Affymax wavers on forecast of Hematide approval

By Marley Seaman, AP Business Writer  |  July 2, 2008

NEW YORK --Shares of Affymax Inc. fluctuated wildly Wednesday after an analyst predicted success for the company's drug candidate Hematide as a treatment for anemia caused by kidney disease.

Robert W. Baird & Co. analyst Christopher Raymond predicted sales of Hematide could peak at $800 million. He believes investors are overlooking the drug's prospects because it is an erythopoesis-stimulating agent, like Amgen Inc.'s Aranesp. Those drugs, which treat anemia caused by kidney disease and chemotherapy, have been hit hard after studies showed they increased tumor growth and the risk of death for cancer patients.

The warning labels for the drugs were repeatedly strengthened and their use restricted, and Raymond said some investors doubt Hematide can receive approval.

But Raymond said there is still a market for ESAs in kidney failure-induced anemia, and he believes Hematide has some advantages over the drugs currently approved to treat that illness. Older ESA's include Aranesp and Epogen, Johnson & Johnson's Procrit, and Roche's Mircera, which received FDA approval in November.

"All the stuff that's happened in the oncology setting has caused a lot of concerns," he said in a telephone interview. "What I think the market is missing ... is this isn't an oncology story, it's a nephrology story."

Raymond thinks Hematide will be approved in 2011. The analyst started covering Affymax shares with an "Outperform" rating and a price target of $25, implying potential upside of 57 percent over its closing price Tuesday of $15.92.

Early in the session, the Palo Alto, Calif., company's shares surged as high as $18, a gain of 13.1 percent. They then dropped as low as $14.99, down 5.8 percent, and were down 54 cents to close at $15.38.

Affymax shares have fallen 39.1 percent over the last year, and Raymond said some investors may have looked to consolidate their gains after the stock moved up.

Affymax licensed technology from Nektar Therapeutics Inc. to develop Hematide, and it is partnering with Takeda Pharmaceutical Co. to bring the drug through clinical trials and market it.