FMS expanded contract alone will likely send it up 15-25% in one day between now and April. AFFY is running a trial for 10,000 patients right now, but 140,000+ patients can potentially switch over. They have 5 of the 6 small-to-mid size dialysis providers (see JPM conference). Nephrologist awareness of the drug is vastly picking up - confirmed by BioTrends report. It's going to be a slow mover, but I am fine with that - relatively low risk here: approved drug thats equally effective, financially competitive, advantageous to doctors, nurses, patients, and clinics. Sitting on a large long position. As good as it can get in biotech investment, that is why it is 92% institution owned.
There is relatively no competition till mid 2014, early 2015. I originally picked up AFFY at $11-14 range, sold at $25-27. Been buying back aggressively in $19-23 range.
Don't let anyone scare you into selling your shares. In biotech, be worried about misleading scientific data. Be worried of government intervening in overpriced drugs. Be worried if company is low on cash or has inept management. None of these are the case with AFFY. Management is sitting on $100 million in cash. They share costs with Takeda and take advantage of their marketing expertise. It's also nice to have conservative management that hasn't given guidance yet until contracts are finalized. Omontys is the drug that everyone wants.
No one likes bullies. People are tired of getting 9-13 injections a month. Think about the price of gas having to get into your car 13 times a month. Think about clinics paying nurses 13 times when they can be paying once. Think of the opportunity cost of all that lost time. People now can get 1 injection a month. People, clinics can save money in the process. It bodes better for administrative costs, it bodes better for any potential side effects. People are tired of AMGN monopoly. AFFY's Omontys is to ESA/Dialysis what REGN's Eylea is to Wet AMD. Eylea is the 2nd or 3rd most successful drug launch in history. The contractual complexities of the ESA/dialysis providers means Omontys will see (has seen) much slower sales growth than Eylea. But by 2014, I expect Omontys to be pulling in sales of $300-500 million conservatively or even $600-750million if things go well. That is not even accounting for foreign sales. Take a look at REGN's stock price and market cap. REGN has a great pipeline, probably one of the top 2-3 pipeline in all of Biotech. AFFY lacks a pipeline, but has the technological means to create more drugs if they wanted to. I like that management is prioritizing Omontys currently. Right now AFFY has an $800 million market cap. I full expect this company's market cap to be between $1.5-2 Billion between 2013-2014 which would put the company's stock price at around $41-$54.
Lot of people want a buyout, but I think management should not entertain offers below $40/share.
I am adding more almost daily at these levels through options and shares since I know in 12-24 months, $18-22 will be the 52week low on AFFY. This is one of the 5 best stocks you can own in your portfolio.
Good luck, health, wealth, peace, and prosperity for all.
Sentiment: Strong Buy
The Eyelea and Omontys launches do have a parralel in that they each have an easily identifiable market that is unserved even though drugs have been available for some time. For Eyelea it was patients who were wtill getting monthly doses of Lucentis (or Avastin), but still had lots of fluid in their eyes, Eyelea solved that very well in nearly all patients. Omontys has the peritoneal and home hemo dialysis populations who don't need to be in the clinic three times a week. Both have the advantage of less frequent dosing.
That is where the similarities end. Eyelea had other clear advantages over Lucentis including less frequent dosing, but more importantly it has far greater affinity for VEGF, it is dosed less frequntly because it is more potent. Omontys is not clinically superior and the population with unmet needs is far smaller than the one REGN exploited. Also the buyer of Omontys are economically sensitive and the drug is a cost center for prescribers, while the buyers of Eyelea (insurance companies) have no influence on it's use and the prescribers see it as a rfit center. Most likely Omontys will find a niche in the dialysis market, but it will be nowhere close to Eylea. The launches of each drug are a stark reminder of this as Eyelea has had six consecutive massive beats of consensus, while it appears Omontys will be a dissapointment in its second full quarter after launch. The only lever AFFY has to pull to move market share is lowering price which just makes the revenue opportunity smaller and hurts their chances of ever being profitable.
Competition is coming for both as well with biosimilar EPO and Mircera in the ESA market and AGN's DARPin (dosing once every four months) for Eyelea.