Why AMAG Pharmaceuticals Inc. Shares Stumbled

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of AMAG Pharmaceuticals , a biopharmaceutical company focused on developing treatments for iron-deficiency related to anemia, sank by as much as 16% following a form 8-K filing with the Securities and Exchange Commission before the bell.

So what: The SEC filing was to alert shareholders that on Monday it had received a notification from the Food and Drug Administration that as part of its review process of AMAG's Feraheme injection -- which was submitted as a supplemental new drug application to expand its use in December -- it "identified deficiencies that preclude discussion of labeling and postmarketing requirements/commitments." AMAG believes that this deficiency wouldn't preclude Feraheme from gaining its expanded indication and will work with the FDA to resolve the issue, but didn't rule out the possibility of having to run new studies, either.

Now what: Any time the FDA notes deficiencies in any aspect of a drug's production, it's generally bad news. In this case, the hopeful silver lining is that it just relates to labeling and not postmarketing requirements, in which case I would suspect AMAG has a pretty simple solution on its hands once it meets with the FDA. "Postmarketing requirements," on the other hand, could be another of way saying that a lengthy and costly post-, or even worse pre-approval safety study would need to be run. AMAG has already seen quite the run-up leading into this upcoming sNDA decision, so I'm more than happy just waiting on the sidelines in the meantime.

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