After forfeiting two board seats and undertaking a strategic review, AMAG Pharmaceuticals is saying goodbye to its CEO and two of its drugs. But with another med likely being pulled from the market, AMAG’s sudden decision to cut ties with its chief executive could be akin to shifting “deck chairs on the Titanic,” one analyst said.
AMAG CEO William Heiden has agreed to step down following a strategic review spurred by activist investor Caligan Partners that also recommended the sale or spinoff of two women’s health drugs, female libido treatment Vyleesi and painful sex med Intrarosa, the company said Thursday.
Heiden will stay on with AMAG through the successor search, which the company expects to wrap up by mid-2020, it said.
“It has been an honor and a privilege to lead the team at AMAG,” Heiden said in a release. “As we implement the strategic shift announced today, my fellow directors and I believe that this is the right time for the board to identify a new CEO for the next leg of AMAG’s journey.”
Heiden’s planned departure comes more than two months after an FDA advisory committee recommended AMAG pull premature birth med Makena from the market in a 9-7 vote after confirmatory testing showed little clinical benefit in patients.
Piper Jaffray analyst Christopher Raymond called the panel’s recommendation “surprisingly definitive” in a note to investors at the time and forecast that the FDA would likely pull Makena’s marketing approval and structure a phaseout through mid-2020.
With Makena likely being taken off the market, AMAG said it would focus on the success of its iron deficiency med Feraheme as it moves ahead and has already received tentative interest from buyers for both Vyleesi and Intrarosa. With Heiden departing, Chief Financial Officer Ted Myles will assume the additional role of chief operating officer, and general counsel Joseph Vittiglio will assume the additional role of chief business officer.
In a note to investors Thursday, Raymond said the “handwriting was on the wall’ in Heiden’s departure and the Vyleesi and Intrarosa divestures after both drugs showed little market impact in their short commercial lives. AMAG hasn’t yet disclosed revenue contributions from Vyleesi, which the FDA approved in June and AMAG launched in September. And Intrarosa, approved in 2017, hit just $21 million in sales in 2019 despite promise of a more than $500 million market for the drug.
Worse times could be coming, Raymond said, comparing AMAG’s plight to shifting “deck chairs on the Titanic”––particularly with Feraheme soon to face generic competition.
“While (Feraheme) has been a stalwart, recall that beginning (around) July 2021, Sandoz can launch its generic version of Feraheme,” Raymond wrote. “Combining this with a substantial debt burden from the acquisitions of these and other assets, we would avoid the stock.”
Just weeks before the FDA committee vote, AMAG opted to give two board seats to activist investor Caligan after the venture capital firm pushed for change at the top. The move temporarily expanded AMAG’s board to 11 seats before the company’s 2020 annual meeting, when nine permanent directors will be chosen.
Caligan acquired 10.3% of AMAG’s shares in early August, aiming to push the company to find an international marketing partner for Feraheme and investigate opportunities for its women’s health business. Caligan also floated the idea of splitting up the drugmaker.
In mid-September, in a proposal seeking to take four of AMAG’s board seats, Caligan lambasted AMAG’s share price—and what it called the failure of the drugmaker’s five-year strategic plan—despite the “immense value” of some of its pharmaceutical portfolio. The firm said AMAG’s board, recently elected in May, was approved because shareholders lacked options.
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