Affymax Targets Amgen Anemia Drug Aided by U.S. Rules (Update3)
February 16, 2010, 4:12 PM EST
By Rob Waters
Feb. 16 (Bloomberg) -- Affymax Inc., a 10-year-old company with no marketed products, may get help from the U.S. government in grabbing market share from Amgen Inc.’s $2.6 billion anemia drug Epogen with a treatment in line to be approved next year.
New rules for Medicare, the U.S. plan for the elderly and disabled, will cap fees for kidney dialysis, including the cost of anemia drugs, at about $250 per treatment starting on Jan. 1, 2011, and combine all services under one bill or “bundle,” said Yaron Werber, a Citibank analyst in New York.
The regulations may push dialysis clinics to use smaller amounts of cheaper drugs, Werber said. While Affymax hasn’t yet announced a price for its treatment, called Hematide, it’s given only once a month while Epogen is usually administered three times a week. Affymax expects Hematide to be approved as early as next year, Chief Executive Officer Arlene Morris said in an interview. If so, sales may hit $1.1 billion by 2015, said Phil Nadeau, a Cowen & Co. analyst in New York.
“When we go under the bundle, everything’s going to be about money,” said Julia Inrig, a kidney specialist at UT Southwestern Medical Center in Dallas, in a telephone interview. If Hematide is cheaper to buy and use than Epogen, “its use could significantly increase, and it could potentially drive Epogen out of the market.”
Affymax, of Palo Alto, California, rose 21 cents, or 1.1 percent, to $20.07 at 4 p.m. New York time in Nasdaq Stock Exchange composite trading. Thousand Oaks, California-based Amgen rose 51 cents to $56.99.
Sales of Amgen’s anemia drugs Epogen and Aranesp have declined for four straight years after studies linked them to heart attacks and strokes at high doses.
Anemia is a condition in which the body does not have enough healthy, red blood cells to carry oxygen to other body tissues. It is common in people with kidney disease who use dialysis, and Amgen’s drugs remain the only ones now used in dialysis clinics. The company sells Epogen for about $8,445 per patient per year, Citibank’s Werber said.
The debut of Hematide could give the clinics more bargaining power, Affymax’s Morris said.
Now, “Amgen can do what they want because they’re the only game in town,” Morris said during an interview in San Francisco. “A second company makes the playing field level and gives a second choice” to dialysis providers.
Labor Costs, Supplies
Even if the company doesn’t charge less for a once-a-month injection of Hematide than Amgen does for Epogen given three times a week, dialysis centers could save money on labor costs and supplies with a less frequently used drug, said Sylvia Wheeler, an Affymax spokeswoman.
Emma Hurley, an Amgen spokeswoman, said in an e-mail that while it’s too early to draw conclusions about the prospects for Hematide, “Amgen strongly believes the dialysis and pre- dialysis markets are already well-served.”
Affymax will market Hematide with Takeda Pharmaceuticals Inc., Japan’s largest drugmaker. The companies will share U.S. profits equally and Affymax will get a share of revenue from sales outside the U.S., Wheeler said.
Hematide’s prospects may be strongest if Affymax can negotiate a deal with either of the companies that operate most of the dialysis centers in the U.S. -- Germany’s Fresenius Medical Care AG and Lakewood, Colorado-based DaVita Inc. -- said Werber.
Capturing a Chain
“Their goal is to capture one of the big dialysis chains from Amgen,” Werber said in a telephone interview. “If they can sign a contract with one of them, they wouldn’t need a big sales force.”
Neither dialysis company responded to repeated requests for comment.
People with kidney disease often don’t produce enough erythropoietin, a hormone that stimulates production of the red blood cells. The result is anemia, a condition that leaves people fatigued and impairs the work of the heart and brain.
Some people’s kidneys deteriorate so badly they go to dialysis centers and have machines filter waste from their blood. Nearly all patients on dialysis are anemic.
Epogen, a synthetic version of erythropoietin, boosts the depleted red-blood cells and is used primarily by dialysis patients, who take it with most treatments.
Introduced in 1989
Epogen was introduced in 1989 and seven years later topped $1 billion in sales. Combined sales of Epogen and Aranesp, a longer-acting version approved in 2001, soared to $6.6 billion in 2006, helping Amgen become the world’s largest biotechnology company. They plummeted 21 percent from 2006 to 2009 as studies documented the side effects caused by high doses of the drugs.
Amgen said today that a new requirement from the FDA starting March 24 will require all cancer doctors to enroll online and take a training course before prescribing Epogen or Aranesp. Fears by investors that this will slow prescribing may be overstated, said Michael Yee, a biotechnology analyst at RBC Capital Markets in San Francisco, in a note today to clients.
“It doesn’t look too bad,” he said.
Worldwide sales of anemia drugs for the one-year period ended Sept. 30 totaled $10.7 billion, according to IMS Health, a Norwalk, Connecticut, company that tracks prescriptions. Aranesp and Epogen combined have 55 percent of those sales.
Hematide is a synthetic peptide, a smaller version of a protein, and is easier to produce than a biologically engineered drug like Epogen, said Anne-Marie Duliege, Affymax’s chief medical officer.
It’s being tested in kidney disease patients who don’t yet need dialysis, as well as those who do. Affymax and Takeda could grab market share from Amgen in both parts of the kidney disease market, said Cowen’s Nadeau in a telephone interview.
Affymax and Takeda said Jan. 25 they had completed four large studies testing the drug in 2,600 patients with kidney disease and will release results by the end of June. They plan to submit a marketing application to U.S. regulators by the end of the year, Morris said.
In a previous study, 114 dialysis patients were given Epogen three times a week or Hematide in low or high doses once a month. After 12 weeks, all three groups had achieved the same increase in their levels of hemoglobin, the iron-bearing protein in red blood cells, Affymax said in an Oct. 30 statement.
On average, hemoglobin rose from 9.2 grams per deciliter of blood to the target range of 11 to 12, Affymax said. The most common side effect was high blood pressure, which occurred in 8 percent of patients getting Epogen or high-dose Hematide and 3 percent of those getting the lower Hematide dose, according to the company.
Hematide’s once-monthly dosing will appeal to patients who now get Epogen three times a week or Aranesp once a week, said Iain Macdougall, a kidney specialist at Kings College in London.
Hematide also may not require refrigeration, said Macdougall, who has led trials of the drug for Affymax. As a peptide, it’s cheaper to make than a protein drug, Macdougall said in a Jan. 22 telephone interview.
“We’re hoping we’ll get much cheaper anemia therapy,” Macdougall said. “I don’t know what the marketers at Affymax will do. There will be a bit of pressure to pass that on to the consumer.”
Affymax’s Wheeler said the company was thinking about how to price the drug.
“We recognize that we are launching Hematide into a price- and cost-sensitive marketplace,” she said. http://www.businessweek.com/news/201...-update1-.html