After a long time
AMAG Pharmaceuticals Inc.
) got a chance to announce some good news. AMAG and partner Takeda
stated that Health Canada has approved its sole marketed drug
Feraheme as an intravenous (IV) iron replacement therapeutic for
the treatment of iron deficiency anemia (
) in chronic kidney disease (CKD) patients. AMAG is entitled to
receive a milestone payment of $3 million from Takeda upon first
commercial sale in Canada.
Feraheme is already marketed in the US for the disease and is
under review in the European Union (
) where it is expected to be cleared in the first quarter of next
year. The drug's sales have been struggling as changes in dialysis
reimbursement have negatively impacted reimbursement for high
priced drugs like Feraheme.
Separately, AMAG recently presented preliminary data from a
trial which evaluated the safety and efficacy of a single infusion
of 1020 mg of Feraheme in patients with IDA at the American Society
of Hematology meeting (
). The Feraheme label currently allows two sequential 510mg
infusions 3 to 8 days apart. The data demonstrated the efficacy of
the 1020 mg infusion and highlighted that a single infusion of
Feraheme did not cause any serious adverse event. However, around
44% of the 36 patients experienced minor adverse events.
As a reminder, in late October 2011, AMAG announced the
termination of its deal to merge with Colorado based
Allos Therapeutics, Inc
). AMAG had entered into an agreement to merge with Allos in July
this year in an all stock deal that had a total equity value of
$686 million. The deal failed to receive sufficient shareholder
votes necessary for closure. AMAG management thus decided to
restructure its expenses, including a workforce reduction of 25% to
bring it in line with expected sales from Feraheme.
AMAG is also conducting a large global registrational program to
expand the label for Feraheme for IDA treatment irrespective of the
underlying cause. If Feraheme gets approval for the broad label it
would boost sales significantly. Moreover, AMAG hopes to generate
$60 million in revenue from Feraheme in 2012, representing low
AMAG thus hopes to turn profitable in 2013 from a combination of
expense reduction policies, completion of the IDA program,
potential Feraheme revenue in Canada and EU and moderating revenue
growth in US.
We note that AMAG management is evaluating all strategic
alternatives for the company, including a potential sale, merger,
acquisition, or in-licensing opportunity and has hired
Jefferies & Company, Inc.
) as a financial advisor to help it evaluate these strategic
We currently have an Outperform recommendation on the stock. The
stock carries a Zacks #2 Rank (short term "Buy" rating). We are
optimistic about the company's new restructuring plan and its
efforts to explore strategic initiatives, which we believe will
bring it on track after the failed Allos deal.
ALLOS THERAPEUT (
): Free Stock Analysis Report
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): Free Stock Analysis Report
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