AMAG Reports Record Second Quarter 2015 Financial Results

Achieves quarterly net product sales of $84.7 million and Non-GAAP adjusted EBITDA of $52.1 million

Executes on two business development initiatives to further expand maternal health business

Increases Non-GAAP Adjusted EBITDA and cash earnings guidance for 2015

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

WALTHAM, Mass., July 23, 2015 (GLOBE NEWSWIRE) -- AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG), a specialty pharmaceutical company, today reported unaudited consolidated financial results for the second quarter and year-to-date periods ended June 30, 2015. Total revenues for the second quarter of 2015 increased to $123.9 million, compared with $24.8 million in the second quarter of 2014. This increase is primarily related to the addition of Makena® (hydroxyprogesterone caproate injection) in November 2014, which contributed $63.6 million in net product sales to the second quarter 2015 results, and the recognition of $39.2 million of collaboration revenue related to the termination of the company's ex-US ferumoxytol marketing agreement. Net income on a GAAP basis totaled $33.3 million, or $0.82 per diluted share¹ for the second quarter of 2015. Non-GAAP net income, or cash earnings², for the second quarter of 2015 totaled $44.8 million, or $1.12 per diluted share, compared with $0.6 million, or $0.03 per diluted share, for the same period in 2014.

"We continue to deliver strong financial performance by driving product sales growth, including Makena, which grew more than 58% in the quarter compared to the same quarter last year, and by identifying and executing on new business development opportunities," said William Heiden, chief executive officer of AMAG. "We recently announced our plan to acquire Cord Blood Registry® (CBR), and we also purchased an option for the rights to a development program for the treatment of severe preeclampsia, an area of significant unmet need among at-risk pregnant women. Both of these transactions further our commitment to helping pregnant women and their families and strengthens our efforts to collaborate with the maternal health community. In addition to providing future avenues of growth for AMAG, we also expect these acquisitions to add new capabilities to our organization that can be leveraged across our current and future product lines."

2Q15 Business Highlights and Recent Developments

• Net product sales increased to $84.7 million in the second quarter of 2015, compared to $22.5 million in the corresponding period in 2014. This increase was driven by record sales of Makena in the quarter ended June 30, 2015.
• The company delivered record earnings in the second quarter of 2015, including operating income on a GAAP basis of $61.1 million, compared with $1.2 million for the same period in 2014. On a non-GAAP basis, adjusted EBITDA grew to $52.1 million, compared with $1.6 million in the second quarter of 2014².
• Makena achieved significant market share growth, increasing four percentage points over the first quarter of 2015 (to an estimated 32% share of patients) and continued to take share from compounded product.
• Feraheme® (ferumoxytol) injection sales declined eight percent in the second quarter of 2015, as compared to the corresponding period in 2014 to $20.6 million as the company implemented label changes to the package insert in March 2015.
• The company continued to advance its lifecycle management program for Makena, including the submission of a prior approval supplement with the FDA for the manufacture of a single-dose, preservative-free formulation of Makena by Hospira, Inc., the current manufacturer of the company's multi-dose vial.
• The company announced that it entered into a definitive agreement to acquire CBR, the world's largest stem cell collection and storage company serving pregnant women and their families, for $700 million in cash. The transaction will further diversify AMAG's revenue base, expand the size of its obstetrician-focused sales team, and add new consumer-directed sales and marketing capabilities. The transaction is forecasted to be immediately accretive to adjusted EBITDA and earnings and is expected to close in the third quarter of 2015.
• The company entered into an option agreement with Velo Bio, LLC (Velo), which includes an upfront payment of $10 million to acquire the global rights to an orphan drug candidate being developed for use in the treatment of severe preeclampsia in pregnant women. The option to acquire the program can be exercised at the conclusion of an upcoming Phase 2b/3a clinical study. This transaction further expands AMAG's maternal health portfolio and advances the company's strategy of adding differentiated products in growing specialty markets.

Second Quarter Ended June 30, 2015 Financial Results (unaudited)

Total revenues for the second quarter of 2015 were $123.9 million, compared with $24.8 million for the same period in 2014. This increase is primarily related to the addition of Makena, which contributed $63.6 million to net product sales in the second quarter, as well as the recognition of $39.2 million of collaboration revenue related to the termination of the company's ex-US ferumoxytol marketing agreement with Takeda Pharmaceutical Company Limited (Takeda), which included cash of $5.6 million recorded as revenue during the quarter related to termination and royalty payments and the recognition of $33.6 million representing all remaining Takeda-related previously deferred revenues.

Net product sales for the second quarter of 2015 totaled $84.7 million, compared with $22.5 million in the second quarter of 2014. Sales of Makena in the second quarter of 2015 totaled $63.6 million, representing an increase of 58 percent from $40.3³ million of Makena sales for the same period in 2014. Sales growth of Makena was driven by increasing volume, as more clinically indicated pregnant women, including those covered by commercial insurance plans as well as Medicaid, were prescribed Makena therapy to reduce their risk of preterm birth. Makena's volume increased across all distribution channels, including compounding pharmacies that now dispense Makena instead of compounded hydroxyprogesterone caproate. The conversion of Makena compounders into distributors is our fastest growing channel and accounted for approximately 16 percent of Makena's second quarter sales, compared with three percent in the second quarter of 2014.³ In the company's hematology/oncology and hospital business, Feraheme net product sales declined eight percent to $20.6 million in the second quarter of 2015, compared with $22.2 million for the same period in 2014. The decline in Feraheme sales was partially a result of recent changes to the product's label that included adding a boxed warning. Prescription volume of Feraheme in the second quarter of 2015 increased over the first quarter of 2015 and was down slightly from the second quarter of 2014 with the market share loss partially offset by growth of the overall intravenous (IV) iron market. The company anticipates that sales of Feraheme will return to growth in the second half of the year driven by expected continued growth in the overall IV iron market and forecasted future price appreciation.

Total operating expenses, excluding cost of product sales, for the second quarter of 2015 were $43.1 million, compared with $20.8 million for the same period in 2014. The increases in operating expenses were primarily due to costs related to the Lumara acquisition and costs associated with managing the company's expanded product portfolio. During the second quarter, the company incurred approximately $2.7 million related to certain acquisition-related costs associated with the CBR transaction announced in June 2015.

The company reported net income of $33.3 million, or $1.09 per basic share and $0.82 per diluted share¹, for the second quarter of 2015, compared with net loss of $1.5 million, or ($0.07) per basic and diluted share, for the same period in 2014. The weighted average diluted shares used in calculating diluted net income per share for the second quarter of 2015 followed the if-converted method of accounting for the convertible debt.

Non-GAAP adjusted EBITDA for the second quarter of 2015 was $52.1 million, compared with $1.6 million for the same period in 2014. After deducting cash interest expense, the company generated non-GAAP cash earnings of $44.8 million, or $1.12 per non-GAAP diluted share. The weighted average diluted shares used in calculating the non-GAAP cash earnings per diluted share for the second quarter of 2015 followed the treasury stock method of accounting for the convertible debt and related warrants.²

As of June 30, 2015, the company's cash and investments totaled approximately $398.4 million and debt (face value) totaled $523.0 million.

"The second quarter momentum built off an already strong start to 2015," said Frank Thomas, president and chief operating officer of AMAG. "Our business continues to generate significant positive cash flow and earnings. We believe that the CBR transaction will allow us to further diversify our portfolio and achieve even greater financial flexibility as we pursue additional business development transactions."

Six Months Ended June 30, 2015 Financial Results (unaudited)

Net product sales for the six months ended June 30, 2015 were $162.1 million, compared with $40.0 million for the same period in 2014.

On a GAAP basis, net income for the first six months of 2015 totaled $46.2 million, compared with a net loss of $8.6 million for same period in 2014. GAAP basic earnings per share were $1.60¹, compared with ($0.40) in 2014. GAAP diluted earnings per share were $1.23, compared with ($0.40) in 2014. The weighted average diluted shares used in calculating diluted net income per share for the first half of 2015 followed the if-converted method of accounting for the convertible debt.

Non-GAAP adjusted EBITDA for the six months ended June 30, 2015 was $99.5 million, compared with a loss of $2.1 million for the same period in 2014. After deducting cash interest expense, the company generated non-GAAP cash earnings of $84.5 million, or $2.27 per non-GAAP diluted share. The weighted average diluted shares used in calculating the non-GAAP cash earnings per diluted share followed the treasury stock method of accounting for the convertible debt and related warrants.²

Updating 2015 Financial Outlook

The company is updating its 2015 guidance to reflect the business performance for the first half of 2015 and the outlook for the business for the remainder of 2015, including expectations of continued strong management of operating expenses. The guidance below does not include any expected revenue or expenses related to the acquisition of CBR, which is expected to close in the third quarter of 2015 and be immediately accretive to adjusted EBITDA and cash earnings, or the impact of the option agreement with Velo. The company will provide further guidance for the combined business later this year.