Affymax, once a promising biotech, is dissolving

Affymax ($AFFY), which 18 months ago appeared poised for big things, is dissolving the company and will pay shareholders pennies for the shares that traded at $27 a share before patient deaths led it to pull its Omontys anemia drug from the market.

The news comes two weeks after Affymax and Japan's Takeda, its partner on Omontys, announced they would dissolve their licensing agreement in September. Takeda said that an extensive investigation found no quality or manufacturing issues for the treatment used during dialysis but neither could it find the root cause of serious hypersensitivity reactions in some patients.

"In light of these findings, Omontys would not be permitted to be returned to the market, and Takeda is working with the FDA to withdraw approval," Affymax said today. "Based on this outcome, the board has determined it to be in the best interests of the stockholders to dissolve the company." It said it has about $4 million cash on hand.

The companies in February 2013 voluntarily recalled all lots of the drug after the FDA reported receiving reports of 19 serious reactions; three of those patients died. The news eviscerated Affymax's share price, which plunged 85% that day and swept away about a half billion dollars in the biotech's market cap. Ten days earlier, the dialysis provider Fresenius said it was stopping an Omontys pilot program, after seeing "infrequent" allergic reactions in patients after their first dose, a "small number" of those serious. The overall reaction rate was about 0.2%, with about one-third of those requiring "prompt medical attention and in some cases hospitalization," the companies said at the time. But those reactions raised serious concerns and the drug was pulled.

Omontys had been seen as the first competitor to Amgen's ($AMGN) longtime blockbuster Epogen. Omontys had to be injected only once a month, compared to three times a month for Epogen.

Affymax said Tuesday it expects an orderly dissolution of the company but could abandon that plan if it "receives an offer for a transaction that will, in the view of the board, provide superior value to stockholders."

- here's the Affymax announcement
- and the joint release