Spectre of Omontys safety concerns haunt Affymax again
If Affymax investors believed their worries over the safety of Omontys were over, their hopes were dashed over the weekend by the announcement that the erythropoietin-stimulating agent will be recalled because of fatal hypersensitivity reactions. Shares plunged 85% to a record low of $2.49 in early trading today after a decision that will cut off Affymax's only revenue stream – one that has yielded just a reported $10m so far in profit-sharing from its partner Takeda.
The once-monthly drug had already been subject to cardiovascular concerns, and got on to the market only after Affymax scrapped plans for use in pre-dialysis patients (Affymax's fight begins as Epogen contender finally wins approval, March 28, 2012). Fatal anaphylaxis is a rare occurrence and has only happened almost immediately after a first dose, so a path forward still looks plausible, if a long shot. It will probably be some time before it can happen though, and persuading kidney disease specialists to use Omontys will now be even tougher.
Looking for clues
A total of five deaths have been reported relating to the use of Omontys, three of them in February, executives told investors today. Two previous deaths had previously been characterised as cardiovascular in nature; in every case, the reaction leading to death occurred in the first 30 minutes following a first dose.
Hypersensitivity reactions have been reported in 0.2% of patients, or roughly 50 of the 25,000 treated so far. A third of the cases have been serious enough for medical intervention, including hospitalisation. All marketed forms of the product were withdrawn – single and multiple-use intravenous vials and single use pre-filled subcutaneous syringes – indicating that there is no clear pattern emerging from post-marketing surveillance.
The fact shares fell to cash levels is a sign investors see little hope of resurrecting the product. Indeed, it seems likely that legal repercussions await, and announcement of lawsuits would probably act as a further drag on the stock. In addition, the US withdrawal has probably put paid to any hopes of EU approval, an event the partners have been waiting for.
Given that Affymax had been building momentum, this is an unfortunate turnaround. Supply deals signed with Fresenius Medical Care and US Renal Care in 2012 had allowed the company to secure a customer base, and a permanent J-code assigned in January would have spurred reimbursement. Investors had responded by driving shares up to a post-crash high of $26.75 in October, but it looks like those days will not return any time soon.
Amgen is the big beneficiary from the recall. Its shares rose 4% to $90.36 in early trading with the knowledge that a threat to the Epogen-Aranesp franchise had fallen.
Analysts from UBS said the withdrawal would add 9% to Epogen sales in 2013 and 13% in 2014, corresponding to a 3% rise in earnings per share.
Given that sales of the two Amgen ESAs will account for more than $2bn in lost sales, according to EvaluatePharma forecasts, the Omontys withdrawal could help ease some fears about Amgen’s growth prospects. Epo biosimilars are still possible, however, so the competitive threat has not eased by much.
The UBS analysts write that while Omontys was not a biosimilar, its withdrawal could help strengthen Amgen’s case that Epo biosimilars must be carefully vetted, especially given that so much safety controversy has surrounded the ESA class (Cardiovascular risk prompts new US scrutiny of Epo drugs, March 25, 2010).
It is too soon to write an epitaph for Affymax, but it is an incredibly deep hole the company finds itself in. It is hard to say what a best-case scenario would be; it could be months or even years before Omontys is back on the market, if ever, and Affymax's very existence is in doubt.