AMAG Pharmaceuticals Provides Business Update and 2015 Financial Guidance

Integration of Lumara Health acquisition substantially complete

 

 

 

Estimated pro forma fourth quarter 2014 product sales of $74 million

 

 

 

2015 sales guidance of $355 million represents +300% increase over 2014
sales

 


WALTHAM, Mass., Jan. 11, 2015 (GLOBE NEWSWIRE) -- AMAG Pharmaceuticals,
Inc. (Nasdaq:AMAG) today provided a business update, including
preliminary unaudited 2014 fourth quarter and annual financial results
and its financial outlook for 2015. The company will present further
details at the 33rd Annual J.P. Morgan Healthcare Conference in San
Francisco on Wednesday, January 14, 2015, at 8:00 a.m. Pacific time.

"The preliminary 2014 financial results and 2015 guidance that we are
issuing today both reinforce the key themes of continuing operational
excellence on our current business and the transformative nature of our
acquisition of Lumara Health in November 2014," said William Heiden,
president and chief executive officer of AMAG. "In 2014, the AMAG team
drove nearly 20% sales growth for Feraheme(R) in the U.S., now in its
sixth year since launch. We have rapidly integrated the Lumara Health
business, and the positive financial impact of our new maternal health
division is already apparent in our fourth quarter results, and is even
more evident in the 2015 financial guidance issued today."

Preliminary 2014 Financial Results (unaudited)

AMAG's preliminary unaudited financial results for the fourth quarter
and full year 2014 include the results of Lumara Health, effective from
the closing date of the acquisition (November 12, 2014) through the end
of 2014.


-- Fourth Quarter 2014
-- AMAG expects total revenues of between $52.8 million and $54.5
million. This includes approximately $6.0 million of revenue
recognized from AMAG's collaboration agreement with Takeda
Pharmaceutical Company Limited (Takeda) for commercialization of
Feraheme (ferumoxytol) Injection/Rienso(TM) outside of the U.S., which
was mutually terminated in December 2014.
-- Net product sales totaled between $47.2 million and $48.2 million,
including between $23.8 million and $24.3 million of sales from
Feraheme in the U.S. (which includes approximately $1.8 million in
revenue associated with a favorable change in estimated Feraheme
product returns reserves) and between $23.1 million and $23.6 million
of sales from Makena(R)(hydroxyprogesterone caproate injection).
-- Total operating expenses are expected to be between $41.5 million and
$42.8 million. Excluding non-cash and one-time charges1, adjusted
operating expenses are expected to be between $28.2 million and $29.5
million, which includes Lumara Health expenses from the closing date.
-- AMAG expects pro forma net product sales of between $72.7 million and
$74.7 million for the fourth quarter of 2014. The pro forma amounts
represent total net product sales as if the acquisition of Lumara
Health (and Makena) had occurred as of the beginning of the fourth
quarter.
-- Full Year 2014
-- AMAG expects 2014 total revenues of between $123.8 million and $125.5
million. This includes approximately $14.0 million of revenue
recognized from AMAG's collaboration agreement with Takeda.
-- Net product sales totaled between $110.1 million and $111.1 million.
U.S. Feraheme net sales are expected to be between $85.8 million and
$86.3 million and Makena sales are expected to be between $23.1
million and $23.6 million. The 19% growth in 2014 Feraheme sales over
2013 was driven by significant increases in volume, as well as
increasing net revenue per gram.
-- Total operating expenses for 2014 are expected to be between $104.6
million and $105.9 million. Excluding non-cash and one-time charges2,
adjusted operating expenses are expected to be between $84.2 million
and $85.5 million, which includes Lumara Health expenses from the
closing date.
-- AMAG expects 2014 pro forma net product sales of between $252.0
million and $255.5 million, including U.S. Feraheme net product sales
and pro forma Makena sales of $165.0 million to $168.0 million. The
pro forma amounts represent total net product sales as if the
acquisition of Lumara Health (and Makena) had occurred as of the
beginning of 2014.
-- The company ended 2014 with approximately $143.6 million in cash and
investments, $540 million in debt and 25.6 million basic shares
outstanding.

 


Additional Business Updates


-- As part of a multi-pronged line extension/lifecycle management program
for Makena, the company announced today that a preservative-free,
single-dose (1 mL) vial for Makena has been filed and is under review at
the U.S. Food and Drug Administration (FDA) with a decision expected in
the second quarter of 2015. Makena is currently only available in a
5-dose (5 mL) vial.
-- In June 2014, AMAG proposed to the FDA certain changes to the current
Feraheme label for the treatment of iron deficiency anemia (IDA) in adult
chronic kidney disease (CKD) patients to mitigate the risk of
hypersensitivity. In January 2015, the FDA responded with recommended
label changes that go beyond what the company proposed in June 2014. The
company plans to submit a response to the FDA's recommendations and will
work with the FDA to finalize an updated label.
-- AMAG is awaiting feedback from the FDA regarding the study design that
AMAG submitted to the FDA in 2014 to generate additional safety data to
support expansion of the U.S. Feraheme label beyond the current CKD
indication to include all adult patients with IDA who have failed or
cannot tolerate oral iron treatment.
-- As announced in December 2014, AMAG will regain all worldwide development
and commercialization rights for Feraheme/Rienso following the transfer
of marketing authorizations. Previously, Takeda had been commercializing
the product outside of the U.S. under a March 2010 license arrangement
with AMAG.

 


2015 Financial Outlook

The company expects to achieve the following in 2015:


-- Total revenue of between $380 million and $420 million, including:
-- Total product sales of between $335 million and $375 million,
including:
-- Makena net sales of between $245 million and $270 million;
-- Feraheme and MuGard net sales of between $90 million and $105
million; and
-- Collaboration revenue of approximately $45 million related to the
Takeda agreement, which was mutually terminated in December 2014, most
of which is non-cash.
-- Non-GAAP adjusted EBITDA3 of between $180 million and $200 million; and
-- Non-GAAP cash earnings3 of between $150 million and $170 million.

 


Heiden concluded by stating, "2014 was a transformative year for AMAG.
We are now on track to becoming a highly profitable specialty
pharmaceutical company with strong growth potential across a
diversified portfolio in attractive market segments. I want to thank my
colleagues for their unwavering commitment to excellence and to
pursuing opportunities that make real differences in the lives of
thousands of patients and their families. As we begin 2015, we are
excited by our prospects for future growth and shareholder value
creation through continued revenue growth from our current products and
future portfolio expansion."

Webcast Information

A live audio webcast of the company's presentation and the following
breakout session, along with the accompanying slide presentation at the
33rd Annual J.P. Morgan Healthcare Conference, will be accessible
through the Investors section of the company's website at
www.amagpharma.com on January 14, 2015 at 8:00 a.m. P.T. (11:00 a.m.
E.T.). Following the conference, the webcast will be archived on the
company's website until February 14, 2015.

About AMAG

AMAG Pharmaceuticals, Inc. is a specialty pharmaceutical company with a
focus on maternal health, anemia and cancer supportive care. The
primary goal of AMAG and its maternal health division, Lumara
Health(TM), is to bring to market therapies that provide clear benefits
and improve patients' lives. In addition to continuing to pursue
opportunities to make new advancements in patients' health and to
enhance treatment accessibility, AMAG intends to continue to expand and
diversify its portfolio through the in-license or purchase of
additional pharmaceutical products or companies. For additional company
information, please visit www.amagpharma.com.

About Makena(R) (hydroxyprogesterone caproate injection)

Makena(R) is a progestin indicated to reduce the risk of preterm birth
in women with a singleton pregnancy who have a history of singleton
spontaneous preterm birth.

The effectiveness of Makena is based on improvement in the proportion
of women who delivered <37 weeks of gestation. There are no
controlled trials demonstrating a direct clinical benefit, such as
improvement in neonatal mortality and morbidity.

Limitation of use: While there are many risk factors for preterm birth,
safety and efficacy of Makena has been demonstrated only in women with
a prior spontaneous singleton preterm birth. It is not intended for use
in women with multiple gestations or other risk factors for preterm
birth.

Makena should not be used in women with any of the following
conditions: blood clots or other blood clotting problems, breast cancer
or other hormone-sensitive cancers, or history of these conditions;
unusual vaginal bleeding not related to the current pregnancy,
yellowing of the skin due to liver problems during pregnancy, liver
problems, including liver tumors, or uncontrolled high blood pressure.

Before patients receive Makena, they should tell their healthcare
provider if they have an allergy to hydroxyprogesterone caproate,
castor oil, or any of the other ingredients in Makena; diabetes or
prediabetes, epilepsy, migraine headaches, asthma, heart problems,
kidney problems, depression, or high blood pressure.

In one clinical study, certain complications or events associated with
pregnancy occurred more often in women who received Makena. These
included miscarriage (pregnancy loss before 20 weeks of pregnancy),
stillbirth (fetal death occurring during or after the 20th week of
pregnancy), hospital admission for preterm labor, preeclampsia (high
blood pressure and too much protein in the urine), gestational
hypertension (high blood pressure caused by pregnancy), gestational
diabetes, and oligohydramnios (low amniotic fluid levels).

Makena may cause serious side effects including blood clots, allergic
reactions, depression, and yellowing of the skin and the whites of the
eyes. The most common side effects of Makena include injection site
reactions (pain, swelling, itching, bruising, or a hard bump), hives,
itching, nausea, and diarrhea.

For additional U.S. product information, including full prescribing
information, please visit www.makena.com.

About Feraheme(R) (ferumoxytol) Injection /Rienso

Feraheme received marketing approval from the FDA on June 30, 2009 for
the treatment of IDA in adult CKD patients and was commercially
launched by AMAG in the U.S. shortly thereafter. Ferumoxytol is
protected in the U.S. by five issued patents covering the composition
and dosage form of the product. Each issued patent is listed in the
FDA's Orange Book, the last of which expires in June 2023.

Ferumoxytol received marketing approval in Canada in December 2012,
where it has been marketed by Takeda as Feraheme, and in the European
Union in June 2013 where it has been marketed by Takeda as Rienso.
Ferumoxytol received marketing approval in Switzerland in August 2013.
Takeda had been commercializing the product outside of the U.S. under a
license arrangement with AMAG. In December 2014, AMAG and Takeda
mutually agreed to terminate the license arrangement and are in the
process of transferring the licensed rights back to AMAG.

Feraheme is contraindicated in patients with known hypersensitivity to
Feraheme or any of its components. Serious hypersensitivity reactions,
including anaphylactic-type reactions, have been reported in patients
receiving Feraheme/Rienso. Serious adverse reactions of clinically
significant hypotension have been reported in the post-marketing
experience of Feraheme.

For additional U.S. product information, including full prescribing
information, please visit www.feraheme.com.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA)
and other federal securities laws. Any statements contained herein
which do not describe historical facts, including among others,
statements regarding AMAG's expectations as to preliminary fourth
quarter and full year financial results, including total revenues, net
product sales (actual and pro forma), and operating expenses;
expectations regarding integration efforts and status for the Lumara
Health division and expectations as to related synergy cost savings,
the performance of Makena and the resulting impact on AMAG's fourth
quarter, full year and future financial results; the relationship
between AMAG and Takeda and transitioning activities; beliefs regarding
AMAG's position for portfolio expansion and growth, as well as AMAG's
growth potential; plans to create shareholder value; expected timing
and nature of interactions with the FDA and EMA and other regulatory
authorities, including label changes, study designs and expansion of
the product label, and any regulatory decisions resulting from such
interactions; and AMAG's 2015 financial outlook, including potential
profitability (and the magnitude thereof), Makena product sales,
Feraheme product sales (which range takes into account expected label
changes), adjusted EBITDA and cash earnings, are forward-looking
statements which involve risks and uncertainties that could cause
actual results to differ materially from those discussed in such
forward-looking statements.

Such risks and uncertainties include, among others: (1) demand for
Feraheme and AMAG's ability to successfully compete in the intravenous
iron replacement market as a result of the FDA's recommended label
changes, including a boxed warning which would provide, among other
things, (i) that Feraheme be administered only when personnel and
therapies are immediately available for the treatment of anaphylaxis
and other hypersensitivity reactions, (ii) observation for signs or
symptoms of hypersensitivity reactions during and for at least 30
minutes following infusion and (iii) that hypersensitivity reactions
have occurred in patients in whom a previous Feraheme dose was
tolerated; (2) the outcome and timing of the process in accordance with
Section 505(o) of the Federal Food, Drug and Cosmetic Act whereby the
FDA is authorized to require AMAG to make safety-related label changes,
including prescribed periods for submitting proposed changes to the
label recommended by the FDA; (3) the impact on sales if AMAG
disseminates future Dear Healthcare Provider letters; (4) the ability
of AMAG to invest in the development and commercialization of
Feraheme/Rienso outside the U.S., and the level of commercial success
of any of such efforts, given the December 2014 arrangement to
terminate AMAG's and Takeda's license arrangement; (5) uncertainties
regarding the likelihood and timing of potential approval of
Feraheme/Rienso in the U.S., the EU and Canada in the broader IDA
indication; (6) the possibility that following review of new safety
information, the FDA or regulators in Europe and Canada will request
additional technical or scientific information, new studies or
reanalysis of existing data, on-label warnings, post-marketing
requirements/commitments or risk evaluation and mitigation strategies
(REMS) in the current CKD indication for Feraheme/Rienso, or cause
Feraheme/Rienso to be withdrawn from the market, and the additional
costs and expenses that will or may be incurred in connection with such
activities; (7) the possibility that significant safety or drug
interaction problems could arise with respect to Feraheme/Rienso or
Makena and in turn affect sales or AMAG's ability to market such
product; (8) AMAG's patents and proprietary rights; (9) maintaining the
benefits associated with Makena's orphan drug exclusivity status; (10)
the risk of an Abbreviated New Drug Application (ANDA) filing,
especially (i) as to Feraheme following the FDA's draft bioequivalence
recommendation for ferumoxytol published in December 2012 and (ii) as
to Makena given the history of the approved drug Delalutin (the
original version of 17-alpha-hydroxyprogesterone caproate) for
conditions other than reducing the risk of preterm birth; (11) AMAG's
ability to execute on, or to realize the expected results from, its
long-term strategic plan; (12) the possibility that AMAG will not
realize expected synergies and other benefits from its acquisition of
Lumara Health, as well as AMAG's ability to pursue additional business
development opportunities, especially in light of AMAG's being highly
leveraged; (13) the impact on sales of Makena from competitive,
commercial payor, government (including federal and state Medicaid
reimbursement policies), physician, patient or public responses with
respect to product pricing, product access and sales and marketing
initiatives, as well as patient compliance and the number of preterm
birth risk pregnancies for which Makena may be prescribed; (14) the
likelihood that labeling changes may be used to support product
liability claims that the prior product labeling did not adequately
disclose the risk of adverse events; (15) compliance with restrictive
and affirmative covenants with respect to substantial indebtedness
incurred to finance the acquisition of Lumara Health, including a
requirement that AMAG reduce its leverage over time; (16) the
possibility that AMAG will need to raise additional capital from the
sale of its common stock, which will cause significant dilution to its
stockholders, in order to satisfy its contractual obligations,
including its debt service, milestone payments that may become payable
to Lumara Health's stockholders, or in order to pursue business
development activities; (17) the availability and timing of tax net
operating loss carryforwards; (18) the manufacture of AMAG's products,
including any significant interruption in the supply of raw materials
or finished product and (19) other risks identified in AMAG's filings
with the U.S. Securities and Exchange Commission (SEC), including its
Quarterly Report on Form 10-Q for the quarter ended September 30, 2014
and subsequent filings with the SEC. Any of the above risks and
uncertainties could materially and adversely affect AMAG's results of
operations, its profitability and its cash flows, which would, in turn,
have a significant and adverse impact on AMAG's stock price. Use of the
term "including" in the two paragraphs above shall mean in each case
"including, but not limited to." AMAG cautions you not to place undue
reliance on any forward-looking statements, which speak only as of the
date they are made.

AMAG disclaims any obligation to publicly update or revise any such
statements to reflect any change in expectations or in events,
conditions or circumstances on which any such statements may be based,
or that may affect the likelihood that actual results will differ from
those set forth in the forward-looking statements.

AMAG Pharmaceuticals(R) and Feraheme(R) are registered trademarks of
AMAG Pharmaceuticals, Inc. MuGard(R) is a registered trademark of
PlasmaTech Biopharmaceuticals, Inc. (formerly known as Access
Pharmaceuticals, Inc.). Rienso(TM) is a trademark of Takeda
Pharmaceutical Company Limited. Lumara Health(TM) is a trademark of
Lumara Health Inc. Makena(R) is a registered trademark of Lumara Health
Inc.


Non-GAAP Financial Measures Reconciliation for Forward-Looking Guidance

------------------------------------------------------------------------
($ in millions) 2015 Guidance
-----------------------------------------------------------------------
GAAP Net Income $95 - $105
-----------------------------------------------------------------------
Add - depreciation and amortization of intangibles $50 - $55
-----------------------------------------------------------------------
Add - interest expense, net $40
-----------------------------------------------------------------------
EBITDA $185 - $200
-----------------------------------------------------------------------
Less - non-cash collaboration revenue $41 - $42
-----------------------------------------------------------------------
Add - non-cash inventory step-up $10 - $12
-----------------------------------------------------------------------
Add - stock compensation $12 - $14
-----------------------------------------------------------------------
Add - adjustment to contingent consideration $15 - $16
-----------------------------------------------------------------------
Add - severance and restructuring $2 - $3
-----------------------------------------------------------------------
Adjusted EBITDA $180 - $200
-----------------------------------------------------------------------
Less - cash interest expense, net $30
-----------------------------------------------------------------------
Cash earnings $150 - $170
-----------------------------------------------------------------------

 

1 Non-cash and one-time charges include $10.9 million of
transaction-related expenses and severance related to the Lumara Health
acquisition in November 2014 and stock compensation of $2.4 million.

2 Non-cash and one-time charges include $11.9 million of
transaction-related expenses and severance related to the Lumara Health
acquisition in November 2014 and stock compensation of $8.5 million.

3 See summary of non-GAAP adjustments at conclusion of press release


CONTACT: AMAG Pharmaceuticals, Inc.
Katie Payne, 617-498-3303

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