AMAG Pharmaceuticals Inc. (AMAG - Snapshot Report) recently announced certain changes to its operating cost structure. The company intends to focus on Feraheme and boost its product portfolio with commercial stage assets.
AMAG’s global phase III iron deficiency anemia (IDA) clinical program for Feraheme is scheduled to complete this year. This should allow the company to file a supplemental New Drug Application (sNDA) for Feraheme.
AMAG is managing its internal development expenses so as to meet its future development requirements.
We note that Feraheme is approved in the US since June 2009. It is also approved in Canada and is marketed by Takeda Pharmaceuticals (TKPYY - Snapshot Report). Recently, Feraheme received marketing authorization in the EU where it will be launched in 2012 under the trade name of Rienso.
AMAG intends to outsource its manufacturing requirements and is divesting its own Cambridge, MA manufacturing facility. With the company deciding to divest its manufacturing facility, AMAG will now stop producing GastroMark. AMAG will be incurring one-time costs related to the GastroMark agreements of around $1.6 million in the second quarter.
The company also intends to cut its workforce by 45 positions by the end of this year and expects to incur restructuring costs of about $1 million. Of the $1 million, AMAG expects to recognize $0.5 million in the second quarter 2012.
AMAG stated that these restructuring efforts will help reduce operating expenses from early 2013. AMAG added that external research and development expenses related to the company’s IDA clinical development program will not be recurring, resulting in further reduction in the company’s 2013 operating expenses. The change in the manufacturing structure will also result in lower cost of goods sold in 2014.
We currently have a Neutral recommendation on the stock, which carries a Zacks #3 Rank (short-term Hold rating).