On May 2, 2017 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) reported unaudited consolidated financial results for the quarter ended March 31, 2017. Total GAAP revenue for the first quarter of 2017 increased to $139.5 million, approximately 28% higher than the same period last year. This increase was primarily driven by growth in net sales of Makena (hydroxyprogesterone caproate injection). The company reported an operating loss of $40.0 million in the first quarter of 2017, compared with operating income of $7.4 million in the same period last year. The operating loss in the first quarter of 2017 was primarily due to a one-time payment of $60 million to Palatin Technologies, Inc. related to the bremelanotide licensing transaction. Non-GAAP adjusted EBITDA increased approximately 21% to $57.6 million in first quarter of 2017, as compared to the corresponding period in 2016.1
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"Today we are reaffirming our 2017 annual revenue guidance on our existing commercial portfolio of Makena, Feraheme and CBR based on the strong underlying fundamentals of those products," stated William Heiden, AMAG’s president and chief executive officer. "While our commercial team drove higher physician-level Makena demand (distributor shipments to end users) in the first quarter of 2017 compared to the fourth quarter of 2016, first quarter 2017 ex-factory sales of Makena (shipments to distributors) decreased compared to the fourth quarter of 2016. The difference between demand and ex-factory sales was primarily due to a decline in channel inventory, as well as one-time items impacting net price in the first quarter of 2017."
The company today also separately announced positive Phase 3 clinical data evaluating the safety of Feraheme (ferumoxytol) compared to Injectafer (ferric carboxymaltose injection) in adults with iron deficiency anemia (IDA). The study achieved all primary and secondary safety and efficacy endpoints and will be the basis for a supplemental new drug application (sNDA) filing planned in mid-2017 to broaden the Feraheme label beyond the current chronic kidney disease (CKD) indication to include all adult IDA patients who have failed or cannot tolerate oral iron treatment.
"We made strong progress against key 2017 goals with today’s announcement of a successful Phase 3 study for Feraheme, the April filing of an sNDA for the Makena subcutaneous auto-injector, and the closing of two transactions that expand our product portfolio and position AMAG well for sustainable long-term growth," added Mr. Heiden. "Our license agreements for IntrarosaTM and bremelanotide represent significant opportunities to address unmet medical needs in women’s health, and combined with Makena and our CBR offerings, demonstrate AMAG’s growing commitment to women’s healthcare."
1 See summaries of GAAP to non-GAAP adjustments at the conclusion of this press release.
1
First Quarter 2017 and Recent Business Highlights:
•
Generated strong revenues, including 33% growth in Makena sales and 7% growth in Feraheme sales over the first quarter of 2016
•
Increased Makena market share2 by 2% to 44% over the fourth quarter of 2016
•
Ended the quarter with $558.4 million of cash and investments
•
Filed an sNDA with the U.S. Food and Drug Administration (FDA) in April 2017 for the Makena subcutaneous auto-injector, with an anticipated six month review timeline
•
Announced positive Phase 3 clinical data evaluating the safety of Feraheme compared to Injectafer in adults with IDA (see separate press release dated May 2, 2017)
•
Closed two licensing transactions in the women’s health space for rights to Intrarosa and bremelanotide
•
Initiated the hiring of a new ~150-person women’s health commercial team to support the anticipated mid-2017 launch of Intrarosa
•
Advanced ongoing clinical work with our partner Palatin for the submission of a new drug application for bremelanotide in early 2018
First Quarter Ended March 31, 2017 (unaudited)
Financial Results (GAAP Basis)
Total revenues for the first quarter of 2017 were $139.5 million, compared with $109.3 million in the first quarter of 2016. Net product sales of Makena were $86.5 million in the first quarter of 2017, compared with $65.0 million in the same period last year. Sales of Feraheme and MuGard totaled $26.1 million in the first quarter of 2017, compared with $24.5 million in the first quarter of 2016. Service revenue from Cord Blood Registry (CBR) totaled $26.9 million in the first quarter of 2017, compared with $19.5 million in the same period last year.
Costs and expenses, including costs of product sales and services totaled $179.5 million in the first quarter of 2017, compared with $101.9 million for the same period in 2016. This increase was primarily due to (i) a one-time, upfront payment of $60 million to Palatin pursuant to the terms of the licensing transaction for bremelanotide, (ii) research and development expenses of $4.4 million related to clinical work performed by Palatin, (iii) higher cost of products sold of $9.3 million, of which $7.4 million was an increase in amortization expense related to Makena intangible asset, and (iv) higher selling, general and administrative expenses of $7.2 million related to commercial activities to support our growing product portfolio.
The higher expenses in the first quarter of 2017 resulted in an operating loss of $40.0 million (including the one-time payment of $60 million to Palatin), compared with operating income of $7.4 million for the same period last year. The company reported a net loss of $36.6 million, or $1.06 per basic and diluted share, for the first quarter of 2017, compared with a net loss of $7.5 million, or $0.22 per basic share and diluted share, for the same period in 2016.
Financial Results (Non-GAAP Basis)1
Non-GAAP revenue totaled $140.8 million in the first quarter of 2017, up from $117.9 million in the first quarter of 2016. Non-GAAP CBR service revenue totaled $28.3 million in the first quarter of 2017, compared with $28.1 million in the first quarter of 2016. The difference between GAAP and non-GAAP revenue represents CBR purchase accounting adjustments related to deferred revenue.
Total costs and expenses on a non-GAAP basis totaled $83.2 million in the first quarter of 2017, compared with $70.4 million in the first quarter of 2016.
Non-GAAP adjusted EBITDA for the first quarter of 2017 was $57.6 million, resulting in an adjusted EBITDA margin of 41%. This compares non-GAAP adjusted EBITDA of $47.5 million in the first quarter of 2016, with an adjusted EBITDA margin of 40%. The company maintained a strong adjusted EBITDA margin while also investing significantly in the development of its current and future products to create long-term value.
2 Company estimates Makena market share based on distributor dispensing data and all other market share based on physician market research data conducted by AMAG.
2
Balance Sheet Highlights
As of March 31, 2017, the company’s cash and investments totaled approximately $558.4 million and total debt (principal amount outstanding) was approximately $1.02 billion.
"We have updated our full year 2017 financial guidance to include revenue and expenses related to Intrarosa and are reiterating full year 2017 revenue guidance for our currently marketed products," said Ted Myles, AMAG’s chief financial officer. "During the quarter and throughout 2017, we have and will continue to invest in the launch of Intrarosa, potential expansion of the label for Feraheme, development work to support the bremelanotide NDA, and potential approval and launch of the Makena subcutaneous auto-injector. We believe these investments will deliver long-term value to our shareholders."
Updated 2017 Financial Guidance
2017 GAAP Guidance
2017 Non-GAAP Guidance
$ in millions
Previous
Updated
Previous3
Updated3
Makena sales
$410 – $440
$410 – $440
$410 – $440
$410 – $440
Feraheme and MuGard sales
$100 – $110
$100 – $110
$100 – $110
$100 – $110
CBR revenue
$110 – $120
$110 – $120
$115 – $1254
$115 – $1254
Intrarosa
—
$5 – $15
—
$5 – $15
Total revenue
$620 – $670
$625 – $685
$625 – $675
$630 – $690
Net income (loss)
$19 – $60
($88) – ($44)
N/A
N/A
Operating income (loss)
$103 – $173
($72) – $1
N/A
N/A
Adjusted EBITDA
N/A
N/A
$270 – $340
$210 – $260