On Nov 20, Zacks Investment Research upgraded AMAG Pharmaceuticals, Inc. (AMAG) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
AMAG has been witnessing positive earnings estimates revisions since the announcement of its third-quarter 2013 results last month, which included a 90.9% positive earnings surprise. Moreover, the specialty pharmaceutical company delivered positive earnings surprises in 3 of the last 4 quarters.
AMAG posted third quarter 2013 loss of a penny per share, narrower than the Zacks Consensus Estimate of a loss of 11 cents and the year-ago loss of 16 cents per share. The company’s narrower loss was attributable to a 21.8% rise in revenues.
AMAG recorded revenues mainly from Feraheme, an injectable drug for intravenous use as iron replacement therapy for the treatment of iron deficiency anemia (IDA) in adults suffering from chronic kidney disease (CKD). Feraheme contributed $19.3 million to the company’s top-line in the third quarter, up 19.5% year over year.
AMAG is also working on expanding Feraheme’s label. AMAG is looking to get Feraheme’s label expanded for the treatment of CKD adults suffering from IDA with a history of unsuccessful oral iron therapy. In Dec 2012, the company submitted a supplemental new drug application (sNDA) to the U.S. Food and Drug Administration (FDA) for Feraheme. A final decision from the U.S. regulatory body is expected by Jan 21, 2014.
Apart from Feraheme, AMAG now has another marketed product, MuGard, an oral mucoadhesive for managing oral mucositis.
Based on its strong third quarter 2103 results, the company now expects to generate total revenues in the range of $78–$81 million (previous: $77–$80 million) and Feraheme U.S. sales in the range of $69 million to $71 million (previous: $67−$70 million) in 2013. AMAG also expects to generate around $9−$10 million from revenues from other sources.
We are pleased with Feraheme’s performance so far. The raised revenue guidance also encourages us. However, we expect investor focus to stay on Feraheme’s label expansion.
Other Stocks to Consider
Apart from AMAG, Actelion Ltd. (ALIOF), Shire (SHPG) and Jazz Pharmaceuticals Public Limited Company (JAZZ) too carry a Zacks Rank#1 and are worth considering.
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