Auriga: FDA Approves Peginesatide

In a research report released this morning by Auriga, Affymax AFFY announced the FDA approval of Peginesatide, an anemia treatment for adult patients with chronic kidney disease. According to Auriga, “First pass approval is in line with our expectations and appears to have been anticipated by the street given the recent run up in AFFY shares. Approval triggers a $50MM milestone payment from Takeda, which should be recognized this quarter. AFFY expects to launch peginesatide early in 2Q12. The commercialization of peginesatide will not easy given Amgen's (AMGN, NR) market dominance, but we believe AFFY can carve out a profitable segment of the ESA market without significant penetration of the two big dialysis chains. Given peginesatide's convenience attributes and concentrated market, we believe AFFY's valuation leaves room for further upside. We are maintaining our Buy rating and $17 price target.” Affymax closed yesterday at $14.31.