UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): October 30, 2014
AMAG PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
001-10865 |
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04-2742593 |
(Commission File Number) |
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(IRS Employer Identification No.) |
1100 Winter Street |
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Waltham, Massachusetts |
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02451 |
(Address of principal executive offices) |
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(Zip Code) |
(617) 498-3300
(Registrants telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
The following information and Exhibits 99.1 and 99.2 attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it or they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
On October 30, 2014, AMAG Pharmaceuticals, Inc., (the Company) issued a press release regarding its operating results and revenues for the quarter and nine-months ended September 30, 2014 and its intention to hold a conference call to discuss the Companys financial results, the acquisition of Lumara Health and commercial and regulatory updates. A copy of the Companys press release is furnished herewith as Exhibit 99.1 and a copy of the presentation slides to be used during the conference call are furnished herewith as Exhibit 99.2.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The Company hereby furnishes the following exhibits:
Exhibit |
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Description |
99.1 |
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Press Release dated October 30, 2014. |
99.2 |
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Copy of presentation slides of the Company during October 30, 2014 conference call. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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AMAG PHARMACEUTICALS, INC. | |
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By: |
/s/ Scott B. Townsend |
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Scott B. Townsend | |
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General Counsel and Senior Vice President of Legal Affairs | |
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Date: October 30, 2014 |
Exhibit 99.1
FOR IMMEDIATE RELEASE
AMAG Pharmaceuticals Reports Financial Results for Third Quarter and
Nine Months Ended September 30, 2014
20% Growth Results in Record U.S. Feraheme Sales
Lumara Health Acquisition on Track to Close in Fourth Quarter
Conference call scheduled for 8:00 a.m. EDT today
WALTHAM, MA (October 30, 2014) AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG), a specialty pharmaceutical company, today reported unaudited consolidated financial results for the third quarter and nine months ended September 30, 2014. Total revenues for the third quarter of 2014 were $25.5 million, of which $22.5 million were U.S. net Feraheme® (ferumoxytol) product sales, the highest Feraheme quarterly sales since launch in 2009. AMAG ended the third quarter with $386.2 million in cash and investments.
Our ability to deliver another quarter of record sales in the fifth year since Ferahemes launch demonstrates that more physicians across the U.S. are prescribing Feraheme for the treatment of iron deficiency anemia (IDA) in a growing number of patients with chronic kidney disease (CKD), said William Heiden, president and chief executive officer. In addition to driving growth of Feraheme, we also are executing on our long-term strategic plan to expand and diversify our product portfolio through our recently announced agreement to acquire Lumara Health Inc. We believe the Lumara Health business will facilitate future product acquisitions in an attractive new therapeutic area and is an excellent strategic fit with our Feraheme market expansion plans, if regulatory approval for the broader IDA indication is sought and received.
Business Highlights
· The company reported record U.S. net Feraheme product sales of $22.5 million in the third quarter of 2014, compared to $19.3 million in the third quarter of 2013, representing a 20% increase (excluding a $0.6 million reduction in reserves for Medicaid rebates recorded in the third quarter of 2013). This growth was driven by higher volume and improved net revenue per gram of Feraheme, each up 10% from the third quarter of 2013.
· Total Feraheme provider demand for the third quarter of 2014 was approximately 37,000 grams, compared to approximately 36,000 in the third quarter of 2013.1 Several strategies led to the sales success during the third quarter of 2014, including greater penetration in the hospital segment and effective commercial contracting strategies.
1 IMS Health
· Feraheme gross margins held relatively steady at 88% in the third quarter of 2014, compared to 87% in the third quarter of 2013. Reported operating expenses for the third quarter of 2014 were $18.2 million. Excluding the favorable impact of a $3.7 million adjustment to MuGard-related contingent consideration expense in the quarter, operating expenses were $21.9 million, representing a 13% increase from the corresponding period in 2013 and a 5% increase from the second quarter of 2014. The increase in operating expenses is due largely to costs associated with the planned acquisition of Lumara Health.
· On September 29, 2014, AMAG announced that it had entered into a definitive agreement to acquire Lumara Health Inc., a privately held pharmaceutical company specializing in womens health. Lumara Health markets the fast-growing product Makena® (hydroxyprogesterone caproate injection), which was granted 7-year orphan drug exclusivity in February 2011 and is the only FDA-approved product indicated to reduce the risk of preterm birth in women who are pregnant with one baby and who have spontaneously delivered one baby preterm in the past.
· AMAG will acquire Lumara Health for $675 million ($600 million in cash and $75 million in AMAG stock) and additional contingent consideration of up to $350 million based on achievement of certain sales milestones, including $100 million payments at $300 million, $400 million and $500 million in net sales in non-overlapping 12-month periods.
· Based on the last three months ended August 31, 2014, the combined pro forma company (AMAG and Lumara Health) is on a run rate to achieve annualized total revenue of approximately $288 million and annualized pro forma adjusted EBITDA of approximately $147 million2, including $20 million in expected annual synergies.
· Shipments of Makena for the third quarter were 20,421 vials, representing 14% growth over the quarter ended June 30, 2014. AMAG believes that attractive market dynamics, along with the implementation of a new patient-centric business strategy aimed at expanding patient access to and compliance with the product, has contributed to the significant recent growth of Makena.
AMAGs acquisition of Lumara Health will position the combined company for accelerated top-line growth and significant cash earnings, provide further business diversification and create value for our shareholders, said Frank Thomas, executive vice president and chief operating officer. Plans for integrating these two businesses are well underway, and we believe they will allow us to efficiently and quickly capture value following the close of the acquisition. We also feel confident that we are on track to complete the loan syndication process and close the transaction by the end of the year.
2 The $147 million in annualized adjusted EBITDA is arrived at as follows: (1) AMAG net loss for the three months ended August 2014 of ($0.4) million, plus $3.1 million of interest expense and amortization of debt discount and deferred financing costs, plus $0.2 million in depreciation and amortization, less $0.3 million in interest income, plus $1.5 million in stock compensation expense, plus $0.4 million due to a fair value adjustment in contingent consideration expense, plus $0.6 million in other items; PLUS (2) Lumara Health net income for the three months ended August 2014 of $7.7 million, plus $0.9 million of interest expense and amortization of debt discount and deferred financing costs, plus $14.9 million in depreciation and amortization, plus $2.3 million in stock compensation expense, plus $0.6 million in other items; PLUS (3) $20 million in expected annual synergies.
Third Quarter and Nine Month 2014 Financial Results (unaudited)
The company reported record U.S. net Feraheme product sales of $22.5 million for the third quarter of 2014, compared to $19.3 million in the third quarter of 2013. For the nine months ended September 30, 2014, AMAG reported U.S. net Feraheme product sales of $62.1 million, compared to $52.4 million for the corresponding period in 2013.
Total revenues for the quarter ended September 30, 2014 were $25.5 million, as compared to $21.6 million for the third quarter of 2013. For the nine months ended September 30, 2014, AMAG reported total revenues of $71.1 million, as compared to revenues of $59.1 million for the corresponding period in 2013.
Feraheme cost of goods sold (COGS) for the quarter ended September 30, 2014 were $2.8 million, or 12% of net Feraheme product sales, compared to $2.5 million, or 13% of net Feraheme product sales for the quarter ended September 30, 2013. For the nine months ended September 30, 2014, Feraheme COGS were $8.2 million, or 13% of net Feraheme product sales, compared to $8.4 million, or 16% of net Feraheme product sales, for the corresponding period in 2013.
Total operating expenses for the quarter ended September 30, 2014 were $18.2 million, compared to $19.5 million for the third quarter of 2013. Total operating expenses for the nine months ended September 30, 2014 were $63.0 million, as compared to operating expenses of $58.1 million for the corresponding period in 2013.
The company reported net income of $1.5 million, or $0.07 per basic share, and $0.06 per diluted share, for the quarter ended September 30, 2014, as compared to net loss of $0.1 million, or $0.01 per basic and diluted share, for the third quarter of 2013. AMAG reported a net loss for the nine months ended September 30, 2014 of $7.2 million, or $0.33 per basic and diluted share, as compared to a net loss of $5.9 million, or $0.28 per basic and diluted share, for the corresponding period in 2013.
As of September 30, 2014, the companys cash and investments totaled approximately $386.2 million, reflecting net cash usage during the third quarter of approximately $0.3 million. The Company expects to have approximately $100 million in cash and investments following the close of the Lumara Health transaction.
Conference Call and Webcast Access
AMAG Pharmaceuticals, Inc. will host a conference call and webcast with slides today at 8:00 a.m. EDT, during which management will discuss the companys financial results, the acquisition of Lumara Health and commercial progress. To access the conference call via telephone, please dial (877) 412-6083 from the United States or (702) 495-1202 for international access. A telephone replay will be available from approximately 11:00 a.m. ET on October 30, 2014 through midnight November 6, 2014. To access a replay of the conference call, dial (855) 859-2056 from the United States or (404) 537-3406 for international access. The pass code for the live call and the replay is 25342306.
The call will be webcast with slides and accessible through the Investors section of the companys website at www.amagpharma.com. The webcast replay will be available from approximately 11:00 a.m. ET on October 30, 2014 through midnight on November 29, 2014.
AMAG Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations
(unaudited, amounts in thousands, except per share data)
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Three Months Ended |
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Nine Months Ended |
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2014 |
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2013 |
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2014 |
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2013 |
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Revenues: |
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U.S. Feraheme product sales, net |
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$ |
22,547 |
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$ |
19,347 |
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$ |
62,147 |
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$ |
52,381 |
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Other product sales and royalties |
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765 |
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271 |
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1,560 |
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708 |
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License fee and other collaboration revenues |
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2,182 |
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1,998 |
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7,424 |
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6,056 |
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Total revenues |
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25,494 |
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21,616 |
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71,131 |
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59,145 |
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Operating costs and expenses: |
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Cost of product sales |
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2,968 |
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2,547 |
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8,548 |
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8,634 |
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Research and development expenses |
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5,358 |
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4,530 |
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16,396 |
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13,983 |
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Selling, general and administrative expenses |
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12,875 |
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14,934 |
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46,650 |
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44,150 |
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Total operating costs and expenses |
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21,201 |
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22,011 |
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71,594 |
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66,767 |
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Operating income (loss) |
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4,293 |
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(395 |
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(463 |
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(7,622 |
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Interest expense |
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(3,129 |
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(7,656 |
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Interest and dividend income, net |
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291 |
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246 |
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809 |
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773 |
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Gains on sale of assets |
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102 |
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865 |
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Gains on investments, net |
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3 |
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4 |
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17 |
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36 |
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Net income (loss) before income taxes |
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1,458 |
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(145 |
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(7,191 |
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(5,948 |
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Income tax benefit |
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Net income (loss) |
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$ |
1,458 |
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$ |
(145 |
) |
$ |
(7,191 |
) |
$ |
(5,948 |
) |
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Net income (loss) per basic share |
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$ |
0.07 |
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$ |
(0.01 |
) |
$ |
(0.33 |
) |
$ |
(0.28 |
) |
Net income (loss) per diluted share |
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$ |
0.06 |
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$ |
(0.01 |
) |
$ |
(0.33 |
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$ |
(0.28 |
) |
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Weighted average shares outstanding used to compute net income (loss) per share: |
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Basic |
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21,984 |
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21,691 |
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21,912 |
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21,613 |
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Diluted |
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23,467 |
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21,691 |
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21,912 |
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21,613 |
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AMAG Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheets
(unaudited, amounts in thousands)
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September 30, 2014 |
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December 31, 2013 |
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Cash and cash equivalents |
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$ |
196,154 |
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$ |
26,986 |
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Short-term investments |
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190,088 |
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186,803 |
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Accounts receivable, net |
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10,873 |
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6,842 |
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Inventories |
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19,580 |
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17,217 |
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Receivable from collaboration |
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932 |
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278 |
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Other current assets |
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9,357 |
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6,279 |
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Total current assets |
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426,984 |
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244,405 |
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Property and equipment, net |
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1,582 |
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1,846 |
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Intangible assets, net |
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16,597 |
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16,844 |
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Other assets |
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6,229 |
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2,364 |
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Total assets |
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$ |
451,392 |
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$ |
265,459 |
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Accounts payable |
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$ |
1,899 |
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$ |
2,629 |
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Accrued expenses |
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27,521 |
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22,266 |
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Deferred revenues |
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9,419 |
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8,226 |
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Total current liabilities |
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38,839 |
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33,121 |
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Convertible 2.5% senior notes, net |
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165,778 |
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Deferred revenues |
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36,682 |
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44,534 |
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Acquisition-related contingent consideration |
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11,188 |
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13,609 |
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Other long-term liabilities |
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1,924 |
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1,787 |
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Total long-term liabilities |
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215,572 |
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59,930 |
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Total stockholders equity |
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196,981 |
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172,408 |
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Total liabilities and stockholders equity |
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$ |
451,392 |
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$ |
265,459 |
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About AMAG
AMAG Pharmaceuticals, Inc. is a specialty pharmaceutical company that markets Feraheme® (ferumoxytol) Injection and MuGard® Mucoadhesive Oral Wound Rinse in the United States. Along with driving continued growth of its products, AMAG intends to continue to expand its portfolio through the in-license or purchase of additional pharmaceutical products or companies, including revenue-generating commercial products and late-stage development assets that leverage its corporate infrastructure, sales force call points and commercial expertise. Our primary goal is to bring to market therapies that provide clear benefits and improve patients lives. For additional company information, please visit www.amagpharma.com.
About Lumara Health
Lumara Health is a specialty pharmaceutical company committed to advancing the health of women throughout the stages of their lives, with a particular focus on maternal health. At the heart of Lumara Health is our mission to help women achieve healthier lives. For more information on Lumara Health, please visit www.lumarahealth.com.
About Makena® (hydroxyprogesterone caproate injection)
Makena® is a progestin indicated to reduce the risk of preterm birth in women with a singleton pregnancy who have a history of singleton spontaneous preterm birth.
The effectiveness of Makena is based on improvement in the proportion of women who delivered <37 weeks of gestation. There are no controlled trials demonstrating a direct clinical benefit, such as improvement in neonatal mortality and morbidity.
Limitation of use: While there are many risk factors for preterm birth, safety and efficacy of Makena has been demonstrated only in women with a prior spontaneous singleton preterm birth. It is not intended for use in women with multiple gestations or other risk factors for preterm birth.
Makena should not be used in women with any of the following conditions: blood clots or other blood clotting problems, breast cancer or other hormone-sensitive cancers, or history of these conditions; unusual vaginal bleeding not related to the current pregnancy, yellowing of the skin due to liver problems during pregnancy, liver problems, including liver tumors, or uncontrolled high blood pressure.
Before patients receive Makena, they should tell their healthcare provider if they have an allergy to hydroxyprogesterone caproate, castor oil, or any of the other ingredients in Makena; diabetes or prediabetes, epilepsy, migraine headaches, asthma, heart problems, kidney problems, depression, or high blood pressure.
In one clinical study, certain complications or events associated with pregnancy occurred more often in women who received Makena. These included miscarriage (pregnancy loss before 20 weeks of pregnancy), stillbirth (fetal death occurring during or after the 20th week of pregnancy), hospital admission for preterm labor, preeclampsia (high blood pressure and too much protein in the urine), gestational hypertension (high blood pressure caused by pregnancy), gestational diabetes, and oligohydramnios (low amniotic fluid levels).
Makena may cause serious side effects including blood clots, allergic reactions, depression, and yellowing of the skin and the whites of the eyes. The most common side effects of Makena include injection site reactions (pain, swelling, itching, bruising, or a hard bump), hives, itching, nausea, and diarrhea.
For additional U.S. product information, including full prescribing information, please visit www.makena.com.
About Feraheme® (ferumoxytol)/Rienso
Feraheme (ferumoxytol) Injection for IV use received marketing approval from the FDA on June 30, 2009 for the treatment of IDA in adult chronic kidney disease (CKD) patients and was commercially launched by AMAG in the U.S. shortly thereafter. Ferumoxytol is protected in the U.S. by five issued patents covering the composition and dosage form of the product. Each issued patent is listed in the FDAs Orange Book, the last of which expires in June 2023.
Ferumoxytol received marketing approval in Canada in December 2012, where it is marketed by Takeda as Feraheme, and in the European Union in June 2013 where it is marketed by Takeda as Rienso. Ferumoxytol received marketing approval in Switzerland in August 2013.
Feraheme is contraindicated in patients with known hypersensitivity to Feraheme or any of its components. Serious hypersensitivity reactions, including anaphylactic-type reactions, some of which have life-threatening and fatal, have been reported in patients receiving Feraheme. Serious adverse reactions of clinically significant hypotension have been reported in the post-marketing experience of Feraheme.
For additional U.S. product information, including full prescribing information, please visit www.feraheme.com.
About MuGard
MuGard® Mucoadhesive Oral Wound Rinse is indicated for the management of oral mucositis/stomatitis (that may be caused by radiotherapy and/or chemotherapy) and all types of oral wounds (mouth sores and injuries), including aphthous ulcers/canker sores and traumatic ulcers, such as those caused by oral surgery or ill-fitting dentures or braces. MuGard is contraindicated in patients with known hypersensitivity to any of the ingredients in the formulation. MuGard was launched in 2010 after receiving 510(k) clearance from the U.S. Food and Drug Administration.
Forward-looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA) and other federal securities laws. Any statements contained herein which do not describe historical facts, including but not limited to, statements regarding: (i) physician behaviors and growth in the number of patients with CKD; (ii) AMAGs plans to build a multi-product specialty pharmaceutical company; (iii) the transaction with Lumara Health and the addition of Makena to AMAGs product portfolio, including expected benefits and the impact on shareholder value and AMAGs business diversification, as well as the timing of the closing of the transaction with Lumara Health; (iv) AMAGs belief that the Lumara Health business will facilitate future product acquisitions and its strategic fit with AMAGs Feraheme market expansion plans, if regulatory approval for the broader IDA indication is sought and received; (v) AMAGs plans to expand the market for Feraheme; (vi) expectations that the combined company, after the completion of AMAGs acquisition of Lumara Health, will see annualized total revenue of approximately $288 million, adjusted EBITDA of approximately $147 million and expected annual synergies of $20 million; (vii) beliefs and expectations regarding integration efforts, (viii) beliefs regarding the drivers of recent growth in sales of Makena; (ix) AMAGs belief that this transaction will position AMAG for accelerated top-line growth and significant cash earnings, further portfolio diversification and shareholder value creation; (x) beliefs about the commercial platform and the strategic fit of Lumara Health; (xi) expectations that the combined company will generate cost synergies and other efficiencies; and (xii) AMAGs beliefs regarding the timing of completion and expected closing of the pending loan syndication process in connection with the Lumara Health transaction 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. Statements about AMAGs or Lumara Healths past financial results do not, and are not meant to, predict future results. AMAG can provide no assurance that such results and performance will continue.
Such risks and uncertainties include, among others: (1) the possibility that the closing conditions set forth in the definitive agreement for the acquisition of Lumara Health will not be met and that the parties will be unable to consummate the proposed transaction, (2) the chance that, despite having a commitment in place for the financing of the Lumara Health acquisition, AMAG will be unable to secure such financing, or financing on satisfactory terms, in amounts sufficient to consummate the acquisition of Lumara Health, (3) the possibility that if the Lumara Health acquisition is consummated, AMAG may not realize the expected benefits, synergies and opportunities anticipated in connection with the transaction, including the anticipated costs synergies of $20 million, annualized sales of more than $180 million, continued revenue growth, annualized EBITDA of $110 million and $1 billion market opportunity, (4) the challenges of integrating the Makena commercial team into AMAG, (5) the impact on sales of Makena from competitive,
commercial payor, government (including federal and state Medicaid reimbursement policies), physician, patient or public responses with respect to product pricing, product access and sales and marketing initiatives, (6) the impact of patient compliance on units sales, (7) the uncertainty of achieving sales of Feraheme to OB/GYN specialists for the treatment of women who suffer from IDA, even assuming FDA approval for the broader IDA indication, (8) AMAG may face challenges in leveraging its in-office injectables commercial expertise, which could result in unforeseen expenses and disrupt business operations, (9) liabilities AMAG assumes from Lumara Health, including the class action litigation In Re K-V Pharmaceutical Company Securities Litigation, Case No. 4:11CV1816 AGF, may be higher than expected, (10) the possibility that sales of Makena will not meet expectations as a result of current and future competition from compounded products and/or future competition from generic alternatives upon expiration of exclusivity in February 2018, (11) the impact of reimbursement policies for Makena and the resulting coverage decisions and/or impact on pricing, (12) the number of preterm birth risk pregnancies for which Makena may be prescribed, its safety and side effects profile and acceptance of pricing, (13) in connection with the Lumara Health acquisition, AMAG will incur a substantial amount of indebtedness and will have to comply with restrictive and affirmative debt covenants, including a requirement that AMAG reduce its leverage over time, (14) the possibility that AMAG will need to raise additional capital from the sale of its common stock, which will cause significant dilution to AMAGs stockholders, in order to satisfy its contractual obligations, including its debt service, milestone payments that may become payable to Lumara Healths stockholders and/or in order to pursue business development activities, (15) upon consummation of the Lumara Health transaction, AMAG will be highly leveraged and have limited cash and cash equivalent resources which may limit its ability to take advantage of attractive business development opportunities and execute on its strategic plan, (16) the possibility that AMAGs stockholders will not approve the amendment to its shareholder rights plan and that AMAGs tax benefits, including those acquired upon consummation of the Lumara Health acquisition, will not be available in the future, (17) the likelihood and timing of potential approval of Feraheme in the U.S. in the broader IDA indication in light of the complete response letter AMAG received from the FDA informing AMAG that its supplemental new drug application (sNDA) for the broader indication could not be approved in its present form and stating that AMAG had not provided sufficient information to permit labeling of Feraheme for safe and effective use for the proposed broader indication, (18) the possibility that following FDA review of post-marketing safety data, including reports of serious anaphylaxis, cardiovascular events, and death, and/or in light of the label changes requested by the European Medicines Agencys (EMA) Pharmacovigilance Risk Assessment Committee (PRAC) and confirmed by the Committee for Medicinal Products for Human Use (CHMP), the FDA (or other regulators) will request additional technical or scientific information, new studies or reanalysis of existing data, on-label warnings, post-marketing requirements/commitments or risk evaluation and mitigation strategies (REMS) in the current indication for Feraheme for IDA in adult patients with CKD and the additional costs and expenses that will or may be incurred in connection with such activities, (19) whether AMAGs proposed label changes will be acceptable to the FDA or other regulatory authorities and what impact such changes, or such additional changes as the FDA, CHMP or other regulators may require, will have on sales of Feraheme/ Rienso (Rienso is the trade name for ferumoxytol outside of the U.S. and Canada), (20) AMAGs and Takeda Pharmaceutical Company Limiteds ability to successfully compete in the IV iron replacement market both in the U.S. and outside the U.S., including the EU, as a result of limitations, restrictions or warnings in Ferahemes/Riensos current or future label, including that Feraheme/Rienso be administered to patients by infusion over at least 15-minutes (replacing injection) and that it be contraindicated for patients with any known history of drug allergy, (21) AMAGs ability to execute on its long-term strategic plan or to realize the expected results from its long-term strategic plan, (22) Takedas ability to obtain regulatory approval for Feraheme in Canada, and Rienso in the
EU, in the broader IDA patient population, (23) the possibility that significant safety or drug interaction problems could arise with respect to Feraheme/Rienso and in turn affect sales, or AMAGs ability to market the product both in the U.S. and outside of the U.S., including the EU, (24) the relationship between Takeda and AMAG and the impact on commercialization efforts for Feraheme/Rienso in the EU and Canada, (25) the likelihood and timing of milestone payments, if any, in connection with AMAGs licensing arrangement with Takeda, (26) the manufacture of Feraheme/Rienso or MuGard (or Makena if the acquisition is consummated), including any significant interruption in the supply of raw materials or finished product, (27) AMAGs patents and proprietary rights both in the U.S. and outside the U.S. (including those that AMAG acquires from the acquisition of Lumara), (28) the risk of an Abbreviated New Drug Application (ANDA) filing for generic ferumoxytol, especially following the FDAs draft bioequivalence recommendation for ferumoxytol published in December 2012 (or, following the consummation of the Lumara Health acquisition, hydroxyprogesterone caproate), (29) the possibility that AMAG (or Takeda) will disseminate future Dear Healthcare Provider letters, (30) uncertainties regarding AMAGs ability to compete in the oral mucositis market in the U.S. and in the womens maternal health market and (31) other risks identified in AMAGs filings with the U.S. Securities and Exchange Commission (SEC), including its Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and subsequent filings with the SEC. Any of the above risks and uncertainties could materially and adversely affect AMAGs results of operations, profitability and cash flows, which would, in turn, have a significant and adverse impact on AMAGs stock price. Use of the term including in the two paragraphs above shall mean in each case including, but not limited to. AMAG cautions you not to place undue reliance on any forward-looking statements, which speak only as of the date they are made.
AMAG disclaims 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.
AMAG Pharmaceuticals and Feraheme are registered trademarks of AMAG Pharmaceuticals, Inc. MuGard is a registered trademark of Access Pharmaceuticals, Inc. Rienso is a registered trademark of Takeda Pharmaceutical Company Limited. Lumara Health is a trademark of Lumara Health Inc. Makena is a registered trademark of Lumara Health Inc.
AMAG Pharmaceuticals, Inc. Contact
Katie Payne, 617-498-3303
Exhibit 99.2
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AMAG Pharmaceuticals Third Quarter Financial Results October 30, 2014 |
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Forward Looking Statements This presentation 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, statements regarding: (i) our plans to build a high-growth, multi-product specialty pharmaceutical company, (ii) expectations regarding our pending acquisition of Lumara Health, including market dynamics, the strategic rationale (including our ability to gain entry into specialty womens health market and the impact on future product acquisitions), expected combined annual sales and synergies, the impact on adjusted earnings per share and our use of combined net operating loss carryforwards, as well as the expected timing for the closing of the transaction, (iii) beliefs regarding the Makena Care Connection and the lifecycle management program for Makena, (iv) the expected financial profile of the combined company following the closing of the Lumara Health acquisition, including revenues and adjusted EBITDA, (v) integrations plans for the acquisition of Lumara Health, including expectations for the management team, synergies and value-capture, the post-closing organization and integration support, (vi) beliefs about the competitive landscape for the U.S. IV iron market, (vii) Feraheme growth opportunities, including an increase in our current chronic kidney disease (CKD) indication and plans for potential label expansion to cover the broader iron deficiency anemia (IDA) market, including the anticipated call audiences and potential future call points in the womens health arena, (viii) expectations regarding regulatory developments in the U.S., the EU and Canada, including the belief that we may be able to determine in the fourth quarter of 2014 the potential path forward for possibly pursuing a broader label in the U.S. and the implementation of our proposed label changes in the U.S. and the likelihood and timing of approval for the broader indication in the EU and Canada,, (ix) future expansion opportunities through 2020, (x) our 2014 financial outlook, including revenues, cost of goods sold, operating expenses, net loss and cash and investments (including our expected cash balance assuming the consummation of the Lumara Health acquisition), (xi) our 2014 goals, including plans to maximize Feraheme opportunities, drive MuGard sales, execute on business development transactions (such as the Lumara Health acquisition) and continue to operate the business with financial discipline and (xii) our statement that AMAG is well positioned for success in 2014 and beyond 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. Statements about AMAGs and Lumara Healths past financial results do not, and are not meant to, predict future results. AMAG can provide no assurance that such results and performance will continue. Such risks and uncertainties include, among others: (1) the possibility that the closing conditions set forth in the definitive agreement for the acquisition of Lumara Health will not be met and that the parties will be unable to consummate the proposed transaction, (2) the chance that, despite having a commitment in place for the financing of the Lumara Health acquisition, we will be unable to secure such financing, or financing on satisfactory terms, in amounts sufficient to consummate the acquisition of Lumara Health, (3) the possibility that if the Lumara Health acquisition is consummated, we may not realize the expected benefits, synergies and opportunities anticipated in connection with the transaction, including the anticipated costs synergies of $20 million, annualized sales of more than $180 million, continued revenue growth, annualized EBITDA of $110 million and $1 billion market opportunity, (4) the challenges of integrating the Makena commercial team into AMAG, (5) the impact on sales of Makena from competitive, commercial payor, government (including federal and state Medicaid reimbursement policies), physician, patient or public responses with respect to product pricing, product access and sales and marketing initiatives, (6) the impact of patient compliance on units sales, (7) the uncertainty of achieving sales of Feraheme to OB/GYN specialists for the treatment of women who suffer from IDA, even assuming FDA approval for the broader indication, (8) we may face challenges in leveraging our in-office injectables commercial expertise, which could result in unforeseen expenses and disrupt business operations, (9) liabilities we assume from Lumara Health, including the class action litigation In Re K-V Pharmaceutical Company Securities Litigation, Case No. 4:11CV1816 AGF, may be higher than expected, (10) the possibility that sales of Makena will not meet expectations as a result of current and future competition from compounded products and/or future competition from generic alternatives upon expiration of exclusivity in February 2018, (11) the impact of reimbursement policies for Makena and the resulting coverage decisions and/or impact on pricing, (12) the number of preterm birth risk pregnancies for which Makena may be prescribed, its safety and side effects profile and acceptance of pricing, (13) in connection with the Lumara Health acquisition, we will incur a substantial amount of indebtedness and will have to comply with restrictive and affirmative debt covenants, including a requirement that we reduce our leverage over time, (14) the possibility that we will need to raise additional capital from the sale of our common stock, which will cause significant dilution to our stockholders, in order to satisfy our contractual obligations, including our debt service, milestone payments that may become payable to Lumara Healths stockholders and/or in order to pursue business development activities, (15) upon consummation of the Lumara Health transaction, we will be highly leveraged and have limited cash and cash equivalent resources which may limit our ability to take advantage of attractive business development opportunities and execute on our strategic plan, (16) the possibility that our stockholders will not approve the amendment to our shareholder rights plan and that our tax benefits, including those acquired upon consummation of the Lumara Health acquisition, will not be available in the future, (17) the likelihood and timing of potential approval of Feraheme in the U.S. in the broader IDA indication in light of the complete response letter we received from the FDA informing us that our supplemental new drug application (sNDA) for the broader indication could not be approved in its present form and stating that we had not provided sufficient information to permit labeling of Feraheme for safe and effective use for the proposed broader indication, (18) the possibility that following FDA review of post-marketing safety data, including reports of serious anaphylaxis, cardiovascular events, and death, and/or in light of the label changes requested by the European Medicines Agencys (EMA) Pharmacovigilance Risk Assessment Committee (PRAC) and confirmed by the Committee for Medicinal Products for Human Use (CHMP), the FDA (or other regulators) will request additional technical or scientific information, new studies or reanalysis of existing data, on-label warnings, post-marketing requirements/commitments or risk evaluation and mitigation strategies (REMS) in the current indication for Feraheme for IDA in adult patients with CKD and the additional costs and expenses that will or may be incurred in connection with such activities, (19) whether our proposed label changes will be acceptable to the FDA or other regulatory authorities and what impact such changes, or such additional changes as the FDA, CHMP or other regulators may require, will have on sales of Feraheme/ Rienso (Rienso is the trade name for ferumoxytol outside of the U.S. and Canada), (20) our and Takeda Pharmaceutical Company Limiteds ability to successfully compete in the IV iron replacement market both in the U.S. and outside the U.S., including the EU, as a result of limitations, restrictions or warnings in Ferahemes/Riensos current or future label, including that Feraheme/Rienso be administered to patients by infusion over at least 15-minutes (replacing injection) and that it be contraindicated for patients with any known history of drug allergy, (21) our ability to execute on our long-term strategic plan or to realize the expected results from our long-term strategic plan, (22) Takedas ability to obtain regulatory approval for Feraheme in Canada, and Rienso in the EU, in the broader IDA patient population, (23) the possibility that significant safety or drug interaction problems could arise with respect to Feraheme/Rienso and in turn affect sales, or our ability to market the product both in the U.S. and outside of the U.S., including the EU, (24) the relationship between Takeda and AMAG and the impact on commercialization efforts for Feraheme/Rienso in the EU and Canada, (25) the likelihood and timing of milestone payments, if any, in connection with AMAGs licensing arrangement with Takeda, (26) the manufacture of Feraheme/Rienso or MuGard (or Makena if the acquisition is consummated), including any significant interruption in the supply of raw materials or finished product, (27) our patents and proprietary rights both in the U.S. and outside the U.S. (including those that we acquire from the acquisition of Lumara), (28) the risk of an Abbreviated New Drug Application (ANDA) filing for generic ferumoxytol (or, following the consummation of the Lumara Health acquisition, hydroxyprogesterone caproate), especially following the FDAs draft bioequivalence recommendation for ferumoxytol published in December 2012, (29) the possibility that AMAG (or Takeda) will disseminate future Dear Healthcare Provider letters, (30) uncertainties regarding our ability to compete in the oral mucositis market in the U.S. and in the womens maternal health market and (31) other risks identified in our filings with the U.S. Securities and Exchange Commission (SEC), including our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 and subsequent filings with the SEC. Any of the above risks and uncertainties could materially and adversely affect our results of operations, our profitability and our cash flows, which would, in turn, have a significant and adverse impact on our stock price. Use of the term including in the two paragraphs above shall mean in each case including, but not limited to. 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. AMAG Pharmaceuticals and Feraheme are registered trademarks of AMAG Pharmaceuticals, Inc. MuGard is a registered trademark of Access Pharmaceuticals, Inc. Rienso is a registered trademark of Takeda Pharmaceutical Company Limited. Lumara Health is a trademark of Lumara Health Inc. Makena is a registered trademark of Lumara Health Inc. |
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Agenda 2 Topic Speaker Opening Remarks Acquisition of Lumara Health Bill Heiden, CEO Feraheme Update Future Expansion Opportunities Frank Thomas, COO Financial Highlights & Outlook Scott Holmes, SVP of Finance and IR Closing Remarks Bill Heiden, CEO |
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EXPERIENCED MANAGEMENT TEAM CORPORATE INFRASTRUCTURE Building a High-Growth, Multi-Product Specialty Pharmaceutical Company HEMATOLOGY/ONCOLOGY, HOSPITAL, NEPHROLOGY FERAHEME® MUGARD® TWO HIGH-PERFORMING SPECIALTY COMMERCIAL TEAMS LUMARA - MATERNAL HEALTH MAKENA® |
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Third Quarter 2014 Highlights Entered into definitive agreement to acquire Lumara Health Will add high-growth Makena product Exceptional growth trend continues in 3Q14 Integration planning underway Transaction expected to close 4Q14 Projected pro forma combined 2015 product sales of ~$350 million Strong AMAG 3Q14 financial performance vs. 3Q13 21% increase in total revenues(1) Record U.S. Feraheme ex-factory net sales of $22.5MM (up 20%(1)) Generated positive adjusted EBITDA Feraheme Robust physician-level demand Provider demand of approximately 37,000 grams Greater penetration of hospital market 4 (1) Excludes 3Q13 Medicaid reversal |
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ACQUISITION OF LUMARA HEALTH |
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Acquisition of Lumara Health Transaction Highlights Upfront consideration of $675MM and up to $350MM of additional consideration based on Makena sales, including milestone payments at $300MM, $400MM and $500MM in annual Makena revenue(1) Makena is the only FDA-approved product to lower the risk of preterm singleton birth in certain at-risk women Orphan drug exclusivity through February 2018 with active line extension/lifecycle program Rapidly evolving positive market dynamics Strong strategic rationale and a natural fit for AMAG Entry into specialty womens health, an area of strategic interest for IDA market expansion(2) Enables future product acquisitions on a new commercial platform Transforms financial profile Pro forma combined annualized sales of ~$288 million and adjusted EBITDA of $147 million(3) Annual synergies of $20 million Immediately accretive to adjusted earnings per share Accelerates utilization of combined $500 million in net operating losses (subject to limitations) 6 (1) Based on consecutive 12 months net sales (2) If FDA regulatory approval in broader IDA population is sought and received (3) See slide 8 and see also slide 26 for L3MA 8/31/14 adjusted EBITDA reconciliation |
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Strong Makena Efficacy Data(1)(2) Before 37 weeks Overview 7 Only FDA-approved drug indicated to reduce the risk of preterm birth in women who are pregnant with one baby and who have spontaneously delivered one baby preterm in the past Administered intramuscularly (1 mL weekly) between 16-37 weeks of pregnancy (maximum possible injections per patient: 18-22 weekly injections) Growing proportion of Rxs channeled through proprietary and effective Makena Care Connection, Lumaras patient reimbursement and support services function Makena Sales Force coverage collectively reaches more than 9,000 OB / GYN and Maternal Fetal Medicine specialists across the U.S. 7 years of orphan drug exclusivity until Feb. 3, 2018 Active line extension/lifecycle management program underway Rate of Birth 32% Improvement Control N=153(%) Makena N=310(%) Before 32 weeks 31% Improvement 39% Improvement Before 35 weeks Before 37 weeks Makena U.S. prescribing information. The effectiveness of Makena is based on improvement in the proportion of women who delivered < 37 weeks of gestation. |
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$ in millions AMAG Lumara Combined Key Product Areas & Number of Marketed Products Hematology / Oncology / Hospital, Supportive Care 2 Maternal Health 1 Maternal Health Hematology / Oncology / Hospital, Supportive Care 3 L3MA(1) 8/31/14 Revenue $100.2 $188.1 $288.3 L3MA(1) (3) 8/31/14 Adjusted EBITDA $20.2 $106.5 $146.9(2) Revenue by Product Transformed Financial Profile of Combined Company Last three months (ended August 31, 2014) annualized Includes $20.3 million in estimated expense synergies See slide 26 for L3MA 8/31/14 Adjusted EBITDA reconciliation (~24% Growth vs. FY 2013) (~75% Growth vs. FY 2014) |
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And Makena Continues to Perform Strong sequential growth over the last 2+ years ($ in millions) (000 vials) Consistent & Strong Growth in Makenas Prescriptions Makena Historical Sales (FY Ended March 31) Strong quarterly growth through 3Q14 14% increase in vials shipped (3Q14 vs. 2Q14) $46MM-$48MM in Q3 Makena sales Last three months (ended August 31, 2014) annualized |
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2016 2017 2018 2019 2020 2015 Future Expansion Opportunities Makena Line Extension/Lifecycle Management Routes of Administration Drug Delivery Technologies Reformulation Technologies |
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Integration Support Synergy & Value Capture Organization Management Team AMAG management team and headquarters remain intact Lumara Health will operate as a separate maternal health business unit Synergy targets identified Single sites for each company allow for quick evaluation and implementation of integration plan Lumara commercial team to remain intact G&A and R&D infrastructures to be integrated Independent nationally renowned consulting firm retained to support merger management and integration Integration team will operate on an accelerated timeline Lumara Health Integration Plans |
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FERAHEME UPDATE |
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Feraheme Sales Performance Ex-factory net sales* ($ in millions) *Excludes the impact of changes in estimates made to product returns and Medicaid reserves in 2012 and 2013 3Q14 vs. 3Q13 20% growth* (+10% volume, +10% price) |
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Source: IMS Health Data. *Evolution Index = Product growth divided by market growth Overall Feraheme Demand Growth Market Share & E.I. 3Q14 vs. 3Q13 Hospital segment 11.6% market share; E.I. 117 Hem/Onc segment 25.1% market share; E.I. 85 -7.7% +21.4% 3Q12 3Q14 3Q14 vs. 3Q13 2.5% growth Evolution Index (E.I.)* of 97 +24.9% +36.5% 3Q13 |
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Competitive Landscape U.S. IV Iron Market ~900,000 Grams Annually *Aggregate of Ferrlecit® Brand + Generic Ferric Gluconate 3Q14 Share of Non-dialysis Market (Grams) Venofer® Iron Dextran / Dexferrum Injectafer® * Ferric Gluconate 16.3% (vs. 16.3% 2Q14) Source: IMS Health Data. 14.0% 42.6% 7.0% 20.1% |
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Feraheme Growth Opportunities: Increase Share of Current CKD Market & Plan for Potential IDA Label Expansion ~$500 million Feraheme potential (900,000 grams**) IDA- CKD IDA Label Expansion Opportunity** Same call audience: Hematology/Oncology Expand use to all IDA patients in current accounts Convert single IV iron stockers to Feraheme Hospitals Expand use to all IDA patients in current accounts Continue to gain new accounts *IMS Health Data **If regulatory approval is pursued and received. 33% Significant growth opportunity in current indication: ~$250 million Feraheme potential (450,000 grams*) |
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Opportunity to Grow U.S. IV Iron Market IV Iron IDA-CKD IV Iron IDA* IV Iron IDA* IV Iron IDA-CKD IDA Expansion Opportunity* IDA-CKD Expansion Opportunity *If regulatory approval is pursued and received. |
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Regulatory Update: Feraheme & Rienso Feraheme - U.S. U.S. broad IDA label 2Q14/3Q14 - Continued interaction with FDA regarding study design 4Q14 - Determination of potential path forward U.S. Feraheme label changes 4Q14 Expected implementation of proposed changes to strengthen warnings and precautions in order to enhance patient safety (submitted to FDA in 2Q14 for 6-month review) Rienso EU; Feraheme Canada Broad IDA label Based on preliminary information, approval in the broader indication is unlikely 4Q14 CHMP expected to provide opinion 1Q15 Health Canada expected to render a final decision Takeda is our commercial partner in these territories |
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2016 2017 2018 2019 2020 2015 Future Expansion Opportunities Feraheme IDA Approval(1) IV Iron Market Expansion Business Development Oncology/hematology Womens Health Makena Line Extension/Lifecycle Management(1) Routes of Administration Drug Delivery Technologies Reformulation Technologies MuGard Growth (1) If regulatory approval is pursued and received. |
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FINANCIAL HIGHLIGHTS & OUTLOOK |
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Third Quarter Financial Highlights ($ in millions) 3Q13 3Q14 U.S. Feraheme net sales $19.3 $22.5 Total revenues $21.6 $25.5 Feraheme gross profit $16.8 $19.7 R&D expenses $4.5 $5.4 SG&A expenses $14.9 $12.9(1) Operating income (loss) $(0.4) $4.3 Net income (loss) $(0.1) $1.5 Cash and investments $213.5 $386.2(2) Adjusted EBITDA(3) Q3 / YTD Sept. $3.3 / $2.4 $4.1 / $5.4 21 Includes $3.7MM favorable contingent consideration adjustment related to MuGard Includes net proceeds of February 2014 $200MM convertible debt offering See slide 25 for Adjusted EBITDA reconciliation |
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2014 Financial Outlook ($ in millions) Original 2014 Guidance(1) Updated July 2014 (1) (2) Total revenues $88 - $100 $93 - $102 U.S. Feraheme net sales $75 - $85 $80 - $87 Feraheme COGS (% of Feraheme global net sales) 14% - 16% 13% - 15% Operating expenses $80 - $85 $87 - $92 Net loss ($10 - $12) ($12 - $14) Cash and investments $392 - $397 $388 - $393(3) 22 Excludes the impact of business development transactions, potential expenses associated with further development of Feraheme for the broad IDA indication and potential milestone associated with broad IDA approval in EU Excludes any potential Q4 impact due to acquisition of Lumara Health Inc. Cash balance following Lumara Health transaction closing expected to be ~$100MM |
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2014 Goals 23 Maximize Feraheme opportunities Drive market share within current U.S. IDA-CKD indication Optimize net revenue per gram Potential label expansion: broad IDA Determine regulatory path forward in U.S. Expected CHMP opinion 4Q14 Pursue IV iron market expansion initiatives in IDA-CKD Drive MuGard sales through focused targeting, product differentiation and expanded payer coverage Execute quality business development transactions Complete Lumara Health transaction Execute seamless integration and Makena growth plans Continue to operate the business with financial discipline |
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Well positioned for success in 2014. . . and beyond. |
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Adjusted EBITDA Reconciliation ($ in millions) Q3 2013 Q3 2014 9 months ended Sept. 2013 9 months ended Sept. 2014 Net income (loss) $(0.1) $1.5 $(5.9) $(7.1) Interest expense and amortization of debt discount and deferred financing costs $ - $3.1 $ - $7.7 Depreciation & amortization $ 1.6 $0.3 $ 2.9 $0.7 Interest income $(0.3) $(0.3) $(0.8) $(0.8) EBITDA $ 1.3 $ 4.6 $(3.8) $ 0.5 Stock compensation expense $ 1.7 $ 2.0 $ 5.9 $6.2 Fair value adjustment to contingent consideration expense $ 0.3 $(3.7) $ 0.3 $(2.5) One-time deal related costs $ - $ 1.2 $ - $ 1.2 Adjusted EBITDA $ 3.3 $ 4.1 $ 2.4 $ 5.4 |
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Adjusted EBITDA Reconciliation (for L3MA(1) 8/31/14) ($ in millions) 3 months ended Aug. 2014 (AMAG) 3 months ended Aug. 2014 (Lumara) Net income (loss) $(0.4) $7.7 Interest expense and amortization of debt discount and deferred financing costs $3.1 $0.9 Depreciation & amortization $0.2 $14.9 Interest income $(0.3) $ - EBITDA $2.6 $23.5 Stock compensation expense $1.5 $2.3 Fair value adjustment to contingent consideration expense $0.4 $ - Other $0.6 $0.8 Adjusted EBITDA $5.1 $26.6 Annualized (4x)(2) $20.2 $106.5 Last three months (ended August 31, 2014) annualized Excludes $20MM in synergies. $20.2MM + $106.5MM + $20MM in synergies = $146.7MM for combined company |
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