AMAG Pharmaceutical Inc. (AMAG) is evaluating an offer from a hedge fund looking to break up the drug maker's plan to acquire Allos Therapeutics Inc. (ALTH) in an all-stock merger that hasn't been well-received on Wall Street.

The investor, MSMB Capital, has offered $18 a share in cash, or $378 million, for the shares it doesn't already own. MSMB has criticized AMAG's management and the Allos deal, and said it plans to buy the company and turn it around, despite having never conducted such a transaction in the past.

MSMB is run by Martin Shkreli, a relatively new shareholder activist in the life sciences sector who has been outspoken about his short positions and whose firm has employed some unconventional tactics. The size of MSMB isn't known, and Shkreli won't disclose that information or whether he has partners, but he said the firm has enough cash on hand to close the deal.

AMAG Chief Financial Officer Frank Thomas, who only joined the company Monday, said the board will evaluate the offer, which came in a letter on Tuesday.

He said the company continues to believe that the proposed merger with Allos "enhances value" for AMAG shareholders, but he wouldn't comment on the board's process regarding MSMB or whether MSMB would be allowed to conduct due diligence.

AMAG's shares are down 25% since its agreed to buy Allos last month but jumped Wednesday, up 11% to $16.

Robert Baird & Co. analyst Chris Raymond said it is hard to gauge the "credibility" of the MSMB offer, but he applauded MSMB for raising valid questions about the Allos deal. Meanwhile, Capstone Investments analyst Difei Yang said the MSMB offer "is still too low for an asset with long-term patent protection" and suggested that $21 to $24 a share would be more reasonable.

Shkreli said he is willing to increase the offer if AMAG would allow his firm to review its books. He said the board seemed receptive to his offer, and AMAG's investment bank has contacted him.

"If we look under the hood and see things we like, we would definitely be interested in raising the offer. Right now, this is the offer that I'm willing to make with no due diligence," he said in an interview.

Shkreli said his offer isn't simply designed to scuttle the Allos acquisition and that he plans to turn around AMAG by ousting its management, cutting costs and reinvigorating the launch of its anemia treatment Feraheme. He criticized AMAG Chief Executive Brian Pereira as lacking experience in running a drug company.

To be sure, Shkreli is treading on new ground himself, having never taken over a public company and leading it through a restructuring.

"I'm new to the hostile takeover game," he said but stressed that he fully intends to close the deal, possibly building AMAG into a larger company with other deals. The firm owns less than 5% of the company's shares and has been a shareholder for "a while," but Shkreli wouldn't disclose how long he has been an investor.

Shkreli has been outspoken over the past year about his short positions on several companies, including NeoProbe Corp. (NEOP), Oncothyreon Inc. (ONTY) and Arena Pharmaceuticals Inc. (ARNA). He only has a long position in AMAG and doesn't have any position in Allos.

In June, he made a takeover offer for diagnostics company SeraCare Life Sciences Inc. (SRLS), a move that was followed by its CEO leaving and the board beginning to explore strategic alternatives. MSMB's offer, for $4.25 a share, has since expired, but Shkreli said "we are negotiating with the company and we hope to come to an acquisition agreement."

In June, MSMB submitted a citizen's petition to the Food and Drug Administration--an unusual move for an investor--that called for the agency to deny approval of Neoprobe's Lymphoseek, an imaging agent, because of "severe deficiencies and flaws" in clinical trials. The company later filed a response that called the allegation "inaccurate and misleading."

Last year, Shkreli submitted a presentation to an FDA committee that urged it to reject Arena's obesity drug lorcaserin, another move seen as unorthodox for an investor.

The deal between AMAG and Allos came as both companies have had disappointing launches of their drugs, AMAG's for anemia and Allos's for a type of blood cancer. The merger is a bet that cost savings and marketing overlaps will help invigorate the products.

Under the terms, Allos shareholders will get 0.1282 share of AMAG for each Allos share, valuing the stock at $1.84 a share as of Tuesday's close. If it closed, AMAG holders will own about 61% of the combined company with Allos holders holding the remainder.

Shares of Allos ended flat Wednesday at $1.78.

Lexington, Mass.-based AMAG sells Feraheme, which is a quickly administered intravenous iron therapy used in chronic kidney disease. The treatment was approved two years ago in the U.S. and had $59 million in 2010 sales. Allos sells Folotyn, approved early last year, and has projected 2011 sales of $48 million to $55 million.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

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