On May 11, 2020 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) reported unaudited consolidated financial results for the first quarter ended March 31, 2020 (Press release, AMAG Pharmaceuticals, MAY 11, 2020, View Source [SID1234557455]). The company reported total revenues for the first quarter of 2020 of $68.7 million, including revenue of $44.4 million from Feraheme and revenue of $21.8 million from Makena (hydroxyprogesterone caproate injection), as well as expense reductions across the business. The company also reported an operating loss of $19.6 million and an adjusted EBITDA loss of $5.5 million in the first quarter of 2020.1

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Despite strong first quarter results, AMAG’s products are being impacted by the COVID-19 pandemic as patient visits have declined during this period. Given the planned divestiture of Intrarosa (prasterone) and Vyleesi (bremelanotide injection) and the impact of COVID-19, AMAG has implemented a company-wide restructuring, which will reduce the workforce by approximately 30 percent. AMAG is withdrawing its 2020 financial guidance due to the uncertainty surrounding the duration of the COVID-19 pandemic.

"We are sharpening our focus on our priorities of maximizing Feraheme’s value, retaining patient access to Makena and continuing to efficiently develop innovative therapies, namely ciraparantag," said Scott Myers, AMAG’s president and chief executive officer. "As we look to the future, it is difficult to estimate the severity and duration of the COVID-19 pandemic. We’ve seen signs of stabilization and remain confident in the underlying demand for our products; however, we cannot speculate on the subsequent speed of recovery and the overall impact on our business."

"Based upon the extraordinary dynamics across the industry due to the COVID-19 pandemic, we have decided to withdraw our 2020 financial guidance," said Ted Myles, AMAG’s chief financial officer and chief operating officer. "We remain committed to our previously stated goal of reducing total operating expenses by more than $100 million in 2020, as compared to 2019, and we are on track to achieve this objective. Furthermore, we continue to strive towards returning to profitability this year. The work force reduction that we announced today is an important step towards achieving these corporate objectives. While it was a difficult decision, we believe the organization is now the right size to support our long-term goals. We’d like to thank our colleagues who are leaving AMAG for their many contributions to our organization."

OTHER KEY UPDATES
Leadership Transition: AMAG announced in April that its Board of Directors appointed Scott Myers as AMAG’s president and chief executive officer, and a member of the Board, effective immediately. Mr. Myers is a proven executive who brings nearly three decades of global pharmaceutical and medical technology experience to AMAG. Mr. Myers succeeds William Heiden who stepped down upon Mr. Myers’ appointment.

1

Supply Chain: At this time, all of the company’s products remain available and the supply chain has not been materially affected by COVID-19. AMAG continues to closely monitor suppliers and supply levels. The company has risk mitigation plans in place to minimize potential supply interruptions, including redundant drug substance manufacturing and inventory safety stock, and will continue to work diligently with its suppliers to maintain continuous supply as the COVID-19 situation continues to evolve.

Regulatory: In response to the company’s request to the FDA for a meeting to discuss the future of Makena, the FDA indicated that it was premature to meet at this time as it was still reviewing the matter. AMAG remains committed to working collaboratively with the FDA to maintain access to Makena for eligible pregnant women.

Clinical Trials: The COVID-19 pandemic is an evolving situation and is having a serious impact on clinical trials globally. The AMAG-423 Phase 2b/3a clinical trial is a hospital-based trial and all sites have paused new patient enrollment. The company has had to pause initiation of new sites due to the pandemic, significantly impacting recruitment and enrollment. AMAG continues to work with the FDA to initiate the ciraparantag Phase 2b trial in healthy volunteers in the U.S. However, the COVID-19 pandemic has forced the clinical trial sites where the company expected to conduct the trial to close.

FIRST QUARTER ENDED MARCH 31
Revenue
First quarter revenue totaled $68.7 million, compared to $75.8 million for the same period in 2019. This decrease was primarily due to a decrease in sales of Makena stemming from the unfavorable FDA Advisory Committee recommendation for Makena in October 2019. These decreases were partially offset by an increase in sales of Feraheme.
•Feraheme achieved first quarter revenue of $44.4 million, an increase of 11 percent over the same period last year. Feraheme’s average quarterly market share was 17.2 percent in the first quarter of 2020, compared to 16.2 percent in the first quarter of 2019.
•Makena first quarter revenue totaled $21.8 million, compared to $31.3 million in the first quarter of last year.
•Intrarosa revenue in the first quarter of 2020 totaled $3.2 million, compared to $4.4 million in the same period last year.

($M) Three Months Ended March 31, 2020 2019 Total revenues $68.7 $75.8 Feraheme 44.4 40.0 Makena 21.8 31.3 Intrarosa 3.2 4.4 Other (0.7) 0.1

Operating Expenses
Total costs and expenses decreased by $105.3 million to $88.2 million in the first quarter of 2020, as compared to the first quarter of 2019. In the first quarter of last year, the company recorded $74.9 million of acquired in-process research and development (IPR&D) expense in connection with the acquisition of Perosphere Pharmaceuticals for the development asset, ciraparantag. Also recorded in the first quarter of last year was a one-time restructuring charge of $7.4 million related to combining the company’s maternal health and women’s health sales forces in February 2019.
•Cost of products sales in the first quarter of 2020 increased by $5.9 million, as compared with the first quarter of last year, driven by an increase in amortization expense associated with the Makena, Intrarosa and Vyleesi intangible assets.
•Research and development (R&D) expenses totaled $11.2 million, compared to $18.1 million in the first quarter of last year. This decrease was primarily related to lower costs for Vyleesi following its FDA approval in June 2019.
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•Selling, general and administrative (SG&A) expenses decreased by approximately $22.0 million, or 29 percent, in the first quarter of 2020, compared to the same period in 2019.

($M) Three Months Ended March 31, 2020 2019 Amortization of intangible assets $9.8 $3.9 Direct cost of product sales 14.5 14.5 Total cost of product sales 24.3 18.4 Research and development expenses 11.2 18.1 Acquired in-process research and development — 74.9 Selling, general and administrative expenses 52.7 74.7 Restructuring expenses — 7.4 Total costs and expenses $88.2 $193.5

Balance Sheet
•As of March 31, 2020, the company’s cash and investments totaled $124.7 million.
•Long-term debt totaled $320.0 million (representing the principal amounts outstanding of the 2022 convertible notes).

Operating Loss and Adjusted EBITDA
•The company reported an operating loss of $19.6 million in the first quarter of 2020, compared to an operating loss of $117.7 million in the same period last year.
•The company reported a loss in adjusted EBITDA of $5.5 million in the first quarter of 2020, compared to a loss in adjusted EBITDA of $26.6 million in the same period last year.

($M) Three Months Ended March 31, 2020 2019 Operating loss $(19.6) $(117.7)
Non-GAAP adjusted EBITDA1
$(5.5) $(26.6)
1 See reconciliations of GAAP to non-GAAP adjustments at the conclusion of this press release.

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 2020 financial results and recent business updates.

DIAL-IN NUMBERS
U.S./Canada Dial-in Number: (877) 412-6083
International Dial-in Number: (702) 495-1202
Conference ID: 4948155

Replay Dial-in Number: (855) 859-2056
Replay International Dial-in Number: (404) 537-3406
Conference ID: 4948155

A telephone replay will be available from approximately 11:00 a.m. ET on May 11, 2020 through midnight on May 18, 2020.