(AFFY) Affymax to Cut 75% of Workforce

Affymax, Inc. (AFFY) recently announced that it will reduce its total workforce by approximately 75% (230 employees). The company took this decision after it recalled all lots of Omontys (peginesatide) voluntarily along with its partner Takeda Pharmaceutical Company Limited (TKPYY) in Feb 2013.

The recall was prompted by data from post-marketing studies which revealed that fatal reactions including anaphylaxis were found to be associated with the use of Omontys. The decision is in conformity with the US Food and Drug Administration’s (FDA) views. A letter was also issued to doctors by the company stating that no patient (new or existing) should be on Omontys.

We remind investors that Omontys received approval in the US, in Mar 2012, for the treatment of anemia due to chronic kidney disease (CKD) in adult patients on dialysis.

The drug received approval on the basis of randomized, controlled, open-label, phase III EMERALD studies (EMERALD 1 and 2) which evaluated Omontys in 2,606 patients. At that time, the company reported that the most common side effects associated with Omontys were shortness of breath, diarrhea, nausea, cough and arteriovenous fistula site complication.

However, data from post-marketing studies revealed that hypersensitivity reactions were observed in approximately 0.2% of the patients receiving Omontys and approximately one-third of these patients experienced severe reactions, necessitating immediate medical care and even hospitalization.

Affymax and Takeda are currently examining the data. Affymax is also evaluating other strategic options including sale, merger, restructuring, wind-down of operations and filing for bankruptcy.

Affymax and Takeda Pharma both carry Zacks Rank #4 (Sell). Lannett Company, Inc. (LCI) and Cytokinetics, Incorporated (CYTK) look more attractive in the pharma sector. Both carry a Zacks Rank #1 (Strong Buy).
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