AMAG Pharma's Feraheme Could Have Solid Growth Opportunities in the Non-CKD Market

AMAG Pharmaceuticals is a specialty biotech company that markets Feraheme (ferumoxytol), which is currently indicated only for the treatment of iron deficiency anemia (IDA) in adult chronic kidney disease (CKD) patients in the US. In December 2012, AMAG filed its supplemental new drug application (sNDA) with the FDA to expand the label to include the treatment of patients with all cause IDA who have failed or are intolerant to oral iron therapy. The FDA has recently extended its PDUFA action date by three months to January 21, 2014. It is expected that the FDA will approve Feraheme for the broader IDA patient population.

AMAG developed Feraheme for patients with IDA regardless of the underlying cause, which has completed Phase III clinical program. AMAG has reasonable growth opportunities to expand the Feraheme business through the upcoming potential label expansion strategy into IDA, the non-CKD market

Feraheme's post approval opportunities
AMAG is planning to increase its Feraheme market share in the current intravenous iron market post the FDA approval. Aside from CKD, additional 400,000 grams of the drug would be available to the company with the broad IDA label. This opportunity can be tapped immediately with the company's existing physician audiences and hospitals.

Another opportunity post approval would be market expansion. More than 4 million people in the US have IDA, 1.6 million of whom are estimated to have CKD, while the other 2.4 million suffer from anemia due to other causes, which include abnormal uterine bleeding, gastrointestinal disorders, inflammatory diseases and chemotherapy-induced anemia. Currently the majority of these patients are prescribed oral iron. In most of the cases the patients don't see improvement in their symptoms and in some other cases patients can't tolerate it and continue to live with chronic anemia. Capturing even a small percentage of these patients and being treated with Feraheme represents a significant growth opportunity for AMAG

AMAG's valuation
AMAG is currently trading at a Price/Book ratio of 3. It is a cash-rich company with enterprise value significantly lower than market cap. Its earnings per share are expected to increase from a negative (-) $0.42 in December 2013 to $0.94 in December 2016. The company's huge growth prospects suggest that the stock is undervalued.

Year End
EPS Forecast
High EPS
Number of
Dec 2013-0.37-0.28-0.486
Dec 2014-0.040.58-0.596
Dec 20150.30.55-0.154
Dec 20160.941.010.872

Source: NASDAQ

Competition in the intravenous iron drugs market is growing rapidly with a large number of listed and unlisted players operating in the field, which includes Fresenius Medical Care , Galenica, Vifor Pharma, Luitpold Pharmaceuticals, American Regent, Pharmacosmos A/S, Rockwell Medical Technologies, Sanofi-Aventis , Syner-Med (Pharmaceutical Products), and Watson Pharmaceuticals. AMAG management is working hard amid this competitive environment to grow Feraheme in the US CKD and non-CKD markets and to drive additional growth through international expansion.

To further build its business, the company management intends to expand its portfolio through the in-license or purchase of additional marketed specialty pharmaceutical products. AMAG's earnings are expected to see solid expansion going ahead, which should boost its stock price over the long-term.


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