After years of proxy squabbles and FDA scrutiny of a key drug, troubled AMAG Pharmaceuticals appeared to be in the clear with a buyout deal signed last week. But the FDA decided to drop the hammer on one of AMAG's drugs, and it could endanger the drugmaker's acquisition.
The FDA's Center for Drug Evaluation and Research has proposed withdrawing marketing approval for AMAG's premature-birth med Makena nearly a year after an advisory committee blasted the drug's shaky clinical data, the agency said last week.
It's not an unexpected outcome for AMAG, but it does come at an unfortunate time—right on the heels of a $647 million deal to sell to Covis Group, struck late last week. The buyout was a 42% mark-up on AMAG's most recent closing share price, and the transaction was expected to close in November.
The FDA argued that a pivotal confirmatory trial for Makena's approval did not show the drug improved the health of babies born prematurely and did not prevent premature births, findings that agreed with its advisory committee's recommendation.
While the FDA's decision wasn't exactly a shock—SVB Leerink analyst Ami Fadia put the chances at about 50% given the committee's 9-7 split vote—the timing of the request was surprising. As recently as three weeks ago, Fadia said, AMAG executives told analysts the FDA had not set a timeline to review its committee's recommendation and could push a decision into 2021.
Fadia told clients the buyout is still "more likely than not (to) go through unchanged" given the committee's prior vote and the continued promise of AMAG's Feraheme, an iron deficiency anemia therapy, and its investigational anticoagulant-reverser ciraparantag.
"We believe it is more likely than not that Covis' agreement to acquire AMAG announced last week will still go through unchanged, although we acknowledge that a buyer can always walk away, and with today's event this possibility is now non-negligible," Fadia wrote.
AMAG has 15 days to respond to the FDA's request and is weighing "a full range of potential options," the company said in a release.
One of those is agreeing to a full FDA hearing on the withdrawal, which could take months to resolve, AMAG said. In the meantime, Makena and its approved generics would remain on the market.
In October 2019, an advisory committee voted 9-7 to pull Makena's marketing approval after questioning the drug's efficacy over placebo in reducing premature births and improving the condition of babies born prematurely. The seven dissenting votes pushed for Makena to be put on accelerated approval and for a new confirmatory trial, arguing there were few treatments on the market for pregnant patients at risk of premature birth.
AMAG acquired the drug in 2014 as part of a $675 million deal with Lumara Health.
The Makena controversy was the latest blow to AMAG, whose troubling history of proxy battles appeared to come to an end with its Covis buyout pact.
The same month as the committee vote, AMAG reached a deal with activist investor Caligan to place two of the firm's nominees on its board, including its co-founder, David Johnson, and a former Boehringer Ingelheim exec, Paul Fonteyne.
In September 2019, in a proposal seeking to take four of AMAG’s board seats, Caligan lambasted AMAG’s share price—and what it called the failure of the drugmaker’s five-year strategic plan—despite the “immense value” of some of its pharmaceutical portfolio, including Feraheme.