On February 27, 2018 AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) today reported unaudited consolidated financial results for the fourth quarter and full year ended December 31, 2017 (Press release, AMAG Pharmaceuticals, FEB 27, 2018, View Source [SID1234524190]).

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Total GAAP revenue for the full year of 2017 increased approximately 15% to $609.9 million, driven by increased sales growth across AMAG’s portfolio, which includes Makena (hydroxyprogesterone caproate injection), Feraheme (ferumoxytol injection) and Cord Blood Registry (CBR), as well as the addition of Intrarosa (prasterone) to the company’s portfolio and subsequent launch in July 2017. The company reported a GAAP operating loss of $293.3 million in 2017, due primarily to a third quarter non-cash accounting charge, and non-GAAP adjusted EBITDA of $230.1 million in 2017.1

"2017 was an exciting year for AMAG and we have had a strong start to 2018," said William Heiden, president and chief executive officer. "In early 2017, we expanded our women’s health product portfolio with the in-licensing of Intrarosa and bremelanotide. Our commercial team performed across the board by driving revenue to a record level, with growth coming from each of the key products in our portfolio. Today we also announced strong earnings in a year when we made significant investments in our new products, as well as in next generation opportunities for Makena and Feraheme — which resulted in two sNDA approvals by the FDA this month."

"We have been evolving AMAG into a more fully integrated pharmaceutical company with strong development capabilities. These recent wins from our clinical and regulatory teams, and another NDA filing with the FDA anticipated this quarter, are a testament to the progress that we have made. This new corporate competency, combined with our track record for commercial excellence, positions AMAG well for an exciting future as we continue to work toward bringing new therapies to patients in need," continued Mr. Heiden.

2017 Highlights and Recent Events:
Financial
•
Achieved record revenue of $609.9 million, with every key AMAG product growing over 2016
•
Reduced total debt by nearly 20% and extended maturities, ending 2017 with cash and cash investments of $328.7 million
Business Development
•
Expanded product portfolio with Intrarosa and bremelanotide and established new 170-person women’s health commercial team
Intrarosa
•
Launched Intrarosa; drove broad awareness and access; over 5,000 HCPs have prescribed Intrarosa
•
Phase 3 hypoactive sexual desire disorder (HSDD) study in post-menopausal women initiated by AMAG’s partner, Endoceutics

1 See summaries of GAAP to non-GAAP adjustments at conclusion of this press release.

1

Makena
•
Received FDA approval for subcutaneous auto-injector (February 14, 2018)
•
Achieved record sales of $387.2 million, an increase of 16% over 2016
Feraheme
•
Received FDA approval for broad IDA label (February 2, 2018)
•
Grew sales to $105.9 million, an increase of 9% over 2016
CBR
•
Increased storage revenue by approximately $7.4 million, or 9%, over 2016
•
Grew new first-time enrollments by 4% over 2016
Bremelanotide
•
Completed clinical work with partner, Palatin, for planned new drug application (NDA) submission in the first quarter of 2018

Fourth Quarter Financial Results Ended December 31, 2017 (unaudited)
GAAP Fourth Quarter Financial Results
Total GAAP revenues for the fourth quarter of 2017 were $158.3 million, compared with $151.6 million for the same period in 2016. In the fourth quarter of 2017, sales of Makena increased to $100.4 million, compared with $97.2 million in the same period last year; sales of Feraheme and MuGard were $26.6 million; and service revenue from CBR increased to $29.8 million, compared with $27.7 million in the same period last year.

Total costs and expenses, including costs of product sales and services, were $165.5 million in the fourth quarter of 2017, compared with $137.0 million in the same period in 2016. This increase was primarily related to a $33.9 million increase in amortization expense for the Makena intramuscular intangible asset, which contributed to an operating loss of $7.1 million, compared with operating income of $14.6 million in the prior year period. The company reported net income of $3.5 million, or $0.10 per basic and diluted share, in the fourth quarter of 2017, compared with a net loss of $10.6 million, or $(0.31) per basic and diluted share, in the same period of 2016. Net income in the fourth quarter of 2017 was driven primarily by a decrease in the deferred tax liability due to federal tax reform.

Non-GAAP Fourth Quarter Financial Results1
Non-GAAP revenue totaled $159.7 million in the fourth quarter of 2017, up from $153.0 million in same period last year. Non-GAAP CBR service revenue totaled $31.2 million in the fourth quarter of 2017, compared with $29.1 million in the fourth quarter of 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 $94.0 million, resulting in an adjusted EBITDA margin of 41% in the fourth quarter of 2017. Non-GAAP adjusted EBITDA totaled $65.7 million in the fourth quarter of 2017, compared to $77.4 million recorded in the fourth quarter of 2016. The decline in adjusted EBITDA for the fourth quarter of 2017 was in line with the company’s expectations and previously stated plans to invest in the commercial launch of Intrarosa while also advancing bremelanotide as the company prepares to file the NDA in the first quarter of 2018.

Full Year Financial Results Ended December 31, 2017 (unaudited)
GAAP Full Year Financial Results
Total GAAP revenues in 2017 increased 15% to $609.9 million, compared with $532.1 million in 2016. This increase was driven by record sales of Makena in 2017 and increased sales of Feraheme and CBR, as well as the commercial launch of Intrarosa in July 2017. In 2017, net sales of Makena increased 16% to $387.2 million, compared with $334.1 million in 2016; sales of Feraheme and MuGard increased 9% to $106.7 million, compared with $98.1 million in 2016; and service revenues from CBR increased 15% to $114.2 million, compared with $99.6 million in 2016.

2

Total costs and expenses on a GAAP basis, including costs of product sales and services, totaled $903.2 million in 2017, compared with $453.2 million in 2016. The increase in total costs and expenses in 2017 was primarily due to (i) the third quarter non-cash impairment charge related to the Makena intramuscular intangible asset of $319.2 million, (ii) acquired in-process research and development expense in 2017 of $65.8 million primarily due to our license agreement with Palatin Technologies for the rights to bremelanotide, and (iii) higher amortization expense of the Makena intramuscular intangible asset, partially offset by a reduction in our fair value estimate of contingent consideration.

Higher costs and expenses in 2017 (including the third quarter non-cash impairment charge) resulted in an operating loss of $293.3 million, compared to operating income of $78.9 million in 2016. The company reported a net loss of $199.2 million, or $(5.71) per basic and diluted share in 2017, compared with a net loss of $2.5 million, or $(0.07) per basic and diluted share in 2016.

Non-GAAP Full Year Financial Results2
Non-GAAP revenues increased 12% to $615.4 million in 2017, compared with $549.1 million in 2016. Non-GAAP CBR service revenue totaled $119.7 million in 2017, compared with non-GAAP CBR service revenue of $116.6 million in 2016.

Total costs and expenses on a non-GAAP basis totaled $385.3 million, resulting in adjusted EBITDA of $230.1 million in 2017. This compares to costs and expenses of $283.4 million and adjusted EBITDA of $265.7 million in 2016. The increase of approximately $101.9 million in total costs and expenses in 2017, compared with 2016 was consistent with the company’s stated plan to invest in its expanding portfolio of products. The majority of the increase, approximately $81.8 million, was substantially related to the hiring of the Intrarosa commercial team and costs associated with the product launch during the second half of 2017.

Balance Sheet Highlights
The company ended 2017 with $328.7 million in cash and investments and total debt (principal amount outstanding) of $816.4 million. In 2017, the company reduced its overall indebtedness by nearly 20% and extended maturities through a series of financing transactions that were completed in the second quarter.

2018 Financial Guidance2
The company affirms the following financial guidance for 2018.
$ in millions

Total revenue
$500 – $560
GAAP operating loss
($147) – ($117)
Non GAAP adjusted EBITDA
$100 – $130
2 See reconciliation of 2018 GAAP to non-GAAP financial guidance at conclusion of this press release.

"In 2017, we delivered strong top- and bottom-line results while investing aggressively in the products that we expect will drive future growth and shareholder value," said Ted Myles, executive vice president and chief financial officer. "We also improved our liability profile so that our balance sheet is better aligned with our evolving business strategy. We have a solid plan for 2018 focused on executional excellence across our portfolio, and with two FDA approvals this month, we are off to a great start."

Conference Call and Webcast Access
AMAG Pharmaceuticals, Inc. will host a conference call and webcast today at 8:00 a.m. ET to discuss the company’s fourth quarter and full year 2017 financial results and recent developments.

Dial-in Number
U.S./Canada Dial-in Number: (877) 412-6083

3

International Dial-in Number: (702) 495-1202
Conference ID: 5496159

Replay Dial-in Number: (855) 859-2056
Replay International Dial-in Number: (404) 537-3406
Conference ID: 5496159

A telephone replay will be available from approximately 11:00 a.m. ET on February 27, 2018 through midnight on March 5, 2018.

The webcast with slides will be accessible through the Investors section of AMAG’s website at www.amagpharma.com. A replay of the webcast will be archived on the website for 30 days.

Use of Non-GAAP Financial Measures
AMAG has presented certain non-GAAP financial measures, including non-GAAP revenue and non-GAAP adjusted EBITDA (earnings before income taxes, depreciation and amortization). These non-GAAP financial measures exclude certain amounts, revenue, expenses or income, 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. Management uses these measures, among other factors, to assess and analyze operational results and trends and to make financial and operational 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. In addition, these non-GAAP financial measures are unlikely to be comparable with non-GAAP information provided by other companies. 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 at the conclusion of this press release.