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AMAG Pharmaceuticals Announces Financial Results for the Third Quarter and Nine Months Ended September 30, 2012

  • Year-over-year quarterly Feraheme® sales and provider demand
    growth continued
  • Reduced operating expenses by 42% from the third quarter of 2011
  • Updates financial guidance for 2012, raising Feraheme sales and
    lowering expense forecasts

LEXINGTON, Mass.–(BUSINESS WIRE)–Nov. 1, 2012–
AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG), a specialty pharmaceutical
company focused on the development and commercialization of Feraheme®
(ferumoxytol) Injection for intravenous (IV) use to treat iron
deficiency anemia (IDA), today reported unaudited consolidated financial
results for the third quarter ended September 30, 2012. The company
ended the third quarter of 2012 with approximately $211 million of cash,
cash equivalents and investments.

Business Update

  • Total revenues for the third quarter of 2012 were $17.7 million, which
    included $16.2 of net U.S. Feraheme product revenues. As a result of
    actions taken earlier this year to improve the pricing dynamics for
    Feraheme, net revenue realized per gram of Feraheme increased in the
    third quarter of 2012 compared to the second quarter of 2012,
    reversing a historically downward trend.
  • Feraheme provider demand1 for the third quarter of 2012 was
    approximately 27,500 grams, an 11% increase over the third quarter of
    2011, with growth continuing to outpace IV iron market growth.
    Feraheme gained share in the hematology and hospital segments, with
    demand in these segments growing at 8% and 34%, respectively, compared
    to the third quarter of 2011.
  • The company reported positive data from the second phase III clinical
    trials of Feraheme for the treatment of iron deficiency anemia
    regardless of the underlying cause and plans to submit a supplemental
    new drug application to the U.S. Food and Drug Administration in the
    fourth quarter of 2012.
  • International expansion efforts for ferumoxytol are progressing as
    planned. The first shipment of ferumoxytol to support European launch
    of Rienso®, the brand name of ferumoxytol in Europe, occurred in the
    third quarter. Revenue from these sales has been deferred until the
    product has been sold to customers of Takeda Pharmaceuticals Company,
    Ltd.
    , AMAG’s partner in the EU and Canada. Additionally, Feraheme was
    launched in Canada early in the fourth quarter, for which AMAG has
    received a $3 million milestone payment, and today, Rienso was
    launched in Europe. The first commercial sale of Rienso in Europe,
    which is expected shortly, triggers a $15 million milestone payment
    from Takeda.

“We are pleased to report the results of our strong third quarter
performance. Our updated full-year 2012 financial guidance is a direct
result of our renewed focus on Feraheme sales growth and aggressive
operating expense management,” commented William Heiden, president and
chief executive officer of AMAG. “While I am pleased with the growth
achieved in our U.S. Feraheme business this year, I believe that we can
do even better. Feraheme represents a tremendous opportunity for AMAG
and I want to ensure that we unlock its full potential — by maximizing
the number of adult IDA patients with chronic kidney disease who benefit
from Feraheme today, and broadening that to all IDA patients next year,
should we gain regulatory approval of an expanded label.”

Heiden continued, “Additionally, we have extended the international
reach of Feraheme/Rienso with launches in Canada and Europe, we remain
on-track for our fourth quarter sNDA filing in the U.S. for our Feraheme
label expansion and are making progress in our search to acquire
additional commercial products.”

Third quarter and Nine Month 2012 Financial Results (unaudited)

Total revenues for the quarter ended September 30, 2012 were $17.7
million
, as compared to $17.6 million for the third quarter of 2011. For
the nine months ended September 30, 2012, AMAG reported total revenues
of $64.2 million, as compared to revenues of $46.3 million for the same
period in 2011. The increase in total revenues for the nine-month period
ended September 30, 2012 was due to increased physician demand for
Feraheme and the recognition of a $15 million milestone payment from
Takeda in 2012.

Net U.S. Feraheme product revenues for the third quarter of 2012 were
$16.2 million and include approximately $2.1 million in revenues
associated with changes in estimated Medicaid rebate and product returns
reserves. These reductions in estimated reserves reflect AMAG’s lower
Medicaid claims and product returns than originally recorded since
launch in 2009. For comparison, net U.S. Feraheme product revenues for
the third quarter of 2011 were $15.6 million and included $3.0 million
of revenues associated with a change in estimated Medicaid reserves.

Total cost of goods sold (COGS) for the quarter ended September 30, 2012
were $4.3 million, as compared to $2.7 million for the third quarter of
2011. Total COGS for the nine months ended September 30, 2012 were $10.2
million
, as compared to $7.8 million for the same period in 2011. The
increase in COGS for the nine months ended September 30, 2012 is
primarily due to a $0.7 million increase in idle capacity charges and an
additional $1.8 million in non-cash charges related to the closure of
the company’s Cambridge, MA manufacturing facility.

Total operating expenses, excluding COGS, for the quarter ended
September 30, 2012 were $18.0 million, as compared to $32.1 million for
the third quarter of 2011. Total operating expenses, excluding COGS, for
the nine months ended September 30, 2012 were $67.5 million, as compared
to $98.8 million for the same period in 2011. The decreases in total
operating expenses in the 2012 periods were due to decreased research
and development costs associated with the company’s global IDA
registration program and decreased selling, general and administrative
expenses as the company realized the benefits of its streamlined cost
structure.

For the quarter ended September 30, 2012, the company’s net loss
decreased 76% to $4.0 million, or a loss of $0.19 per basic and diluted
share, as compared to a net loss of $16.6 million, or a loss of $0.78
per basic and diluted share, for the third quarter of 2011. AMAG’s net
loss for the nine months ended September 30, 2012 was $13.1 million, or
a loss of $0.61 per basic and diluted share, as compared to a net loss
of $58.5 million, or a loss of $2.76 per basic and diluted share for the
same period in 2011.

Updated Annual 2012 Financial Guidance

The company is updating its 2012 full year financial guidance. AMAG now
expects:

  • Increased net Feraheme product revenue of $58$60 million, including
    the impact of changes in estimated reserves already recorded this
    year; and
  • Reduced total operating expenses, excluding COGS, of $87$90 million.

AMAG confirms prior annual 2012 guidance for the following:

  • COGS of approximately 20% – 24% of total product sales, which includes
    accelerated depreciation and idle capacity associated with the closure
    of the company’s manufacturing facility;
  • Cash milestones totaling $33 million associated with regulatory
    approvals and commercial launches in the EU and Canada, $18 million of
    which have already been received; and
  • A 2012 year-end cash and investments balance of $225$230 million,
    not including the impact of a business development transaction.

Conference Call and Webcast Access

AMAG Pharmaceuticals, Inc. will host a conference call and webcast with
slides today at 8:00 a.m. ET. To access the conference call via
telephone, dial 877-412-6083 from the United States or 702-495-1202 for
international access. A telephone replay of the conference call will be
available from approximately 12:00 p.m. ET on November 1, 2012 until
midnight November 8, 2012. To access the replay, dial 855-859-2056 from
the United States or 404-537-3406 for international access. The passcode
for the live call and the telephone replay is 37432497.

A live webcast of the conference call and accompanying slides will be
accessible through the Investors section of the company’s website at www.amagpharma.com
beginning today at 8:00 a.m. ET. Following the conference call, the
webcast replay will be available today at approximately 10:00 a.m. ET
and will be archived on the AMAG Pharmaceuticals, Inc. website until
midnight November 30, 2012.

About Feraheme

In the United States, Feraheme® (ferumoxytol) Injection for Intravenous
(IV) use is indicated for the treatment of iron deficiency anemia in
adult chronic kidney disease (CKD) patients. Feraheme received marketing
approval from the U.S. Food and Drug Administration on June 30, 2009 and
was commercially launched by AMAG in the U.S. shortly thereafter.
Ferumoxytol received marketing approval in Canada in December 2011, in
the European Union in June 2012, and in Switzerland in August 2012. For
additional product information, please visit www.feraheme.com.

About AMAG Pharmaceuticals, Inc.

AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG), a specialty
pharmaceutical company focused on the development and commercialization
of an intravenous iron to treat iron deficiency anemia (IDA). For
additional company information, please visit www.amagpharma.com.

AMAG Pharmaceuticals and Feraheme are registered trademarks of AMAG
Pharmaceuticals, Inc.

Rienso is a registered trademark of Takeda Pharmaceutical Company, Ltd.

1IMS Health Data (in grams) through the period ending
September 30, 2012.

               
 
AMAG Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(unaudited, amounts in thousands, except for per share data)
   
Three Months Ended Sept 30, Nine Months Ended Sept 30,
  2012   2011     2012     2011  
Revenues:
Product sales, net $ 16,176 $ 15,802 $ 44,304 $ 39,905
License fee, collaboration and royalty revenues   1,566   1,753     19,930     6,437  
Total revenues   17,742   17,555     64,234     46,342  
 
Operating costs and expenses (1):
Cost of product sales 4,323 2,669 10,193 7,792
Research and development expenses 5,260 14,894 25,393 45,155
Selling, general and administrative expenses 12,160 17,230 40,442 53,690
Restructuring expense   562       1,620      
Total operating costs and expenses   22,305   34,793     77,648     106,637  
 
Operating income (loss) (4,563 ) (17,238 ) (13,414 ) (60,295 )
 
Interest and dividend income, net 295 378 1,026 1,390
Other income (expense)   2   14     (1,469 )   (194 )
Net income (loss) before income taxes (4,266 ) (16,846 ) (13,857 ) (59,099 )
Income tax benefit   299   215     793     611  
 
Net income (loss) $ (3,967 ) $ (16,631 ) $ (13,064 ) $ (58,488 )
 
Net income (loss) per share – basic and diluted $ (0.19 ) $ (0.78 ) $ (0.61 ) $ (2.76 )
Weighted average shares outstanding used to compute net loss per
share:
Basic and diluted 21,403 21,194 21,374 21,169
 
(1) Stock-based compensation included in operating costs and
expenses:
Cost of product sales $ 52 $ 131 $ 198 $ 483
Research and development 473 84 1,420 1,365
Selling, general and administrative 1,525 1,487 3,694 6,950
       
 
AMAG Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(unaudited, amounts in thousands)
 
September 30, 2012 December 31, 2011

Cash and cash equivalents

$ 42,900 $ 63,474
Short-term investments 167,943 148,703
Accounts receivable 7,363 5,932
Inventories 12,227 15,206
Receivable from collaboration 777 428
Assets held for sale 2,300
Other current assets   7,627   6,288
Total current assets 241,137 240,031
 
Net property, plant & equipment 3,411 9,206
Long-term investments 17,527
Other assets   460   460
 
Total assets $ 245,008 $ 267,224
 
Accounts payable $ 3,620 $ 3,732
Accrued expenses and other short-term liabilities 16,674 28,916
Deferred revenues   7,250   6,346
Total current liabilities 27,544 38,994
 
Deferred revenues 40,624 45,196
Other long-term liabilities   2,136   2,438
Total long-term liabilities 42,760 47,634
 
Total stockholders’ equity   174,704   180,596
 
Total liabilities and stockholders’ equity $ 245,008 $ 267,224

Forward-looking Statements

This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and
other federal securities laws. Any statements contained herein which do
not describe historical facts, including but not limited to, our belief
that “we can do better,” our expectation to submit a supplemental new
drug application to the U.S. Food and Drug Administration by the end of
2012, our progress in our search to acquire additional products and our
expected financial results for the 2012 fiscal year, 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: (1) uncertainties regarding our
and Takeda’s ability to successfully compete in the intravenous iron
replacement market both in the U.S. and outside the U.S., (2)
uncertainties regarding our ability to successfully and timely complete
our clinical development programs and obtain regulatory approval for
Feraheme in the broader IDA indication and in territories outside of the
U.S., including the European Union, (3) the possibility that significant
safety or drug interaction problems could arise with respect to
Feraheme, (4) uncertainties regarding the ability to manufacture
Feraheme, (5) uncertainties relating to our patents and proprietary
rights, (6) uncertainty regarding our ability to acquire additional
products for our portfolio, and (7) other risks identified in our
Securities and Exchange Commission filings, including our Quarterly
Report on Form 10-Q for the quarter ended June 30, 2012. We caution you
not to place undue reliance on any forward-looking statements, which
speak only as of the date they are made.

We disclaim 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.

Source: AMAG Pharmaceuticals, Inc.

AMAG Pharmaceuticals, Inc.
Amy Sullivan, 617-498-3303