AMAG Avoids Black Box Warning - Analyst Blog

AMAG Pharmaceuticals Inc. (AMAG) finally came to an agreement with the US Food and Drug Administration (FDA) regarding an updated label for Feraheme, thus resolving the matter which has been in discussion since the past two months. The shares reacted positively to the news, thereby boosting the stock.

Feraheme is an intravenous (IV) therapy for the treatment of iron deficiency anemia (IDA) in patients with chronic kidney disease (CKD). The drug can be used by patients irrespective of dialysis.

AMAG has been instructed to describe events like life-threatening hypersensitivity reactions and clinically significant hypotension that have been reported following administration of Feraheme in the post-marketing environment. These events will be described as bolded warnings and precautions in the updated label.

The company will also be required to insert a new section to the label entitled Adverse Reactions from Post-Marketing Spontaneous Reports. Finally, the label will also instruct health care providers to observe patients for an additional 30 minutes for signs and symptoms of hypersensitivity following administration of Feraheme. Earlier, patients were observed for 30 minutes.

In addition to label changes AMAG plans to design a registry to better understand the frequency and timing of adverse events following Feraheme administration.

Importantly, the FDA did not require the inclusion of a black box warning. This is good news for AMAG as the inclusion of a black box label would have restricted sales significantly.

With the conclusion of the label issues, the company can now concentrate fully on commercializing Feraheme. It has over 100 field-based, customer-facing salespeople who will promote Feraheme with the updated label through all appropriate channels including a Dear Healthcare Professional letter regarding label updates.

Feraheme was launched in July 2009. Feraheme recorded sales of $44.1 million in the nine months ended September 30, 2010 versus $2.9 million in the nine months ended September 30, 2009.  Feraheme allows non-dialysis CKD patients with iron deficiency to conveniently replete their iron levels in as few as three days on two separate visits.

Other intravenous iron products require a patient to visit hospitals or outpatient clinics five to ten times over a span of 14 days to a month to get that same 1 gram of iron to replete their iron levels.

With the label update issue behind it, the company also plans to focus on completing the phase III trial of Feraheme for treating IDA irrespective of the underlying cause.

Management pointed out that the FDA may require other drugs of similar class to update their labels similarly.  Feraheme competes with existing IV iron replacement therapies like Fresenius Medical Care AG & Co. (FMS)/Vifor International's Venofer and Sanofi-Aventis' (SNY) Ferrlecit.

The company expects to be in a position to provide 2011 guidance relating to expenses, revenue and cash in January 2011, once it gets a better visibility on the commercial impact of the updated label.

Our View

AMAG currently has a Zacks #3 Rank, which translates into a short-term Hold rating. We are also Neutral on the stock in the long term.

We believe that the resolution of the label issue removes a major uncertainty for the company. Though we are encouraged by the company's evasion of the black box warning from the FDA, we prefer to remain on the sidelines until better visibility is obtained on the commercial impact of the updated label.  

 
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