AMAG’s Recent Public Letter Demonstrates
Complete Disregard for Shareholders
Current Board’s Poor Decisions, Strategic
Missteps and Lax Oversight Have Destroyed $1.1 Billion in
Shareholder Value over Past Seven Years
Fresh Perspectives are Urgently Needed in
Boardroom to Replace Ineffective Directors And Reverse Value
Destruction
Caligan’s Four Highly-Qualified Nominees
Have the Experience and Skillsets Needed to Conduct Comprehensive
Review and Make Immediate Changes
Caligan Partners LP (“Caligan”), one of the largest shareholders
of AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) (“AMAG” or the
“Company”), today issued a letter to AMAG shareholders in
connection with its campaign to replace four directors of AMAG.
The full text of the letter is below. Additional information,
including a detailed presentation, can be found at
www.saveamag.com.
September 26, 2019
Dear Fellow AMAG Pharmaceuticals Shareholder,
Caligan Partners owns approximately 10.3% of AMAG
Pharmaceuticals ("AMAG" or the "Company") stock, making us one of
the Company’s largest shareholders.
We are asking you to remove four incumbent directors at AMAG and
replace them with new, highly-qualified nominees – Paul Fonteyne,
Lisa Gersh, David Johnson and Kenneth Shea – who are dedicated to
operating AMAG for the long-term benefit of all shareholders. We
believe this refresh of the AMAG Board of Directors (the “Board”)
is urgently needed to reverse the years of value destruction that
has occurred at the Company.
Through poor decisions and lax oversight, the directors of AMAG
have cost shareholders more than $1.1 billion over the last seven
years. During that period, the value of AMAG’s stock has been cut
almost in half, while the values of other companies in the biotech
and specialty pharmaceutical industry have soared.
The Company has also suffered a multitude of significant
setbacks during the tenure of the current CEO and Chairman:
- They have acquired businesses and divested them shortly
thereafter (at significant losses).
- They have excessively spent shareholder dollars on disparate
commercial infrastructure and disappointing product launches.
- They have had multiple development and operational execution
missteps.
Despite this list of failures, among others, the Board maintains
that all is well at AMAG and that shareholders should simply accept
their money-losing fate.
We disagree.
We think shareholders must act now, with extreme urgency, before
additional value is destroyed. The status quo is no longer tenable.
It is time for shareholders to demand improved performance and
fresh perspectives in the boardroom.
AMAG’s Disregard for
Shareholders
It is extremely telling that in its recent 3100-word letter,
AMAG’s Board never acknowledges the significant financial harm it
has caused AMAG shareholders. Instead, the Board claims to be
“shocked” and “sad” that one of AMAG’s largest shareholders is
disappointed by the massive losses investors have suffered under
this Board’s failed stewardship. The Board goes so far as to claim
that Caligan’s desire to stem these losses can be prompted only by
“wild assumptions” and “lack of experience.”
The fact is that Caligan and the rest of AMAG’s shareholders are
simply in a different place than this Board. Despite collectively
pocketing millions of dollars in compensation during their tenures,
and with the exception of one small purchase four years ago,
none of the independent directors has bought
a single share of AMAG in the open market in seven years. No
wonder this Board is not bothered by the sharp decline in the
Company’s share price – from $70 per share in July 2015 to $8 at
the end of July 2019.
Incredibly, this Board fails to exhibit any self-reflection or
empathy for the plight of shareholders who have invested capital in
AMAG. The Board chastises us for tailoring peer groups for detailed
analyses demonstrating AMAG’s underperformance, but, tellingly,
never even attempts to show that the Company has matched the
performance of any relevant peer group, over any period of time, on
any important metric. Because it
cannot.
Instead, the directors are seeking to protect their Board seats
by insulting shareholders who speak out. But the Board is certainly
not the victim here. The only constituency that has the right to be
upset in this story are the long-suffering shareholders, for whom
this Board has no apparent regard. This Board believes shareholders
should be patient and quiet.
But AMAG’s stock has not generated
a positive return over twenty-five years. For exactly how
long does the Board expect its shareholders to remain silent?
The Facts Speak Volumes
The AMAG Board now claims to have had an epiphany in 2016, after
which it adjusted the Company’s strategy. However, no one else
seems to recognize the supposed merits of this strategy: since the
end of 2016, the stock has fallen more than 70% and short interest
in AMAG's stock has grown 50% to the second highest level of any
U.S. pharmaceutical or biotech company.1
Multiple well-respected equity research analysts have expressed
significant skepticism about this new plan. In fact, consensus
estimates for the Company’s 2022 revenue are more than 30% below
AMAG’s 2019 Analyst Day projections and AMAG trades at the lowest
multiple of projected future revenue of any pharmaceutical company
in the United States.2
Ignoring these financial indicators of dissatisfaction among the
shareholder base and analyst community, AMAG grasps at the fact
that its Board was “recently re-elected” without noting that its
nominees ran unopposed. Their re-election is hardly an
accomplishment about which to brag. Nearly 30% of the shares voted
at the recent annual meeting opposed the re-election of AMAG’s
Chairman, Gino Santini, despite the fact that he was essentially
guaranteed to be re-elected.
AMAG has some great assets that can generate significant cash
flow, profits and shareholder value – but plowing ahead with the
same strategy is unlikely to lead to value maximizing results. The
Board, however, appears recalcitrant and unwilling to re-consider
how best to configure the Company and maximize the value of its
assets and opportunities.
That is why all AMAG shareholders will benefit from replacing
four ineffective directors with individuals who can provide a fresh
perspective, instill financial and strategic discipline, and ensure
rigorous oversight.
Our Nominees Will Challenge The Status
Quo
We believe that new directors are needed to conduct a
comprehensive strategic review at AMAG, return the Company to
profitability and monetize Feraheme’s worldwide rights. AMAG calls
these potential changes “risky and ill-informed.” Frankly, it is
hard to imagine a worse plan than this Board’s continued pursuit of
a strategy which has led to $1.1 billion of value destruction for
shareholders.
AMAG’s incumbent directors have overseen the loss of vast sums
of shareholder wealth and now refuse to be candid about their
mistakes and the financial impact to shareholders caused by their
decisions. These directors should no longer be trusted to lead the
Company. We believe new directors can help make better capital
allocation and strategic decisions. It would be hard to do
worse.
Our highly-qualified nominees – Paul Fonteyne, Lisa Gersh, David
Johnson and Kenneth Shea – will bring fresh perspectives to the
Board and, unlike AMAG's current Board, will have no need to
justify past decisions or deflect blame. These new directors can
instead apply objective business judgment to the problems at AMAG
and are prepared to conduct a comprehensive review to make the
immediate changes that are urgently needed.
We strongly urge you to support our four nominees for the Board
in order to build true and lasting value for all stockholders.
Internet voting and telephone voting
cannot be used in this solicitation. Please sign, date, and return
the enclosed WHITE consent card by mail.
Regards,
David Johnson Caligan Partners LP
About Caligan Partners LP
Caligan Partners LP is an investment firm headquartered in New
York, NY that pursues a deep value-oriented strategy through
investments in activist equities and distressed debt.
LEGEND
Caligan, Caligan Partners CV II LP, David Johnson, Samuel
Merksamer, Paul Fonteyne, Lisa Gersh and Kenneth Shea
(collectively, the “Participants”) have filed a definitive consent
statement and accompanying form of consent card with the SEC to be
used in connection with the solicitation of consents from the
stockholders of AMAG Pharmaceuticals, Inc. (the “Company”). All
stockholders of the Company are advised to read the definitive
consent statement and other documents related to the solicitation
of consents by the Participants because they contain important
information, including additional information related to the
Participants. The definitive consent statement and an accompanying
WHITE consent card will be furnished to some or all of the
Company’s stockholders and will be, along with other relevant
documents, available at no charge on the SEC’s website at
http://www.sec.gov/, on Caligan’s website at www.saveamag.com and
from the Participants’ consent solicitor, D.F. King & Co., Inc.
by requesting a copy via email to AMAG@dfking.com. Information
about the Participants and a description of their direct or
indirect interests by security holdings is contained in the
definitive consent statement on Schedule 14A, filed by Caligan with
the SEC on September 16, 2019. This document is available free of
charge from the sources indicated above.
1 With more than $300 million of consensus product revenue.
Source: S&P Capital IQ
2 With more than $300 million of consensus product revenue.
Source: S&P Capital IQ
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190926005459/en/
Investors: Ed McCarthy / Geoffrey Weinberg D.F. King
& Co., Inc. +1 (212) 269-5550 AMAG@dfking.com
Media: Dan Zacchei / Joe Germani Sloane & Company +1
(212) 486-9500 Dzacchei@sloanepr.com JGermani@sloanepr.com
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