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AMAG Pharmaceuticals (AMAG) Down 21.5% Since Last Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for AMAG Pharmaceuticals . Shares have lost about 21.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AMAG Pharmaceuticals due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

AMAG Q4 Loss Wider Than Expected, Revenues Beat Estimates

AMAG incurred an adjusted loss of 35 cents per share in the fourth quarter of 2019, wider than the Zacks Consensus Estimate of a loss of 34 cents and the year-ago quarter’s loss of 11 cents.

Moreover, quarterly revenues of $90 million grew approximately 1.8% from $88.1 million a year ago. The top line also beat the Zacks Consensus Estimate of $89 million.

Quarter in Detail

Makena subcutaneous auto-injector recorded sales of $25.6 million, reflecting a decrease of 46.9% year over year.

Feraheme sales were $41.7 million in the fourth quarter, rising 18.5% year over year. Intrarosa generated sales of $6.5 million in the reported quarter compared with $5.9 million in the year-ago period.

In the fourth quarter of 2019 the company earned collaboration revenues of $16.3 million recognized in connection with a termination and settlement agreement entered into with Daiichi Sankyo, Inc. related to a clinical trial collaboration agreement that AMAG acquired as part of the Perosphere acquisition. Per the settlement agreement with Daiichi Sankyo, AMAG received $10 million in cash and recognized an additional $6.3 million of deferred revenues in December 2019.

The company incurred impairment charges of $155.0 million in the quarter. During the fourth quarter of 2019, the company identified indicators of impairment for the Makena subcutaneous auto-injector, Intrarosa and Vyleesi asset groups related to the unfavorable FDA Advisory Committee recommendation for Makena and completed a strategic review, which led it to consider the divestiture of Intrarosa and Vyleesi.

2020 Guidance

AMAG expects full-year revenues of $230-$280 million.

Other Updates

We remind investors that in October 2019, AMAG announced that the FDA’s Bone, Reproductive and Urologic Drugs Advisory Committee analyzed data from the PROLONG trial on Makena. The drug is approved to reduce preterm birth in pregnant women, who have had a prior spontaneous preterm delivery. Nine of 16 advisory committee members voted to recommend the FDA to pursue the withdrawal of Makena from the market, while the rest voted in favor of keeping the product in the market under an accelerated approval and requested a new confirmatory trial. The regulatory agency will consider the advisory committee's recommendation when making its decision but is not bound by the same.

Following the advisory committee meeting, the company saw some market contraction and additional net price pressure on Makena in the fourth quarter.  The company remains committed to working with the FDA to find the path that could allow at-risk women to have continued access to Makena and to manage Makena-related expenses so that the product is cash flow positive.

The company acknowledged the Makena challenges in during its strategic review, resulting in the decision to divest Intrarosa and Vyleesi. This decision is expected to position the company well to continue the development of ciraparantag and AMAG-423, see continued growth of Feraheme, and carry on with its work to retain patient access to Makena.


 

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

VGM Scores

Currently, AMAG Pharmaceuticals has an average Growth Score of C, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision looks promising. Notably, AMAG Pharmaceuticals has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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