Revenues Decline at AMAG - Analyst Blog

By Zacks Equity Research,

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AMAG Pharmaceuticals Inc. ( AMAG ) posted fourth quarter 2011 loss of 87 cents per share, narrower than the Zacks Consensus Estimate of a loss of $1.11 and the year-ago loss of 94 cents per share. In 2011, loss came in at $3.64 per share, narrower than the Zacks Consensus Estimate of a loss of $3.87 and the year-ago loss of $3.90 per share.

Quarterly revenues declined 13.4% year-over-year to $14.9 million, but were in line with the Zacks Consensus Estimate. Full-year revenues also slipped 7.6% from 2010 levels to $61.2 million. However, annual revenues were in line with the Zacks Consensus Estimate.

Revenues went down primarily due to a decline in revenues from dialysis organizations following the January 2011 implementation of the new Medicare prospective payment system for end-stage renal disease patients.

Quarterly Highlights

AMAG records revenue mainly from Feraheme, the company's sole marketed product. Feraheme is an injectable drug for intravenous use as an iron replacement therapy for the treatment of iron deficiency anemia ( IDA ) in adult patients suffering from chronic kidney disease (CKD).

In the reported quarter, net sales of Feraheme amounted to $12.8 million, down from $15.2 million reported in the fourth quarter of 2010. However, Feraheme non-dialysis provider demand in fourth quarter was 16% higher than the prior-year quarter.

Total operating costs in the quarter were $34.4 million, down from $37.4 million recorded in the fourth quarter of 2010. Both research & development (R&D) expenses and selling, general and administrative (SG&A) expenses were on the downswing in the final quarter of 2011.

AMAG is working with Jefferies & Company, a subsidiary of Jefferies Group, Inc. ( JEF ) to evaluate all strategic alternatives for the company, including a potential sale, merger, acquisition, or in-licensing opportunity.

Forecast for 2012

For 2012, AMAG expects Feraheme sales to amount to $53 - $57 million, excluding any royalties from sales outside the US.

Further, the company expects operating expenses in the range of $90 - $95 million, with R&D expenses expected in the range to come in at $40 - $45 million and SG&A expenses amounting to $50 - $55 million.

AMAG expects to end 2012 with cash and investments of $225 - $300 million. Moreover, it expects to achieve breakeven cash flow in 2012.

Our Take

We currently have a Neutral recommendation on the stock. The stock carries a Zacks #4 Rank (short-term Sell rating). While we are slightly disappointed by the weak fourth quarter and 2011 results, we are optimistic about the company's efforts to explore strategic initiatives, which we believe will bring AMAG on track.

AMAG PHARMA INC ( AMAG ): Free Stock Analysis Report
JEFFERIES GP-NW ( JEF ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: AMAG , IDA , JEF

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