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AMAG to Sell Women Healthcare Drugs, CEO Resigns, Stock Down

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Shares of AMAG Pharmaceuticals AMAG slipped 2.84% after it announced that its president, who is also the chief executive officer and a member of its board of directors, will step down from the post once a successor is named. Further, in order to lower its operating expenses, the company announced plans to divest Intrarosa (prasterone) and Vyleesi (bremelanotide), two sexual health treatments for women.

Shares of AMAG have lost 22.2% in the past year compared with the industry’s decline of 2.7%.


The company foresees significant future commercial potential in its pipeline candidates — ciraparantag and AMAG-423 — and thus, decided to divest the women’s healthcare drugs. The company also provided preliminary 2019 guidance and expects total revenues of $324-$329 million. It expects Feraheme revenues in the range of $167-$169 million and Makena sales of $120-$123 million. Intrarosa sales are expected to be $21 million in 2019.

In addition to the CEO transition, chief financial officer Ted Myles will assume the additional role of the chief operating officer, effective immediately. 

The company also provided guidance for 2020 and expects revenues of $230-$280 million. The financial guidance includes a reduction in operating expenses of more than $100 million for 2020 compared to 2010. After divesting Intrarosa and Vyleesi, the expenses will reduce and the company will be more streamlined and focused on Feraheme’s growth, support the development of two of its pipeline assets and deliver positive adjusted EBITDA. 

The 2020 revenue guidance reflects a range of potential revenue scenarios for Makena (hydroxyprogesterone caproate injection), given the uncertainty caused by the FDA Advisory Committee meeting and soft fourth-quarter results. 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 requesting a new confirmatory trial. The company will remain committed to working with the FDA to maintain patient access to Makena and managing Makena-related expenses so that the product is cash flow positive.

The company is making these decisions to generate sustainable, long-term shareholder value and increase profitability.


Zacks Rank and Stocks to Consider

AMAG currently carries a Zacks Rank #3 (Hold). 

A few better-ranked stocks in the medical drugs sector are Amarin Corporation Plc AMRN,  Emergent Biosolutions, Inc. (EBS - Free Report) and Audentes Therapeutics, Inc.BOLD, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Amarin’s loss per share estimates have narrowed from 9 cents to 2 cents for 2019 in the past 60 days. The company delivered a positive earnings surprise in three of the trailing four quarters by 109.17%, on average.  

Emergent’s earnings per share estimates have increased from $3.39 to $3.58 for 2020 in the past 60 days.

Audentes’ loss per share estimates have narrowed from $4.17 to $4.13 for 2019 and from $4.45 to $4.33 for 2020 in the past 60 days.

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