AMAG’s Feraheme Revs Look Good

AMAG Pharmaceuticals (AMAG) announced its preliminary fourth quarter and full year 2013 financial results. AMAG’s shares gained more than 9.3% following the announcement.

Q4 Snapshot

AMAG’s total revenues for the fourth quarter of 2013 are expected within $21.3–$21.8 million, compared with $21.1 million in the year-ago period. The company’s projected range is above the Zacks Consensus Estimate of $21 million. AMAG’s fourth quarter revenues include U.S. net Feraheme product revenues of $18.6–$19.1 million, compared with $14.4 million in the year-ago period.

AMAG records 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). AMAG is looking to get Feraheme’s label expanded for the treatment of IDA in all adults suffering from CKD with a history of unsuccessful oral iron therapy. The FDA is expected to render a final decision on Feraheme’s label expansion by Jan 21, 2014.

2013 Guidance

The company’s total revenue for 2013 is expected to be in the band of $80.5–$81 million, compared with the year-ago figure of $85.4 million. The Zacks Consensus Estimate of $81 million is on the high end of the company’s guidance.

Meanwhile, the company’s U.S. net Feraheme revenues look impressive. AMAG expects U.S. net Feraheme product revenues in the range of $71−$71.5 million, up from the 2012 figure of $58.3 million. Higher volume and improved pricing drove 2013 Feraheme sales.

AMAG expects 2013 operating expenses within $79.5–$81 million, down about 7% from 2012.

Our Take

AMAG’s fourth quarter and full year 2013 Feraheme sales figures look impressive. However, we believe investor focus will stay on the upcoming FDA decision on Feraheme’s label expansion. We expect a negative decision or further delay in the approval of the broader label of Feraheme. This will have a negative impact on AMAG’s share price.

AMAG currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks include Jazz Pharmaceuticals Public Limited Company (JAZZ), Actelion Ltd. (ALIOF) and Gentium (GENT). All the stocks hold a Zacks Rank #1 (Strong Buy).

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