Wider-than-Expected Q4 Loss at AMAG - Analyst Blog

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AMAG Pharmaceuticals Inc. 's ( AMAG ) fourth quarter 2013 loss of 17 cents per share was wider than the Zacks Consensus Estimate of a loss of 10 cents and the year-ago loss of 14 cents per share. The wider loss was attributable to higher expenses.

Revenues during the reported quarter increased 2.7% to $21.7 million. The increase in revenues was primarily due to higher product sales. Revenues also beat the Zacks Consensus Estimate of $21 million.

Quarterly Highlights

AMAG records revenues mainly from Feraheme, an injectable drug for intravenous use as iron replacement therapy for the treatment of iron deficiency anemia (IDA) in adults suffering from chronic kidney disease (CKD).

In the fourth quarter of 2013, U.S. net sales of Feraheme amounted to $19.0 million, up 32% year over year. The increase was attributable to both price and volume growth. We note that AMAG has an agreement with Takeda Pharmaceuticals ( TKPYY ) for Feraheme, in the EU and Canada. Rienso (EU trade name of Feraheme) was launched in the EU and Canada during the fourth quarter of 2012 for the same indication.

Total operating expenses in the quarter increased 4.7% year over year to $25.7 million. While research and development (R&D) expenses declined 16.7%, selling, general and administrative (SG&A) expenses increased 25.1% in the reported quarter.

2013 Numbers

AMAG's full year 2013 loss of 49 cents per share was wider than the Zacks Consensus Estimate of a loss of 39 cents but narrower than the year-ago loss of 61 cents per share. The narrower year-over-year loss was attributable to lower expenses.

Revenues during the year decreased 5.3% to $80.9 million. The decrease in revenues was primarily due to higher license fee and collaboration revenues recorded in 2012. Revenues nominally missed the Zacks Consensus Estimate of $81 million.

Feraheme Label Expansion Update

Last month, AMAG received a huge blow in its effort to expand Feraheme's label for a broader indication. The U.S. Food and Drug Administration (FDA) declined to approve the company's supplemental new drug application (sNDA) for Feraheme in the present form and issued a complete response letter (CRL).

AMAG is looking to get Feraheme's label expanded as an intravenous (IV) use for the treatment of IDA in all adults suffering from CKD with a history of unsuccessful oral iron therapy. The U.S. regulatory body has asked AMAG to conduct additional clinical trials for the broader indication.

Moreover, the FDA recommended the company to evaluate alternative dosing and/or administration of Feraheme. AMAG intends to work closely with the FDA to decide on the future course of action. AMAG believes that the successful label expansion of Feraheme may double its market opportunity to over $500 million annually.

Takeda also filed a similar label expansion application in the EU for Rienso. The company expects a decision during the second half of 2014. Rienso's successful label expansion in the EU will trigger milestone payments and tiered, double-digit royalties on sales of the drug to AMAG.

2014 Outlook

AMAG provided its financial guidance for 2014. The company expects to generate total revenue in the range of $88-$100 million excluding the potential milestone payment from Takeda. The Zacks Consensus Estimate for 2014 revenues of $107 million is above the company's guidance range.

Feraheme U.S. sales for the year are expected in the range of $75-$85 million. AMAG also expects to generate around $13−$15 million of revenues from other sources. The company's operating expense guidance is in the range of $80-$85 million (R&D expenses: $20−$22 million; SG&A expenses: $60−$63 million).

AMAG intends to expand its product portfolio by way of acquisitions and in-licensing deals.

Our Take

Though pleased with Feraheme's performance in the fourth quarter of 2013, we are disappointed with the CRL on Feraheme's label expansion. The CRL will further delay the approval of Feraheme in the broader indication. Moreover, the additional trials as mandated by the FDA will lead to a surge in the company's operating expenses. We expect investor focus to stay on updates regarding the company's efforts to expand Feraheme's label.

AMAG currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks include Actelion Ltd. ( ALIOF ) and Gentium ( GENT ). Both the stocks hold a Zacks Rank #1 (Strong Buy).



ACTELION LTD (ALIOF): Get Free Report

AMAG PHARMA INC (AMAG): 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 The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: IDA , CRL , ALIOF , AMAG , GENT

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