Troubled AMAG snaps up fresh-from-bankruptcy Lumara in $1.25B deal

Lumara Health CEO William Heiden

Troubled KV Pharmaceuticals started a new life earlier this year, emerging from bankruptcy and changing its name to Lumara Health. Now, it's selling out. AMAG Pharmaceuticals agreed to pay up to $1.25 billion for the company's maternal health business and its once-controversial preterm-labor treatment Makena.

The deal includes $600 million in cash and $75 million in stock up front, plus up to $350 million more in sales milestone payments. Separately, Lumara will be unloading its women's health products--including a vaginal cream and skin spray--to Perrigo ($PRGO) for $82 million.

AMAG figures that adding Lumara to its operations will add to earnings immediately--good thing, because AMAG has suffered a string of losses in recent quarters and recently predicted that its full-year loss would be larger than expected. Plus, its lead drug Feraheme lost out on a new indication early this year. Besides the initial boost from Lumara's sales and the $20 million in cost savings AMAG plans to achieve, the company sees Lumara as a platform for growth in the field, partly via M&A.

"We believe the Lumara Health transaction will facilitate future product acquisitions in an attractive new therapeutic area and is an excellent strategic fit with our Feraheme market expansion plans," CEO William Heiden said in a statement, adding that the company is looking forward to adding "the talented Makena commercial team" to its mix.

Lumara will operate as a separate division within AMAG, possibly to make sure that its recent successes with Makena sales continue. The drug brought in more than $130 million in sales over the last 12 months, AMAG said in a statement.

The buyout closes a chapter full of drama for Makena, its original developer Hologic, and KV. Makena is a standardized, FDA-approved version of a compounded hormonal injection long used to prevent preterm labor, and when KV launched the drug at $1,500 per dose, patient groups--and eventually politicians--raised an outcry.

KV slashed its price to $595, but the FDA still backed off of barring compounded versions, leaving Makena open to cheap competition. KV wasn't happy. The Makena rollout floundered, and the drug ended up top of FiercePharma's list of top drug launch disasters.

The company got a break when quality problems at compounding pharmacies cropped up, giving it a marketing edge, but that wasn't enough to prevent KV's descent into bankruptcy. After the company was forced to file for protection from its creditors, Hologic sued to regain the rights to Makena, but the two companies ended up settling. KV emerged from Chapter 11 early this year and in May rebranded itself as Lumara.

Meanwhile, AMAG has experience some drama of its own. Its lead drug, Feraheme, is now approved to treat iron-deficiency anemia in patients with chronic kidney disease. The company had been counting on a new, broader use for the drug in other iron deficiency anemia patients, but the FDA thwarted those plans in January. AMAG plans to take another run at the approval, but in the meantime, the agency is digging into adverse event reports, and European regulators have already added safety warnings to Feraheme's EU label.

- read the AMAG release

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