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June 25, 2014

Affymax Board Approves Dissolving Troubled Company

  • Affymax' Board of Directors has agreed to liquidate and dissolve the company, subject to stockholder approval. The drastic move comes more than a year after the company’s flagship anemia drug Omontys (peginesatide) was voluntarily withdrawn from the market  following reports of patient deaths linked to the treatment.

    In a statement, Affymax said it plans to distribute all available cash to its stockholders as soon as legally permitted “and reasonably practicable” after paying or making “reasonable provision” for all known and potential liabilities and other obligations. Affymax estimated stockholders would only see “a few cents per share,” based on 37,490,095 shares of common stock outstanding as of April 30, and remaining cash of about $4 million as of last month.

    Affymax said it intends to call a meeting of its stockholders to seek approval for the dissolution, and will file proxy materials with the U.S. Securities and Exchange Commission, “as soon as practicable.”

    Affymax said the decision to dissolve followed its most recent setback last week. The company joined its development and commercialization partner on Omontys, Takeda Pharmaceutical, in terminating their collaboration and license agreement as of September 10.

    In a joint statement June 13 and again today, Takeda said it conducted “a detailed investigation” of postmarketing reports that tied Omontys to serious hypersensitivity reactions including anaphylaxis that in some instances resulted in death.

    “The investigation has confirmed no quality or manufacturing issues were present but has not identified a specific root cause for the reactions that were observed,” Takeda stated.

    Affymax acknowledged at the time that Omontys is unlikely to return to market any time soon, that its board had launched a review of its strategic options, and that Takeda was working with the FDA to withdraw its earlier approval.

    “Based on this outcome,” Affymax said, “the Board has determined it to be in the best interests of the stockholders to dissolve the Company.”

    Affymax has struggled for more than a year to bounce back after joining Takeda in voluntarily recalling all lots of Omontys, a once-monthly intravenous treatment for anemia due to chronic kidney disease in adult patients on dialysis. The companies said at the time that at least five deaths could be linked to the drug—though a federal court order in a shareholder lawsuit against the company and four former executives earlier this year noted that 14 deaths, nine life-threatening events and 17 other events requiring hospitalization had been reported to the FDA by the time of the recall.

    The recall followed reports of severe hypersensitivity reactions including anaphylaxis in 0.2% or about 50 patients—including fatal reactions in 0.02%—of the 25,000 patients within 30 minutes of their first IV dose in the post-marketing phase. In about one-third of these reports, reactions were serious enough to require “prompt medical intervention and in some cases hospitalization,” the companies said at the time.

    Following the withdrawal of Omontys, Affymax laid off 75% of its workforce, or 230 employees. The company’s president and CEO John Orwin left; he now holds the same position at Relypsa Pharmaceuticals. A restructuring firm took over management at Affymax. The company’s stock was delisted from NASDAQ, with trading shifted to the OTCQB market.

    FDA approved Omontys, an erythropoiesis-stimulating agent (ESA) that aids in the formation of red blood cells in March 2012, following two pivotal trials involving a total 1,608 patients. Affymax and Takeda sought to offer an anemia alternative to epoetin, a three-times-weekly drug sold under the brand name Epogen (epoetin alfa) by its developer Amgen, as well as by Amgen licensee Johnson & Johnson under the brand name Procrit (epoetin alfa).