AMAG Pharmaceuticals Inc. (AMAG) posted a loss of 83 cents per share (excluding a one-time restructuring charge) during the fourth quarter of fiscal 2010, lower than the Zacks Consensus Estimate of a loss of $1.05 per share and the year-ago loss of $1.07 per share. Higher Feraheme revenues led to the narrower loss in the quarter.
For full year 2010, AMAG reported loss per share of $3.79, narrower than the Zacks Consensus Estimate of a loss of $4.02 and the year-ago loss per share of $5.46. Full year 2010 revenues of $66.2 million were well above the Zacks Consensus Estimate of $49 million. Revenues were $17.2 million in the previous year, as Feraheme, the biggest revenue generator for AMAG, was launched in US in July 2009.
The Quarter in Detail
Fourth quarter 2010 revenues of $17.2 million were slightly above the Zacks Consensus Estimate of $17 million, but much above the year-ago figure of $13.1 million.
Sales of Feraheme, an injectable drug for intravenous use as an iron replacement therapy for the treatment of iron deficiency anemia (IDA) in adult patients with chronic kidney disease (CKD), increased to $15.2 million from $13.1 million in the year-ago period.
Total Feraheme provider demand and launch incentive program utilization was approximately 27,600 grams, down sequentially, due to a decline in dialysis sales from bundling issues that was concomitantly offset by a sequential increase in the non-dialysis segment. Feraheme utilization in the non-dialysis CKD setting comprised approximately 73% of Feraheme provider demand. Consequently, the company is now focused on growing Feraheme utilization in non−dialysis dependent CKD patients, specifically in hematology and hospital office sites of care, where a large number of such patients are treated.
Bundling Issues: Effective from January 2011, there have been changes in dialysis reimbursement, which could negatively impact reimbursement for high priced drugs like Feraheme. Given expectations of lower utilization due to bundling, Feraheme utilization in the dialysis setting has been weak since the second quarter of 2010.
Feraheme Update
AMAG has filed regulatory applications for approval of Feraheme in Europe, Canada and Switzerland. A decision in Europe is expected by the end of 2011. In Canada, the company has received a Notice of Non-Compliance to which the company hopes to respond in 2011.
AMAG is currently enrolling patients for its global registrational program for Feraheme for IDA treatment irrespective of the underlying cause. Approximately 1,400 patients are expected to be enrolled for the program. The program consists of two phase III studies, one comparing Feraheme with placebo, and the other comparing Feraheme with intravenous iron sucrose. The company intends to complete enrollment for the program by the end of 2011.
2011 Guidance
AMAG maintained its previously provided 2011 guidance. Feraheme expects 2011 revenue in the range of $55 million to $60 million. The company anticipates an increase in provider demand in the non-dialysis CKD segment. However, provider demand in the dialysis segment is expected to be minimal in 2011. Cost of product sales is expected in a band of $12 million to $15 million. AMAG expects 2011 R&D expenses in the range of $62 million to $68 million and SG&A expenses in a $72 million to $78 million range.
The company further expects to end 2011 with approximately $215 million to $220 million in cash that does not include $33 million in potential milestones, which AMAG is eligible to receive upon approval and launch of Feraheme in IDA for CKD in Europe.
Our Recommendation
We currently have a Neutral recommendation on the stock. We prefer to remain on the sidelines until more visibility is obtained on Feraheme’s progress.
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