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Affymax may file for bankruptcy; cuts 75 percent of workforce

By Zeba Siddiqui

(Reuters) - Drugmaker Affymax Inc said it was considering selling itself or filing for bankruptcy among a range of alternatives, as it struggles to stay afloat following the recent recall of its sole commercial product, the anemia drug Omontys.

Affymax's shares slumped nearly 57 percent to $1.27 in extended trade on Monday, not far above the $1.00 minimum average trading price required to stay listed on the Nasdaq.

The company also said it would fire its chief commercial officer, slash about 230 jobs -- or about 75 percent of its workforce -- and may reduce headcount further to cut costs and reorganize into a "significantly smaller company."

"If the company and (partner) Takeda are unable to rapidly identify and rectify the causes of the safety concerns to the satisfaction of the FDA, which is highly uncertain, Omontys may be permanently withdrawn from the market," Affymax said in a regulatory filing on Monday. (http://r.reuters.com/weh76t)

Affymax and its Japan-based partner Takeda Pharmaceutical Co Ltd's <4502.T> recall of all lots of Omontys in February, citing deaths and other serious adverse events, sent the company's shares crashing 85 percent.

MLV & Co analyst Ed Arce, who had warned last month that Affymax had no other pipeline to speak of, said his "working assumption" now was that the recall would be permanent.

Analysts have also estimated that a full recall of Omontys would bolster sales of Epogen, a rival drug made by Amgen Inc .

Omontys launched last March as a treatment for anemia in patients on dialysis, and promised a more convenient dosage schedule than Epogen.

TAKEDA HANDOVER

Affymax also said on Monday that it was shifting most activities related to the investigation of the recall to Takeda as it could not estimate if it had enough financial resources to complete the probe.

Affymax reported a cash balance of about $67 million as of February end. It had liabilities that included potential contract manufacturing organization commitments of up to an estimated $33 million and outstanding debt obligations of up to about $11 million under its existing credit facility.

It also expects to incur between $8 million and $10 million in costs related to the job cuts.

"(Affymax) is particularly dependent on Takeda's willingness to continue the collaboration in a modified form that reduces the company's operating expenses and responsibilities under the collaboration," the drugmaker said.

This arrangement would reduce Affymax's share in Omontys profits, if the drug were to re-enter the market.

Affymax shares closed at $2.92 on the Nasdaq on Monday, nearly 82 percent off the price they traded at before news of the recall. In that time, Amgen's shares have risen 4 percent to its Monday close of $90.39.

(Reporting by Zeba Siddiqui in Bangalore; Editing by Sriraj Kalluvila and Anthony Kurian)

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