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Affymax in a tailspin after Omontys recall

Makes heavy job cuts in face of bankruptcy threat

Takeda Affymax OmontysAffymax is slashing three quarters of its workforce and could be facing bankruptcy in the wake of the recall last month of kidney disease drug Omontys, its only marketed product.

Omontys (peginasetide) was pulled off the market in the US by Affymax and commercial partner Takeda after several people died as a result of severe hypersensitivity reactions within 30 minutes of the first intravenous dose of the treatment.

Around 230 staff at the Californian firm will lose their jobs - including chief commercial officer Jeffrey Knapp, the rest of the commercial and medical affairs field forces as well as other employees - as Affymax "aligns resources around [the] ongoing product investigation".

The company said it is now seeking a financial institution to help it evaluate "strategic alternatives", which could include the sale of the company, a merger, a winding-down of operations or bankruptcy proceedings. As of February 28 the firm was sitting on around $67m in cash.

Analysts put the chances of Omontys returning to the market as slim, noting this would likely prompt Takeda to activate a six-month exit clause from its contract with Affymax. 

A string of downgrade recommendations pushed shares in the US company down 64 per cent, closing at $1.05 yesterday. In November 2012 the stock was trading at almost $28.

"I would like to sincerely thank all of our departing employees and recognise their important and valued contributions to the company," commented Affymax' chief executive John Orwin.

"While this decision was extremely difficult, aligning and managing our limited resources around our product investigation is our most important priority."

In a separate filing with the Securities & Exchange Commission (SEC), Affymax said: "If the company and Takeda are unable to rapidly identify and rectify the causes of the safety concerns to the satisfaction of the FDA, which is highly uncertain, Omontys may be permanently withdrawn from the market".

It added that there was no assurance that the product would be commercially viable even if re-introduced.

20th March 2013

From: Research, Sales

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