On May 3, 2018 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) reported unaudited consolidated financial results for the quarter ended March 31, 2018, provided a business update, and increased its full year 2018 financial guidance (Press release, AMAG Pharmaceuticals, MAY 3, 2018, View Source [SID1234526018]).
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Total GAAP revenue for the first quarter of 2018 increased to $146.4 million, 5% higher than the same period last year. The year-over-year increase was driven by the addition of Intrarosa (prasterone) to the product portfolio, as well as net sales growth from Makena (hydroxyprogesterone caproate injection) and Cord Blood Registry (CBR). The company reported an operating loss of $44.9 million in the first quarter of 2018, compared with an operating loss of $40.0 million in the same period last year. Non-GAAP adjusted EBITDA totaled $40.6 million in the first quarter of 2018, compared with $57.6 million in the first quarter of 2017.1
"Strong execution led to the achievement of a number of significant regulatory and business milestones in the first quarter of 2018, including two FDA approvals that provide an opportunity to broaden and extend the Makena and Feraheme brands," stated Bill Heiden, AMAG’s president and chief executive officer. "We’ve received positive initial market feedback on both the Makena subcutaneous auto-injector and Feraheme broad label launches, and continue to see good progress on the Intrarosa launch. During the first quarter, we also filed the new drug application for bremelanotide and we are initiating programs to educate healthcare providers about diagnosing hypoactive sexual desire disorder. These accomplishments, solid first quarter financial results, and our expectation for continued strong commercial execution allowed us to increase our 2018 full year financial guidance."
First Quarter 2018 and Recent Business Highlights:
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Secured two U.S. Food and Drug Administration (FDA) approvals
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Broad intravenous (IV) iron deficiency anemia (IDA) label for Feraheme (ferumoxytol injection)
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Makena subcutaneous (SC) auto-injector
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Submitted a new drug application (NDA) to the FDA for bremelanotide for the treatment of hypoactive sexual desire disorder (HSDD) in premenopausal women
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Maintained 50% Makena market share and launched the SC auto-injector (March 2018)
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47% of new patient enrollments through the Makena Care Connection were prescribed the SC auto-injector in the week of April 23
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Eight patents covering Makena SC auto-injector were listed in the FDA Orange Book, the last of which expires in 2036
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Increased Intrarosa weekly market share to 2.8%, with approximately 50,000 total prescriptions written by more than 6,600 healthcare providers since the July 2017 launch
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High gross-to-net adjustments (low net price) continued, but are expected to improve throughout 2018
1 See summaries of GAAP to non-GAAP adjustments at the conclusion of this press release.
1
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Initiated first wave of multi-faceted Intrarosa digital direct-to-consumer program
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Launched Feraheme with broad IV IDA label and already capturing additional share
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Four successive quarters of year-over-year growth in new family enrollments at CBR, which are a strong indicator of upcoming new customer collections and revenues
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Ended the quarter with $370.6 million of cash and investments, an increase of more than $40 million from year end
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Increased 2018 full year financial guidance
First Quarter Ended March 31, 2018 (unaudited)
Financial Results (GAAP Basis)
Total revenues for the first quarter of 2018 increased 5% to $146.4 million, compared with $139.5 million in the first quarter of 2017. Intrarosa, which was commercially launched in July 2017, contributed $2.2 million in net sales during the first quarter of 2018. Net product sales of Makena increased 4% to $90.0 million in the first quarter of 2018, compared with $86.5 million in the same period last year. Sales of Feraheme and MuGard decreased 3% to $25.2 million in the first quarter of 2018, compared with $26.1 million in the first quarter of 2017. The temporary shortage of saline caused by the 2017 hurricane destruction in Puerto Rico, a key manufacturing site for saline, negatively impacted Feraheme sales in the early weeks of the quarter. Service revenue from CBR increased 8% to $29.0 million in the first quarter of 2018, compared with $26.9 million in the same period last year, due in part to continued growth of new family enrollments.
Costs and expenses, including costs of product sales and services, totaled $191.2 million in the first quarter of 2018, compared with $179.5 million for the same period in 2017. This increase was primarily due to higher costs of products sold of $36.3 million, of which $31.5 million was an increase in amortization expense primarily related to the Makena intramuscular intangible asset, and higher selling, general and administrative (SG&A) expenses related to launch activities for the Feraheme expanded label, the Makena SC auto-injector and Intrarosa. The increase in total costs and expenses was partially offset by lower research and development expenses and lower acquired in-process research and development (IPR&D) expenses. Acquired IPR&D expense in 2017 consisted of a one-time, upfront payment of $60 million to Palatin for bremelanotide. Acquired IPR&D expense in 2018 consisted of a $20 million charge to recognize the contingent liability associated with the FDA acceptance milestone that the company expects to pay to Palatin.
The operating loss in the first quarter of 2018 was $44.9 million, compared to an operating loss of $40.0 million for the same period last year. The company reported a net loss of $54.2 million, or $1.59 loss per basic and diluted share, for the first quarter of 2018, compared with net loss of $36.6 million, or $1.06 loss per basic and diluted share for the same period in 2017.
Financial Results (Non-GAAP Basis)1
Going forward, the company will present GAAP revenue only, as historically the only difference between GAAP and non-GAAP revenue was an adjustment to purchase accounting related to CBR deferred revenue, which is now minimal.
Total costs and expenses on a non-GAAP basis totaled $105.7 million in the first quarter of 2018, compared with $83.2 million in the first quarter of 2017. This increase was primarily due to higher SG&A expenses related to investments the company is making to support the launches of the Feraheme broad label, Makena SC auto-injector and Intrarosa.
Non-GAAP adjusted EBITDA for the first quarter of 2018 was $40.6 million, compared to $57.6 million in the first quarter of 2017. Adjusted EBITDA for the first quarter of 2018 was in line with the company’s expectations and previously stated plans to invest in the continued development and commercialization of its newer and expanded products to create long-term shareholder value.
Balance Sheet Highlights
As of March 31, 2018, the company’s cash and investments totaled $370.6 million and total debt (principal amount outstanding) was $816.4 million.
"AMAG cleared a number of de-risking milestones during the first quarter of 2018, namely the approval and launch of the subcutaneous auto-injector in advance of potential generic competition and the approval and launch of the broad Feraheme label. These events combined with continued execution across the company give us conviction to increase our financial guidance for the full year," said Ted Myles, AMAG’s chief financial officer. "We believe we are well positioned, financially and operationally, to achieve our 2018 company goals, including the updated guidance. We will continue to invest in 2018 to build and grow a broad portfolio of differentiated long-lived assets that we believe will generate significant shareholder value."
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 2018 financial results, recent business highlights and 2018 outlook.
Dial-in Number
U.S./Canada dial-in number: (877) 412-6083
International dial-in number: (702) 495-1202
Conference ID: 6978298
Replay dial-in number: (855) 859-2056
Replay International dial-in number: (404) 537-3406
Conference ID: 6978298
A telephone replay will be available from approximately 11:00 a.m. ET on May 3, 2018 through midnight on May 9, 2018.
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 revenue, 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, revenue, 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.