Any drug has the potential to cause allergic reactions, but in a patient population with significant co-morbidities and limited physiological reserve, a severe hypersensitivity rate of 0.2% that requires prompt medical intervention or hospitalization could cripple future sales. Most dialysis occurs in the outpatient setting and doctors are not always present. Thus, converting patients from current erythropoietin-stimulating agents, like Amgen’s (AMGN) Epogen, to Omontys in the outpatient setting no longer seems appropriate. The question, however, is why these safety issues weren’t spotted during clinical testing or whether the reactions are related to a “bad batch” of the drug: manufacturing-specific issues. Note that the Phase III program supporting Omontys’ NDA and subsequent approval enrolled 2,606 patients, including approximately 1,600 dialysis patients. Following approval, however, the FDA post-marketing requirements included an observational study and a randomized controlled trial, with data due in 2018 and 2019, respectively: “The objectives of the studies are to evaluate cardiovascular safety and assess safety of long-term use in adult patients on dialysis, in particular in the incident patient population.”
Affymax and Takeda will discuss the issues with FDA to see if Omontys does have a place in the market, and while dialysis patients have severe allergic reactions to other therapies, like IV iron, we have doubts that this product will be able to reenter the market anytime soon. A very quick identification of a “bad batch” or some other CMC-related cause could revive Omontys’ prospects, but the overhang from this episode may persist. If the cause cannot be identified, it could take more than 6-12 months for Affymax to run another clinical study, perhaps pre-treating patients with hydrocortisone to see if that brings the hypersensitivity, severity, and/or incidence down to acceptable levels. Affymax currently has a negative cash flow and no pipeline, so it may well trade near cash until a resolution of this problem. For adventurous investors, cash per share is roughly $2.00, therefore, buying the stock below this level could allow those to speculate on an Omontys comeback, with minimal risk. Because Affymax currently has negative cash flow and no drug pipeline, avoiding the name makes more sense, and investors may be better off moving to alternative drug and biotech companies that are on solid ground.