AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) (“AMAG” or the “Company”)
today announced that it filed a definitive consent revocation
statement with the U.S. Securities and Exchange Commission on
September 20, 2019, and has sent a letter to AMAG shareholders. The
letter contains AMAG’s response to the consent solicitation made by
Caligan Partners LP (“Caligan”), including AMAG’s thoughts on
Caligan’s director nominees and Caligan’s views on the Company’s
business and strategy. AMAG urges shareholders to sign and
return AMAG’s
GREEN Consent Revocation Card and
disregard any white consent cards received from Caligan.
The full text of the letter is as follows:
September 23, 2019
REJECT CALIGAN’S SELF-SERVING AND
RECKLESS ATTEMPT TO SEIZE NEARLY HALF THE
RECENTLY-ELECTED AMAG BOARD
Caligan’s Nominees and Ideas for AMAG Show a
Shocking Lack of Experience and Understanding of AMAG’s Business
and Put the Value of Shareholder Investment at Risk!
Dear AMAG Shareholder,
Just four months ago, AMAG held its 2019 Annual Meeting of
Shareholders, where AMAG shareholders overwhelmingly voted in
support of AMAG’s slate of experienced and accomplished directors
by an average of more than 90% of the vote. Only a few weeks later,
Caligan Partners LP, a new and inexperienced activist hedge fund,
began to quickly accumulate shares in AMAG, and last month Caligan
initiated what appears to be a rushed, aggressive and misleading
scheme to seize near control of your AMAG Board. Now you are
essentially being asked by Caligan -- as part of a rarely used
corporate action called a consent solicitation -- to remove and
replace four members of the recently-reelected Board as a precursor
to risky and ill-informed changes that Caligan wants to make at
AMAG. AMAG fears that the changes proposed by Caligan, a
firm with zero pharmaceutical investment or operating experience,
would be catastrophic to AMAG’s ongoing strategic evolution which
is focused on driving sustainable, long-term shareholder value by
creating durable revenue streams through the development and
commercialization of innovative therapies for patients in
need.
AMAG strongly urges you to reject Caligan’s
proposals and to discard any White Consent Cards you receive from
them.
AMAG IS EXECUTING ON AN AMBITIOUS AND
CAREFULLY DEVELOPED STRATEGY AND HAS TAKEN ACTION TO POSITION
SHAREHOLDERS FOR LONG-TERM VALUE CREATION
In 2016, AMAG’s Board and Management team correctly recognized
the changing landscape for specialty pharmaceutical companies. At
that time, AMAG had only two pharmaceutical assets: Feraheme, which
had a limited label and could only address a portion of the target
patient population; and Makena intramuscular formulation, which was
facing loss of orphan drug exclusivity and likely significant
generic competition. The need for an ambitious strategic
realignment was clear. By early 2017, AMAG had begun executing on a
five-year strategic plan aimed at extending the life of its current
products -- the broad iron deficiency anemia (IDA) trial for
Feraheme and the subcutaneous auto-injector for Makena -- while
diversifying the portfolio to create opportunities for a new
chapter of financial growth and long-term sustainable shareholder
value creation.
Fewer than three years into this five-year strategic evolution,
AMAG has transformed itself from a two product company with limited
growth opportunities to a six asset company with two durable core
products, two innovative women’s health products, and two
development-stage therapies. The AMAG Board and Management team
acknowledge that these types of transformations can impact
financial performance and share price in the short-term. However,
this transformation supports the potential to generate significant
and durable revenue growth, aligned with AMAG’s vision to identify
new and better ways to help support patients and families along the
path to health. AMAG has been successfully executing on a strategic
evolution away from its previous “spec pharma” model, in comparison
to several peers who have not successfully pivoted and today face
uncertain futures (peers that Caligan has apparently ignored).
A portfolio chart accompanying this release is
available
at: https://www.globenewswire.com/NewsRoom/AttachmentNg/90a9d9fd-34ad-438b-83e3-6920cdfb55f1
Caligan sits on the sidelines, casting exaggerated criticisms
without proposing an actionable, constructive and forward-facing
plan, and ignores significant accomplishments that have been
realized in AMAG’s strategic evolution. An example of this
strategy and its strong execution is AMAG’s success with Feraheme –
the Company made the strategic decision to design and execute a
2,000 patient IDA trial for Feraheme in February 2016, at a cost of
approximately $30 million, which has already provided a strong
return on investment. AMAG achieved approval for the broad label a
year ahead of schedule, has grown Feraheme revenue from
approximately $100 million in 2017, to approximately $135 million
in 2018 and the Company is on track to achieve approximately $165
million in 2019. This represents nearly $100 million of incremental
revenue since the broad label was approved in February 2018. Since
unveiling and commencing the strategic plan, AMAG has consistently
executed against this plan, evolving its Board, Management, product
portfolio and financial profile including by taking the following
actions:
Recently Enhanced Board of Directors
- Appointed Anne Phillips, MD, senior vice president, clinical
development, medical and regulatory affairs for Novo Nordisk, Inc.
to the Board in April 2019, bringing significant experience in
clinical development and regulatory strategy as AMAG’s pipeline
assets become more important to future value creation.
- Appointed Katherine O’Brien, former vice president and general
manager, skin and marketing services for Unilever PLC to the Board
in April 2019, bringing years of experience in consumer marketing
to women as AMAG engages the nearly six million pre-menopausal
women suffering from low desire with associated distress.
Diversified AMAG’s Product Portfolio and Development
Pipeline
- In-licensed Vyleesi in February 2017.
- In-licensed Intrarosa in April 2017.
- Acquired two orphan drug development candidates:
- AMAG-423 in September 2018.
- Ciraparantag in January 2019.
Successfully Achieved FDA Approval of Three
Products
- Makena subcutaneous auto-injector approved in February
2018.
- Feraheme expanded label approved in February 2018.
- Vyleesi approved in June 2019.
Divested Cord Blood Registry (CBR) Business in August
2017
- Re-aligned the portfolio of assets to focus on AMAG’s core
strengths.
Strengthened Financial Profile and Balance Sheet,
Substantially Reducing Debt
- In May of 2017, AMAG achieved net 20% delevering and
significant extension of the Company’s liability profile through
the issuance of $320 million convertible notes due in 2022 and
simultaneously retired majority of the Company’s $200 million
convertible notes due 2019 and $320 million term loan due in
2021.
- In September of 2018, AMAG extinguished $500 million of its
7.875% Senior Notes due in 2023, which eliminated nearly $40
million in annual cash interest expense, five years ahead of
schedule.
- February 2019, AMAG streamlined operations with the
consolidation of the Women’s Health and Maternal Health sales
forces to 124 sales representatives, eliminating 110 positions,
leveraging the Company’s variable cost structure and gaining
operational synergies with one sales force comprised of the “best
of the best” supporting one mature product (Makena subcutaneous
auto-injector) and active promotion of a growth product (Intrarosa)
and a launch product (Vyleesi).
Even Caligan agrees about the Company’s strong
execution, and in their public materials state that “AMAG
has a collection of valuable assets,” acknowledging that “Feraheme
and Makena subcutaneous auto-injector continue to grow market
share” and the overall business “possesses several fundamental
upside drivers.” These successful commercial pharmaceutical
products, along with valuable investigational treatments in the
AMAG portfolio, were developed and launched by the AMAG Management
team and Board that Caligan is looking to recklessly disrupt. Upon
reviewing the full set of Caligan’s proposed ideas, the Board and
Management team were shocked at what they found.
AMAG CONDUCTED A RIGOROUS REVIEW OF
CALIGAN’S BUSINESS IDEAS AND FOUND SLOPPY RESEARCH, WILD
ASSUMPTIONS, MISLEADING PEER GROUPS AND CALIGAN’S CONFUSION ABOUT
AN ENTIRE BUSINESS CATEGORY
Consistent with its fiduciary duties, AMAG’s Board and
Management team have thoroughly reviewed the proposals included in
Caligan’s consent solicitation with the assistance of independent
financial and legal advisors. Following its review, AMAG’s
Board believes that Caligan’s ideas are reckless and irresponsible
and recommends that shareholders reject Caligan’s proposals,
because:
1. Caligan’s suggestions represent a dramatic
and fundamental misunderstanding of how value is created in the
pharmaceutical industry and the value in AMAG’s business model and
strategic plan.
- Caligan believes that AMAG’s portfolio of commercial and
development-stage therapies is more valuable as individual pieces.
However, AMAG believes that Caligan disregards the compelling
synergies and revenue drivers created by the Women’s Health
salesforce for AMAG’s marketed products – including Feraheme.
- AMAG believes that Caligan has also shown a brazen disregard
and lack of understanding of the investment required to create
future value in the pharmaceutical business, specifically for the
value creation milestones ahead for AMAG’s launch of Vyleesi and
two promising pipeline candidates.
- Caligan’s materials fail to acknowledge the upcoming Advisory
Committee hearing with the Food & Drug Administration for
Makena later this year and how AMAG’s efforts towards that
important event can impact the future value proposition of the
Company.
- AMAG believes that Caligan’s proposal to launch Feraheme
globally through commercial partnerships is overly simplistic. AMAG
is executing on a thoughtful and strategic expansion strategy for
Feraheme, which takes into consideration current regulatory
complexities and exclusivity protection realities. AMAG believes
that Caligan’s approach underscores an extreme lack of
understanding of market conditions, regulatory complexities,
intellectual property strategies, pharmaceutical partnerships and
disciplined, responsible stewardship of the Company’s portfolio of
assets.
2. Caligan uses
cherry-picked and constantly changing peer groups in an apparent
effort to mislead investors.
- Caligan seems to cherry-pick a different set of peers for
almost every comparison (Total Shareholder Return (TSR), Enterprise
Value, Selling, General & Administrative (SG&A) expenses,
Women’s Health sales, guidance and consensus).
- For example, Caligan’s criticism of AMAG’s SG&A spending
includes comparisons to companies like Biogen and Gilead – which
are two companies of completely different size and profile compared
to AMAG. It ignores the Company’s upcoming launch of Vyleesi and
omits the fact that, when compared to similarly sized Women’s
Health and Hematology peers1 with upcoming commercial launches,
AMAG’s SG&A as a percentage of revenue is 84% versus 96%2.
- AMAG believes these misleading comparisons underscore Caligan’s
superficial, rushed and desperate attempt to find numbers that fit
its narrative. At best, this appears to show a lack of
understanding of AMAG’s business and peer set and, at worst, seems
to be a sad attempt to mislead shareholders to vote for a value
destroying Board de-stabilization.
3. It appears that Caligan
does not understand, or deceptively conflates, the difference
between market opportunity and guidance.
- Alarmingly, Caligan appears to have confused a very basic
premise of drug development rationale: in its analysis, Caligan
conflates AMAG’s previous directional discussion on market
sizing/opportunity with actual financial guidance, despite explicit
communication that some comments are not guidance.
- Even worse, Caligan seems to have deceptively applied this
discussion of market opportunity, which does not include a time
frame, to 2019 revenues.
4. AMAG believes that
Caligan does not understand, or is actively trying to confuse
shareholders about, an entire AMAG business segment.
- Caligan has made multiple references to a “nephrology
portfolio” at AMAG. AMAG has two businesses – Women’s Health and
Hematology/Oncology – but no Nephrology business. It’s a common
misunderstanding that could be made by someone with zero
pharmaceutical experience. AMAG has been commercializing Feraheme
and generating consistent success in the “hem/onc” segment for more
than 10 years. This should have been obvious for a group of
investors who are boldly stating that they can direct the Company
after claiming to have “researched AMAG for 18 months.”
- For Caligan’s educational benefit, Nephrology is a totally
different intravenous (IV) iron segment, which AMAG does not
compete in for important strategic reasons. This apparent
misunderstanding demonstrates that Caligan ‘knows enough to be
dangerous’—but clearly not enough about the actual business. AMAG
thinks investors should be concerned about having those who don’t
even understand the call point of AMAG’s largest product in the
Board room.
____________1 Women’s Health (Radius, TherapeuticsMD, ObsEva,
Myovant) and Hematology (La Jolla, Portola, Rigel, Catalyst,
Dova) 2 Based on mean of annualized last quarter SG&A
reported in respective SEC filings as a percentage of IBES
consensus estimates for 2020E revenues
AMAG’s Board and Management team believe Caligan’s
proposed ideas for AMAG are ill-informed and lack any rational path
to creating shareholder value. Caligan’s decision to focus
their plan solely on a critique of AMAG’s past highlights their
apparent lack of experience in, and understanding of, the
pharmaceutical industry. AMAG’s highly-skilled and experienced
Board and Management team are tirelessly executing on the Company’s
established five year strategic plan, and regularly explores and
undertakes strategic opportunities for the entirety of its
business, including a number of recent acquisitions, the
divestiture of CBR, and structural optimizations. Any suggestion by
Caligan that the AMAG Board hasn’t reviewed and considered various
alternatives for its portfolio and strategy is false. Further, it
seems clear that any work Caligan is suggesting along the lines of
a “Comprehensive Review of AMAG” by their proposed new Board
members, only one of whom has any experience in the pharmaceutical
industry, would be uneducated in its execution and likely
destructive.
THE AMAG BOARD HAS DETERMINED THAT
CALIGAN’S NOMINEES ARE NOT QUALIFIED TO SERVE ON AMAG’S
BOARD
AMAG’s Board reviewed the credentials of Caligan’s nominees in a
good-faith effort to assess if any might be qualified to be part of
AMAG’s ongoing Board refreshment process. Notably, the AMAG Board
has a very rigorous Board-refreshment process focused on
identifying specific experience needs, aimed at building a
well-rounded Board with a balance of requisite competencies and
expertise, underscored by the recent addition of two new
highly-qualified directors to the AMAG Board. The Caligan nominees,
however, appear to have minimal industry experience and at least
one has a conflict of interest. For example, AMAG found that:
- Minimal Industry Experience: Three
nominees have absolutely no experience in the pharmaceutical
industry. Also, despite nominee David Johnson’s purported
“operational knowledge”-related qualifications, as stated in
Caligan’s investor presentation, in his relatively short career he
has demonstrated no operational capabilities, in addition to his
lack of relevant pharmaceutical experience.
- Conflict of Interest: As Partner and
co-Founder of Caligan Partners, and with a fund at least partly
dedicated to Caligan’s investment in AMAG, David Johnson would have
an inherent conflict of interest in managing his fiduciary duties
to both his firm’s Limited Partners (LPs) and all other AMAG
shareholders.
Furthermore, it is both alarming and concerning that Caligan has
proposed to replace the Chairman and the Chair of every Committee
on the AMAG Board (along with their combined decades of
pharmaceutical industry and institutional knowledge), with its own
nominees, who clearly lack any institutional knowledge of the
Company.
AMAG strongly urges you to reject these nominees,
disregard the White Consent Card from Caligan and sign and return
the Company’s GREEN Consent Revocation Card.
Caligan was formed just one year ago and is a relatively
unknown quantity. Most of the global investment community
doesn’t know who Caligan is because there is only record of one
prior investment in the entire history of their fund. Caligan has
not provided AMAG investors, nor its own investors, with any
insight into the mandate of their specific Caligan investment fund,
nor its time horizon. However, even a cursory review of the
founders of Caligan shows a suspect track record and conflated
expertise. Here is what AMAG does know. Caligan has:
- Little to no track record of investments.
- No previous experience in the pharmaceutical sector.
- No long-term ownership in AMAG (first share was bought on June
21, 2019).
- Refused discussing their business ideas with AMAG in any detail
before launching this solicitation.
- Made no good faith attempt to work constructively with
AMAG.
AMAG HAS A CLEAR PATH FORWARD TOWARD
CREATING SIGNIFICANT AND SUSTAINABLE VALUE
Creating a sustainable portfolio of pharmaceutical assets in the
bio-pharmaceutical industry demands a long-term view and a
thoughtful approach. The progress made to date on the strategic
evolution of AMAG has positioned the Company with a favorable
risk-reward profile. AMAG believes, and even Caligan agrees, that
the inherent value of this favorable profile is not currently
reflected in AMAG’s share price. Very few of AMAG’s peers
have pipeline product candidates that hold the potential of a
therapy for a medical condition where no treatments exist today and
a potential next-generation therapy in a large and growing market;
AMAG-423 is being investigated to treat severe preeclampsia, and
ciraparantag is being reviewed as a potential best-in-class
anticoagulant reversal agent.
Not only is AMAG working to develop these important potential
therapies, but the cash flow generation of AMAG’s core commercial
products – Feraheme and Makena subcutaneous auto-injector – will
fund the clinical development and new product launch costs. AMAG
generates its own cash flows to invest in its future, where many
companies with promising new pharmaceutical companies are dependent
on the constant sale of new equity to fund clinical development and
new product launches. AMAG’s newly-approved and developmental-stage
therapies are forecasted to drive future revenue generation,
positioning AMAG for significant growth and for the creation of
significant shareholder value:
Vyleesi |
|
AMAG-423 |
|
Ciraparantag |
|
- Commercial launch September 2019.
- Approximately 5.8 million U.S. women suffer from HSDD.
- Product differentiators include:
- Use as-needed in anticipation of sexual activity.
- Novel mechanism of action (melanocortin-receptor-4-agonist
(MCR4)).
- No alcohol warning.
- No REMS program.
|
|
- Orphan status with fast track review.
- Severe preeclampsia is associated with high maternal and
neonatal morbidity and mortality.
- Significant economic burden to the U.S. healthcare system.
- No effective treatments for the approximately 140,000 pregnant
women who suffer from preeclampsia.
|
|
- 6 million patients on NOAC therapy, with about 150,000 patients
requiring reversal agents per year.
- Small molecule that binds to and blocks the effect of the most
commonly prescribed NOACs.
- Ready-to-use.
- Single IV injection dose.
- Potential for fixed dose for all Xa inhibitors.
- Demonstrates a sustained effect over 24 hours.
|
|
Investments in the launch of Vyleesi and the development of the
Company’s late-stage clinical products will allow AMAG to bring
additional innovative therapies to patients in need and build a new
chapter of durable, sustainable growth for shareholders.
The AMAG Board strongly objects to Caligan’s gross
misrepresentation of the Company and urges AMAG shareholders to
reject its short-sighted attempt to destroy AMAG’s progress. The
reality is that shareholders already voted in favor of directors
with support of its directors by an average of more than 90% of the
vote just four months ago. Consistent with that vote, AMAG urges
you to support your Company’s Board by signing, dating and
returning the enclosed GREEN Consent Revocation Card TODAY.
If you receive a White Consent Card from Caligan, please disregard
it.
REJECT CALIGAN’S ATTEMPT TO PUSH ITS
STRATEGY UPON YOU
DO NOT SIGN OR RETURN ANY CALIGAN WHITE
CONSENT CARDS
If you have any questions or require assistance, please contact
AMAG’s proxy solicitor, Innisfree M&A Incorporated, by calling
toll-free at (877) 750‐0926 or collect at (212) 750‐5833.
Sincerely,
Gino
SantiniChairman of the Board |
William K.
HeidenPresident and Chief Executive Officer |
|
|
If you have any questions or need assistance in executing your
revocation,please call AMAG’s proxy solicitor,INNISFREE
M&A INCORPORATED,TOLL-FREE at
1-877-750-0926. |
Important Additional Information and Where to Find
It
In connection with the consent solicitation initiated by
Caligan, the Company has filed a consent revocation statement and
accompanying GREEN consent revocation card and
other relevant documents with the Securities and Exchange
Commission (the “SEC”). SHAREHOLDERS ARE STRONGLY ENCOURAGED TO
READ THE COMPANY’S DEFINITIVE CONSENT REVOCATION STATEMENT
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO), ACCOMPANYING
GREEN CONSENT REVOCATION CARD AND ALL OTHER
DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN
THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION.
Stockholders may obtain a free copy of the definitive consent
revocation statement, any amendments or supplements to the consent
revocation statement and other documents that the Company files
with the SEC at the SEC’s website at www.sec.gov or the Company’s
website at http://ir.amagpharma.com as soon as reasonably
practicable after such materials are electronically filed with, or
furnished to, the SEC.
Forward-Looking Statements
This communication contains forward-looking information about
AMAG within the meaning of the Private Securities Litigation Reform
Act of 1995 and other federal securities laws. Any statements
contained herein which do not describe historical facts, including,
among others, the belief that any corporate action taken must be
for the benefit of all Company shareholders and must be rooted in a
strong understanding of the pharmaceutical industry, AMAG’s
business and its important milestones ahead, beliefs about AMAG’s
strategy and long-term value creation, beliefs about AMAG’s
strategic plan and implementation thereof, beliefs about AMAG’s
financial profile and its Board and expectations as to and beliefs
about the consent solicitation are forward-looking statements which
involve risks and uncertainties that could cause actual results to
differ materially from those discussed in such forward-looking
statements.
Such risks and uncertainties include, among others, the impact
and results of the consent solicitation and other activism
activities by Caligan and/or other activist investors; as well as
those risks identified in AMAG’s filings with the SEC, including
its Annual Report on Form 10-K for the year ended December 31,
2018, its Quarterly Reports on Form 10-Q for the quarters ended
March 31, 2019 and June 30, 2019 and subsequent filings with the
SEC which are available at the SEC’s website at www.sec.gov. Any
such risks and uncertainties could materially and adversely affect
AMAG’s results of operations, its profitability and its cash flows,
which would, in turn, have a significant and adverse impact on
AMAG’s stock price. AMAG cautions you not to place undue reliance
on any forward-looking statements, which speak only as of the date
they are made. AMAG disclaims any obligation to publicly update or
revise any such statements to reflect any change in expectations or
in events, conditions or circumstances on which any such statements
may be based, or that may affect the likelihood that actual results
will differ from those set forth in the forward-looking
statements.
About AMAG
AMAG is a pharmaceutical company focused on bringing innovative
products to patients with unmet medical needs. The company does
this by leveraging its development and commercial expertise to
invest in and grow its pharmaceutical products across a range of
therapeutic areas, including women’s health. For additional company
information, please visit www.amagpharma.com.
AMAG Pharmaceuticals Contacts: Investors: Linda
Lennox908-627-3424
Innisfree M&A IncorporatedScott Winter / Jonathan
Salzberger212-750‐5833
Media:Sarah Connors781-296-0722
Sard Verbinnen & CoChris Kittredge / Emily Claffey / Nikki
Ritchie212-687-8080
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