Biotech company Affymax (AFFY) saw its stock price enter more or less of a free-fall, plunging more than 85 percent to lead all decliners Monday. Shares of Affymax are currently trading around $2.50, down from Friday's close of $16.52. The precipitous decline is the direct result of news that its anemia treatment drug Omontys not only caused allergic reactions in 50 patients (0.2 percent of users so far), but was actually responsible for the deaths of five others.
Omontys is administered intravenously, and has been used in the treatment of anemia resulting from chronic kidney disease since it was approved and reached the market last April. The drug functions by enhancing the kidney’s production of erythropoietin, a protein that regulates the production of red blood cells, and had the advantage over competitors of necessitating injections only once a month. Similar products from Amgen (AMGN) and Johnson & Johnson (JNJ) require several injections per-month.
The news is particularly disastrous for Affymax as Omontys is the only product it makes, and arrives not long after the company, in tandem with Japan's biggest drug manufacturer Takeda (TKPYY), went ahead on an agreement to supply the drug to the major U.S. dialysis provider, DSI Renal. Five analysts immediately downgraded the company after Saturday’s announcement of the fiasco. The recall has essentially emptied the company of nearly all of its value, based on reactions from analysts covering the stock. Shares of Amgen traded up as high as 5 percent on the news, while Johnson & Johnson has stayed mostly flat.
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