On January 9, 2020 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) reported the initiation of a leadership transition, the decision to divest Intrarosa and Vyleesi and financial updates (Press release, AMAG Pharmaceuticals, JAN 9, 2020, View Source [SID1234552915]).
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Leadership Transition & Business Updates
AMAG announced that William Heiden plans to step down as AMAG’s President and Chief Executive Officer, and that the Company’s Board of Directors will immediately initiate a search for his successor, which it expects to complete by mid-2020. Mr. Heiden will remain in his role as President and CEO until a successor is appointed.
AMAG also recently completed a robust review of its product portfolio and strategy and engaged Goldman Sachs and Co., LLC as its financial advisor to assist in the review. The guiding principles for this strategic review included driving near- and long-term profitability and enhancing shareholder value. As a result of this review, AMAG will divest Intrarosa (prasterone) and Vyleesi (bremelanotide). The Company has received preliminary expressions of interest to acquire/sub-license the rights to these products. AMAG’s 2020 financial guidance indicates a return to positive adjusted EBITDA, reflecting the continued growth of Feraheme (ferumoxytol injection) and a significant reduction in operating expenses, primarily associated with the divestiture of Intrarosa and Vyleesi. The 2020 revenue guidance reflects a range of potential revenue scenarios for Makena (hydroxyprogesterone caproate injection) given the uncertainty caused by the FDA Advisory Committee meeting and soft fourth quarter results.
"The strategic decisions announced today will allow AMAG to leverage its commercial strengths and proven development and regulatory capabilities while focusing on core value drivers: developing ciraparantag and AMAG-423; driving the continued growth of Feraheme, which funds our two pipeline assets; and continuing our work to retain patient access to Makena," said Mr. Heiden. "It has been an honor and a privilege to lead the team at AMAG. We’ve achieved numerous successes and overcome many challenges. As we implement the strategic shift announced today, my fellow directors and I believe that this is the right time for the board to identify a new CEO for the next leg of AMAG’s journey."
Mr. Heiden added, "We continue to believe in the significant long-term potential of Intrarosa and Vyleesi. However, the uncertainty around the long-term durability of Makena revenues makes it challenging to invest in both our promising pipeline and in the physician and consumer marketing required to support these two new products. Given the significant future commercial potential of ciraparantag and AMAG-423 to fulfill unmet medical needs of patients, AMAG made the difficult decision to divest Intrarosa and Vyleesi. The Company is seeking a transaction with a party that can make the investments necessary to maximize the value of these two important women’s healthcare products."
In addition to the announced CEO transition, Chief Financial Officer Ted Myles will assume the additional role of Chief Operating Officer, effective immediately, expanding his responsibilities to include technical operations, global supply chain and quality. General Counsel Joseph Vittiglio will assume the additional role of Chief Business Officer, focusing on managing the divestiture of Intrarosa and Vyleesi and out-licensing opportunities in ex-U.S. territories, primarily for AMAG’s development-stage programs.
Gino Santini, Chairman of AMAG’s Board, said, "The Board is committed to pursuing strategies that will unlock value for AMAG shareholders and better leverage the Company’s strengths and proven capabilities. We are confident that taking the strategic actions announced today will position AMAG for future growth and enable the Company to better serve patients."
Mr. Santini continued, "The Board would like to thank Bill for his visionary leadership, transforming AMAG from a single-product company to one with an in-house clinical development team that has gained three FDA product approvals in the last two years, and is progressing two late-stage development products through the regulatory process. For nearly eight years, Bill developed and executed on strategies to invest in products that have benefited hundreds of thousands of patients and which hold the potential of reaching many more in the future. The Board looks forward to working with Bill on a seamless transition, as well as continuing to work with AMAG’s outstanding executive leadership team to drive near- and long-term results."
Preliminary 2019 Financial Results and 2020 Financial Guidance
AMAG announced preliminary unaudited fourth quarter and full year 2019 financial results and provided 2020 financial guidance, reflecting the Company’s focus on profitability in 2020. The Company expects to report final financial results for the fourth quarter and audited results for the full year of 2019 in early March.
Preliminary, Unaudited Fourth Quarter Financial Results
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1 Includes the recognition of $16M of collaboration revenue due to the termination and settlement agreement entered into with Daiichi Sankyo, Inc. (DSI) in December 2019 related to a clinical trial collaboration agreement that AMAG acquired as part of the Perosphere acquisition. As part of the settlement, AMAG received $10M in cash from DSI in December 2019.
2 Operating loss does not include the impact of material impairment charges or the associated acceleration of amortization, which are likely to be recognized in the 2019 audited financial statements.
3 See reconciliation of GAAP to non-GAAP preliminary financial results at the conclusion of this press release.
The Company ended 2019 with approximately $170 million in cash and investments and $320 million of 2022 convertible notes (principal amount outstanding).
Key priorities for 2020 include:
Complete successful CEO transition
Divest Intrarosa and Vyleesi to align with the new strategic direction
Drive continued Feraheme growth
Work with the FDA to maintain patient access to Makena
Advance ciraparantag and AMAG-423 development programs
Pursue ex-US portfolio partnering opportunities
Meet/exceed financial guidance
2020 Financial Guidance4
Mr. Myles stated, "With the divestiture of Intrarosa and Vyleesi and the associated expense reductions, the AMAG of 2020 will be more streamlined and focused to drive Feraheme growth, support the development of our two pipeline assets and deliver positive adjusted EBITDA. While we remain committed to working with the FDA to maintain patient access to Makena, we will be managing Makena-related expenses so that the product is cash flow positive. Our financial guidance includes a reduction of operating expenses of more than $100 million in 2020 relative to 2019. We believe our 2020 plan, including the revised capital allocation strategy, maintains our strong commitment to patients and best positions AMAG to generate sustainable, long-term shareholder value."
INFORMATION FOR LIVE AUDIO WEBCAST AT THE 38TH J.P. MORGAN HEALTHCARE CONFERENCE
The Company will provide a live update at the 38th Annual J.P. Morgan Healthcare Conference in San Francisco on Thursday, January 16, 2020 at 9:30 a.m. PT (12:30 p.m. ET). A live audio webcast of the presentation and the
4 See reconciliations of 2020 GAAP to non-GAAP financial guidance at the conclusion of this press release. 2020 financial guidance reflects management’s current assumptions about the potential impact of multiple scenarios across our product portfolio, including (i) various potential regulatory outcomes related to Makena and (ii) that the divestitures of Intrarosa and Vyleesi will be reported in discontinued operations for accounting purposes in 2020. Therefore, 2020 financial guidance excludes revenue and expenses related to Intrarosa and Vyleesi.
following breakout session will be accessible in the Investors section of AMAG’s website at www.amagpharma.com. on January 16, 2020 at 9:30 a.m. PT (12:30 p.m. ET). Following the conference, the webcast will be archived on the Company’s website until February 17, 2020.
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.