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What: Shares of biotech Affymax dropped by more than 20% this morning after the company announced that Fresenius Medical Care North America -- part of Fresenius Medical Care -- has "paused" its pilot program for the drug Omontys. Shares have rebounded and are currently down only 6%.
So What: Omontys, which treats anemia in chronic kidney disease patients who are on dialysis, is jointly marketed by Affymax and Takeda Pharmaceuticals. Fresenius, a major dialysis provider, agreed to use the drug in more than 100 centers last July with the possibility of expanding its use if patients responded well to the treatment. This pilot program runs to April of this year, and Fresenius has decided to launch an interim analysis of the drug's use now.
It's important to note that Fresenius has put the brakes on expanding the use of Omontys in additional dialysis centers while it looks at the data from the pilot -- but it will continue using Omontys in the meantime. In fact, according to an 8-K form filed by Affymax today, Fresenius stated that "The vast majority of patients who are receiving the medication on an ongoing monthly basis are tolerating it well" and "For patients on Omontys, we recommend continued use of the agent as it has been providing effective anemia management."
Now What: It's actually difficult to find anything negative in the company's announcement today. Fresenius is simply reviewing the data and should provide guidance on whether it will expand the use of Omontys in the coming weeks; today's drop was probably a knee-jerk reaction by investors.
Securing a long-term contract with Fresenius and additional dialysis providers is key to Affymax's business, so the real catalyst should be coming up in a few weeks when Fresenius reveals the results of its analysis. Affymax is also facing stern competition from Amgen's Epogen, the established leader in the CKD anemia market, and needs to nab as many contracts as possible.
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The article Affymax Hit Hard... and Then Rebounds? originally appeared on Fool.com.Max Macaluso, Ph.D. has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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