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AMAG, Palatin Ink Deal to Focus on Female Sexual Disorder

Zacks

AMAG Pharmaceuticals, Inc. AMAG announced that it has entered into an agreement with Palatin Technologies, Inc. PTN to acquire exclusive U.S. rights to develop and commercialize Rekynda (bremelanotide). However, shares of AMAG plunged 35.6% on the news, while Palatin’s stock was down 5.5%.

A look at AMAG’s share price movement in the past one year shows that the company has outperformed the Zacks classified Medical-Biomedical/Genetics industry. Specifically, the stock lost 1.5 % during this period, compared to the industry’s plunge of 13.5%.



Shares of Palatin have outperformed the industry as well, with the stock losing only 13.3%.



Coming back to the latest news, we note that Rekynda is designed for the on-demand treatment of hypoactive sexual desire disorder (HSDD) in pre-menopausal women. Rekynda has been successfully evaluated in two phase III studies.

A New Drug Application for Rekynda is expected to be filed in early 2018, with an anticipated approval and launch by early 2019.

Terms of the Agreement

AMAG will pay an upfront payment of $60 million to Palatin. Moreover, Palatin will be eligible to receive up to $80 million upon achieving certain regulatory milestones and up to $300 million upon meeting certain sales milestones from AMAG.

Further, AMAG will pay up to $25 million to Palatin for ongoing development expenses in connection with the remaining development of Rekynda in 2017. In addition, Palatin will receive tiered royalties on net sales ranging from high-single digit to low-double digit percentage.

The transaction is expected to close in the first quarter of 2017.

We note that AMAG has been pursuing strategic acquisitions and deals to boost its maternal health portfolio and pipeline. With the exclusive U.S. rights to Rekynda, AMAG will expand its presence in women’s health and leverage its commercial capabilities and customer relationships.

According to the information provided by the company, approximately 15 million women in the U.S. are affected by HSDD. Successful development and commercialization of the product would address an underserved medical condition with significant untapped market potential.

Financial & Business Update

In a separate press release, AMAG provided an update on its financial and business front, including unaudited fourth-quarter 2016 and full-year financial results, a financial guidance for 2017, and an update on the company’s Makena subcutaneous (SC) auto-injector program.

AMAG expects fourth-quarter 2016 revenues in the range of $529–$534 million, with Makena contributing $96–$99 million, Feraheme and MuGard bringing in $25–$27 million, and CBR service revenues of approximately $28 million.

For 2016, the company expects revenues in the range of $529–$534 million, which includes Makena sales of $333–$336 million, Feraheme and MuGard sales of $96–$98 million, and CBR service revenues of approximately $100 million.

Also, the company has provided its guidance for 2017. AMAG expects revenues in the range of $620–$670 million. Makena sales are expected to be around $410–$440 million. Combined sales of Feraheme and MuGard are projected in the range of $100–$110 million. CBR service revenues are forecasted to be around $110–$120 million.

Meanwhile, the company expects to file a supplemental new drug application (sNDA) for the SC auto-injector in the second quarter of 2017.

AMAG currently carries a Zacks Rank #5 (Strong Sell).

Key Picks in the Sector

A couple of better-ranked stocks in the health care sector are Kite Pharma, Inc. KITE and Anika Therapeutics, Inc. ANIK. While Kite Pharma carries a Zacks Rank #1 (Strong Buy), Anika is a Zacks Rank #2 (Buy) stock. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kite Pharma’s loss estimates narrowed from $5.48 to $5.48 for 2016 and from $7.00 to $6.85 for 2017 in the last 30 days. The company posted a positive surprise thrice in the four trailing quarters with an average beat of 7.89%.

Anika’s earnings estimates for 2016 and 2017 were up 3.9% and 0.5%, respectively, over the last 60 days. The company recorded a positive earnings surprise in each of the last four quarters, the average being 33.14%. Its share price was up 37.8% in the past one year.

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