Affymax Inc. (NASDAQ: AFFY) has had its share of problems recently. The company's kidney disease drug, Omontys, was recently pulled off the market by the FDA. Omontys was approved by Food and Drug Administration in March 2012. The advantage of using this drug was that patients needed take only one injection a month in place of taking 12 per month for patients taking Epogen. Unfortunately, Affymax had to recall this medicine as there were as many as five fatal incidents attributed to the drug. Over 25,000 patients were treated with Omontys: 0.02 percent have died and another 0.2 percent have been hospitalized. Affymax shares dropped 85 percent on the heels of the news and analysts have downgraded the stock.
Fresenius Medical Care AG & Co. (NYSE: FMS,) the largest kidney dialysis center in the U.S., will not sign any more agreements with Affymax. This gave a boost to Amgen Inc. (NASDAQ: AMGN) allowing its drug Epogen to garner further use. When Omontys was launched, Epogen had already notched up revenues of $1.9 billion in the U.S., and is now expected to increase well above that mark. Amgen shares have already risen more than 1 percent.
In addition, more problems continue to plague ailing Affymax, as a securities fraud class action suit has been filed against the company. As per this suit, it has been claimed that the shareholders who purchased shares between December 8, 2011 and February 2013, have been mislead by overstated financial guidance. The suit claims that sales of Omontys were not sustainable and as such were overstated. The suit also claims that the company did not disclose the potential liability to patients. Investors who bought shares during this period and have suffered a loss can file a law suit against the company.
Shares of Affymax are trading at $2.68, marginally up by 1.13 percent but considerably lower than the 52 week high of $28. Volume of shares traded has also gone down significantly from an average of 4.15 million shares to just 1.85 million today. Shares of Amgen are up 1.13 percent, trading at $92.58.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.