AMAG Pharmaceuticals, Inc. (AMAG) posted a loss of $1.01 per share during the second quarter, 4 cents wider than the Zacks Consensus Estimate, but 54 cents narrower than the year-ago quarter.
Increased Feraheme sales led to the narrowing of the loss incurred by the company.
Second quarter 2010 revenues of $18.8 million beat the Zacks Consensus Estimate of $18 million, and was way above the year-ago figure of $0.06 million. Robust Feraheme sales accounted for the huge year-over-year increase. Feraheme was launched in the US in July 2009.
Sales of Feraheme, an injectable drug for intravenous use as an iron replacement therapy for the treatment of iron deficiency anemia in adult patients with chronic kidney disease, increased 23% year over year to $16 million. AMAG posted $1.5 million in collaboration revenues related to the amortization of upfront payment received from Takeda Pharmaceutical Co. Ltd., AMAG’s partner for Feraheme.
AMAG recorded another $1 million as collaboration revenues during the quarter, received from Takeda. This represented a reimbursement payment made by Takeda to AMAG related to the costs incurred by AMAG for filing the Marketing Authorization Application for Feraheme in the EU in June 2010.
Operating Expenses
Quarterly operating expenses increased about 49% to $40.7 million. The increase was a result of a rise in both the research and development (R&D) and selling, general and administrative (SG&A) expenses associated with label expansion and commercialization of Feraheme.
R&D expenses came in at $14.8, while SG&A expenses amounted to $24.0 million during the second quarter.
AMAG said that it expects R&D expenses to go up by $2–$4 million every quarter through the rest of 2010. However, SG&A expenses are expected to remain around the current quarter figure.
Our View
We currently have a Neutral recommendation on AMAG. Given that AMAG is conducting several trials for expanding Feraheme’s label, we believe the drug can receive approval for one or more of these indications, thereby helping drive growth.
However, Feraheme currently faces stiff competition from established products (Venofer and Ferrlecit) in the dialysis market. Moreover, the drug will take some time to establish its presence in the pre-dialysis market.
