Affymax Prepares to Mount Challenge to Amgen Anemia Drug Monopoly

1/25/12Follow @xconomy

Affymax shocked the world when an FDA advisory committee recommended last month that its anemia drug was good enough to earn a spot on the U.S. market. Now the Palo Alto, CA-based company (NASDAQ: AFFY) is making all sorts of moves behind the scenes that will determine how big a bite it will take out of Thousand Oaks, CA-based Amgen’s multi-billion dollar anemia drug monopoly.

Decisions about the product’s price, who to hire to sell it, and how to negotiate with Medicare and dialysis clinics are all high on the list of tasks facing the Affymax executive team. It’s part of the process of getting ready for March 27, the deadline the FDA has to complete its review of peginesatide, the experimental anemia drug from Affymax and its partner, Takeda Pharmaceuticals. If Affymax can get the green light from the FDA, it will be allowed to sell its product to about 400,000 patients in the U.S. on dialysis treatment, and tap into a market that generated $2.5 billion in sales last year for Amgen’s epoetin alfa (Epogen.)

Medicare has spent tens of billions of dollars on Amgen anemia products over the years, and members of Congress at various points have been critical of how much taxpayer money goes to one company making one drug.

“I don’t want to say there’s pent-up demand, but there’s a lot of interest in the renal community,” in the new product, says Affymax CEO John Orwin. Without disclosing the price, he suggested that Affymax plans to offer a lower-cost alternative. “Healthcare providers are under a lot of pressure to find overall cost-lowering solutions. So we think we’re coming into a favorable environment.”

Given the FDA advisory panel’s lopsided 15-1 vote in favor of its drug, the odds are Affymax will soon be in position to start selling the first alternative to Amgen’s epoetin alfa (Epogen), which has had a monopoly since it was first cleared for sale in 1989. The FDA previously approved a rival from Roche called epoetin beta (Mircera) in 2007, but that drug has been blocked from the U.S. market, at least until mid-2014, because of an intellectual property dispute that Amgen won. Affymax is able to sidestep that minefield because its drug helps stimulate production of oxygen-carrying red blood cells, like Amgen’s, but it is a peptide that is chemically distinct, and works through a different biological mechanism.

Even though Affymax will likely be in position to sell its product soon, it is a classic underdog in this story. Amgen (NASDAQ: AMGN), the world’s biggest biotech company, has contracts in place to provide its anemia drug to Fresenius Medical Care and DaVita, which together control about 70 percent of the dialysis market, analyst Christopher Raymond of Robert W. Baird said in a December 28 note to clients.

Raymond rates Affymax a “buy” with a price target of $13, but he sees many obstacles ahead. Small biotechs often … Next Page »

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  • carmen

    why does affymax need such a large sales force if 70% of the market is not available?

  • http://www.xconomy.com/author/ltimmerman/ Luke Timmerman

    Carmen—I don’t think 60-80 is a very big sales force for a company in Affymax’s position, even if it’s going after 30 percent of the dialysis market. The question to ask there—which I didn’t in my brief meeting with Orwin—is how nephrologists each rep is supposed to call on. If that ratio is too high, then the sales reps are spread too thin. If it’s too low, then I’d say you’ve overbuilt the sales force.

  • Cary Lindsay

    I had some great news today via Amgen when they announced the buyout of (MITI). They were my biggest holding in my biotechs, so now I have to reallocate my funds. IMO, the big guys are needing to restock the pipeline with deals like this one. I’m wondering if this move by (AMGN) is a preemptive move for the potential of (AFFY) moving into their turf. I hold a small position in (AFFY),but also have similar positions in (ARQL)(NKTR) and (OPTR). Your article has me leaning for at least getting FDA aproval, but as you mention–having an informed and aggressive marketing team is going to be critical for (AFFY). Decisions! Decisions!As you know, (NKTR) will benefit from (AFFY) getting approval, so I don’t want all my eggs in one basket.

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