Amid a proxy fight with activist investor Caligan Partners, AMAG Pharmaceuticals implored shareholders to stay the course on the drugmaker’s strategic vision. But with one of its drugs facing the prospect of getting pulled from the market, turns out AMAG didn’t intend to stay the course itself.
AMAG reached a deal with Caligan on Tuesday that will place two of the investor’s nominees on its board, including the firm’s co-founder, David Johnson, and a former Boehringer Ingelheim exec, Paul Fonteyne.
The move will temporarily expand AMAG’s board to 11 seats before the company’s 2020 annual meeting, when nine permanent directors will be chosen, the drugmaker said in a release.
“We are pleased to have reached this constructive solution with AMAG in order to work with the company to focus on maximizing the potential of its great portfolio,” Johnson said in a statement.
The deal puts an end to Caligan’s monthlong attempt to oust four of AMAG’s directors in favor of its own as the drugmaker stumbles through flagging share prices and the possible retraction of an FDA marketing approval for one of its drugs.
Caligan acquired 10.3% of AMAG’s shares in early August, aiming to push the company to find an international marketing partner for its iron deficiency med Feraheme and investigate opportunities for its women’s health business. Caligan also floated the idea of splitting up the drugmaker.
In mid-September, 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. The firm said AMAG’s board, recently elected in May, was approved because shareholders lacked options.
According to SVB Leerink analyst Ami Fadia, the two Caligan appointees will likely spell a strategic review for AMAG, but it's unclear what direction that review will go.
"Visibility into the long-term growth profile of the business remains a key investor question, and while it is unclear how these developments may impact it, we believe this is a step in the right direction," Fadia said in a note to investors.
Caligan’s plea seemed prescient after AMAG was put on notice in late September that the FDA planned to review marketing approval for premature birth med Makena after a follow-up study found the drug wasn’t as effective as advertised.
Makena’s approval will face an FDA advisory committee Oct. 29 after a confirmatory trial showed the drug did not significantly reduce the risk of recurrent preterm birth or improve neonatal mortality over placebo. The review for Makena, which AMAG picked up in 2014 as part of a $675 million deal with Lumara Health, could be the first step in pulling the drug off the market.
Fadia said AMAG had yet to receive the advisory committee questions from the FDA.
On Tuesday, consumer advocate Public Citizen called on the FDA to pull Makena's approval, citing AMAG's confirmatory trial findings.
"The drug never should have been approved under accelerated approval in the first place because the data from the single phase 3 premarket trial that was relied on to establish efficacy were seriously flawed," the group said in a citizen's request.
Makena, initially developed by KV Pharmaceuticals, is no stranger to controversy. Prior to its accelerated approval by the FDA in 2011, the drug was sold for under $20 through compounding pharmacists, which also make the drug’s progesterone treatment competitors.
After approval—when compounding was no longer allowed by the FDA—KV listed Makena at $1,500 per injection. The public outrage that followed pushed the FDA to allow compounded competitors of the drug on the market to keep prices low. Makena was eventually sold off to Lumara after KV filed for Chapter 11 bankruptcy in 2012 following an unsuccessful suit against the FDA to block its rivals.