Will Third Time Be Charm For AMAG Pharma's Feraheme?

(RTTNews) - AMAG Pharmaceuticals Inc. (AMAG | Quote | Chart | News | PowerRating) is now days away from the long-awaited decision on its lead product candidate Ferumoxytol, branded as Feraheme, a treatment of iron deficiency anemia in chronic kidney disease patients. The FDA, which has twice delayed its verdict on the injectable iron replacement therapy, is now expected to make a decision on June 29.

The company submitted a New Drug Application to the FDA for Feraheme as an iron replacement therapeutic in December of 2007. Last October, AMAG Pharma was issued a complete response letter for Feraheme and was requested by the FDA to submit additional clinical information related to the product and resolve certain deficiencies at its Cambridge, Massachusetts manufacturing facility.

In December of 2008, the regulatory agency again sought more data to clarify scientific and manufacturing issues and required the resolution of deficiencies observed in the manufacturing facility. However, the FDA did not ask the company to conduct additional clinical trials of Feraheme at the time.

The company has settled all outstanding issues related to the manufacturing of Feraheme to the satisfaction of the FDA. Shares of AMAG Pharma have gained an impressive 117% from its March 10 closing low of $24.24 and currently trade around $52.

Market potential

Anemia is common in chronic kidney disease, or CKD patients. Treatment with iron therapy is essential for the proper management of iron deficiency in CKD patients.

The CKD patients are ranged on a scale of 1 through 5, with stage 1 being less severe and stage 5 being most severe, based on their level of kidney function, whether or not they are on dialysis, and whether or not they have received a kidney transplant. Usually IV (intravenous) iron administration is recommended for hemodialysis patients with stage 5 CKD, while either oral or IV iron is recommended for peritoneal dialysis patients and non-dialysis patients with stages 1 through 5 CKD.

Venofer manufactured by the U.S. subsidiary of Japanese drug firm Daiichi Sankyo Company and Ferrlecit manufactured by Watson Pharmaceuticals Inc. (WPI | Quote | Chart | News | PowerRating) are the most commonly used intravenous iron replacement therapies.

AMAG Pharma believes that the U.S. intravenous iron replacement therapy market, which was valued at $567 million in 2008, could reach $1 billion by 2010. According to an estimate by the United States Renal Data System, or USRDS, there will be approximately 393,000 chronic kidney disease or CKD patients on dialysis in the U.S. in 2009. About 87% of these dialysis patients receive IV iron as part of managing their anemia.

The company sees untapped opportunity in non-dialysis dependent CKD patients. According to data released in a 2009 publication in the Clinical Journal of American Society of Nephrology, there are more than 1.6 million stage 3 and 4 non-dialysis CKD patients with anemia who may be iron deficient and could therefore benefit from receiving IV iron.

IV iron is reimbursed by CMS (Centers for Medicare & Medicaid Services) and private payers.

Feraheme Vs. Other IV Iron

According to AMAG Pharma, Feraheme is a highly bioavailable iron oxide nanoparticle that can be easily incorporated into hemoglobin in red blood cells and excess of it can be stored for future use. The drug is said to have less immunological reactivity and minimal free iron than other intravenous forms of iron. Minimal immunological reactivity and minimal free iron permit a safe administration of iron in large doses, making it easier and faster to administer, according to experts.

AMAG Pharma says Feraheme is easier and faster to administer compared to other IV irons. It takes only 17 seconds to administer Feraheme, while it takes 15 to 30 minutes to give intravenous infusions of other iron-replacement therapies.

In one of the late-stage trials, Feraheme administered as two rapid intravenous injections of 510 mg each within a week's time to anemic patients with late-stage CKD who were on dialysis, resulted in significantly greater hemoglobin increases compared with 200 mg oral iron daily for 21 days. Ferumoxytol was also found to be well-tolerated, related to oral iron supplementation.

Expanding Label, Expanding Horizons

Feraheme is also under a phase II study as a diagnostic imaging agent in vascular-enhanced magnetic resonance imaging, or MRI, to assess peripheral arterial disease, or PAD. In August 2008, the FDA granted fast track status to Feraheme for its development as a diagnostic agent.

Seeking to enter attractive foreign markets, in 2008, the company entered into a license agreement and a supply agreement with 3SBio Inc. (SSRX | Quote | Chart | News | PowerRating) with respect to the development and commercialization of Feraheme as an IV iron replacement therapeutic agent in China. The State Food and Drug Administration registration trials for Feraheme are expected to commence this year.

Apart from the $1 million upfront payment received from 3SBio, AMAG Pharma is entitled to receive milestone payments for approval in CKD and other indications and double-digit royalties of up to 25% on Feraheme net sales.

Financials

AMAG Pharma has yet to turn a profit. The company's fiscal year ends on December 31 of each year. As of March 31, 2009 the company had an accumulated deficit of $214.75 million. During the first-quarter ended March 31, 2009 the company posted a loss of $26.4 million or $1.55 per share, wider than the loss of $9.3 million or $0.55 per share reported in the year-ago period.

The company has two approved products, Feridex I.V., a liver contrast agent and GastroMARK, an oral contrast agent used for delineating the bowel in MRI. In November 2008, AMAG decided to cease manufacturing Feridex I.V. in the best interest of the company and its shareholders. The company does not intend to continue commercializing Feridex I.V.

AMAG's total revenue, which includes product sales, royalties and license fees, was $956 thousand in the first-quarter of fiscal 2009, up from $612 thousand in the comparable quarter a year before.

Cash and cash equivalents as of March 31, 2009 totaled $67.9 million, up from $64 million as of December 31, 2008.

Closing Thoughts

The biotechnology sector is a risky investment arena and investing in such companies requires a great deal of patience. However, despite the regulatory setbacks, some companies exude a steely determination to bring their drugs to market and their patience has been amply rewarded. Analysts are optimistic about AMAG Pharma's Feraheme passing the FDA muster this time.

... Will third time be lucky for Feraheme? Stay tuned.

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