001-10865 | 04-2742593 | |
(Commission File Number) | (IRS Employer Identification No.) |
1100 Winter Street | ||
Waltham, Massachusetts | 02451 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, par value $0.01 per share | AMAG | NASDAQ Global Select Market |
AMAG PHARMACEUTICALS, INC. | ||
By: | /s/ Joseph D. Vittiglio | |
Joseph D. Vittiglio Executive Vice President, General Counsel, Quality & Corporate Secretary | ||
Dates: August 7, 2019 |
• | Makena supply: due to sustained supply disruptions, resulting in loss of market share, and increased generic competition, the company made the decision to exit the IM market and, through mutual agreement, has terminated the arrangement with Prasco, LLC, its authorized generic partner. |
• | Makena PROLONG study: in a recent meeting with the U.S. Food and Drug Administration (FDA) regarding PROLONG, the Agency informed the company that it plans to hold an Advisory Committee meeting. This meeting is expected to occur in the fourth quarter of 2019 to facilitate transparent discussions of the PROLONG trial and allow FDA to obtain the necessary input from Advisory Committee members and important stakeholders to inform regulatory decision-making for Makena. In addition to presentations by the company and the FDA, clinical experts, medical society representatives and patients will have the opportunity to provide their perspectives on the clinical importance and medical need for Makena. |
• | Quarterly growth across all promoted products: strong revenue and market share performance in the second quarter |
• | Makena® (hydroxyprogesterone caproate (HPC) injection) SC auto-injector achieved 63% market share of all FDA-approved HPC prescription volume in the quarter. |
• | Feraheme® (ferumoxytol injection) achieved record market share of 17.2% in the quarter. |
• | Intrarosa® (prasterone) exited the quarter at a TRx share of 4.8%, the highest share achievement since launch. |
• | VyleesiTM (bremelanotide injection) on track for national launch in September: June 21 approval generated coverage from more than 300 news outlets across the country, which has helped drive early awareness of Vyleesi alongside the initial marketing campaign. |
• | Development pipeline is progressing: the company expects to initiate a phase 3a study of ciraparantag in the fourth quarter of 2019. AMAG-423 Phase 2b/3a study continues to open new sites and enroll patients. |
($M) | Three Months Ended June 30, | |||||||
2019 | 2018 | % Change | ||||||
Total product revenues, net | $78.0 | $146.2 | (47 | )% | ||||
Makena subcutaneous auto-injector | 41.0 | 13.5 | 204 | % | ||||
Makena intramuscular - branded and generic | (10.0 | ) | 91.8 | (111 | )% | |||
Feraheme | 42.1 | 37.7 | 12 | % | ||||
Intrarosa | 4.9 | 3.2 | 53 | % | ||||
Operating (loss) income | $(115.8) | $41.9 | N/A | |||||
Non-GAAP adjusted EBITDA1 | $(24.4) | $59.7 | N/A |
2019 Financial Guidance | ||||
($M) | Updated | Previous | ||
Total revenue | $325 - $355 | $365 - $415 | ||
Operating loss | ($286) - ($276) | ($206) - ($176) | ||
Adjusted EBITDA2 | ($85) - ($75) | ($65) - ($35) |
• | Makena SC auto-injector revenue grew to $41.0 million, compared with $13.5 million in the same period last year (launched March 2018). |
• | The company did not ship any Makena IM product during the quarter, therefore the full impact of the $10.0 million change in estimated Medicaid and commercial rebate liabilities from prior period sales appears as negative revenue during the quarter. |
• | Feraheme revenue increased to $42.1 million, an increase of 12% over the same period last year. Feraheme’s average quarterly market share increased to 17.2%, compared with 16.3% in the same period last year and 16.1% in the first quarter of 2019. |
• | Intrarosa revenue totaled $4.9 million, compared with $3.2 million in the same period last year. TRx share increased to 4.5%, compared with 3.2% in the same period last year and 3.9% in the first quarter of 2019. |
($M) | Three Months Ended June 30, | |||
2019 | 2018 | |||
Total product revenues, net | $78.0 | $146.2 | ||
Makena subcutaneous auto-injector | 41.0 | 13.5 | ||
Makena intramuscular - branded and generic | (10.0 | ) | 91.8 | |
Feraheme | 42.1 | 37.7 | ||
Intrarosa | 4.9 | 3.2 |
• | Cost of products sales (CoPS) in the second quarter of 2019 included a $4.8 million write-down of Makena IM inventory; CoPS in the second quarter of 2018 included $61.4 million in amortization expense primarily related to the Makena IM intangible asset. |
• | Selling, general and administrative (SG&A) expenses in the second quarter of 2018 included an expense reversal of $49.8 million related to the Makena contingent consideration liability because the company no longer believed that it was probable that a sales milestone would be achieved. Excluding this expense reversal, SG&A expenses increased by $11.6 million, or 18%, in the second quarter of 2019, compared with the same period last year, primarily due to increased marketing expenses related to the upcoming launch of Vyleesi. |
• | The intangible asset impairment charge relates to the full impairment of the Makena IM intangible asset (described above). |
($M) | Three Months Ended June 30, | |||
2019 | 2018 | |||
Amortization of intangible assets | $3.9 | $61.4 | ||
Direct cost of product sales | 20.4 | 15.4 | ||
Total cost of product sales | 24.3 | 76.8 | ||
Total Research and development expenses | 15.0 | 11.7 | ||
Fair value of contingent consideration liability | — | (49.8 | ) | |
Other selling, general and administrative expenses | 77.3 | 65.7 | ||
Total selling, general and administrative expenses | 77.3 | 15.9 | ||
Impairment of intangible assets | $77.4 | $0.0 | ||
Total costs and expenses | $194.0 | $104.4 |
• | As of June 30, 2019, the company’s cash and investments totaled $261.0 million. |
◦ | The FDA approval of Vyleesi triggered a $60.0 million payment obligation to Palatin Technologies, which was paid in July 2019. |
• | Long-term debt totaled $320.0 million (representing the principal amounts outstanding of the 2022 convertible notes). |
• | The impact of the $77.4 million non-cash impairment charge and the related $4.8 million inventory write-down in the second quarter of 2019 contributed to an operating loss of $115.8 million. The company reported negative adjusted EBITDA of $24.4 million in the second quarter of 2019. |
($M) | Three Months Ended June 30, | |
2019 | 2018 | |
Operating (loss) income | $(115.8) | $41.9 |
Non-GAAP adjusted EBITDA1 | $(24.4) | $59.7 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues: | |||||||||||||||
Makena | $ | 30,935 | $ | 105,172 | $ | 62,192 | $ | 195,156 | |||||||
Feraheme/MuGard | 42,164 | 37,806 | 82,222 | 63,005 | |||||||||||
Intrarosa | 4,877 | 3,241 | 9,291 | 5,406 | |||||||||||
Other revenues | 133 | 35 | 208 | 75 | |||||||||||
Total revenues | 78,109 | 146,254 | 153,913 | 263,642 | |||||||||||
Operating costs and expenses: | |||||||||||||||
Cost of product sales | 24,290 | 76,776 | 42,767 | 140,688 | |||||||||||
Research and development expenses | 14,980 | 11,693 | 33,046 | 22,502 | |||||||||||
Acquired in-process research and development | — | — | 74,856 | 20,000 | |||||||||||
Selling, general and administrative expenses | 77,324 | 15,898 | 152,006 | 89,329 | |||||||||||
Impairment of intangible assets | 77,358 | — | 77,358 | — | |||||||||||
Restructuring expenses | — | — | 7,420 | — | |||||||||||
Total costs and expenses | 193,952 | 104,367 | 387,453 | 272,519 | |||||||||||
Operating (loss) income | (115,843 | ) | 41,887 | (233,540 | ) | (8,877 | ) | ||||||||
Other income (expense): | |||||||||||||||
Interest expense | (6,330 | ) | (16,056 | ) | (12,780 | ) | (32,034 | ) | |||||||
Interest and dividend income | 1,224 | 952 | 2,810 | 1,595 | |||||||||||
Other income | 2 | (44 | ) | 342 | (44 | ) | |||||||||
Total other expense, net | (5,104 | ) | (15,148 | ) | (9,628 | ) | (30,483 | ) | |||||||
(Loss) income from continuing operations before income taxes | (120,947 | ) | 26,739 | (243,168 | ) | (39,360 | ) | ||||||||
Income tax (benefit) expense | (120 | ) | 52,556 | (257 | ) | 44,556 | |||||||||
Net loss from continuing operations | $ | (120,827 | ) | $ | (25,817 | ) | $ | (242,911 | ) | $ | (83,916 | ) | |||
Discontinued Operations: | |||||||||||||||
Income from discontinued operations | $ | — | $ | 7,158 | $ | — | $ | 13,036 | |||||||
Income tax expense | — | 1,422 | — | 3,444 | |||||||||||
Net income from discontinued operations | $ | — | $ | 5,736 | $ | — | $ | 9,592 | |||||||
Net loss | $ | (120,827 | ) | $ | (20,081 | ) | $ | (242,911 | ) | $ | (74,324 | ) | |||
Basic and diluted net (loss) income per share: | |||||||||||||||
Loss from continuing operations | $ | (3.57 | ) | $ | (0.75 | ) | $ | (7.12 | ) | $ | (2.45 | ) | |||
Income from discontinued operations | — | 0.17 | — | 0.28 | |||||||||||
Basic and diluted net loss per share | $ | (3.57 | ) | $ | (0.58 | ) | $ | (7.12 | ) | $ | (2.17 | ) | |||
Weighted average shares outstanding used to compute net (loss) income per share (basic and diluted) | 33,807 | 34,358 | 34,136 | 34,261 |
June 30, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 150,461 | $ | 253,256 | |||
Marketable securities | 110,583 | 140,915 | |||||
Accounts receivable, net | 83,183 | 75,347 | |||||
Inventories | 25,179 | 26,691 | |||||
Prepaid and other current assets | 24,549 | 18,961 | |||||
Note receivable | — | 10,000 | |||||
Total current assets | 393,955 | 525,170 | |||||
Property and equipment, net | 8,224 | 7,521 | |||||
Goodwill | 422,513 | 422,513 | |||||
Intangible assets, net | 191,789 | 217,033 | |||||
Operating lease right-of-use asset | 6,582 | — | |||||
Deferred tax assets | 630 | 1,260 | |||||
Restricted cash | 495 | 495 | |||||
Other long-term assets | 12 | 1,467 | |||||
Total assets | $ | 1,024,200 | $ | 1,175,459 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 26,946 | $ | 14,487 | |||
Accrued expenses | 214,211 | 129,537 | |||||
Current portion of convertible notes, net | — | 21,276 | |||||
Current portion of operating lease liability | 3,889 | — | |||||
Current portion of deferred revenue | 1,128 | — | |||||
Current portion of acquisition-related contingent consideration | 128 | 144 | |||||
Total current liabilities | 246,302 | 165,444 | |||||
Long-term liabilities: | |||||||
Convertible notes, net | 269,305 | 261,933 | |||||
Long-term operating lease liability | 3,504 | — | |||||
Long-term deferred revenue | 5,171 | — | |||||
Long-term acquisition-related contingent consideration | 183 | 215 | |||||
Other long-term liabilities | 228 | 1,212 | |||||
Total liabilities | 524,693 | 428,804 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, par value $0.01 per share, 2,000,000 shares authorized; none issued | — | — | |||||
Common stock, par value $0.01 per share, 117,500,000 shares authorized; 33,899,954 and 34,606,760 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively | 339 | 346 | |||||
Additional paid-in capital | 1,287,553 | 1,292,736 | |||||
Accumulated other comprehensive loss | (3,032 | ) | (3,985 | ) | |||
Accumulated deficit | (785,353 | ) | (542,442 | ) | |||
Total stockholders’ equity | 499,507 | 746,655 | |||||
Total liabilities and stockholders’ equity | $ | 1,024,200 | $ | 1,175,459 |
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (242,911 | ) | $ | (74,324 | ) | |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
Depreciation and amortization | 9,089 | 126,183 | |||||
Impairment of intangible assets | 77,358 | — | |||||
Provision for bad debt expense | (12 | ) | 856 | ||||
Amortization of premium/discount on purchased securities | (51 | ) | 93 | ||||
Write-down of inventory | 4,836 | — | |||||
Gain on disposal of fixed assets | — | (99 | ) | ||||
Non-cash equity-based compensation expense | 9,407 | 11,122 | |||||
Non-cash IPR&D expense | 18,029 | — | |||||
Amortization of debt discount and debt issuance costs | 7,513 | 7,851 | |||||
Gains on marketable securities, net | (270 | ) | — | ||||
Change in fair value of contingent consideration | (21 | ) | (49,184 | ) | |||
Deferred income taxes | 630 | 42,372 | |||||
Prepaid transaction costs | — | (3,865 | ) | ||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable, net | (7,825 | ) | (11,265 | ) | |||
Inventories | (3,323 | ) | 1,223 | ||||
Prepaid and other current assets | (5,562 | ) | (756 | ) | |||
Accounts payable and accrued expenses | 35,479 | 27,475 | |||||
Deferred revenues | (101 | ) | 7,329 | ||||
Other assets and liabilities | 1,283 | 117 | |||||
Net cash (used in) provided by operating activities | (96,452 | ) | 85,128 | ||||
Cash flows from investing activities: | |||||||
Proceeds from sales or maturities of marketable securities | 46,420 | 44,038 | |||||
Purchase of marketable securities | (14,815 | ) | (46,726 | ) | |||
Capital expenditures | (1,907 | ) | (1,553 | ) | |||
Net cash provided by (used in) investing activities | 29,698 | (4,241 | ) | ||||
Cash flows from financing activities: | |||||||
Payments to settle convertible notes | (21,417 | ) | — | ||||
Payments of contingent consideration | (27 | ) | (60 | ) | |||
Payments for repurchases of common stock | (13,730 | ) | — | ||||
Proceeds from the issuance of common stock under the ESPP | 851 | — | |||||
Proceeds from the exercise of common stock options | 30 | 1,473 | |||||
Payments of employee tax withholding related to equity-based compensation | (1,748 | ) | (2,362 | ) | |||
Net cash used in financing activities | (36,041 | ) | (949 | ) | |||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (102,795 | ) | 79,938 | ||||
Cash, cash equivalents, and restricted cash related to discontinued operations | — | (59,714 | ) | ||||
Cash, cash equivalents, and restricted cash at beginning of the period | 253,751 | 192,770 | |||||
Cash, cash equivalents, and restricted cash at end of the period | $ | 150,956 | $ | 212,994 | |||
Supplemental data for cash flow information: | |||||||
Cash paid for taxes | $ | 433 | $ | 4,181 | |||
Cash paid for interest | $ | 5,467 | $ | 24,171 |
Non-cash investing and financing activities: | |||||||
Settlement of note receivable in connection with Perosphere acquisition | $ | 10,000 | $ | — | |||
Milestone payment accrued for FDA approval of Vyleesi | $ | 60,000 | $ | — |
Revenue | Cost of product sales | Research & development | Selling, general & administrative | Intangible asset impairment charge | Operating Loss / Adjusted EBITDA | ||||||||||||||||||
GAAP | $ | 78,109 | $ | 24,290 | $ | 14,980 | $ | 77,324 | $ | 77,358 | $ | (115,843 | ) | ||||||||||
Depreciation and intangible asset amortization | — | (3,943 | ) | (336 | ) | (434 | ) | — | |||||||||||||||
Stock-based compensation | — | (199 | ) | (680 | ) | (3,656 | ) | — | |||||||||||||||
Asset impairment charges | — | (4,836 | ) | — | — | (77,358 | ) | ||||||||||||||||
Non-GAAP Adjusted | $ | 78,109 | $ | 15,312 | $ | 13,964 | $ | 73,234 | $ | — | $ | (24,401 | ) |
Revenue | Cost of product sales | Research & development | Selling, general & administrative | Operating Income / Adjusted EBITDA | |||||||||||||||
GAAP | $ | 146,254 | $ | 76,776 | $ | 11,693 | $ | 15,898 | $ | 41,887 | |||||||||
Depreciation and intangible asset amortization | — | (61,423 | ) | (6 | ) | (449 | ) | ||||||||||||
Non-cash inventory step-up adjustments | — | (967 | ) | — | — | ||||||||||||||
Stock-based compensation | — | (107 | ) | (608 | ) | (4,077 | ) | ||||||||||||
Adjustments to contingent consideration | — | — | — | 49,810 | |||||||||||||||
Non-GAAP Adjusted | $ | 146,254 | $ | 14,279 | $ | 11,079 | $ | 61,182 | $ | 59,714 |
Revenue | Cost of product sales | Research & development | Selling, general & administrative | Acquired IPR&D | Restructuring | Intangible asset impairment charge | Operating Loss / Adjusted EBITDA | ||||||||||||||||||||||||
GAAP | $ | 153,913 | $ | 42,767 | $ | 33,046 | $ | 152,006 | $ | 74,856 | $ | 7,420 | $ | 77,358 | $ | (233,540 | ) | ||||||||||||||
Depreciation and intangible asset amortization | — | (7,886 | ) | (345 | ) | (858 | ) | — | — | — | |||||||||||||||||||||
Stock-based compensation | — | (401 | ) | (1,360 | ) | (6,981 | ) | — | — | — | |||||||||||||||||||||
Acquisition-related costs | — | — | — | (270 | ) | — | — | — | |||||||||||||||||||||||
Acquired IPR&D | — | — | — | — | (74,856 | ) | — | — | |||||||||||||||||||||||
Restructuring | — | — | — | — | — | (7,420 | ) | — | |||||||||||||||||||||||
Asset impairment charges | — | (4,836 | ) | — | — | — | — | (77,358 | ) | ||||||||||||||||||||||
Non-GAAP Adjusted | $ | 153,913 | $ | 29,644 | $ | 31,341 | $ | 143,897 | $ | — | $ | — | $ | — | $ | (50,969 | ) |
Revenue | Cost of product sales | Research & development | Selling, general & administrative | Acquired IPR&D | Operating Loss / Adjusted EBITDA | ||||||||||||||||||
GAAP | $ | 263,642 | $ | 140,688 | $ | 22,502 | $ | 89,329 | $ | 20,000 | $ | (8,877 | ) | ||||||||||
Depreciation and intangible asset amortization | — | (113,786 | ) | (6 | ) | (764 | ) | — | |||||||||||||||
Non-cash inventory step-up adjustments | — | (3,191 | ) | — | — | — | |||||||||||||||||
Stock-based compensation | — | (307 | ) | (1,328 | ) | (7,948 | ) | — | |||||||||||||||
Adjustments to contingent consideration | — | — | — | 49,184 | — | ||||||||||||||||||
Acquired IPR&D | — | — | — | — | (20,000 | ) | |||||||||||||||||
Non-GAAP Adjusted | $ | 263,642 | $ | 23,404 | $ | 21,168 | $ | 129,801 | $ | — | $ | 89,269 |
Updated 2019 Financial Guidance | Previous 2019 Financial Guidance | |
Operating loss | ($286) - ($276) | ($206) - ($176) |
Depreciation & intangible asset amortization | 18 | 36 |
Stock-based compensation | 19 | 22 |
Non-cash inventory step up and adjustments to contingent consideration | — | 1 |
Acquired IPR&D | 75 | 75 |
Restructuring | 7 | 7 |
Asset impairment charges | 82 | — |
Non-GAAP adjusted EBITDA | ($85) - ($75) | ($65) - ($35) |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Weighted average basic shares outstanding | 33.8 | 34.4 | 34.1 | 34.3 | |||||||||
Employee equity incentive awards | — | 3 | — | 3 | — | 3 | — | 3 | |||||
GAAP diluted shares outstanding | 33.8 | 34.4 | 34.1 | 34.3 | |||||||||
Employee equity incentive awards | — | 0.4 | 4 | — | 0.3 | 4 | |||||||
Non-GAAP diluted shares outstanding | 33.8 | 34.8 | 34.1 | 34.6 |
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