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AMAG Narrows Loss; Maintains View

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AMAG Pharmaceuticals Inc.’s (AMAG - Free Report) first quarter 2013 loss of 19 cents per share was narrower than the year-ago loss of 58 cents and the Zacks Consensus Estimate of a loss of 20 cents per share. Higher revenues and lower expenses resulted in the narrower loss.

Revenues during the reported quarter climbed 16% to $17.9 million, surpassing the Zacks Consensus Estimate of $17 million. Revenues in the first quarter of 2013 benefited from higher Feraheme sales.

Quarterly Highlights

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

In the first quarter of 2013, US net sales of Feraheme amounted to $15.6 million, up 14.3% year over year. The increase was attributable primarily to volume growth.

AMAG has a partnership agreement with Takeda Pharmaceuticals for Feraheme, in the EU and Canada. We note that Rienso (EU trade name of Feraheme) was launched in the EU and Canada during the fourth quarter of 2012.

AMAG is working on expanding Feraheme’s label. In Dec 2012, the company submitted a supplemental new drug application (sNDA) to the US Food and Drug Administration (FDA) for Feraheme. AMAG is looking to get Feraheme’s label expanded for the treatment of CKD adults suffering from IDA with a history of unsuccessful oral iron therapy. The US regulatory body is expected to render a final decision on the proposed label expansion by Oct 21, 2013. Successful label expansion would boost the sales potential of the drug in the US.

Total operating cost (including cost of goods sold) in the quarter amounted to $22.4 million, down 24% from the year-ago period. While research and development (R&D) expenses declined 56.8%, selling, general and administrative (SG&A) expenses climbed up 6.3% in the reported quarter.

Lower R&D expenses resulting from the completion of the company’s global IDA clinical program reduced operating expenses.

2013 Outlook Maintained

AMAG reiterated its previously announced guidance for 2013. The company still expects to generate total revenues in the range of $73–$77 million in 2013. The Zacks Consensus Estimate of $75 million is well within the company’s guidance. The company expects Feraheme US sales to be within $63 million and $67 million.

AMAG also expects to generate around $10 million from royalties, product sales related to ex-US sales of Feraheme/Rienso and milestones.

The company expects to incur operating expenses of around $78–$82 million in 2013. AMAG expects to exit 2013 with cash and investments in the range of $206–$211 million.

We believe that the company’s guidance for 2013 is achievable. We expect investor focus to remain on Feraheme’s performance and the company’s efforts to expand the product’s label.

AMAG currently carries a Zacks Rank #3 (Hold). Meanwhile, other stocks such as Transcept Pharmaceuticals Inc. and Catalyst Pharmaceutical Partners Inc. (CPRX - Free Report) currently look more attractive in the pharma space carrying a Zacks Rank #1 (Strong Buy).

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