Affymax (AFFY) plunged 85% in the stock market Monday after the biotech recalled its anemia drug due to safety concerns, sending shares of rival Amgen (AMGN) to a new high.
On Saturday, Affymax and its Japanese partner Takeda announced they're pulling all lots of Omontys, a drug used in dialysis centers to treat anemia in patients with chronic kidney disease, after some patients died due to hypersensitivity reactions. The news was devastating to Affymax because Omontys is its sole marketed drug.
The news shored up the leading positions of Amgen's drugs Epogen and Aranesp, which together provide more than a quarter of Amgen's sales. The recall removes a competitor and improves Amgen's chances of retaining its relationship with dialysis giant Fresenius Medical (FMS), RBC Capital Markets analyst Michael Yee wrote in a Sunday note. It may also signal heightened FDA scrutiny of other rivals, including cheaper biosimilars, coming onto the market.
Mark Schoenebaum, an ISI Group analyst, wrote in an email to clients that the news suggests the launch of biosimilars will be slow.
"Doctors will (or at least should) wait for proper real-world exposure data before prescribing," he wrote. "There is just no other reliable way to detect very rare adverse events.
Schoenebaum added that big-name biotechs, including Amgen and Biogen Idec (BIIB), that are branching into biosimilars might have the market edge due to their reputations for quality.
Amgen's stock hit a record 91.25 early Monday, closing 3% higher at 89.55.
Another rival is Johnson & Johnson's (JNJ) Procrit, but it provides just a tiny fraction of J&J's revenue. J&J is also dealing with other problems, as it announced Monday that it's taking a $100 million charge in Q1 due to Venezuela's recent currency devaluation. J&J did affirm its overall 2013 guidance for single-digit earnings per share growth.
J&J shares fell 65 cents to 75.60.