AMAG Q4 Sales Set to Disappoint - Analyst Blog
11 Janvier 2012 - 2:15PM
Zacks
AMAG Pharmaceuticals Inc. (AMAG) recently
announced preliminary fourth quarter 2011 results besides providing
an update on its sole marketed product Feraheme and its overall
business. Feraheme is an injectable drug for intravenous use as an
iron replacement therapy for the treatment of iron deficiency
anemia (IDA) in adult patients suffering from chronic kidney
disease (CKD).
Fourth Quarter Preliminary Results
AMAG expects to generate total revenues of $14.3–$15.0 million
in the final quarter, slightly below the Zacks consensus Estimate
of $16 million. Feraheme is expected to generate revenue in a band
of $12.4–$13.1 million. The expected fourth quarter total revenue
as well as Feraheme sales are sequentially below the third quarter
figures of $17.6 million and $15.8 million, respectively. The third
quarter figures however included one-time reserves in Feraheme
revenues. Total Feraheme provider demand was almost flat
sequentially at approximately 24,250 grams.
AMAG expects to record total operating costs in the range of
$38–$43 million in the fourth quarter, which includes restructuring
charges as well as a termination fee of $2 million paid by AMAG to
Allos Therapeutics, Inc (ALTH) following the
failed merger between the two companies.
Feraheme Update
Feraheme, which is currently marketed in the US and approved in
Canada, is under review in Switzerland and European Union (EU). It
is expected to be launched in Canada this year. In EU, the
Committee for Medicinal Products for Human Use (CHMP) of the
European Medicines Agency (EMA) is expected to give an opinion on
approval in the first half of 2012.
AMAG is currently enrolling patients for its global
registrational program for Feraheme for IDA treatment irrespective
of the underlying cause. Enrollment in the program is expected to
be completed this month and the company expects to file regulatory
applications in the US in the second half of 2012. The company is
banking on this label expansion to improve sales of Feraheme.
2012 Outlook
The AMAG management was compelled to restructure its expenses,
in keeping with lackluster Feraheme sales, after the failed Allos
merger, in November last year. AMAG hopes to achieve cash flow
breakeven in 2012. The company had also issued guidance for 2012
which it has affirmed at the latest business update. AMAG hopes to
generate low double-digit growth for Feraheme sales in 2012.
Operating expenses (excluding cost of goods sold) are expected to
range between $90 million and $100 million. Moreover, AMAG expects
to end 2012 with $225 million to $230 million in cash, benefiting
from $33 million of potential milestone payment from Takeda from
the expected launch of Feraheme in Europe and Canada.
At the November 2011 restructuring, management also announced
that it will cut its workforce by about 25%. Moreover, management
also announced some changes at the executive level. Importantly,
management is evaluating all strategic alternatives for the
company, including a potential sale, merger, acquisition, or
in-licensing opportunity and has hired Jefferies & Company, a
subsidiary of Jefferies Group, Inc. (JEF), as a
financial advisor to help it evaluate these strategic
alternatives.
Our Recommendation
We currently have an Outperform recommendation on the stock. The
stock carries a Zacks #2 Rank (short term “Buy” rating). While we
are slightly disappointed by the weak fourth quarter preliminary
estimates, we are optimistic about the company’s new restructuring
plan and its efforts to explore strategic initiatives, which we
believe will bring it on track after the Allos disappointment.
ALLOS THERAPEUT (ALTH): Free Stock Analysis Report
AMAG PHARMA INC (AMAG): Free Stock Analysis Report
JEFFERIES GP-NW (JEF): Free Stock Analysis Report
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