On May 7, 2019 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) reported unaudited consolidated financial results for the first quarter ended March 31, 2019 and provided a business update (Press release, AMAG Pharmaceuticals, MAY 7, 2019, View Source [SID1234535793]).
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Total revenue for the first quarter of 2019 was $75.8 million, compared with $117.4 million in the same period last year. Makena (hydroxyprogesterone caproate injection) revenues were $31.3 million in the first quarter, compared with $90.0 million in the same period last year. This decline was primarily due to the mid-2018 entry of generic competition to the Makena intramuscular (IM) product, as well as IM supply constraints in the quarter (described below). Feraheme (ferumoxytol injection) first quarter 2019 revenues increased to a record $40.0 million, or 59%, over the same period last year. Intrarosa (prasterone) realized significant growth in net price as well as volume growth in the first quarter of 2019, as compared to the prior year period.
The company reported an operating loss of $117.7 million in the first quarter of 2019, compared with an operating loss of $50.8 million in the first quarter of 2018. Included in the loss in the first quarter of 2019 was a $74.9 million accounting impact related to the acquisition of Perosphere Pharmaceuticals Inc., which closed in the quarter. Consistent with its strategic plan and 2019 financial guidance, the company reported negative adjusted EBITDA of $26.6 million in the first quarter of 2019, compared with positive adjusted EBITDA of $30.0 million in the first quarter of 2018.1
"While total Makena revenues in the first quarter were adversely impacted by a number of non-recurring charges, we are encouraged by the strong underlying demand for the subcutaneous auto-injector, and the progress made to replace our previous primary supplier of Makena IM with new inventory from two suppliers this second quarter," said William Heiden, AMAG’s president and chief executive officer. "We’re also proud of our Feraheme team and the continued growth that product has realized. The significant cash flow from these products helps fund the development of our novel pipeline assets, which we believe are the future value drivers of the company."
"In the first quarter, our development pipeline continued to progress nicely. We are eagerly awaiting a decision on the upcoming PDUFA date for VyleesiTM (bremelanotide) and the mid-year initiation of the Phase 3a clinical studies for ciraparantag," continued Mr. Heiden. "We look forward to discussing more about AMAG’s future at our Analyst Day that will be held on May 22 in New York, which will include panels for AMAG-423, Vyleesi and ciraparantag of key opinion leaders who will provide their expert views on the opportunity for and value of these new product candidates."
1 See summaries of GAAP to non-GAAP adjustments at the conclusion of this press release.
1
First Quarter 2019 and Recent Business Highlights:
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Promoted Tony Casciano to chief commercial officer; Mr. Casciano led the successful launches of the Makena SC auto-injector and the Feraheme broad label
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Achieved 59% growth in Feraheme net sales year-over-year
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Makena SC auto-injector achieved 40% volume growth and captured 54% market share of all FDA-approved hydroxyprogesterone caproate prescription volume over the fourth quarter of 2018
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Improved first quarter 2019 Intrarosa gross-to-net price by more than 30% over the fourth quarter of 2018; successfully combined and cross trained the women’s health and maternal health sales forces into one team of approximately 125 sales representatives
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Acquired Perosphere Pharmaceuticals, including ciraparantag, a development-stage drug candidate to reverse the anticoagulant effects of novel oral anticoagulants (NOACs) and low molecular weight heparin (LMWH)
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Completed the study and submitted ambulatory blood pressure data to the FDA and continued activities supporting the potential launch of Vyleesi (PDUFA date: June 23, 2019)
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Data presentations:
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New and encore data related to Vyleesi for the treatment of hypoactive sexual desire disorder (HSDD) at the International Society for the Study of Women’s Sexual Health (ISSWSH)/International Society for Sexual Medicine (ISSM) joint meeting
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New data related to Vyleesi for the treatment of HSDD and Feraheme related to iron deficiency anemia (IDA) resulting from abnormal uterine bleeding at the American College of Obstetricians and Gynecologists (ACOG) Annual Clinical and Scientific Meeting
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Reaffirmed 2019 financial guidance
First Quarter Ended March 31, 2019 (unaudited)
Total revenues for the first quarter of 2019 were $75.8 million, compared with $117.4 million in the first quarter of 2018. First quarter 2019 net product sales of Makena were $31.3 million, which were lower than the $90.0 million reported in the first quarter of 2018, primarily due to the mid-2018 entry of generic competition to the Makena IM product, as well as IM supply constraints. Makena revenues in the first quarter of 2019 were further impacted by a number of gross-to-net charges, including: (i) $3.5 million of failure-to-supply penalties related to a temporary authorized generic (AGx) IM out of stock situation that occurred during the first quarter, (ii) approximately $5.0 million of increased Medicaid rebates related to the IM supply constraints in the quarter and best price implications, and (iii) $6.0 million change in estimate for Medicaid liability for prior period sales of the Makena IM product. The company expects to resolve its Makena IM supply constraints in the second quarter of 2019 and, therefore, believes charges (i) and (ii) described above are non-recurring in nature. During the first quarter of 2019, the company did not record any branded Makena IM revenues, and revenues for the AGx were adversely impacted by IM supply constraints. Sales of the Makena SC auto-injector totaled $37.8 million in the first quarter of 2019, which is net of the $5.0 million additional Medicaid rebates referenced above. Sales of Feraheme and MuGard increased 59% to $40.1 million in the first quarter of 2019, compared with $25.2 million in the first quarter of 2018. Intrarosa contributed $4.4 million in net sales during the first quarter of 2019, compared with $2.2 million in the same period last year.
Operating expenses, including cost of product sales, were aligned with expectations, totaling $193.5 million in the first quarter of 2019, compared with $168.2 million for the same period in 2018. This increase was primarily due to: (i) the $74.9 million acquired in-process research and development charge related to the acquisition of Perosphere, (ii) a one-time restructuring charge of $7.4 million related to combining the company’s women’s health and maternal health sales forces, and (iii) higher research and development costs of $7.3 million related to the company’s ongoing clinical development programs. These increases in operating expenses were partially off-set by a $45.4 million reduction in cost of product sales, driven primarily by lower intangible amortization expense.
2
The company reported an operating loss from continuing operations in the first quarter of 2019 of $117.7 million, compared with an operating loss of $50.8 million for the same period last year, largely due to the Perosphere acquisition described above. The company reported a net loss from continuing operations of $122.1 million, or $3.54 loss per basic and diluted share, for the first quarter of 2019, compared with a net loss from continuing operations of $58.1 million, or $1.70 loss per basic and diluted share, for the same period in 2018. The net loss reported during the first quarter on 2019 was favorably impacted by a reduction in interest expense incurred, as compared to the prior year period. This was the result of the company retiring $475 million in high-yield bonds in the third quarter of 2018.
Non-GAAP adjusted EBITDA from continuing operations for the first quarter of 2019 was ($26.6) million, compared with $30.0 million in the first quarter of 2018.
Balance Sheet Highlights
As of March 31, 2019, the company’s cash and investments totaled $266.5 million, and long-term total debt totaled $320.0 million (representing the principal amounts outstanding of the 2022 convertible notes). Cash used during the first quarter of 2019 included: (i) $70.8 million related to the acquisition of Perosphere Pharmaceuticals, (ii) $21.4 million for the repayment of the balance of the company’s 2019 Convertible Note, and (iii) $13.7 million for the repurchase of approximately 1.1 million shares of common stock.
2 See reconciliations of 2019 GAAP to non-GAAP financial guidance at conclusion of this press release.
3 As previously reported, the 2019 operating loss guidance range issued in January 2019 excluded the potential accounting impact for the acquisition of Perosphere, which had not closed at that time. The operating loss guidance range has now been adjusted to incorporate the $74.9 million accounting impact of the Perosphere acquisition, which was recorded in the first quarter of 2019.
"We’re pleased with the market uptake of the Makena SC auto-injector, which captured more than 50 percent share of patients treated with FDA-approved hydroxyprogesterone caproate in the first quarter, underscoring continued strong physician demand of this differentiated product and the sustainability of the Makena franchise," said Ted Myles, AMAG’s chief financial officer. "With the expected return of Makena IM supply in the second quarter, continued strong underlying demand for the SC auto-injector, impressive performance from Feraheme, as well as encouraging leading indicators from our Intrarosa direct-to-consumer campaign, we are reiterating our full year guidance for 2019."
Conference Call and Webcast Access
AMAG Pharmaceuticals, Inc. will host a conference call and webcast today at 8:00 a.m. ET to discuss the company’s first quarter 2019 financial results, recent business highlights and 2019 outlook.
Dial-in Number
U.S./Canada dial-in number: (877) 412-6083
International dial-in number: (702) 495-1202
Conference ID: 6850648
Replay dial-in number: (855) 859-2056
Replay International dial-in number: (404) 537-3406
Conference ID: 6850648
A telephone replay will be available from approximately 11:00 a.m. ET on May 7, 2019 through midnight on May 14, 2019. The webcast with slides will be accessible through the Investors section of AMAG’s website at www.amagpharma.com. A replay of the webcast will be archived on the website for 30 days.
Use of Non-GAAP Financial Measures
AMAG has presented certain non-GAAP financial measures, including non-GAAP costs and expenses and non-GAAP adjusted EBITDA (earnings before income taxes, depreciation and amortization). These non-GAAP financial measures exclude certain amounts, expenses or income, from the corresponding financial measures determined in accordance with accounting principles generally accepted in the U.S. (GAAP). Management believes this non-GAAP information is useful for investors, taken in conjunction with AMAG’s GAAP financial statements, because it provides greater transparency regarding AMAG’s operating performance. Management uses these measures, among other factors, to assess and analyze operational results and trends and to make financial and operational decisions. Non-GAAP information is not prepared under a comprehensive set of accounting rules and should only be used to supplement an understanding of AMAG’s operating results as reported under GAAP, not as a substitute for GAAP. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. The determination of the amounts that are excluded from non-GAAP financial measures is a matter of management judgment and depends upon, among other factors, the nature of the underlying expense or income amounts. Reconciliations between these non-GAAP financial measures and the most comparable GAAP financial measures are included in the tables accompanying this press release after the unaudited condensed consolidated financial statements.