AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) today reported unaudited consolidated financial results for the third quarter ended September 30, 2011. Additionally, AMAG announced leadership changes, including the departure of the company's president and chief executive officer, Brian J.G. Pereira, MD, and the implementation of a broad restructuring plan to reduce operating expenses. As of September 30, 2011, the company's cash, cash equivalents and investments totaled approximately $251 million.
“Provider demand for Feraheme continues to increase, and we believe that with a leaner organization and increased detail frequency to target accounts we can continue to grow the brand in the non-dialysis CKD IV iron market where we currently have approximately 13% market share”
AMAG Leadership, Strategy and Corporate Restructuring
- AMAG announced today that Dr. Pereira has resigned from his position as president, CEO and a director of the company, effective immediately. Dr. Pereira will remain a key strategic advisor to the company on certain matters, including the ongoing development and regulatory work related to its broad phase III program for patients with iron deficiency anemia (IDA). AMAG also announced the departure of Gary Zieziula, the company's chief commercial officer, effective immediately.
- AMAG promoted Frank Thomas, the company's chief financial officer, to the position of chief operating officer and appointed him as the interim president and chief executive officer. The company has concurrently launched a search for a permanent chief executive officer. Additionally, AMAG's Board of Directors has established a special committee, consisting of Michael Narachi, Robert Perez and Lesley Russell, MD, to assure appropriate commercial, operational and developmental oversight during this transition period.
- AMAG implemented today, a broad restructuring plan to align operating expenses with near-term revenue projections for Feraheme® (ferumoxytol) Injection for Intravenous (IV) use. The plan, including an approximate 25% reduction in positions, is expected to decrease the company's operating expenses, excluding cost of goods sold (COGS), by $20 - $25 million in 2012 as compared to 2011. In addition, the planned completion of the company's phase III clinical program for a broad IDA indication is expected to further reduce operating expenses by approximately $20 million in 2012. As a result of these two actions, AMAG's estimated operating expenses, excluding COGS, in 2012 are expected to be $90 - $100 million, of which $50 - $55 million are expected to be selling, general and administrative expenses. The company expects to end 2012 with $215 - $225 million in cash, cash equivalents and investments, including $33 million in milestone payments related to the expected approval and launch of Feraheme in the EU and Canada. AMAG expects to incur approximately $3.2 million in charges associated with the restructuring, the majority of which is expected to be recognized during the fourth quarter of 2011.
- Finally, AMAG's Board of Directors is committed to the evaluation of all strategic options to enhance stockholder value, while management focuses on strategies to increase Feraheme revenues.
"On behalf of AMAG's Board of Directors, I want to thank Brian for his six years of executive leadership at AMAG and for his numerous contributions to the successful development and approval of Feraheme. We are pleased that Brian will remain as a valuable advisor to the company during this transition, especially as we seek approval for a broad iron deficiency anemia indication," said Michael N. Narachi, Chairman of AMAG's Board of Directors. "We are committed to expeditiously evaluating all available options to enhance stockholder value, and the restructuring announced today is an important first step in that process. Frank has the full support of the Board and has the experience necessary to lead the organization while we look to attract a permanent chief executive with proven ability to build and grow a profitable specialty pharmaceutical company."
"Provider demand for Feraheme continues to increase, and we believe that with a leaner organization and increased detail frequency to target accounts we can continue to grow the brand in the non-dialysis CKD IV iron market where we currently have approximately 13% market share," said Thomas, chief operating officer and interim president and chief executive officer of AMAG. "Based on our near-term revenue projections for Feraheme, we have implemented a broad restructuring plan to significantly reduce operating expenses. Our goal is to preserve cash and drive the business to profitability as soon as possible, through a combination of expense reductions and top line growth of our core asset, Feraheme."
Third Quarter 2011 Financial Results (unaudited)
Total revenues for the third quarter ended September 30, 2011 were $17.6 million, of which $15.6 million were net Feraheme product revenues. Net Feraheme product revenues include a $3.0 million change in estimated Medicaid reserves to reflect AMAG's actual claims experience since launch. Total Feraheme provider demand for the third quarter was comparable to the second quarter at approximately 25,000 grams. The non-dialysis IV iron market contracted in the third quarter, however, Feraheme's market share increased to 13% from 11% in the second quarter of 2011.
Total operating costs and expenses for the quarter ended September 30, 2011 were $34.8 million compared to $34.3 million for the same period in 2010. Total operating expenses in the third quarter of 2011 included approximately $1.9 million related to the proposed acquisition of Allos Therapeutics, Inc., but excludes the termination fee of $2 million, which the company paid and will recognize in the fourth quarter. The company reported a net loss of $16.6 million, or a loss of $0.78 per basic and diluted share, for the quarter ended September 30, 2011 compared to a net loss of $17.0 million, or a loss of $0.81 per basic and diluted share, for the same period in 2010.
For the nine months ended September 30, 2011, the company reported total revenues of $46.3 million, as compared to revenues of $49.0 million for the same period in 2010. The decrease in total revenues in 2011 versus the comparable 2010 period was primarily due to lower provider demand from the dialysis segment due to the implementation of the Medicare prospective payment system, offset, in part, by increased demand from non-dialysis sites of care.
Total operating costs and expenses for the nine months ended September 30, 2011 were $106.6 million, compared to $111.8 million for the same period in 2010. The decrease in total operating costs and expenses in the 2011 period is primarily due to decreased selling, general and administrative expenses associated with the commercialization of Feraheme, partially offset by increased research and development costs associated with the company's global IDA registrational program. Net loss for the nine months ended September 30, 2011 was $58.5 million, or a loss of $2.76 per basic and diluted share, as compared to a net loss of $61.4 million, or a loss of $2.96 per basic and diluted share, for the same period in 2010.