The FDA endured another terrible blunder when Affymax Inc. (NASDAQ:AFFY) and Takeda Pharmaceutical (OTCPK:TKPHF) recalled Omontys late last month, after approving the ill-fated and dangerous anemia drug not 12 months earlier. Once hailed as a fierce contender for Amgen's (NASDAQ:AMGN) Epogen monopoly in the $20 Billion dialysis market, the once-monthly injectable Omontys was being tested by giant Fresenius Medical (NYSE:FMS) in its clinics, and the future looked rosy until five patients died of a severe allergic reaction known as anaphylactic shock. In other words, a drug that was supposed to make more red blood cells in people that were so depleted they had to spend up to four hours a day, three times per week hooked up to tubes to keep them alive killed them within 30 minutes.
I find it particularly morbid that Affymax chose to put a less-pessimistic percentage, 0.02%, on the number of fatalities. They hid behind arithmetic instead of facing the fact they made a bad drug. Not that the old standards Epogen and Procrit are any better. Epogen has an FDA black box warning, causes blood clots, and Amgen closed down manufacturing in a plant last year due to low sales. Procrit, sold by Johnson & Johnson (NYSE:JNJ) has undergone multiple safety reviews since its market release years ago. Now Affymax is closing shop, using remaining cash to pay for investigations of a drug that should have been recognized in clinical trials as faulty.
With the biopump EPODURE in Phase II studies, Medgenics, Inc. (MDGN) is well on its way to delivering an effective substitute to the hazardous anemia drugs now being prescribed. Because the internally-placed "biopumps" are made of the patient's own erythropoietin-producing tissue, safety issues are minimized and Phase I trials already show it works by maintaining hemoglobin in the target range while also keeping serum EPO levels in their normal range, instead of overdose spikes inEPO levels which accompany injections of Epogen and Procrit. The multiple injections needed with those drugs are not necessary with EPODURE.
Medgenics has been delivering on its strategic plan on other fronts. Clinical trials for INFRADURE to treat the hepatitis virus are making good progress and would also treat a disease where the alternatives leave something to be desired. Last year the company beefed up its board of directors with two veterans from the financial services and biotechnology industry, added key patents in the US and Japan, and trimmed operating expenses by 21%. A public stock offering completed in February 2013 offered up $29.4 million in gross proceeds with an additional $2.3 million gross from the exercise of the over-allotment. With cash on hand and a modest yearly burn rate, Medgenics is in a good position to run its business and fund clinical trials at the same time.
I believe the FDA will be more careful when approving anemia drugs in the future, and the agency should welcome an alternative that uses the patient's own tissue to produce EPO like their kidneys used to, particularly where patients aren't at risk of getting too big a dose either because of medical incompetence or, more likely, because prescribing bigger doses means more money from the drug's spread, the difference between the price doctors and hospitals pay for the drug and the price charged to patients. This is a common problem with anemia drugs that carry a profit of as much as $300 per administration in an astounding $8 billion dollar market.
Affymax argued long and hard for Omontys, challenging clinical trial reports of a high rate of cardiovascular problems by claiming that those patients were different from patients receiving dialysis, and won approval in a 15 to 1 vote. America's premier drug and device watchdog floundered once again, continuing a terrible record for recommending drugs that hurt people.
At the end of the day, today's anemia drugs are flawed to the point of causing blood clots, heart attack, stroke and now allergic shock and death. When Medgenics finally comes through clinical trials with a safe, non-new drug method of treating the anemia from unbearable condition of chronic kidney disease, not only the FDA but doctors around the world will breathe a sigh of relief, finally able to offer patients something that isn't likely to kill them.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.