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AMAG Pharmaceuticals Inc. (AMAG - Snapshot Report) posted first quarter 2012 loss of 58 cents per share, narrower than the Zacks Consensus Estimate of a loss of 62 cents and the year-ago loss of $1.05 per share. Higher revenues and lower operating expenses boosted earnings.

Quarterly revenues climbed 15.7% year-over-year to $15.5 million, just above the Zacks Consensus Estimate of $15 million. Increased sales of the company’s sole-marketed product, Feraheme, contributed to the revenue growth.

Quarterly Highlights

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

In the reported quarter, net sales of Feraheme amounted to $13.6 million, up from $10.9 million reported in the first quarter of 2011. Additionally, Feraheme non-dialysis provider demand in first quarter of 2012 was 30% higher than the prior-year quarter and 10% higher than the fourth quarter of 2011.

Total operating costs (including cost of goods sold) in the quarter amounted to $28.3 million, down from $36.2 million recorded in the first quarter of 2011, as a result of the company’s restructuring plans announced in the fourth quarter of 2011. Both research & development (R&D) expenses and selling, general and administrative (SG&A) expenses were on the downswing in the reported quarter.

Outlook Reaffirmed

The company reiterated its guidance for 2012. It expects total revenue of about $79 – $83 million. The Zacks Consensus Estimate of $77 million lies within the company’s guidance range.

For 2012, Feraheme sales are expected to amount to $53 - $57 million, excluding any royalties from sales in the ex-US markets.

Further, AMAG expects operating expenses (excluding cost of goods sold) in the range of $90 - $95 million, with R&D expenses expected in the range of $40 - $45 million and SG&A expenses amounting to $50 - $55 million.

The company expects to end 2012 with cash and investments of $225 - $300 million.

Our Take

We currently have a Neutral recommendation on the stock. The stock carries a Zacks #3 Rank (short-term Hold rating). We expect AMAG to become cash flow positive by the end of 2012 riding on Feraheme’s uptake.

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