AMAG Pharma (AMAG): Bounce?

From Notable Calls

We have several firms out defending AMAG Pharma (NASDAQ: AMAG) this morning follwing news the FDA issued a Complete Response Letter for Ferumoxytol:

- Leerink says they are encouraged that two of the three issues in the original Complete Response Letter from late October appear to have been resolved without the need for additional clinical trials, and they would be buyers on any weakness, as this removes the worst case scenario, in firm's view. Reits Outperform and $46 tgt.

- JP Morgan reits Overweight on AMAG saying they expect weakness in AMAG shares as investors question the management’s ability to effectively address regulatory questions, but they believe that ferumoxytol (trade name now Feraheme) will be approved without additional clinical trils. Remain Overweight on expectations of a brief delay (6- mo or less), which in their view would drive significant upside in AMAG shares.

A longer delay doesn’t seem likely. The ferumoxytol saga looks a lot to them like Vyvanse story, where Shire gained FDA approval after 2 CR letters, where both resubmissions were designated Class 1 (2-mo review). Unresolved label conflicts apparently was the basis of the 1st CR, while manufacturing questions underpinned the 2nd CR, and the entire approval delay was less than 6 months. Firm believes ferumoxytol could follow a similar path, with approval by mid-09. Note that a longer delay (2H09 or later) could start to impact valuation, since we believe IV iron sales growth could moderate in a bundled environment (likely phase-in begins by 2011e).

Notablecalls: AMAG will hold a conf call 8:30 AM ET to clarify the issues behind the 2nd CR Letter. I really like JPM's reasoning re: Vyvance

I suspect there will be several firms out in defense of AMAG today.

The stock will take a hit but it shouldn't be more than say 10% putting it above the $30 level in my book. This makes the $27-$28 levels a buy

For more calls go to http://notablecalls.blogspot.com/

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