UPDATE 4-Affymax drops as drug trials raise heart concerns

Mon Jun 21, 2010 3:19pm EDT

* Trial raises cardiovascular safety concerns

* Co developing drug with Takeda unit

* Data raises concerns on approvability: analysts

* Shares plummet as much as 69 pct (Adds CEO comment, background)

By Krishnakali Sengupta

BANGALORE, June 21 (Reuters) - Affymax Inc AFFY.O shares plunged, as four late-stage studies of its experimental anemia drug showed heart safety risks, raising doubts about the drug getting regulatory approval.

Shares of the drugmaker dropped as much as 69 percent to their lifetime low of $7.12 Monday on Nasdaq, clocking more than 50-times higher volumes than its 10-day moving average. In late afternoon trading, they had recovered only as far as $7.43, down 67.7 percent on the day.

Shares of Amgen Inc (AMGN.O), whose drugs Epogen and Aranesp were compared with Affymax's Hematide in the trials, were up 2.8 percent at $56.76.

The trials met their main goal but showed a higher rate of cardiovascular events, including death and stroke, in Hematide patients who were suffering from chronic renal failure but were not on dialysis.

The trials found that safety risks for Hematide were similar to those of current drugs for kidney dialysis patients.

The safety of anemia drugs has come under increased scrutiny over the past few years after data emerged showing that they could raise the risk of heart problems for some patients.

Affymax had counted on Hematide's once-monthly dosing regimen as an advantage over Amgen's Epogen and Aranesp, which must be given more frequently.

Chief Executive Arlene Morris told Reuters that Affymax will continue to analyze the data and will update investors in the next several months.

The company said earlier this year it could file for U.S. regulatory approval in the fourth quarter of this year, and that forecast has not yet been updated, she said.

Morris said Affymax has no current plans to conduct additional trials of Hematide.

"We remain very encouraged by the dialysis data," she said.

Data from the late-stage studies of the drug prompted at least two brokerages to cut their ratings on the stock and several analysts to raise doubts of Hematide getting approval in the non-dialysis segment.

"This creates regulatory risk, in our view," said Geoff Meacham, an analyst at J.P. Morgan. "Particularly in non-dialysis, though there could also be read-through to the more important dialysis segment as well."

However, filing for approval of the drug in the smaller dialysis segment could be one way out of the tough spot for the company, McNicoll, Lewis & Vlak analyst Christopher James said.

PiperJaffray analyst Ian Somaiya, who cut his rating on the stock to "underweight" from "overweight," said he expects further downside to the stock, once regulators review data from the drug.

The trial showed that in the non-dialysis group, frequency of cardiovascular events for those taking Affymax's drug was 21.6 percent compared with 17.1 percent for those treated with standard drugs, Affymax said.

Hematide, which Affymax is co-developing with Japan's Takeda Pharmaceutical Co Ltd (4502.T), worked as well as the Amgen drugs in maintaining target hemoglobin levels in each of the four late-stage studies, the company said. (Additional reporting by Vidya L. Nathan in Bangalore and Deena Beasley in Los Angeles; Editing by Vyas Mohan, Aradhana Aravindan and Gerald E. McCormick)

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