NEW YORK (AP) -- Shares of Amag Pharmaceuticals Inc. sank Thursday, a day after the anemia drug maker said it is no longer considering selling itself.
THE SPARK: Amag said it has decided to focus on improving sales of its drug Feraheme. The company said in November it had hired Jefferies & Co. to evaluate options for the company, including a possible sale.
On Wednesday, Amag said it named William Heiden as its new president and CEO and would shift its "focus from an active sale process" to business development and he growth of Feraheme. The company said Frank Thomas, who became interim CEO in November after Brian Pereira resigned, will go back to being chief operating officer.
Heiden, 52, is to join the company on Monday.
Amag said he has been chairman, president and CEO of GTC Biotherapeutics since June 2010 and will remain chairman of that company. Before that, according to Amag, Heiden was president and CEO of Elixir Pharmaceuticals and president and chief operating officer of Praecis Pharmaceuticals, a company that was acquired by GlaxoSmithKline PLC. He also worked for 15 years at Schering-Plough, now part of Merck & Co.
The Lexington, Mass., company is forecasting $53 million to $57 million in annual sales of Feraheme, an injection that treats iron deficiency in adults who have chronic kidney disease. That does not include sales in Europe, but a European Union advisory committee said in April that the drug should be approved.
THE BIG PICTURE: In November, Amag said it would cut costs by restructuring and eliminating about 25 percent of its jobs. Amag said it wanted to bring its spending in line with expected sales of Feraheme. It also announced the departures of Pereira, who had been CEO since November 2006, and Chief Commercial Officer Gary Zieziula.
Two weeks later the company said it was hiring Jefferies to its options.
Before the restructuring and Pereira's departure, Amag was trying to buy lymphoma drug maker Allos Therapeutics Inc. Amag shareholders rejected the $286 million all-stock deal in October.
THE ANALYSIS: Robert W. Baird & Co. analyst Christopher Raymond said he did not object to Amag's shift in strategy if there were no interested buyers, but he said the company's new plan creates additional risks. Raymond downgraded the shares to "Neutral" from "Outperform" and cut his price target to $17 per share from $21.
"M&A, as often as not, can harm shareholder value, despite every good intention," Raymond wrote.
SHARE ACTION: Amag Pharmaceuticals stock fell $2.04, or 12.7 percent, to $13.98 by mid-afternoon.
After the November announcement that Amag was considering a sale, its shares rose as much as 42 percent, but they returned about half that gain even before Wednesday's news.