AMAG Up on Q3 Earnings Beat, Revenues Up
Shares of AMAG Pharmaceuticals, Inc. (AMAG) were up 2.1% immediately after the company reported better-than-expected third-quarter 2014 earnings. Third-quarter 2014 earnings of 6 cents per share were better than the Zacks Consensus Estimate of a loss of 8 cents per share and the year-ago loss of 1 cent per share.
Amag Pharmaceuticals, Inc - Earnings Surprise | FindTheBest
Revenues during the reported quarter increased 18% year over year to $25.5 million. Revenues were boosted by strong Feraheme sales. However, revenues fell short of the Zacks Consensus Estimate of $26.3 million.
Quarter in Details
During the reported quarter, U.S. sales of Feraheme amounted to $22.5 million, up 16.6% year over year. The increase was attributable to both price and volume growth. Notably, the company recorded the highest sales figure in any quarter since the launch of the drug in 2009.
Research and development (R&D) expenses increased 18.3% to $5.4 million, whereas selling, general and administrative (SG&A) expenses decreased 13.8% to $12.9 million.
Meanwhile, AMAG remains on track to acquire privately held pharmaceutical company Lumara Health for $675 million ($600 million in cash and $75 million in stock) in the fourth quarter.
The acquisition will add Makena to AMAG’s portfolio, the only U.S. approved drug to reduce the risk of preterm birth in women who are pregnant with one baby and have delivered one preterm baby spontaneously in the past. The drug enjoys seven-year orphan drug exclusivity which was granted in Feb 2011. AMAG expects combined product sales of around $350 million in 2015.
Feraheme Label Expansion Update
AMAG is looking to expand Feraheme’s label to include the intravenous (:IV) use of the drug for the treatment of iron deficiency anemia (IDA) in all adults with a history of unsuccessful oral iron therapy. The company had met the FDA in Jun 2014 regarding its supplemental New Drug Application (sNDA) for Feraheme, for which it had received a complete response letter in Jan 2014. AMAG intends to continue working with the FDA to expand Feraheme’s label and an update regarding the path forward should be out in the fourth quarter.
The company also intends to strengthen the portion of Feraheme’s U.S. label dealing with warnings and precautions to further enhance the safety of patients. The proposal is under FDA review.
Feraheme is currently approved for IV use as iron replacement therapy for the treatment of IDA in adults suffering from chronic kidney disease. AMAG has an agreement with Takeda Pharmaceuticals (TKPYY) for Feraheme, in the EU and Canada.
Takeda also filed a similar label expansion application in the EU for Rienso (EU trade name of Feraheme). A response from the Committee for Medicinal Products for Human Use (CHMP) and Health Canada is expected in the fourth quarter of 2014 and first quarter of 2015, respectively.
2014 Outlook Maintained
AMAG reiterated its outlook for 2014. AMAG continues to expect revenues in the range of $93 million to $102 million. The Zacks Consensus Estimate of $98 million is within the company’s guidance range.
Feraheme U.S. sales guidance for the year remains unchanged at $80–$87 million.
Our Take
We are pleased with the company’s third-quarter performance and its decision to acquire Lumara. The deal will significantly diversify AMAG’s portfolio and will boost its top-and bottom-line growth. Moreover, the successful expansion of Feraheme’s label will boost sales further.
AMAG currently carries a Zacks Rank #1 (Strong Buy). Some equally well-ranked stocks in the health care sector include Biogen Idec Inc. (BIIB) and Medivation, Inc. (MDVN).
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