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AMAG Pharmaceuticals, Inc. (AMAG - Snapshot Report) received a huge blow when 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’s shares skid more than 4.5% on the news.

AMAG is looking to get Feraheme’s label expanded as an intravenous (IV) use for the treatment of iron deficiency anemia (IDA) in all adults suffering from chronic kidney disease (CKD) with a history of unsuccessful oral iron therapy.

The FDA, while issuing the CRL stated that the information provided by AMAG was insufficient to support the approval of the additional indication. The U.S. regulatory body has asked AMAG to conduct additional clinical trials for the broader indication. The primary composite safety endpoints of these trials should be serious hypersensitivity/anaphylaxis, cardiovascular events and death.

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.

We are extremely disappointed with the news. The CRL will further delay the approval of Feraheme in the broader indication. Moreover, conducting additional trials will lead to a surge in the company’s operating expenses. We expect investor focus to stay on how the company deals with the setback.

Feraheme is currently approved as an injectable drug for intravenous use as iron replacement therapy for the treatment of IDA in adults suffering from CKD. AMAG is expecting U.S. net Feraheme product revenues of $71−$71.5 million for the year 2013 compared with $58.3 million in 2012. The company intends to report its fourth quarter and full year 2013 results in mid-Feb 2014.

AMAG currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks include Affymetrix Inc. (AFFX - Analyst Report), Actelion Ltd. (ALIOF) and Gentium . All these stocks hold a Zacks Rank #1 (Strong Buy).

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