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AMAG In-Licenses Global Rights to Orphan Drug Candidate

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AMAG Pharmaceuticals, Inc. announced that it has acquired the global rights to develop/market digoxin immune Fab (ovine) (DIF) from the privately held Velo Bio, LLC. DIF, a polyclonal antibody is currently being evaluated for the treatment of severe preeclampsia in pregnant women.

We remind investors that in July 2015, AMAG entered into an option agreement with Velo Bio that granted the former an option to acquire the rights to this orphan drug candidate. Both companies have amended the original agreement. Consequently, AMAG will exercise its option to acquire DIF (now known as AMAG-423) for an upfront payment of $12.5 million. AMAG will now be responsible to complete the phase IIb/IIIa study, initiated by Velo Bio during the second quarter of 2017.

Per the agreement, AMAG is entitled to pay $35 million as milestone if the candidate is approved by the FDA. The company will pay an aggregate of $240 million as sales-based milestone payment when net sales cross the $300-million threshold. AMAG will also pay $10 million to a previous licensor of the AMAG-423 program on the first $100 million of sales along with mid-single digit royalties based on net sales.

AMAG expects to enroll around (n=200) pregnant women between 23- and 32-weeks’ gestation period in the double-blind, placebo-controlled phase IIb/IIIa study including patients, enrolled by Velo. The company also plans to open various sites potentially outside the United States to expediate the study.

Shares of AMAG have soared 61.1% year to date versus the industry’s decline of 2.7%.

AMAG expects to report top-line data from the study in the first half of 2020 and plans to submit a new drug application to the FDA during the second half of the same year. Previously, DIF received both an orphan drug status as well as fast-track designations from the FDA for treating preeclampsia. Currently, there are no approved treatments for this fatal medical condition.

The incremental R&D cost associated with AMAG-423 program will not affect the financial guidance, issued by AMAG in second-quarter earnings release. The acquisition looks to be a good strategic fit for the company as it looking to boost its maternal health portfolio. If approved, AMAG estimates the market opportunity of the drug candidate to be above $1 billion in the United States.

AMAG Pharmaceuticals, Inc. Price and Consensus

Zacks Rank & Stocks to Consider

AMAG currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the healthcare sector include Ligand Pharmaceuticals Incorporated LGND, Cambrex Corporation CBM and Anika Therapeutics Inc. ANIK, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ligand’s earnings estimates have been revised 28.4% upward for 2018 and 6.5% for 2019 over the past 60 days. The stock has skyrocketed 97.6% so far this year.

Cambrex’s earnings estimates have moved 3.5% north for 2018 and 4.3% for 2019 over the past 60 days. The stock has surged 38% year to date.

Anika’s earnings estimates have been raised 17.3% for 2018 and 4.2% for 2019 over the past 60 days.

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