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AMAG Pharmaceuticals Inc.’s (AMAG - Snapshot Report) third quarter 2013 loss of 1 cent per share was narrower than the Zacks Consensus Estimate of a loss of 10 cents and the year-ago loss of 16 cents per share. The narrower loss was attributable to higher revenues.

Revenues during the reported quarter increased 21.8% to $21.6 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 third quarter of 2013, U.S. net sales of Feraheme amounted to $19.3 million, up 19.5% year over year. The increase was attributable to both price and volume growth. AMAG mentioned in its press release that this was Feraheme’s highest quarterly sales since its launch. The company expects fourth quarter 2013 Feraheme sales to increase 15% to 30% year over year.

AMAG has an agreement with Takeda Pharmaceuticals (TKPYY) for Feraheme, in the EU and Canada. We note that Rienso (EU trade name of Feraheme) was launched in the EU and Canada during the fourth quarter of 2012.

Total operating expenses in the quarter increased 8.3% year over year to $19.5 million. While research and development (R&D) expenses declined 13.9%, selling, general and administrative (SG&A) expenses increased 22.8% in the reported quarter.

Feraheme Label Expansion

AMAG is also working on expanding Feraheme’s label. AMAG is looking to get Feraheme’s label expanded for the treatment of CKD adults suffering from IDA with a history of unsuccessful oral iron therapy. In Dec 2012, the company submitted a supplemental new drug application (sNDA) to the U.S. Food and Drug Administration (FDA) for Feraheme. Last week, the U.S. regulatory authority pushed back the originally assigned target date for Feraheme by three months to Jan 21, 2014.

We note that last month AMAG received a notification from the FDA regarding the sNDA on Feraheme. The FDA stated in its notification that it has identified some shortcomings while reviewing the application which stopped discussion regarding labelling and post-marketing requirements/commitments.

Takeda also filed a similar label expansion application in the EU for Rienso. The company expects a decision during the first half of 2014.

2013 Outlook

Apart from reporting its financial results for the third quarter 2013, AMAG also raised its revenue guidance for 2013. The company now expects to generate total revenue in the range of $78–$81 million in 2013 (previous: $77–$80 million). The current Zacks Consensus Estimate for 2013 revenues of $80 million is on the higher end of the company’s guidance range.

The company also increased its Feraheme U.S. sales guidance to the range of $69 million to $71 million from the previous range of $67 million to $70 million.

AMAG also expects to generate around $9−$10 million from revenues from other sources.

Meanwhile, the company lowered its operating expenses guidance to the range of $76–$80 million from the range of $78–$82 million.

We are pleased with Feraheme’s performance in the third quarter of 2013. The raised revenue guidance also encourages us. However we expect investor focus to stay on Feraheme’s label expansion.

AMAG currently carries a Zacks Rank #3 (Hold). Stocks such as Actelion Ltd. (ALIOF) and Isis Pharmaceuticals, Inc. (ISIS - Analyst Report) look better positioned with a Zacks Rank #1 (Strong Buy).

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