J.P. Morgan Downgrades AMAG To Neutral

According to J.P. Morgan, AMAG Pharmaceuticals AMAG reported a 1Q loss per share of ($1.05) versus consensus of ($0.99) and the estimate of ($1.04). J.P. Morgan said that the downside was driven by lower Feraheme sales of $10.9M (JPMe: $14.4M; cons: $14M), partially offset by lower opex. “We thought Feraheme sales would rebound a bit in 1Q following the safety concerns in 4Q10, but instead they were again disappointing due to 1) bundling (as expected), 2) sales force realignment (realigned around non-dialysis on Jan 1), and 3) market confusion regarding the label update (occurred in late Nov.). Demand trends for Feraheme improved late in the quarter and into 2Q, though April was likely helped by Venofer manufacturing issues that are now apparently resolved. We think that issues leading to the 1Q Feraheme miss may linger for a few more quarters, which doesn't bode well for upside potential and puts 2011 Feraheme guidance of $55-60M (reiterated on the call) at risk. We get it that the market is ascribing little value to Feraheme currently, but to change this sentiment, sales would have to dramatically accelerate (unlikely), or clinical data from the IDA program would have to come sooner than 1H12 (also unlikely). Hence, we're moving to Neutral from Overweight and lowering our target to $20 (from $28).” AMAG Pharmaceuticals closed yesterday at $17.80.