials with either the MDOs or the 60 plus -- or the 90 plus SDOs?

Jeffrey H. Knapp

Yes, this is Jeff. the -- it's a difficult question to answer, in part because it really varies from customer to customer and kind of their confidence in the drug, their just overall level and readiness to try new things. I think, in the case of some of these SDOs it's really a matter of weeks to a very -- maybe even just a couple of months. I think, in the case of the MDOs, in large part because they are larger, that they take a little bit longer. As you might well know, some of these MDOs that we announced during our previous quarterly call have now been using it for a few months and, I think, are much more closer to making a decision. And I think we'll see the benefits of that begin hopefully in this current quarter and certainly well into 2013. So the answer varies. And I would like to add, though, that, in some cases, there are dialysis organizations that have just jumped right in and done, for the most part, a large -- large for them what is a large scale conversion.

Ed Arce - McNicoll, Lewis & Vlak LLC, Research Division

And actually, along that line of thought, my next question was, if you could disclose just in broad terms what the proportion would be of pilots to these outright conversions among the SDOs.

Jeffrey H. Knapp

I would -- yes, I would say, probably close to 3/4 them -- of them are, in some way, wanting to get some initial experience with it, as opposed to jumping right in.

Ed Arce - McNicoll, Lewis & Vlak LLC, Research Division

Okay, all right. And jumping into a more, I guess, clinical data, a real-life experience question: I know that one of the posters presented at ASN talked about very early data about the hemoglobin range experienced with OMONTYS versus that which is typically seen with EPO and sort of the excursions that clinicians are very familiar with and the required dose adjustments. I'm just wondering if you could speak to that a little bit more.

Anne-Marie Duliege

So yes, we had several posters at ASN which were all post-hoc analyses of our Phase III data. So right now, let's not be confused. This is also a reflection of our clinical trials experience. The one that you're referring to was particularly interesting because it showed that, although they were the same profile of stability of hemoglobin, whether you looked at hemoglobin stability or frequency of excursions, this was achieved with fewer dose adjustments. And this is what we had anticipated simply given the once-a-month dosing of OMONTYS compared to "3 times a week" dosing of -- with EPO. But it was actually good to see that you could manage hemoglobin in the same way with a once-a-month dosing and maybe fewer dose adjustments.

John A. Orwin

And I think that just supports the notion that more frequent dose adjustments than once a month for either products are unlikely to provide better results.

Ed Arce - McNicoll, Lewis & Vlak LLC, Research Division

Right, right. Okay. And then just one last question, if I may, before I get back in the queue. You had mentioned that, at this point, you are now seeing customers across 35 states. And there was a previous figure just before that, that I missed, and I think it was the number of customers.

John A. Orwin

Let me -- I think it was 90 -- we're going back and looking at our script here. I think the reference might have been to over 300 individual dialysis centers. There were 90 customers and 300 centers.

John A. Orwin

Right. And you have to remember that a customer could be a center, but a customer could also be multiple centers based on whether they're an SDO, an MDO, et cetera.

Ed Arce - McNicoll, Lewis & Vlak LLC, Research Division

Right. So these -- there's over 300 centers. Could -- a lot those centers could be from one customer.

Jeffrey H. Knapp

Well, in the case of the 300, that includes Fresenius as well, which we've said already has over 100 centers. So -- and as a reminder, while in the case of Fresenius, we believe that the majority of those -- that in those centers, the majority of the patients have been converted to OMONTYS, not all of them, but the majority of them. In the case of the SDOs, the MDOs and the independents, some have had centers that have converted over completely. And there are many that have also just begun to use it in a smaller number of patients within a center.

Herbert C. Cross

Yes. The 2 numbers that -- were really intended to give you a sense of how broadly the product is being adopted from the standpoint of corporate entities making these decisions, as well as how broadly the product has been used in terms of centers having patients who have been treated with OMONTYS. So it's an important distinction.

Operator

This concludes the Q&A portion of today's call. I would now like to turn the call over to Mr. John Orwin.

John A. Orwin

Thanks, everyone, for listening in today. And we look forward to keeping you apprised of our progress.

Sylvia Wheeler

Thank you, operator.

Jeffrey H. Knapp

Thank you.

Operator

Ladies and gentlemen, this does conclude today's conference. You may now disconnect. Thank you.

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