Biotech Grudge Match: Game, Set, & Match?

Affymax (NASDAQOTH: AFFY  ) is starting 2013 in the best way possible and recently announced a deal with dialysis provider DSI Renal. Its drug, Omontys, is being used in dialysis centers, including some managed by Fresenius Medical Care (NYSE: FMS  ) , and Affymax shareholders hope that the company can secure more lucrative deals in the coming months.

Despite Omontys' dosing advantage, however, biotech stalwart Amgen's (NASDAQ: AMGN  ) drug Epogen is still a formidable competitor in this space. The head-to-head competition for these anemia drugs is far from over, and, in the following video, health care analyst Max Macaluso weighs in on the debate.

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  • Report this Comment On January 08, 2013, at 6:40 PM, mbracket123 wrote:

    Hi Max,

    Not sure I understand your last comment where you say "growth (in stock price I presume) should be constrained as sales ramp." That doesn't really make any sense as you don't comment on what the growth in sales will be over the next two years or any other key metric as it relates to stock price.

    It seems to me that we will see a large increase in price if sales hit analyst consensus number in 2013 of $161.34M, up from $97.58M, all the while closing in on profitability. Personalty I tihnk the whole industry will switch to Omontys - as you said they will be driven primarily by cost and efficiency.

    If you do simple comparison to other fast growing bio companies you will see a comp of 7x - 10x next year sales, or $1.2B to $1.6B mkt cap. And I think they will actually grow much faster.

    Would appreciate your quantitative analysis to support your conclusions - otherwise these seem like just fluff opinion pieces. Thanks, Mike

  • Report this Comment On January 09, 2013, at 12:11 AM, TMFMassimo wrote:

    Hi Mike,

    Thanks for the comment, I definitely wasn't clear there. What I meant was that optimism for Omontys has drive shares up in the last year and, in my opinion, it will be hard for this stock to repeat the same performance in the coming 12 months. Now it's a matter of seeing the proof in the pudding - net sales for the drug were $15 million last quart and we have to see what the numbers are like for Q4. That will help determine sales estimates. I'm looking forward to April when Affymax's deal with Fresenius is up and Omontys might be able to strike a better, long-term deal (or on the flip side, the risk here is that Fresenius might not renew the agreement).

    Estimates, in my opinion, have to be taken with a grain of salt - there are many examples where estimates are far too high after a drug is launched and quarterly sales are well below expectations.

    Best wishes,

    Max

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