AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) today announced the
initiation of a leadership transition, the decision to divest
Intrarosa and Vyleesi and financial updates.
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
GuidanceAMAG 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 |
($M) |
Three Months Ended December
31, 2018 |
|
2019 Preliminary |
|
|
2018 Actual |
|
Total
revenues, net |
$86 - $91 |
|
|
$88.1 |
|
Feraheme |
40 - 42 |
|
|
35.2 |
|
Makena |
24 - 27 |
|
|
46.9 |
|
Intrarosa |
6.5 |
|
|
5.9 |
|
Other product revenue |
(0.5 |
) |
|
0.1 |
|
Collaboration revenue1 |
16 |
|
|
-- |
|
Operating
loss2 |
($22) - ($12 |
) |
|
($18.8 |
) |
Non-GAAP
adjusted EBITDA3 |
($10) - $0 |
|
|
$1.5 |
|
Preliminary, Unaudited Full Year Financial
Results |
($M) |
Twelve Months Ended December
31, 2018 |
|
2019 Preliminary |
|
|
2018 Actual |
|
Total
revenues, net |
$324 - $329 |
|
|
$474.0 |
|
Feraheme |
167 - 169 |
|
|
135.4 |
|
Makena |
120 - 123 |
|
|
322.3 |
|
Intrarosa |
21 |
|
|
16.2 |
|
Other product revenue |
(1 |
) |
|
0.1 |
|
Collaboration revenue1 |
16 |
|
|
-- |
|
Operating
loss2 |
($274) - ($264 |
) |
|
($47.0 |
) |
Non-GAAP
adjusted EBITDA3 |
($70) - ($60 |
) |
|
$120.8 |
|
The Company ended 2019 with approximately $170 million in cash
and investments and $320 million of 2022 convertible notes
(principal amount outstanding).
Key priorities for 2020 include:
- Complete successful CEO transition
- Divest Intrarosa and Vyleesi to align with the new strategic
direction
- Drive continued Feraheme growth
- Work with the FDA to maintain patient access to Makena
- Advance ciraparantag and AMAG-423 development programs
- Pursue ex-US portfolio partnering opportunities
- Meet/exceed financial guidance
2020 Financial
Guidance4 |
|
($M) |
|
Total revenue |
$230 - $280 |
Operating income |
$2 - $32 |
Non-GAAP adjusted
EBITDA |
$20 - $50 |
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 CONFERENCEThe 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
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.
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.
FORWARD-LOOKING STATEMENTS This press release
contains forward-looking information about AMAG Pharmaceuticals,
Inc. 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, AMAG’s beliefs that the leadership transition and
divestiture of Intrarosa and Vyleesi will allow AMAG to leverage
its commercial strengths and development and regulatory
capabilities and position AMAG for future growth; expectations for
the leadership transition, including the timing to complete the CEO
search; plans to work with the FDA regarding patient access to
Makena; beliefs related to the significant long-term potential of
Intrarosa and Vyleesi and the significant future commercial
potential of AMAG-423 and ciraparantag; expectations that AMAG will
return to positive adjusted EBITDA and be able to unlock
shareholder value; plans to reduce operating expenses; beliefs that
Feraheme revenues will continue to grow; expectations that AMAG’s
full year 2019 revenues and adjusted EBITDA will be within its most
recently issued financial guidance range; 2019 preliminary fourth
quarter and full year financial results, including revenues,
operating loss and adjusted EBITDA; AMAG’s 2020 key priorities,
including expectations and beliefs regarding (i) AMAG’s ability to
successfully achieve benefits from its leadership transition plan,
including managing the search for and transition to a new chief
executive officer, (ii) AMAG’s ability to successfully divest
Intrarosa and Vyleesi and the effect and amount of associated
expense reductions; (iii) AMAG’s ability to drive continued
Feraheme growth sufficient to support AMAG’s development programs,
(iv) AMAG’s ability to ensure continued patient access to Makena
and that Makena is cash flow positive in 2020, (v) AMAG’s pipeline,
including AMAG-423 and ciraparantag, (vi) AMAG’s ability to
successfully out-license its products or product candidates in
ex-U.S. territories and (vii) AMAG’s ability to meet or exceed its
2020 financial guidance; 2020 financial guidance, including total
revenue, operating income and positive adjusted EBITDA, and the
related assumptions used to determine the guidance ranges,
including various potential regulatory outcomes for Makena and the
treatment of Vyleesi and Intrarosa as discontinued operations; and
plans to report final, audited 2019 financial results in late
February or early March 2020; 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 risk
that AMAG will be unable to successfully divest Intrarosa and
Vyleesi or that the effect and amount of expense reductions
associated with the planned divestments will be less than
anticipated, or that cash expenditures will be greater than
anticipated; the risk that the FDA will recommend that Makena be
removed from the market, particularly in light of the
recommendation of the Advisory Committee of the FDA; the risk that,
even if the FDA does not recommend that Makena be removed from the
market, sales of Makena will continue to be negatively impacted,
including as a result of the recommendation of the Advisory
Committee; the risk that AMAG will be unable to successfully
achieve the anticipated benefits from its leadership transition
plan; the possibility that AMAG will encounter challenges retaining
or attracting talent; the risk that AMAG may be unable to gain
approval of its product candidates, including AMAG-423 and
ciraparantag, on a timely basis, or at all; the potential for such
approvals, if obtained, to include unanticipated restrictions or
warnings; the risk that the costs and time investments for AMAG’s
development efforts will be higher than anticipated; the
possibility that AMAG has over-estimated the market and potential
revenues for its products and product candidates, if approved,
including AMAG-423 and ciraparantag; the risk that Feraheme and
Makena will not achieve the level of revenues needed to support
AMAG’s development efforts, including because (i) such efforts
require greater costs than anticipated, (ii) because approval of
any such products is withdrawn, (iii) the FDA takes other adverse
action with respect to any such products or (iv) Sandoz Inc.
launches a generic version of Feraheme in accordance with the 2018
settlement agreement we entered into with Sandoz; the risk that
AMAG will be unable to successfully identify and enter into
partnerships with out-licensees for its product candidates in
ex-U.S. territories, which could delay the commercialization of
those product candidates in certain geographies; the risk that AMAG
will not be able to continue to execute on its business plan; the
speculative nature of AMAG’s estimates as to market share for its
products and potential market share for its product candidates and
the risk that such estimates are inaccurate; and those risks
identified in AMAG’s filings with the U.S. Securities and Exchange
Commission (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, June 30, 2019 and
September 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.
AMAG Pharmaceuticals®, Feraheme® and Vyleesi® are registered
trademarks of AMAG Pharmaceuticals, Inc. Makena® is a registered
trademark of AMAG Pharma USA, Inc. Intrarosa® is a registered
trademark of Endoceutics, Inc.
-Tables Follow-
Reconciliation of GAAP to Non-GAAP Preliminary Financial
Results |
|
($M) |
Q4-2019Preliminary |
Q4-2018Actual |
FY 2019Preliminary |
FY 2018Actual |
GAAP operating loss |
($22) - ($12 |
) |
($18.8 |
) |
($274) - ($264 |
) |
($47.0 |
) |
Depreciation and intangible asset amortization |
7.0 |
|
14.0 |
|
21.0 |
|
160.0 |
|
Non-cash inventory step-up adjustments |
-- |
|
0.1 |
|
-- |
|
3.7 |
|
Stock-based compensation |
5.0 |
|
5.3 |
|
18.5 |
|
19.9 |
|
Adjustments to contingent consideration |
-- |
|
(0.4 |
) |
-- |
|
(49.6 |
) |
Restructuring |
-- |
|
-- |
|
7.4 |
|
-- |
|
Transaction/acquisition-related costs |
-- |
|
1.3 |
|
0.3 |
|
1.3 |
|
Acquired IPR&D |
-- |
|
-- |
|
74.9 |
|
32.5 |
|
Asset impairment charges |
-- |
|
-- |
|
82.2 |
|
-- |
|
Non-GAAP adjusted EBITDA |
($10) - $0 |
|
$1.5 |
|
($70) – ($60 |
) |
120.8 |
|
Reconciliation of GAAP to non-GAAP 2020 Financial Guidance
($M) |
|
GAAP operating income |
$2 - $32 |
Depreciation |
2 |
Stock-based compensation |
16 |
Non-GAAP adjusted EBITDA |
$20 - $50 |
AMAG CONTACTS:Investors: Linda
Lennox908-627-3424
Media: Rushmie Nofsinger781-530-6838
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.
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.
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