The Slow Death of Affymax, Inc. (OTCMKTS:AFFY)

The tough period for Affymax, Inc. (OTCMKTS:AFFY) is nowhere close to its end. In fact the situation is getting worse as their stock is currently being traded at $1.01.

This is a pretty decent price for a company that is being traded in the OTC Markets, but it’s nothing compared to the $21.56 peak that they had in January this year. After AFFY‘s stock price dropped from $16.52 to $2.42 over the weekend between February 22 and February 25 they had no possibility to pick themselves from the ground apart from a few promotional campaigns by paid outlets.

Things got even worse after they were delisted from the NASDAQ Stock Market, due to the fact that they were operating as a public shell. The situation now doesn’t look very good, especially when you look at their latest financial report and take into consideration the fact that they have no current product that can generate revenue. Let’s take a look at the numbers of prime interest from their latest quarterly report covering the period ended March 31, 2013.

• cash: $46 thousand
• total assets : $66 thousand
• current liabilities: $70 thousand
• total liabilities: $81 thousand
• revenue: $844
• net loss: $26 thousand

We’ve see worse financial data in the OTC Markets, but compare their financials to other NASDAQ companies with the trouble that AFFY are experiencing and the picture becomes rather grim. The trouble for AFFY comes when the only actual product they had needed to be taken off the shelves thus leading them to the situation that they are now in.

The exact situation can be explained in a few words: inability to generate revenue. This is a bad thing for a pharmaceutical company as it will take long before they can launch any product due to the extensive period of research, development and approval from the FDA.

As we wrote in our previous article about AFFY, the situation in the company is getting worse after they voluntarily pulled out of sale the only drug that they were manufacturing, OMONTYS. The voluntary recall was due to the fact that OMONTYS, caused severe damage to anemia patients treated with it, including anaphylaxis. It even caused death, as a total of three patients that were injected with the drug found a tragic end.

The question of whether they will manage to address the problems cause by their drug and refine it remain. Another even more serious question for long-term investment would be connected with the credibility that their drug has. Even if they manage to fix the problems which caused the severe side effects from OMONTYS the drug already has created a bad image for itself and may very well prove to be unmarketable.

All in all AFFY‘s stock at the moment is not a choice for long-term investments as they are in a very delicate situation. More experienced traders may profit with short term investments, but all should remember to do their due diligence and weigh out the risks.