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Affymax up 32 Percent on Favorable Agreement Terms

Biopharma company Affymax (NASDAQ: AFFY) rose 32 percent in Friday’s trading session after it announced in an 8-K filing that it had terminated an agreement with supplier, Lonza Sales Ltd. Lonza was the supplier of the active agreement in OMONTYS, an anemia drug that Affymax voluntarily recalled after life-threatening and fatal events were reported.

In addition, the company entered into an agreement to resolve all claims with Nektar Therapeutics to resolve money owed to the company. Nektar was also involved in the manufacture of the drug.

An article on The Street sees bullish potential in the stock.

The full release is below:

Affymax, Inc. (the “Company”) entered into a letter agreement (the “Lonza Termination Agreement”) with Lonza Sales Ltd. (“Lonza”) dated May 28, 2013 to terminate a Supply Agreement by and between the Company and Lonza, dated September 29, 2008, to terminate each of the party’s respective obligations regarding the manufacture and supply of the active ingredient in OMONTYS (the “Lonza Agreement”), and to resolve certain disputes relating to orders, commitments and other obligations arising from the Lonza Agreement related to the termination of manufacturing as a result of the voluntary recall from the market of OMONTYS.

The Company also entered into a letter agreement and related amendment (the “Nektar Settlement Agreement”) with Nektar Therapeutics (“Nektar”) dated May 29, 2013, to resolve and settle certain disputed and undisputed amounts owed by the Company to Nektar under both a License, Manufacturing & Supply Agreement between the parties dated April 8, 2004, as amended, for the supply of raw material necessary for the manufacturing of OMONTYS (the “Nektar Agreement”), and a Master Services Agreement between the parties dated as of October 13, 2011 (together with associated project addenda, the “MSA”). The Nektar Amendment provides that during the period of suspension of the manufacture and commercial distribution of OMONTYS by the Company and its marketing partner, Takeda Pharmaceutical Company Limited, which suspension was jointly announced on February 23, 2013 (the “Suspension Period”), the Company’s right to submit purchase orders and obligation to submit quarterly rolling forecasts to Nektar under the Nektar Agreement, shall be suspended. The Nektar Settlement Agreement further provides that if the Company desires to terminate the Suspension Period and reinstate its purchase right, the Company would be obligated to pay $5,000,000 no later than one day after delivery of such notice to Nektar. If the Company does not terminate the Suspension Period by May 1, 2014, the Nektar Amendment provides that the Nektar Agreement shall terminate.

The Company made payments totaling $5,975,000 to Lonza and Nektar in consideration for entering into the Lonza Termination Agreement and the Nektar Settlement Agreement.

[stock-tools exchange="NASDAQ" symbol="AFFY" image_height="180" image_width="300"]

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