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Affymax Reports Third Quarter 2012 Financial Results



  Affymax Reports Third Quarter 2012 Financial Results

Business Wire

PALO ALTO, Calif. -- November 08, 2012

Affymax, Inc. (NASDAQ: AFFY) today reported financial results for the third
quarter ended September 30, 2012. The net loss for the third quarter of 2012
was $24.6 million (or ($0.68) per share) compared to a net loss of $9.8
million (or ($0.28) per share) for the third quarter of 2011.

Affymax recognized total revenue for the quarter ended September 30, 2012, of
$13.6 million compared to $13.2 million for the quarter ended September 30,
2011. Revenue for the quarter ended September 30, 2012 primarily consisted of
a $10.4 million profit equalization payment earned from its partner, Takeda
Pharmaceutical Company Limited (Takeda) related to OMONTYS^® (peginesatide)
Injection product sales during the period. OMONTYS net product sales, as
provided by Takeda, were $15.0 million for the quarter. In addition, Affymax
earned a $2.25 million milestone payment from Takeda during the quarter as a
result of the commercial progress achieved with OMONTYS during its product
launch. Revenue for the quarter ended September 30, 2011 consisted of a $10
million regulatory milestone payment from Takeda and pre-approval research and
development and commercialization expenses reimbursable by Takeda.

Research and development expenses for the quarter ended September 30, 2012,
were $11.4 million compared to $14.9 million for the quarter ended September
30, 2011. The decrease was primarily due to reduced consultant and
personnel-related costs as a result of the completion of both the filing of
the OMONTYS New Drug Application with the U.S. Food and Drug Administration
(FDA) in May 2011 and the preparation for an FDA advisory committee meeting
which occurred in December 2011. These decreases were partially offset by
clinical trial activity for the company’s Phase 3b trial during the current
quarter.

Selling, general and administrative expenses for the quarter ended September
30, 2012, were $26.2 million compared to $8.2 million for the quarter ended
September 30, 2011. The increase was primarily due to increases in commercial
and medical affairs costs, including personnel-related costs associated with
the establishment of its commercial and medical affairs field organizations,
as the company continues to execute on the launch and commercialization of
OMONTYS.

The company had cash and investments of $100.0 million as of September 30,
2012.

Updated Financial Guidance

Affymax is updating its financial guidance for 2012. With respect to
collaboration revenue, Affymax has earned milestone payments of $60.3 million
and is not expecting additional milestone payments in 2012, consistent with
its previously issued guidance. Affymax is not providing profit equalization
payment or OMONTYS net product sales guidance for 2012.

With respect to operating expenses, Affymax now expects to incur $130 million
to $135 million in total operating expenses for 2012, excluding stock based
compensation. This reduction from the previously issued operating expense
guidance of $135 million to $145 million for 2012 is primarily driven by lower
than expected increases in selling, general and administrative expenses as a
result of cost savings.

“We continue to be pleased with our commercial progress since the launch of
OMONTYS in the second quarter of this year,” said John Orwin, chief executive
officer of Affymax. “A number of dialysis providers are evaluating the
conversion process and experience with OMONTYS, including a key large dialysis
organization and four medium dialysis organizations, while some of the smaller
dialysis providers have completely converted centers to the once-monthly
drug.”

Conference Call with Management Today

Management will host a teleconference and webcast to provide a general
business overview, as well as to discuss third quarter 2012 financial results
today, November 8, 2012, at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time).

Interested parties can listen to the live teleconference by dialing (866)
393-1565 from the U.S. or +1 (973) 409-9608 for international callers.
Individuals may access the live audio webcast by visiting:
http://www.investors.affymax.com/events.cfm. A replay of the webcast will be
available on the Company's website for 30 days following the live event.

About Affymax, Inc.

Affymax, Inc. is a biopharmaceutical company based in Palo Alto, California.
Affymax's mission is to discover, develop and deliver innovative therapies
that improve the lives of patients with kidney disease and other serious and
often life-threatening illnesses.

The company's first marketed product, OMONTYS^® (peginesatide) Injection, was
approved by the U.S. Food and Drug Administration (FDA) in March 2012. For
additional information, please visit www.affymax.com.

This release contains forward-looking statements, including statements
regarding financial projections and condition, the continuation and success of
the Company’s collaboration with Takeda and the commercialization of OMONTYS.
The Company’s actual results may differ materially from those indicated in
these forward-looking statements due to risks and uncertainties, including
risks relating to factors affecting the commercial potential of OMONTYS, the
continued safety and efficacy of OMONTYS, industry and competitive
environment, regulatory requirements by the FDA or other regulatory
authorities, including post-marketing studies, trials and Risk Evaluation and
Mitigation Strategy, potential for disruptions to supply, financing
requirements and ability to access capital, and other matters that are
described in Affymax’s Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission. Investors are cautioned not to place undue reliance
on these forward-looking statements, which speak only as of the date of this
release. The Company undertakes no obligation to update any forward-looking
statement in this press release.

AFFYMAX, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share data)
                                                                 
                                                  September 30,   December 31,
                                                  2012            2011
                                                  (Unaudited)      
Assets
Current assets
Cash and cash equivalents                         $  89,169       $  54,339
Short-term investments                            9,684           44,165
Receivable from Takeda                            9,710           6,937
Inventory                                         2,040           —
Deferred tax assets                               351             351
Prepaid expenses and other current assets         7,267           1,828       
Total current assets                              118,221         107,620
Property and equipment, net                       3,024           3,013
Restricted cash                                   1,135           1,135
Deferred tax assets, net of current               6,888           6,888
Other assets                                      3,481           339         
Total assets                                      $  132,749      $  118,995  
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable                                  $  3,766        $  941
Accrued liabilities                               17,749          13,733
Accrued clinical trial expenses                   2,500           3,365
Deposit from Takeda                               559             1,998
Notes payable, current                            2,766           —           
Total current liabilities                         27,340          20,037
Long-term income tax liability                    10,513          10,411
Advance from Takeda                               9,310           6,121
Deferred revenue                                  12,386          5,174
Notes payable, net of current                     7,234           —
Other long-term liabilities                       810             1,255       
Total liabilities                                 67,593          42,998
Commitments and contingencies                     —               —
Stockholders’ equity
Common stock: $0.001 par value, 100,000,000
shares authorized, 36,663,946 and 35,733,181      37              36
shares issued and outstanding at September 30,
2012 and December 31, 2011, respectively
Additional paid-in capital                        540,560         526,244
Accumulated deficit                               (475,442    )   (450,301   )
Accumulated other comprehensive income            1               18          
Total stockholders’ equity                        65,156          75,997      
Total liabilities and stockholders’ equity        $  132,749      $  118,995  
                                                                              

AFFYMAX, INC.
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands, except per share data)
(Unaudited)
                                                    
                          Three Months Ended         Nine Months Ended
                          September 30,              September 30,
                          2012          2011         2012          2011
Revenue:
Collaboration revenue     $ 13,603      $ 13,204     $ 79,562      $ 44,029
License and royalty       4             5            9             14         
revenue
Total revenue             13,607        13,209       79,571        44,043     
Operating expenses:
Research and              11,416        14,863       40,486        51,606
development
Selling, general and      26,181        8,172        62,936        24,426     
administrative
Total operating           37,597        23,035       103,422       76,032     
expenses
Loss from operations      (23,990   )   (9,826   )   (23,851   )   (31,989   )
Interest income           23            45           56            136
Interest expense          (668      )   (38      )   (1,316    )   (111      )
Other income (expense),   (3        )   3            (29       )   39         
net
Net loss before
provision for income      (24,638   )   (9,816   )   (25,140   )   (31,925   )
taxes
Provision for income      —             —            (1        )   (1        )
taxes
Net loss                  $ (24,638 )   $ (9,816 )   $ (25,141 )   $ (31,926 )
Net loss per share:
Basic and diluted         $ (0.68   )   $ (0.28  )   $ (0.70   )   $ (0.98   )
Weighted-average number
of shares used in
computing basic and       36,350        35,578       36,067        32,474     
diluted net loss per
share
                                                                    
Total comprehensive       $ (24,641 )   $ (9,844 )   $ (25,158 )   $ (31,915 )
loss
                                                                              

AFFYMAX, INC.
COLLABORATION REVENUE
(in thousands)
                                                       
                              Three Months Ended        Nine Months Ended
                              September 30,             September 30,
                              2012         2011         2012          2011
OMONTYS net product sales     $ 15,008     $ —          $ 15,008      $ —
(as provided by Takeda)
Total Collaboration costs &     23,406       —            42,920        —
expenses (1)
OMONTYS collaboration           (8,398 )     —            (27,912 )     —
profit (loss)
                                                                         
Affymax share of                (4,199 )     —            (13,956 )     —
collaboration profit (loss)
Net reimbursement of            14,576       —            27,004        —
Affymax costs & expenses
Profit equalization payment     10,377       —            13,048        —
earned by Affymax (2)
Milestone payments            2,250        10,000       60,250        10,000
Revenue previously deferred   441          —            441           —
related to API
Revenue recognized under      —            —            —             26,606
CAPM (3)
Net expense reimbursement     535          3,204        5,823         7,423
after CAPM (4)
Total collaboration revenue   $ 13,603     $ 13,204     $ 79,562      $ 44,029
                                                                         

    (1)   Total Collaboration costs and expenses include costs incurred by
          Affymax and Takeda including amounts provided to us by Takeda.
           
          Profit equalization payment earned is comprised of Affymax’s share
    (2)   of collaboration profit or loss as well as net reimbursement for
          commercialization costs and certain post-marketing development costs
          incurred subsequent to the launch of OMONTYS on March 27, 2012.
           
          Revenue recognized under CAPM (Contingency Adjusted Performance
          Model) includes amounts received related to upfront payments,
          development milestones, purchase of active pharmaceutical
    (3)   ingredient, or API, and reimbursement of development expenses. Under
          CAPM, revenue for these amounts was recognized ratably over the
          expected development period, which ended in May 2011 with the
          submission of the NDA for OMONTYS to the FDA.
           
          Net expense reimbursement after CAPM is comprised of two components:
          (i) net reimbursement of commercialization expenses and certain
          post-marketing development costs incurred subsequent to the
          submission of the NDA for OMONTYS in May 2011 and prior to the
    (4)   launch of OMONTYS on March 27, 2012, after which such costs are
          incorporated into the profit equalization payment and (ii) the
          reimbursement of those development expenses that fall under the
          70/30 expense split in our collaboration agreement with Takeda
          subsequent to the submission of the NDA for OMONTYS in May 2011.

Contact:

Affymax, Inc.
Sylvia Wheeler, 650-812-8861
Vice President, Corporate Communications
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