On August 3, 2017 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) reported unaudited consolidated financial results for the quarter ended June 30, 2017 (Press release, AMAG Pharmaceuticals, AUG 3, 2017, View Source [SID1234520016]).

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Total GAAP revenue for the second quarter of 2017 increased to a record $158.4 million, 24% higher than the same period last year (and 14% higher than the first quarter of 2017). This increase was driven by sales growth across the product portfolio, particularly Makena (hydroxyprogesterone caproate injection), which grew 31%. The company reported operating income of $3.6 million in the second quarter of 2017, compared with $18.1 million in the same period last year. Non-GAAP adjusted EBITDA totaled $50.1 million in the second quarter of 2017, compared with $64.6 million in the second quarter of 2016.1

"AMAG delivered another quarter of record revenues and strong growth across our portfolio of products. That same commercial excellence is now being applied to the launch of Intrarosa, announced just last week," said William Heiden, president and chief executive officer. "We have already realized a number of significant milestones in 2017, and look forward to reaching many others in the second half of the year. The achievement of these goals is an important step on the path to building an even stronger company that develops and markets novel therapeutics to address significant unmet medical needs."

Second Quarter 2017 and Recent Business Highlights:
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Hired and trained a new women’s health commercial team of approximately 150 people;
•
Launched Intrarosa, the first and only FDA-approved local non-estrogen product for the treatment of moderate-to-severe dyspareunia (pain during intercourse), a symptom of vulvar and vaginal atrophy (VVA), due to menopause;
•
Advanced bremelanotide development and regulatory activities to support the planned new drug application (NDA) submission in early 2018;
•
Received FDA acceptance for review of Makena subcutaneous auto-injector supplemental NDA (sNDA) and a PDUFA date of February 14, 2018;
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Drove record quarterly sales of Makena to over $102 million;
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Realized highest number of new family enrollments at Cord Blood Registry (CBR) since the fourth quarter of 2015;
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Partner, Velo Bio, enrolled first patient in Phase 2b/3a study for the treatment of severe preeclampsia;
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Achieved record quarterly sales of Feraheme and completed submission to FDA to broaden Feraheme’s label; and
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Strengthened the balance sheet and ended the quarter with $399.2 million of cash and investments.


Second Quarter Ended June 30, 2017 (unaudited)
Financial Results (GAAP Basis)
Total revenues for the second quarter of 2017 were $158.4 million, compared with $127.4 million in the second quarter of 2016. Net product sales of Makena were $102.7 million in the second quarter of 2017, compared with $78.4 million in the same period last year. Sales of Feraheme and MuGard totaled $27.7 million in the second quarter of 2017, compared with $24.6 million in the second quarter of 2016. Service revenue from CBR totaled $28.0 million in the second quarter of 2017, compared with $24.4 million in the same period last year.

Costs and expenses, including costs of product sales and services, totaled $154.8 million in the second quarter of 2017, compared with $109.3 million for the same period in 2016. This increase was primarily due to (i) higher selling, general and administrative expenses of $29.1 million primarily related to commercial activities to support the launch of Intrarosa, including the addition of a new women’s health sales force, (ii) higher research and development expenses of $16.0 million, primarily due to development work performed by Palatin to support the NDA for bremelanotide, and (iii) higher cost of products sold of $10.2 million, of which $8.9 million was due to amortization expense related to the Makena intangible asset. Also recorded in the second quarter of 2017 was a charge of $5.8 million to acquired in-process research and development expense in connection with the closing of the company’s agreement with Endoceutics for the rights to Intrarosa.

The higher expenses in the second quarter of 2017 resulted in $3.6 million in operating income in the second quarter of 2017, a decrease of $14.4 million, as compared to $18.1 million in operating income for the same period last year. The company reported a net loss of $14.1 million, or $(0.40) per basic and diluted share, for the second quarter of 2017, compared with a net loss of $0.6 million, or $(0.02) per basic share and diluted share, for the same period in 2016. The increased net loss in the second quarter of 2017 includes a $9.5 million loss on the extinguishment of debt in connection with the early retirement of the company’s term loan and a portion of the convertible notes due in 2019.

Financial Results (Non-GAAP Basis)1
Non-GAAP revenue totaled $159.8 million in the second quarter of 2017, up from $132.5 million in the second quarter of 2016. Non-GAAP CBR service revenue totaled $29.4 million in each of the second quarters of 2017 and 2016. The difference between GAAP and non-GAAP revenue represents CBR purchase accounting adjustments related to deferred revenue.

Total costs and expenses on a non-GAAP basis totaled $109.7 million in the second quarter of 2017, compared with $67.8 million in the second quarter of 2016.

Non-GAAP adjusted EBITDA for the second quarter of 2017 was $50.1 million, resulting in an adjusted EBITDA margin of 31%. This compares to non-GAAP adjusted EBITDA of $64.6 million in the second quarter of 2016, with an adjusted EBITDA margin of 49%. The decline in adjusted EBITDA for the second quarter of 2017 is in line with the company’s expectations and stated plans to invest in the continued development of its current and future products in order to create long-term value.

Balance Sheet Highlights
As of June 30, 2017, the company’s cash and investments totaled $399.2 million and total debt (principal amount outstanding) was $861.1 million.

During the second quarter of 2017, the company issued $320 million of convertible senior notes due in 2022. The company also repurchased $158.9 million of its existing convertible senior notes due in 2019 for an aggregate purchase price of $171.3 million, including accrued interest. The company used proceeds from the convertible transactions, along with balance sheet cash, to repay the remaining balance of $321.8 million of its term loan, which was due in 2021.

"By extending our maturities and reducing our total debt by approximately $170 million, we have more financial flexibility to invest in our newest products — Intrarosa and bremelanotide, as well as continue to expand our

2

product portfolio through potential acquisitions and licensing transactions," stated Ted Myles, chief financial officer. "We are pleased with the strong second quarter and year-to-date 2017 financial performance reported today, and we are reaffirming our full year guidance."

Reaffirming 2017 Financial Guidance


2017 GAAP Guidance

2017 Non-GAAP Guidance
$ in millions




Makena sales

$410 – $440

$410 – $440
Feraheme and MuGard sales

$100 – $110

$100 – $110
CBR revenue

$110 – $120

$115 – $1253
Intrarosa

$5 – $15

$5 – $15
Total revenue

$625 – $685

$630 – $690





Net loss

($62) – ($31)2

N/A
Operating income (loss)

($23) – $272

N/A
Adjusted EBITDA

N/A

$210 – $260