AMAG Pharmaceuticals Reports Third Quarter 2016 Financial Results and Provides Corporate Update

 Total GAAP quarterly revenue increased 50% to $143.8 million, driven by record sales of Makena®

Significant growth in operating and net income

Next-generation development programs progressing well

Conference call scheduled for 8:00 a.m. ET today

WALTHAM, Mass., Nov. 03, 2016 (GLOBE NEWSWIRE) -- AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) today reported unaudited consolidated financial results for the third quarter ended September 30, 2016. Total revenue for the third quarter of 2016 increased approximately 50% to $143.8 million. This increase was driven by record sales of Makena and the recognition of a full quarter of revenue from Cord Blood Registry® (CBR), which was acquired by AMAG on August 17, 2015. The company reported third quarter 2016 operating income of $38.8 million and net income of $16.2 million. Non-GAAP adjusted EBITDA for the third quarter of 2016 increased to $76.2 million¹, or 44%, versus the same period in 2015. Non-GAAP net income for the third quarter of 2016 increased to $61.8 million¹, or 46%, versus the same period in 2015.

"We executed well against our key priorities in the third quarter, delivering strong financial results and hitting key milestones in our next-generation development programs," stated William Heiden, AMAG's chief executive officer. "Our Makena subcutaneous auto-injector program is on-track for an sNDA filing in the second quarter of next year and the Feraheme sNDA submission seeking approval of a broader label has been accelerated to mid-year 2017."

"We have updated the company's financial guidance based on our fourth quarter expectations of continued strong top and bottom line performance, building on our successes achieved in the third quarter,” Mr. Heiden continued.

Third Quarter 2016 and Recent Business Highlights

• Delivered total revenue of $143.8 million in the third quarter of 2016, compared with $96.2 million in the same period last year. This increase of approximately 50% was driven by record sales of Makena and the recognition of a full quarter of revenue from CBR.
• Achieved Makena sales of $93.4 million in the third quarter of 2016, compared with $65.2 million in the same period last year. Makena's robust sales growth of 43% was driven exclusively by an increase in volume. This growth resulted in Makena market share of 41%, four percentage points over the second quarter of 2016 and an 11 percentage point gain year-to-date.
• Generated 1.8% growth to $29.9 million¹ in non-GAAP revenue from CBR over the second quarter of 2016 due to improved net revenue per new customer. In addition, enrollments were higher versus the second quarter of 2016.
• Reported $22.3 million in Feraheme sales, maintaining market share in the intravenous iron market, which experienced a slight decline in the third quarter of 2016.
• Achieved key milestones in the Makena subcutaneous auto-injector development program. The company dosed first subjects in both the definitive pharmacokinetic study and comparative pain study. Data from each of these studies is intended to support the supplemental new drug application (sNDA) that the company plans to file with the Food and Drug Administration (FDA) in the second quarter of 2017.
• Continued to enroll patients more rapidly than expected in the company’s head-to-head, Phase 3 clinical trial evaluating Feraheme in adults with iron deficiency anemia (IDA). The company is seeking to broaden Feraheme’s current label beyond its chronic kidney disease (CKD) indication to include all adult IDA patients who have failed or cannot tolerate oral iron treatment. The timeline to anticipated approval has been shortened by approximately six months as a result of the trial’s rapid enrollment, which has accelerated the company's expected sNDA submission date to mid-2017.
• Generated an increase of $147.8 million in cash and investments in the first nine months of 2016 to $614.1 million, net of $20.0 million utilized to repurchase the company’s common stock and $13.1 million to repay debt.

Third Quarter Ended September 30, 2016 (unaudited)

Financial Results (GAAP Basis)
Total revenues for the third quarter of 2016 were $143.8 million, compared with $96.2 million in the third quarter of 2015. This increase is related to record sales of Makena and the recognition of a full quarter of revenue from CBR, which was acquired by AMAG on August 17, 2015. Net product sales of Makena increased to $93.4 million in the third quarter of 2016, compared with $65.2 million in the same period last year. This 43% growth in Makena sales was primarily driven by the successful launch of the single-dose, preservative-free formulation and strong growth in the company’s Makena @Home program. Sales of Feraheme and MuGard® totaled $22.4 million in the third quarter of 2016, compared with $23.8 million in the third quarter of 2015. Service revenue from CBR totaled $28.0 million in the third quarter of 2016, as compared to $7.2 million in the third quarter of 2015.

Total costs and expenses, including costs of product sales and services, totaled $105.0 million for the third quarter of 2016, compared with $97.5 million for the same period in 2015. The increase in operating expenses in 2016 was related to: (i) higher research and development expenses for the company's next generation development programs, (ii) higher selling, general and administrative expenses due to the recognition of a full quarter of CBR-related expenses, and (iii) higher non-cash amortization of the Makena intangible asset. These increases were partially offset by expenses in the third quarter of 2015 that did not recur in 2016 related to an upfront payment for AMAG's exclusive option to acquire rights to a development stage asset to treat severe preeclampsia (Velo) and CBR-related acquisition costs.

Third quarter 2016 operating income totaled $38.8 million, compared with a $1.4 million loss in the third quarter of last year. The company reported net income of $16.2 million, or $0.47 per basic share and $0.43 per diluted share, for the third quarter of 2016, compared with a net loss of $20.6 million, or $0.62 per basic and diluted share, for the same period in 2015. 

Balance Sheet Highlights
The company’s cash, cash equivalents and investments increased by $147.8 million in the first nine months of 2016 to approximately $614.1 million, net of $20.0 million utilized to repurchase the company’s common stock and $13.1 million to repay debt. Total debt (principal amount outstanding), including $200 million of convertible debt, was approximately $1.03 billion as of September 30, 2016. For the 12 months ended September 30, 2016, sales of Makena exceeded $300 million, triggering a $100 million milestone that will be paid to former Lumara Health shareholders in the fourth quarter of 2016.

"In the third quarter, we once again generated strong cash flow as a result of our solid commercial execution and operating discipline,” stated Ted Myles, chief financial officer of AMAG. "We are now in an even better position to capitalize on acquisition or licensing opportunities that would diversify and expand our product portfolio."

Financial Results (Non-GAAP Basis)¹,²
Non-GAAP revenues totaled $145.8 million in the third quarter of 2016, up from $103.5 million in the third quarter of 2015. Non-GAAP CBR revenue totaled $29.9 million in the third quarter of 2016, compared with $14.5 million in the same period in 2015. CBR's financial results for the third quarter of 2015 include only a portion of the quarter, as AMAG purchased CBR on August 17, 2015. The difference between GAAP and non-GAAP revenue for the quarter represents purchase accounting adjustments related to CBR deferred revenue.

Total non-GAAP costs and expenses, including costs of product sales and services, totaled $69.6 million in the third quarter of 2016, compared with total non-GAAP costs and expenses of $50.6 million in the same period in 2015. Non-GAAP adjusted EBITDA for the third quarter of 2016 was $76.2 million, compared with $52.8 million for the same period in 2015.

The company generated third quarter 2016 non-GAAP net income of $61.8 million, or $1.81 per non-GAAP basic share and $1.78 per non-GAAP diluted share. In the third quarter of 2015, non-GAAP net income totaled $42.3 million, or $1.27 per non-GAAP basic share and $1.02 per non-GAAP diluted share. Non-GAAP diluted shares for the third quarter of 2016 do not include 7.4 million of potentially dilutive shares from the convertible notes, as the stock price was below the convertible notes' exercise price.

Updated 2016 Financial Guidance Range³

Conference Call and Webcast Access
AMAG Pharmaceuticals, Inc. will host a conference call and webcast with slides today at 8:00 a.m. ET, during which management will discuss the company’s financial and operating results and recent developments. To access the conference call via telephone, please dial (877) 412-6083 from the United States or (702) 495-1202 for international access. A telephone replay will be available from approximately 11:00 a.m. ET on November 3, 2016 through midnight on November 10, 2016. To access a replay of the conference call, dial (855) 859-2056 from the United States or (404) 537-3406 for international access. The pass code for the live call and the replay is 96588865.

The call will be webcast with slides and accessible through the Investors section of the company’s website at www.amagpharma.com. The webcast replay will be available from approximately 11:00 a.m. ET on November 3, 2016 through midnight on December 3, 2016.

Use of Non-GAAP Financial Measures
AMAG has presented certain non-GAAP financial measures, including non-GAAP revenues, non-GAAP costs and expenses, non-GAAP adjusted EBITDA (earnings before income taxes, depreciation and amortization), non-GAAP net income and non-GAAP basic and diluted net income per share. These non-GAAP financial measures exclude certain amounts, revenue, expenses, income or dilutive shares 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 and prospects for future performance and allows investors to better compare performance over different periods. Management uses these measures, among other factors, to assess and analyze operational results and trends and to make financial and operational decisions, including in compensation 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 financial measures, and AMAG encourages investors to review its consolidated financial statements and publicly filed reports in their entirety. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. Due to the adjustments made to GAAP net income (loss) and GAAP net income (loss) per share to calculate non-GAAP net income and non-GAAP net income per share, the non-GAAP measures are higher than GAAP net income (loss) and GAAP net income (loss) per share. Non-GAAP net income and non-GAAP net income per share should not be considered measures of our liquidity. 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 after the unaudited condensed consolidated financial statements.

About AMAG
AMAG is a biopharmaceutical company focused on developing and delivering important therapeutics, conducting clinical research in areas of unmet need and creating education and support programs for the patients and families we serve. Our products support the health of patients in the areas of maternal health, anemia management and cancer supportive care. Through CBR®, we also help families to preserve newborn stem cells, which are used today in transplant medicine for certain cancers and blood, immune and metabolic disorders, and have the potential to play a valuable role in the ongoing development of regenerative medicine. For additional company information, please visit www.amagpharma.com. 

About Makena® (hydroxyprogesterone caproate injection)
Makena® is a progestin indicated to reduce the risk of preterm birth in women pregnant with a single baby who have a history of singleton spontaneous preterm birth.
               
The effectiveness of Makena is based on improvement in the proportion of women who delivered <37 weeks of gestation. There are no controlled trials demonstrating a direct clinical benefit, such as improvement in neonatal mortality and morbidity.

Limitation of use: While there are many risk factors for preterm birth, safety and efficacy of Makena has been demonstrated only in women with a prior spontaneous singleton preterm birth. It is not intended for use in women with multiple gestations or other risk factors for preterm birth.

Makena should not be used in women with any of the following conditions: blood clots or other blood clotting problems, breast cancer or other hormone-sensitive cancers, or history of these conditions; unusual vaginal bleeding not related to the current pregnancy, yellowing of the skin due to liver problems during pregnancy, liver problems, including liver tumors, or uncontrolled high blood pressure. Before patients receive Makena, they should tell their healthcare provider if they have an allergy to hydroxyprogesterone caproate, castor oil, or any of the other ingredients in Makena; diabetes or prediabetes, epilepsy, migraine headaches, asthma, heart problems, kidney problems, depression, or high blood pressure.

In one clinical study, certain complications or events associated with pregnancy occurred more often in women who received Makena. These included miscarriage (pregnancy loss before 20 weeks of pregnancy), stillbirth (fetal death occurring during or after the 20th week of pregnancy), hospital admission for preterm labor, preeclampsia (high blood pressure and too much protein in the urine), gestational hypertension (high blood pressure caused by pregnancy), gestational diabetes, and oligohydramnios (low amniotic fluid levels).

Makena may cause serious side effects including blood clots, allergic reactions, depression, and yellowing of the skin and the whites of the eyes. The most common side effects of Makena include injection site reactions (pain, swelling, itching, bruising, or a hard bump), hives, itching, nausea, and diarrhea.

For additional product information, including full prescribing information, please visit www.makena.com. 

About Feraheme® (ferumoxytol)
Feraheme received marketing approval from the FDA on June 30, 2009 for the treatment of IDA in adult CKD patients and was commercially launched by AMAG in the U.S. shortly thereafter. Ferumoxytol is protected in the U.S. by six issued patents covering the composition and dosage form of the product. Each issued patent is listed in the FDA’s Orange Book, the last of which expires in June 2023.

Fatal and serious hypersensitivity reactions including anaphylaxis have occurred in patients receiving Feraheme. Initial symptoms may include hypotension, syncope, unresponsiveness, cardiac/cardiorespiratory arrest. Feraheme is contraindicated in patients with a known hypersensitivity to Feraheme or any of its components, or a history of allergic reaction to any intravenous iron product.

For additional product information, please see full Prescribing Information, including Boxed Warning, available at www.feraheme.com. 

About Cord Blood Registry® (CBR)
CBR is the world’s largest private newborn stem cell company. Founded in 1992, CBR is entrusted by parents with storing more than 600,000 umbilical cord blood and cord tissue units. CBR is dedicated to advancing the clinical application of newborn stem cells by partnering with reputable research institutions on FDA-regulated clinical trials for conditions that have no cure today. For more information, visit www.cordblood.com. 

Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA) and other federal securities laws. Any statements contained herein which do not describe historical facts, including, among others, expectations for AMAG’s next generation development programs for Makena, including the anticipated timing to file an sNDA; expectations for AMAG’s Phase 3 clinical trial for the broader indication for Feraheme, including the anticipated timing of an sNDA submission; AMAG’s 2016 updated financial guidance, including GAAP and non-GAAP revenues, GAAP operating income, non-GAAP adjusted EBITDA and GAAP and non-GAAP net income; AMAG's intention to pay a $100 million milestone to former Lumara Health shareholders in the fourth quarter of 2016; AMAG’s belief that the generation of strong cash flows in the first nine months of 2016 puts AMAG in a better position to diversify and expand its portfolio; and beliefs that newborn stem cells have the potential to play a valuable role in the development of regenerative medicine 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, those risks identified in AMAG’s filings with the U.S. Securities and Exchange Commission (SEC), including its Annual Report on Form 10-K for the year ended December 31, 2015, its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2016 and June 30, 2016 and subsequent filings with the SEC. 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® and Feraheme® are registered trademark of AMAG Pharmaceuticals, Inc. MuGard® is a registered trademark of Abeona Therapeutics, Inc. Makena® is a registered trademark of AMAG Pharmaceuticals IP, Ltd.  Cord Blood Registry® and CBR® are registered trademarks of CBR Systems, Inc.

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