AMAG Shares Zoom on CEO Departure and Re-Org Plans
Today, during its third-quarter earnings announcement, Lexington, MA-based AMAG Pharmaceuticals (NASDAQ: AMAG) announced the departure of its CEO, Brian Pereira, and a restructuring plan designed to decrease its operating expenses. Wall Street applauded, pushing the embattled company’s shares up 18 percent to $16.21.The news came just a couple of weeks after shareholders voted down Amag’s plan to merge with Allos Therapeutics (NASDAQ: ALTH).
Amag spent the last several years trying to morph from a maker of diagnostic-imaging products to an inventor of cutting-edge drugs. But the company’s first therapeutic product, ferumoxytol (Feraheme) to treat iron deficiency, ran into safety issues, and the stock fell from $50 a share in 2009 when the product was introduced to below $14 earlier this year. The company sold about $15 million worth of the product in the third quarter and said its market share grew from 11 percent to 13 percent.
Under Pereira, who became CEO in 2006, Amag has started investigating ferumoxytol’s potential in broad markets, such as women with heavy menstrual bleeding or post-pregnancy anemia, and cancer patients. The company’s plan to buy Allos in an all-stock deal worth $686 million would have given it a product called pralatrexate injection (Folotyn), used to treat T-cell lymphoma. But investors were not wowed by the prospect of a single-product company merging with another single-product company.
Some analysts are cautious about Amag’s future. Jefferies & Company analyst Eun Yang called sales of ferumoxytol “sluggish” in a report today and put a price target on the stock of $12. Yang concluded: “shareholders could be better served if AMAG divests Feraheme, returns its value & current cash (~$11.8/sh) to shareholders.”