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1 irctcam Equity Research July 30, 2009 Grant Zeng, CFA North Canal Street, Chicago, IL Amag Pharmaceuticals Inc. (AMAG NSDQ) AMAG: Feraheme is approved by the FDA for anemia; Maintaining BUY Current Recommendation Buy Prior Recommendation Hold Date of Last Change 02/25/2008 Current Price (07/29/09) $49.90 Six- Month Target Price $62.00 OUTLOOK AMAG Pharmaceuticals Inc. develops superparamagnetic iron oxide nanoparticles for use in pharmaceutical products. The company s focus is on developing IV iron replacement therapy for anemia in chronic kidney disease and imaging agent to aid in diagnosis. The company s lead drug, Feraheme, was approved by the FDA on June 30, 2009 and was launched in July. Clinical data in over 1,700 patients indicate an excellent safety profile for the drug with lower incidents of heart problems. Clinical results, and eventual approval, for additional indications should ensure strong growth in the coming years. We maintain our Buy rating on the shares of AMAG with a target price of $62. SUMMARY DATA 52-Week High $ Week Low $18.37 One-Year Return (%) Beta 1.99 Average Daily Volume (sh) 790,062 Shares Outstanding (mil) 17 Market Capitalization ($mil) $849 Short Interest Ratio (days) Institutional Ownership (%) 0 Insider Ownership (%) 3 Annual Cash Dividend $0.00 Dividend Yield (%) Yr. Historical Growth Rates Sales (%) Earnings Per Share (%) Dividend (%) P/E using TTM EPS P/E using 2009 Estimate P/E using 2010 Estimate Zacks Rank 3 Risk Level Low, Type of Stock Mid-Growth Industry Med Instruments Zacks Rank in Industry 27 of 42 ZACKS ESTIMATES Revenue (In millions of $) Q1 Q2 Q3 Q4 Year (Mar) (June) (Sep) (Dec) (Dec) A 0.5 A 0.3 A 0.6 A 1.9 A A 0.1 A 6.0 E 16.0 E 23.0 E E E Earnings per Share (EPS is operating earnings before non recurring items) Q1 Q2 Q3 Q4 Year (Mar) (June) (Sep) (Dec) (Dec) $0.55 A -$1.00 A -$1.40 A -$1.28 A -$4.22 E $1.55 A -$1.55 A -$1.34 E -$0.97 E -$5.41 E $2.05 E 2011 $1.07 E Zacks Projected EPS Growth Rate - Next 5 Years % Copyright 2009, Zacks Investment Research. All Rights Reserved.

2 WHAT S NEW AMAG reports 2Q09 financial results, a non-event for the company On July 29, 2009, AMAG Pharmaceuticals, Inc. reported unaudited consolidated financial results for the quarter ended June 30, As of June 30, 2009, the Company's cash, cash equivalents, investments and settlement rights associated with certain auction rate securities totaled $175.8 million. Revenues for the quarter ended June 30, 2009 were $55 thousand as compared to revenues of $0.5 million for the same period in Total operating costs and expenses for the quarter ended June 30, 2009 were $27.4 million as compared to $19.7 million for the same period in 2008, an increase of $7.7 million. The increase in operating costs and expenses was due to increased research and development expenses to scale up the Company s manufacturing capabilities and expand the Company s development infrastructure, and increased selling, general and administrative expenses associated with the commercialization of Feraheme. The Company reported a net loss of $26.5 million, or $1.55 per basic and diluted share, for the quarter ended June 30, 2009, as compared to a net loss of $17.0 million, or $1.00 per basic and diluted share, for the same period in Apparently, the financial performance is a non event for AMAG. All eyes are focused on the initial sales ramp of Feraheme since it has been approved by the FDA at the end of June and launched in early July. Feraheme has been approved and launched After a series of delay, late yesterday (June 30) the FDA finally granted marketing approval for AMAG Pharmaceuticals, Inc. (AMAG) s Feraheme (ferumoxytol) Injection for intravenous (IV) use as an iron replacement therapy for the treatment of iron deficiency anemia in adult patients with chronic kidney disease. The FDA recommended an initial dose of 510 mg IV injection followed by a second 510 mg IV injection three to eight days later. Feraheme should be administered as an undiluted IV injection delivered at a rate of up to 1 ml/sec (30 mg/sec). The recommended Feraheme dose may be readministered to patients with persistent or recurrent iron deficiency anemia. AMAG officially launched Feraheme in the U.S. on July 13, Feraheme will be distributed primarily through wholesalers and specialty distributors. The Company will market and sell Feraheme through its commercial organization consisting of approximately 150 seasoned professionals, including an 80-person specialized sales force, an experienced account management and reimbursement team, and a contract nurse team. The wholesale acquisition cost (WAC) of Feraheme is $ per 510 mg vial. Feraheme label is expected to treat chronic kidney disease, including patients not on dialysis and patients on dialysis. Iron deficiency anemia is a significant problem in patients with chronic kidney disease and is frequently underdiagnosed and undertreated. Peak sales of Feraheme could reach $500 million. Zacks Investment Research Page 2

3 KEY POINTS We maintain our Buy rating on the shares of AMAG with a target price of $62 based on Feraheme s safety and efficacy profile, and potential for label expansion. Feraheme has been approved the FDA on June 30, 2009 and was launched in early July. The fact that patients using Feraheme had a lower heart problem and cardiac-related death than patients using oral iron drug further supports the drug s approval. We remind investors that the FDA rejected Daiichi Sankyo s Injectafer in February 2008 on grounds of higher heart problems and cardiac-related deaths when compared to an oral iron drug. This eliminates an important potential competitor for Feraheme. The company had over $175.8 million in cash, cash equivalents and marketable securities at the end of June 2009, we are not concerned with the company s cash burn at the moment. Additionally, the company plans to pursue a broad phase III clinical development program of Feraheme to treat iron deficiency anemia (IDA) in a wide range of patient populations and in multiple disease states rather than pursue individual indications. This will greatly expand Feraheme labels. OVERVIEW AMAG Pharmaceuticals Inc., formerly known as Advanced Magnetics Inc., develops and markets superparamagnetic iron oxide nanoparticles used in pharmaceutical products. The company is dedicated to the development and commercialization of its proprietary nanoparticle technology for use in therapeutic iron compounds to treat anemia, as well as imaging agents to aid in the diagnosis of cancer and cardiovascular disease. The company has two approved products, Feridex IV and GastroMARK, which are marketed primarily in the U.S. and Europe. Feridex IV is a liver contrast agent, and GastroMARK is an oral contrast agent used for delineating the bowel in MRI. The company has two primary product candidates, Feraheme and Combidex. Feraheme has been approved by the FDA for use as an IV iron replacement therapeutic in chronic kidney disease patients, whether or not on dialysis. Combidex is an investigational functional molecular imaging agent consisting of iron oxide nanoparticles for use in conjunction with magnetic resonance imaging (MRI) to aid in the differentiation of cancerous from normal lymph nodes. Amag Pharmaceuticals was incorporated in Delaware in 1981 and is based in Cambridge, Massachusetts. INVESTMENT STORY The Core Technology The company s core technology is based on the characteristic properties of extremely small, coated superparamagnetic iron oxide nanoparticles. The company is capable of designing such nanoparticles for particular applications, manufacturing the nanoparticles in controlled sizes and covering the nanoparticles with different coatings depending upon the application for which they will be used. The technology has applications in two key areas: for use in pharmaceutical products such as iron replacement therapeutics and MRI contrast agents. Zacks Investment Research Page 3

4 The company s iron oxide nanoparticles are composed of bioavailable iron that is easily absorbed by the body and incorporated into the body s iron stores. As a result, products using the technology are well suited for use in IV iron replacement therapy. Additionally, the superparamagnetic characteristic of the products results in nanoparticles that become strongly magnetic when placed in a magnetic field, but lose their magnetism once the field is removed. Therefore, use of iron nanoparticles results in magnetic resonance images that increase the information available to the reviewing physicians. Currently marketed products generate only limited revenue Feridex IV: is a liver contrast agent and is used for diagnosis of liver lesions. It is currently approved and marketed in Europe (1994), the U.S. (1996) and other countries. Berlex markets Feridex IV in the U.S. and Guerbet markets the product on an exclusive basis in Europe and several other countries under the trade name Endorem. Eiken is the partner for Feridex IV in Japan. However, Eiken is going to terminate marketing Feridex IV due to increased competition and limited sales of the product in Japan. Eiken began the process of withdrawing Feridex IV as an approved product in Japan. In November 2008, AMAG decided to discontinue the manufacturing of Feridex IV. Apparently, AMAG wants to shift its focus on commercialization of Feraheme IV. GastroMARK: is approved and marketed in Europe, the U.S. and other countries for oral contrast agent used for delineating the bowel in MRI. Mallinckrodt, Inc. markets GastroMARK in the U.S. and Guerbet markets the product in EU and other international markets. Both Feridex IV and GastroMARK have limited sales. Apparently, the company s success will depend on the successful development and commercialization of its pipeline candidates. Feraheme targets the rather large market of anemia, and is the key value driver Feraheme (formerly known as Ferumoxytol) is an iron oxide nanoparticle which is highly bioavailable. Feraheme can be easily incorporated into hemoglobin with minimal detectable and releasable free iron. The FDA approved Feraheme on June 30, 2009 for the intravenous (IV) use as an iron replacement therapy for the treatment of iron deficiency anemia in adult patients with chronic kidney disease. AMAG officially launched Feraheme on July 13, The wholesale acquisition cost (WAC) of Feraheme is $ per 510 mg vial. The approval of Feraheme was supported by data from over 1,700 CKD patients studied in the overall phase III programs and demonstrated Feraheme s safety and clinical benefits. Results from the four phase III trials support an attractive safety profile for Feraheme and demonstrate a statistically significant improvement in hemoglobin levels for non-dialysis dependent CKD patients undergoing Feraheme therapy as compared to oral iron therapy. Two of the phase III studies were identical efficacy and safety studies. Each of the study enrolled 304 non-dialysis-dependent chronic kidney disease (NDD-CKD) patients comparing two doses of 510 mg Feraheme to oral iron. The third phase III study was a safety study in 750 NDD-CKD and dialysisdependent chronic kidney disease (DD-CKD) patients comparing a single dose of 510 mg Feraheme to placebo. In the fourth and final phase III multi-center efficacy and safety study (n=230) in hemodialysisdependent chronic kidney disease (HD-CKD) patients, patients were randomized to receive either two 510 mg doses of Feraheme within one week or 200 mg of oral iron daily for three weeks. The primary endpoint was the mean change in hemoglobin from baseline in the Feraheme group compared to that in the oral iron treatment group. In November 2006, the company presented positive results from the first completed NDD-CKD studies at the American Society of Nephrology s Renal Week 2006 Annual Meeting. The study demonstrated a statistically significant achievement of the primary and secondary efficacy endpoints of the study. For the Zacks Investment Research Page 4

5 primary endpoint, patients receiving Feraheme were tested on the 35th day after they received the drug and were found to have had a significantly greater mean increase in hemoglobin compared to patients in the oral iron group. For the secondary endpoints, a significantly higher proportion of patients receiving Feraheme achieved an increase in hemoglobin of greater than or equal to 1 gram/dl on the 35th day after they received the drug and a significantly greater increase in serum ferritin on the 21st day after receiving the drug compared to patients receiving oral iron in the study. Additionally, all primary and secondary efficacy endpoints were statistically significant in both patients on erythropoeisis stimulating proteins (ESP) and those not on ESP. Further, Feraheme was safe and well tolerated in this study. There were less adverse events in the drug group than in the control group (35.5% vs 52.0%). In April 2007, the company presented positive results from the additional two phase III studies of Feraheme at the National Kidney Foundation s Spring Clinical Meeting in Orlando, Florida. Result from the second phase III study evaluating the efficacy and safety of Feraheme as an IV iron replacement therapy in chronic kidney disease (CKD) patients who were not on dialysis demonstrated a statistically significant achievement of all primary and secondary endpoints. Additionally, all primary and secondary endpoints were achieved with statistical significance in both patients on erythropoiesis stimulating proteins (ESP) and those not on ESPs. The third phase III study evaluated the safety of intravenous Feraheme for iron replacement therapy in chronic kidney disease (CKD) patients, including both dialysisdependent CKD patients and non-dialysis dependent CKD patients. Results showed that treatment related adverse events occurred in 37 patients (5.2%) after Feraheme treatment and in 30 patients (4.2%) after placebo treatment. Treatment related serious adverse events occurred in one patient (0.1%) after Feraheme treatment and in one patient (0.1%) after placebo treatment. In July 2007, Amag announced preliminary positive results from the final phase III trial of Feraheme. Preliminary results were consistent with the results previously presented at the American Society of Nephrology s Renal Week in San Diego, CA in November 2006 from the first phase III study in non-dialysis dependent CKD patients with an identical protocol. Final results from the fourth phase III trial were presented in December 2007 at the American Society of Hematology meeting. The company presented pooled results from a total of 875 dialysis patients involved in the phase III trials. Results from the final study demonstrated a statistically significant achievement of all the primary and secondary endpoints. On January 31, 2008, the company provided additional information on Feraheme clinical development program. Analysis of data from the three open-label, multi-center, randomized phase III trials indicated that the overall incidences of adverse events and serious adverse events occurring after study treatment were both lower in patients following Feraheme than following oral iron. Further, the incidents of death following Feraheme treatment was 1.1 percent compared to the 2.8 percent death rate observed in patients following treatment with oral iron. Additionally, there have been no reported adverse events of hyperphosphatemia (high levels of inorganic phosphate in the blood; most commonly due to the kidney s inability to get rid of the phosphate). Most importantly, the incident of serious cardiac events was 2.0% in the Feraheme treatment group compared to 3.6% in the oral iron treatment group. We remind investors that the FDA recently rejected Daiichi Sankyo s Injectafer (Vifor s Ferinject), an iron-deficiency drug candidate, based on the fact that patients treated with Injectafer had a higher risk of heart problems and cardiac-related death when compared to an oral iron drug. Patients using Injectafer were also more likely to suffer from phosphate deficiency. We note that neither heart problems nor phosphate deficiency are a major problem with Feraheme. Given the drug s safety profile demonstrated in over 1,700 patients, we expect the FDA to approve the drug in late October 2008, with a launch taking place in the first quarter of Additional safety data presented at the National Kidney Foundation Spring Clinical Meeting demonstrated that overall adverse event rates for patients on peritoneal dialysis were lower following Feraheme administration (12.5%) compared to patients following placebo administration (20.5%). Moreover, drug-related adverse event rates were similar following Feraheme administration (5.0%) and placebo administration (7.7%). During 1Q09 conference call, management disclosed that the following discussions with the FDA, the company decided to pursue a broad phase III clinical development program of Feraheme to treat iron deficiency anemia (IDA) in a wide range of patient populations and in multiple disease states rather than pursue individual indications. Consequently, the company announced that it will neither commence Zacks Investment Research Page 5

6 enrollment in its previously planned phase III clinical development program in abnormal uterine bleeding, nor advance plans for a separate phase III program in patients with IDA and cancer. These studies will greatly expand Feraheme labels. AMAG Pharmaceuticals has completed an exploratory phase II trial of Feraheme for MRI contrast agent. A second phase II study (n=100) for Feraheme in vascular-enhanced MRI (VE-MRI) in patients with peripheral arterial disease (PAD) is ongoing. The company is also investigating Feraheme in clinical trials for potential new indications such as for the treatment of anemia associated with both obstetrical and gynecological causes, and gastrointestinal diseases such as Crohn s disease. Meanwhile, the company is evaluating the prospects of seeking approval for Feraheme outside the U.S. on a country-by-country basis. In May 2008, the company signed a thirteen-year development and commercialization deal for Feraheme with 3SBio, Inc. The deal grants 3SBio exclusive rights to develop and commercialize Feraheme for CKD in China, with an option to market the drug for additional indications. Amag will receive an upfront payment of $1 million from 3SBio and is eligible to receive additional milestone payments upon regulatory approval of Feraheme in China for CKD and other specified indications. The company is also entitled to receive tiered, double-digit royalties, of up to 25%, based on sales of Feraheme by 3SBio. The IV iron market in China was estimated at $16 million in SBio is expected to initiate the local registration trial for Feraheme in China in the first half of The company does not anticipate announcing additional commercialization / development deals for Feraheme before the FDA approval of the drug. Combidex targets the imaging market Combidex is an investigational functional molecular imaging agent consisting of iron oxide nanoparticles for use in conjunction with MRI to aid in the differentiation of cancerous from normal lymph nodes. In March 2005, the company received an approvable letter from the FDA with respect to Combidex, subject to certain conditions. The company had hoped to address the concerns raised in the approvable letter based on the results from the phase III trial which Guerbet had conducted in Europe. However, results from the phase III trial did not reach statistical significance. The lack of statistical demonstration of the efficacy of Combidex (European trade name was Sinerem) led to the withdrawal of the marketing authorization application in the E.U. in December the company is currently focusing its entire resources on the approval and launch of Feraheme and we await guidance from the company on the future development program, if any, for Combidex. In August 2000, Amag Pharmaceuticals entered into a license and marketing agreement with Cytogen which granted Cytogen exclusive U.S. marketing rights to Combidex. However, there has been lawsuit between the two parties. On Feb 15, 2007, both parties agreed to dismiss the lawsuit and drop all claims against each other. Under the terms of the settlement agreement, Amag Pharmaceuticals and Cytogen agreed to terminate both the license and marketing agreement and the supply agreement between the parties, effective immediately. With the termination of its agreements with Cytogen, Amag Pharmaceuticals has re-acquired the U.S. marketing rights to Combidex as well as the U.S. marketing rights to Feraheme for oncology imaging applications. Under the terms of the settlement agreement, Amag Pharmaceuticals paid Cytogen a lump sum amount of $4 million in cash and released to Cytogen the 50,000 shares of Cytogen common stock currently being held in escrow under the terms of the original license and marketing agreement. Financial position is strong Currently, AMAG generate very limited revenue from two existing drugs. Net revenue for the 2Q09 was $0.055 million. Net loss was $26.5 million or $1.55 per share. As of June 30, 2009, AMAG held $175.8 million in cash, cash equivalents, investments and settlement rights associated with certain auction rate securities. We are not overly concerned with the cash burn at Zacks Investment Research Page 6

7 this point of time. The company did not have any long term debts or any off-balance sheet arrangements as of June 30, INDUSTRY POSITION IV iron replacement therapy plays a major role, along with erythropoietin, in the treatment of certain types of chronic anemia in patients suffering from chronic kidney disease (CKD), as well as in many patients receiving chemotherapy. According to the U.S. Renal Data System, there were over 370,000 CKD patients on dialysis in the U.S. on December 31, Over 90% of these CKD dialysis patients receive intravenous iron as part of managing their anemia. Additionally, there are approximately 16 million people in the U.S. suffering from moderate or severe CKD who are not yet on dialysis. Among these patients, more than 3 million have anemia. IV iron agent has advantages over traditional oral iron agent in absorption, quick replenishment of iron store in the body, and flavor. Amag Pharmaceuticals Feraheme caters to a rather large market. According to IMS health, the IV iron replacement therapy market in 2008 is estimated at approximately $567 million in the U.S. alone, and the market is estimated to grow at a CAGR of 8 percent. We estimate the potential peak sales for Feraheme will be in the range of $400 to $500 million considering its superior dosing regime and better efficacy and safety profile. The current IV iron market is essentially split between Venofer (62 percent market share) and Ferrlecit, (29 percent market share). Venofer is marketed by American Regent Laboratories and Ferrlecit is marketed by Watson Pharmaceuticals. Watson is also marketing INFeD, an iron dextran product. American Regent has also licensed the rights to develop and commercialize VIT-45 (Ferinject) from Vifor (International) Ltd. Ferinject received approval in the U.K. in June However, the FDA rejected the drug in February 2008 over concerns regarding the increased risk of heart-problems and cardiac-related death in patients using Ferinject when compared to patients using an oral iron drug. In addition, Abbott Laboratories has entered into a license and development agreement in the U.S. with Pharmacosmos A/S of Denmark for the development of Feoligosaccharide (FeOS), an IV iron replacement product for use in hemodialysis patients receiving erythropoietin. However, Abbott has reportedly discontinued the development of FeOS. Rockwell Medical Technologies is developing a dialysate concentrate product containing Ferric pyrophosphate (FePPi), a water-soluble form of iron, to be used as a treatment for anemia in dialysis patients. FDA rejected Daiichi Sankyo s Injectafer in February 2008 on grounds of higher heart problems and cardiac-related deaths when compared to an oral iron drug. This eliminates an important potential competitor for Feraheme. AMAG is also pursuing a broad phase III clinical development program of Feraheme to treat iron deficiency anemia (IDA) in a wide range of patient populations and in multiple disease states as well as a VE-MRI in patients with suspected PAD. Approval in one or more of new indications will drive further market penetration for AMAG s Feraheme. RECENT NEWS July 29, 2009: AMAG Pharmaceuticals, Inc. reported unaudited consolidated financial results for the quarter and six months ended June 30, As of June 30, 2009, the Company's cash, cash equivalents, investments and settlement rights associated with certain auction rate securities totaled $175.8 million. Revenues for the quarter ended June 30, 2009 were $55 thousand as compared to revenues of $0.5 million for the same period in Zacks Investment Research Page 7

8 Revenues for the six month period ended June 30, 2009 were $1.0 million as compared to $1.1 million for the same period in The Company reported a net loss of $26.5 million, or $1.55 per basic and diluted share, for the quarter ended June 30, 2009, as compared to a net loss of $17.0 million, or $1.00 per basic and diluted share, for the same period in Net loss for the six months ended June 30, 2009 was $52.9 million, or $3.10 per basic and diluted share, as compared to a net loss of $26.3 million, or $1.55 per basic and diluted share for the same period in July 13, 2009: AMAG Pharmaceuticals, Inc. announced that Feraheme(TM) (ferumoxytol) Injection is now available for commercial sale in the United States. Feraheme can provide patients with a 1 gram therapeutic course of iron in two 510 mg IV injections administered as quickly as 17 seconds each, within one week. Feraheme was approved by the U.S. Food and Drug Administration on June 30, The Company will be marketing and selling Feraheme in the U.S. through its commercial organization consisting of approximately 150 seasoned professionals, including an 80-person specialized sales force, an experienced account management and reimbursement team, and a contract nurse team. The wholesale acquisition cost (WAC) of Feraheme is $ per 510 mg vial. Feraheme is being distributed through wholesalers and specialty distributors. June 30, 2009: AMAG Pharmaceuticals, Inc. announced that the U.S. Food and Drug Administration (FDA) has granted marketing approval for Feraheme (ferumoxytol) Injection for intravenous (IV) use as an iron replacement therapy for the treatment of iron deficiency anemia in adult patients with chronic kidney disease. The recommended dose of Feraheme is an initial 510 mg IV injection followed by a second 510 mg IV injection three to eight days later. Feraheme should be administered as an undiluted IV injection delivered at a rate of up to 1 ml/sec (30 mg/sec). The recommended Feraheme dose may be readministered to patients with persistent or recurrent iron deficiency anemia. Source: Amag Pharmaceuticals Inc. VALUATION We maintain our Buy rating on AMAG with a target price of $62. From currently available clinical evidence, we believe Feraheme is a viable therapeutic for iron deficiency anemia patients. We believe Feraheme is safe and efficacious for the treatment of anemia in patients with chronic kidney disease. Feraheme has advantages over oral iron product in terms of both efficacy and safety profile. We are happy to hear that the FDA finally approved Feraheme. Peak sales of Feraheme could reach $500 million. We are less optimistic about Combidex. The company still needs to address the concerns FDA asked in the 2005 approvable letter. Even if Combidex gets a nod from the FDA, the market is relatively small. Additionally, the CHMP opined that the phase III data submitted by Amag s partner, Guerbet, did not provide sufficient statistical demonstration of the efficacy of Sinerem (Combidex s trade name in Europe) which led to the withdrawal of the drug s MAA in Europe as well. Therefore, we do not model any contribution from Combidex in the coming quarters. Amag Pharmaceuticals future is predicated on the successful development and commercialization of Feraheme for the treatment of anemia in chronic kidney disease patients. With the company initiating several phase III studies of Feraheme in additional indications later this year, we are optimistic of the drug receiving approval for one or more of these indications by 2011, thereby driving growth in the post-2011 period. We arrive at the price target of $62 by using our 2012 estimated EPS of $4.03, multiplied by a biotech industry average P/E multiple of 30 x, discounted at 25% for three years. Zacks Investment Research Page 8

9 Industry Comparables P/E EPS Gr. P/S (TTM) 4-Yr Est. (TTM) Amag Pharmaceuticals Inc. (AMAG) N/M Biotech Mean 30.0 x 29.9% 8.5 x S&P x 22.2% 2.8 x EPIX Pharma (EPIX) 5.0x Watson Pharma (WPI) 18.8x 19% 1.2x Rockwell Medical Technologies (RMTI) 2.3x Abbott Labs (ABT) 21.5x 11% 3.1x RISKS The company may not be able to successfully commercialize Feraheme in which case the drug may never achieve our peak sales estimate of $400 million to $500 million. We are concerned about the competition in the IV iron market. Currently, there are several IV iron replacement therapy products already on the market and in various stages of clinical development in the U.S. and abroad. Zacks Investment Research Page 9

10 PROJECTED INCOME STATEMENT $ in millions except per share data Dec/07 Dec/08 Q1 Q2 Q3 Q4 Dec/09 E Dec/10 E Dec/11 E Dec/12 E Feraheme US sales YOY Growth Other Revenue Total Revenues $2.6 $1.9 $1.0 $0.1 $6.0 $16.0 $23.0 $100.0 $175.0 $250.0 YOY Growth -4.5% -24.1% 56.2% -88.7% % % % 334.6% 75.0% 42.9% CoGS $0.3 $0.3 $0.1 $0.0 $0.8 $2.3 $3.1 $15.0 $26.3 $37.5 Gross Income $2.2 $1.6 $0.9 $0.1 $5.3 $13.8 $20.0 $85.0 $148.8 $212.5 Gross Margin 87.5% 84.9% 93.6% 100.0% 87.5% 85.9% 86.7% 85.0% 85.0% 85.0% SG&A $20.4 $49.5 $17.8 $17.3 $18.5 $20.0 $73.5 $80.0 $84.0 $95.0 % SG&A 799.3% % % % 308.3% 125.0% 319.5% 80.0% 48.0% 38.0% R&D $24.2 $31.7 $11.1 $10.1 $10.0 $10.5 $41.7 $42.0 $45.0 $40.0 % R&D 949.6% % % % 166.7% 65.6% 181.2% 42.0% 25.7% 16.0% Other $4.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 % Other % 0.0% 0.0% #DIV/0! 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Operating Income ($46.4) ($79.6) ($27.9) ($27.3) ($23.3) ($16.8) ($95.3) ($37.0) $19.8 $77.5 YOY Growth 72.5% 71.6% 120.9% 42.2% -5.3% -27.8% -19.7% -61.2% % 292.4% Operating Margin % % % 11.3% 31.0% Other Net $12.5 $7.7 $1.3 $0.9 $0.4 $0.2 $2.8 $0.5 $1.5 $2.5 Pre-Tax Income ($33.9) ($71.9) ($26.6) ($26.5) ($22.9) ($16.6) ($92.5) ($36.5) $21.3 $80.0 Taxes (benefit) $0.0 ($0.3) ($0.2) $0.0 $0.0 $0.0 ($0.2) $0.0 $2.0 $5.5 Tax Rate 0.0% - 0.7% 0.0% 0.0% 0.0% 0.2% 0.0% 9.4% 6.9% Reported Net Income ($33.9) ($71.6) ($26.4) ($26.5) ($22.9) ($16.6) ($92.3) ($36.5) $19.3 $74.5 YOY Growth 33.6% 111.4% 184.1% 55.5% -4.2% -24.0% -28.8% -60.4% % 287.0% Net Margin % % % % % % % -36.5% 11.0% 29.8% Weighted avg. Shares Out Reported EPS ($2.15) ($4.22) ($1.55) ($1.55) ($1.34) ($0.97) ($5.41) ($2.05) $1.07 $4.03 YOY Growth -7.1% 96.1% 183.2% 55.1% -4.5% -24.2% -28.4% -62.1% % 276.6% Share based expenses $8.2 $8.0 $3.5 $4.1 $4.5 $5.0 $17.1 $15.0 $17.5 $20.0 FAS-123R Net Income ($25.7) ($63.6) ($22.9) ($22.3) ($18.4) ($11.6) ($75.2) ($21.5) $36.8 $94.5 FAS-123R EPS ($1.63) ($3.74) ($1.35) ($1.31) ($1.08) ($0.68) ($4.41) ($1.21) $2.04 $5.11 One time charge (Revenue) $4.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 Non GAAP Net Income ($29.9) ($71.6) ($26.4) ($26.5) ($22.9) ($16.6) ($92.3) ($36.5) $19.3 $74.5 Non GAAP EPS ($1.90) ($4.22) ($1.55) ($1.55) ($1.34) ($0.97) ($5.41) ($2.05) $1.07 $4.03 YOY Growth % % 276.6% Copyright 2009, Zacks Investment Research. All Rights Reserved.

11 HISTORICAL ZACKS RECOMMENDATIONS DISCLOSURES The analysts contributing to this report do not hold any shares of AMAG. Zacks EPS and revenue forecasts are not consensus forecasts. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy or sell the securities from time to time. Zacks uses the following rating system for the securities it covers. Buy- Zacks expects that the subject company will outperform the broader U.S. equity market over the next one to two quarters. Hold- Zacks expects that the company will perform in line with the broader U.S. equity market over the next one to two quarters. Sell- Zacks expects the company will under perform the broader U.S. Equity market over the next one to two quarters. The current distribution of Zacks Ratings is as follows on the 1044 companies covered: Buy- 23.9%, Hold- 67.5%, Sell 8.1%. Data is as of midnight on the business day immediately prior to this publication. Copyright 2009, Zacks Investment Research. All Rights Reserved.