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Affymax, Inc. at Cowen and Company Healthcare Conference - Final.

Article Excerpt
CRAIG GORDON, ANALYST, COWEN AND COMPANY: Good morning, everyone, for coming to the second day of the 29th Annual Cowen and Company conference. My name is Craig Gordon; I work with Eric and Phil on the biotech team. We welcome today Affymax and look forward to getting an update on Hematide's development program.

ARLENE MORRIS, PRESIDENT, CEO, AFFYMAX, INC.: Good morning and thank you for being here this morning so early. Appreciate that. I'm going to go through the presentation this morning and give you an update on Affymax and our progress on our Phase 3 program with Hematide.

Just to remind you, I will be making some forward-looking statements; so please consider that as you listen to my remarks.

Just a quick reminder of the investment highlights of Affymax. We're developing a product called Hematide. Hematide is a small peptide that is pegylated and it's poised to be the first long-acting ESA in the US market. So we think this is a significant advantage over products that are currently being used to treat anemia in patients with chronic kidney disease.

It's a $12 billion global market; and $4 billion of that is in the US renal piece of the market. So a very strong market size for the indication that we are aiming at in the renal area.

There is a very limited existing competition. As a matter of fact, in the renal area it's a monopoly market. And we will be not only the first long-acting ESA but we will be the first ESA to be competing in this monopoly renal market in the US.

We have positive safety efficacy data from a long-term Phase 2 program that I'll review with you this morning.

Our Phase 3 clinical trials were enrolled in the fourth quarter of last year, and we will follow patients up to one year from last patient, last visit. So that will take us into the first quarter of next year for data.

We have a very important strategic alliance with Takeda that allows us to build presence in the US market from a commercial perspective in the renal area. At the end of the fourth quarter we had cash investments and receivables of $139 million.

So I'm going to start off by quickly reminding you of the target profile of Hematide. As I mentioned before it's a synthetic peptide with a novel amino acid sequence. It has no sequence homology whatsoever to the protein ESA. So it is not in conflict with the intellectual property of these earlier molecules.

It's a very convenient product to dose. There is monthly dosing. With monthly dosing you can either correct patients who are anemic or you can maintain patients that you've switched from another ESA and maintain their hemoglobin.

There is a potential for a multidose formulation that we're working on right now, which we think will be very attractive to the dialysis centers. You can give the product both IV and subcu; and they are virtually interchangeable in terms of dosing, which is a very different approach than the protein-based ESAs have, where you have to adjust dosing for patients if you switch them from one route of administration to the other.

From a stability perspective, we have potential for room-temperature storage product. From a safety perspective we did not see anything different in the Phase 2 studies than what one would see with other ESAs. So nothing in terms of any safety issues.

One safety advantage that we have demonstrated is with PRCA. This is pure red cell aplasia, which can happen when a patient becomes -- develops immunogenicity to a protein-based ESA.

We don't do that because we had no sequence homology with the protein-based ESAs. I will actually show you data where we have been able to correct anemia in those patients.

And then we have a low cost of goods, so margins that are pharmaceutical-grade kind of margins in the low 90s, which does give us pricing flexibility.

So let's move on to talk about some of the keys to commercial success in this marketplace. First of all, as I mentioned we're the first ESA to enter the market with Phase 3 data supporting both efficacy and safety with a once-monthly dosing. As I will show you we have an endpoint of safety as well as an endpoint of efficacy.

There will be some reimbursement changes in the way CMS reimburses for these products at about the time we enter the market. And we think that disruption of the status quo will favor a product with a dosing advantage of once a month like Hematide.

There are some very important convenience advantages for the dialysis centers, particularly for patients for dialysis centers where they are giving the drug 13 times a month; they can give ours once a month. And for patients that are being treated as outpatients for their anemia, who have chronic kidney disease but are not yet on dialysis, means a lot of convenience for those patients also.

Then we have Takeda and large partner expertise and infrastructure that we can rely on in the US for the launch of this product.

As I mentioned before,...

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