On February 7, 2019 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) reported unaudited consolidated financial results for the fourth quarter and full year ended December 31, 2018, which were in-line with previously announced preliminary results (Press release, AMAG Pharmaceuticals, FEB 7, 2019, View Source [SID1234533175]).

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Total revenues from continuing operations for the full year of 2018 totaled $474.0 million, including record annual revenue of $135.0 million from Feraheme (ferumoxytol injection), annual revenue of $322.3 million from Makena (hydroxyprogesterone caproate injection) and its authorized generic, and annual revenue of $16.2 million from Intrarosa (prasterone). The company reported an operating loss from continuing operations of $47.0 million and adjusted EBITDA of $120.8 million in 2018.1

"We achieved key regulatory milestones in 2018 with two U.S. Food and Drug Administration (FDA) approvals and the acceptance of a new drug application (NDA). During the second half of 2018, we broadened our product pipeline with the addition of two promising development-stage assets, both of which underscore our commitment to bring forth new drugs in areas of significant unmet patient need," said William Heiden, AMAG’s president and chief executive officer. "Looking to the year ahead, we are reaffirming our 2019 financial guidance, which includes nearly $400 million in top-line revenue, increased investments in clinical development, investments in support of our commercial product portfolio, and the impact of a recently completed consolidation of the company’s women’s health and maternal health sales forces."

2018 Highlights and Recent Events:
•
Received FDA approval and successfully launched Makena subcutaneous auto-injector
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Received FDA approval and launched Feraheme’s expanded label, achieving 27% growth in 2018
•
Established strong healthcare provider support for Intrarosa and initiated direct-to-consumer campaign
•
Received FDA acceptance of Vyleesi NDA with a June 23, 2019 PDUFA date
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Acquired AMAG-423, a late-stage orphan drug candidate in development for the treatment of severe preeclampsia
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Acquired Perosphere Pharmaceuticals Inc. (closed in January 2019), including ciraparantag, a development-stage drug candidate to reverse the anticoagulant effects of novel oral anticoagulants (NOACs) and low molecular weight heparin (LMWH)
•
Divested the Cord Blood Registry (CBR) business and paid off $475 million of senior notes, eliminating cash interest expense of approximately $40 million per year
•
Achieved top- and bottom-line financial guidance, which was raised three times during 2018
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1 See summaries of GAAP to non-GAAP adjustments at conclusion of this press release.

Fourth Quarter Financial Results Ended December 31, 2018)
Financial results for the fourth quarter ended December 31, 2018 were aligned with AMAG’s preliminary results issued on January 7, 2019. Total revenues from continuing operations for the fourth quarter of 2018 were $88.1 million, compared with $128.5 million for the same period in 2017. In the fourth quarter of 2018, sales of Makena totaled $46.9 million, compared with $100.4 million in the same period last year; sales of Feraheme and MuGard increased 33% to $35.3 million, compared with $26.6 million in the same period last year; and sales of Intrarosa totaled $5.9 million, compared with $1.5 million in the same period last year.

Total costs and expenses from continuing operations, including cost of product sales, were $107.0 million in the fourth quarter of 2018, compared with $141.3 million in the same period in 2017. The company reported an operating loss from continuing operations in the fourth quarter of 2018 of $18.8 million, compared with an operating loss from continued operations of $12.7 million for the same period last year. Non-GAAP adjusted EBITDA in the fourth quarter of 2018 totaled $1.5 million, compared with $53.6 million for the same period last year.1

Full Year Financial Results Ended December 31, 2018
Revenues from continuing operations in 2018 totaled $474.0 million, compared with $495.8 million in 2017.
The $21.8 million decrease was primarily due to i) a decrease in Makena intramuscular product sales, partially offset by the successful launch of the Makena subcutaneous auto-injector, ii) record sales of Feraheme following the approval of it expanded label in February 2018, and iii) an increase in net sales of Intrarosa, which was launched in July 2017.

Total costs and expenses from continuing operations, including cost of product sales, totaled $521.0 million in 2018, compared with $799.6 million in 2017. Included in the 2017 cost and expenses was a $319.2 million Makena intramuscular-related non-cash impairment charge. Excluding this charge, total costs and expenses increased by $40.6 million in 2018, compared to 2017. The year-over-year increase was due to i) higher cost of product sales, driven primarily by increased non-cash intangible asset amortization expenses of $28.0 million and higher royalty obligations related to the Makena subcutaneous auto-injector and Intrarosa products, and ii) planned increases in selling, general and administrative expenses, which primarily consisted of commercialization costs related to Intrarosa, the Makena subcutaneous auto-injector, and the Feraheme broad label. These increases were partially offset by lower research and development costs in 2018, compared to 2017, and a $33.3 million decrease in acquired in-process research and development expense.

The company reported an operating loss from continuing operations in 2018 of $47.0 million, compared with an operating loss of $303.8 million in 2017. The company reported a net loss from continuing operations of $169.3 million, or ($4.92) per basic and diluted share in 2018, compared with a net loss of $205.2 million, or ($5.88) per basic and diluted share in 2017.

2018 non-GAAP adjusted EBITDA of $120.8 million was in the middle of the most recently increased guidance range.1

Net Income from Discontinued Operations
As a result of the sale of CBR in August 2018, CBR is classified as discontinued operations for accounting purposes. Net income from discontinued operations was $103.6 million in 2018, of which $87.1 million represents the gain on the sale of the CBR business, as compared to $5.9 million in the same period in 2017.

Balance Sheet Highlights
The company ended 2018 with $394.2 million in cash and investments, $21.4 million of short-term convertible notes, which will be paid off on February 15, 2019, and $320.0 million principal balance of outstanding on its 2022 convertible notes.

2019 Financial Guidance2
The company reaffirms the following financial guidance for 2019.
($M)
2019 Financial Guidance
Total revenue
$365 – $415
Operating loss
($131) – ($101)
Adjusted EBITDA
($65) – ($35)
2 See reconciliation of 2019 GAAP to non-GAAP financial guidance at conclusion of this press release.

The Company’s 2019 financial guidance reflects the impact of a recent combination of the company’s women’s health and maternal health sales forces into one integrated sales team, which will promote both Intrarosa and Makena and now comprises approximately 125 sales representatives. Of the 110 displaced employees, approximately 100 were part of the field-based sales and commercial organization with the remainder coming from general and administrative functions. The company expects to record a one-time restructuring charge of approximately $6 million in the first quarter of 2019. The company’s financial guidance also encompasses a modest expansion of its hematology/oncology sales force to support the continued growth of Feraheme, continued investment in the development of its growing pipeline of clinical programs, and investments to support the anticipated launch of Vyleesi in the second half of 2019.

"Today we are reaffirming the financial guidance that we published in January. This financial guidance contemplated the addition of ciraparantag to the portfolio, the consolidation of our women’s health and maternal health sales forces and other measures that we have taken to increase efficiency," said Ted Myles, AMAG’s chief financial officer. "We have a strong balance sheet, and with Feraheme and the Makena subcutaneous auto-injector expected to generate significant cash flow, we are well positioned to self-fund investments in the Intrarosa direct-to-consumer campaign, launch activities for Vyleesi, and the phase 2b/3a clinical programs for AMAG 423 and ciraparantag. This broad and diversified portfolio, combined with our financial flexibility and discipline, provides a unique platform to deliver innovative therapies to patients in need and to generate significant shareholder value."

The company has a number of goals and key milestones in 2019:

Build on the success of the Makena SC auto-injector’s 46% fourth quarter 2018 market share (of FDA-approved hydroxyprogesterone caproate products)

Drive Feraheme market growth and market share growth to treat more patients suffering from iron deficiency anemia

Continue successful Intrarosa direct-to-consumer campaign; expanding treatment to more of the 18 million untreated women

Submit results to the FDA from the ambulatory blood pressure study assessing short-term daily use of Vyleesi prior to the June 23, 2019 PDUFA date; prepare for commercial launch in 2H-2019

Target full enrollment in AMAG-423 severe preeclampsia Phase 2b/3a clinical study by year end

Initiate ciraparantag anticoagulant reversal agent Phase 3a clinical studies

Pursue business development opportunities

Meet/exceed financial guidance

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 fourth quarter and full year 2018 financial results and recent developments.

Dial-in Number
U.S./Canada Dial-in Number: (877) 412-6083
International Dial-in Number: (702) 495-1202
Conference ID: 9185366

Replay Dial-in Number: (855) 859-2056
Replay International Dial-in Number: (404) 537-3406
Conference ID: 9185366

A telephone replay will be available from approximately 11:00 a.m. ET on February 7, 2019 through midnight on February 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 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.