AMAG Pharmaceuticals announced April 1 it would team up with Takeda Pharmaceutical to commercialize its intravenous iron drug Feraheme (ferumoxytol) outside the US. A deal was not unexpected, as AMAG has signaled since winning approval from U.S. FDA in 2009 that the best way to maximize growth of Feraheme, especially in the European Union, is with a partner with global reach.

"With a strong presence in gastroenterology and primary care, and with near term expansion into oncology and nephrology, Takeda is poised to maximize Feraheme's entry into the license territory following the approval," said AMAG CEO Brian Pereira on a conference call Thursday.

Feraheme is an injectable therapy for iron deficiency anemia (IDA) already approved for use in chronic kidney disease in the U.S. It's nearing a filing date for the same indication in Europe.

The top company by market capitalization in Japan, Takeda has expanded its commercial presence outside its home country through deal-making, most recently via the acquisitions of Millennium Pharmaceuticals and IDM Pharma (Also see "Takeda's Global Ambition " - In Vivo, 1 June, 2008.; Also see "Takeda May Resurrect IDM’s Bone Cancer Drug Mifamurtide In U.S." - Scrip, 20 May, 2009.). It will sell Feraheme in Europe, Canada, Turkey, the Commonwealth of Independent States, and Asia Pacific countries, excluding Taiwan, China, and Japan.

The alliance with AMAG also expands Takeda's reach in the nephrology market, where it previously partnered with Affymax for the development and commercialization of the synthetic erythropoietin stimulating agent Hematide .

Takeda is paying AMAG $60 million up front with $220 million tied to downstream milestones not including sales royalties, which AMAG management said were tiered and in the double-digit territory. That money adds to the specialty pharmaceutical company's already considerable cash reserves. According to its fourth quarter filings, AMAG ended 2009 with close to $130 million in cash and equivalents; in early January 2010, the firm bolstered its coffers with a $165.6 million follow-on public offering.

The cash will come in handy. According to the deal terms, AMAG continues to control Feraheme's clinical development and pay related costs in all potential indications in the regions licensed to Takeda. AMAG is also responsible for filing the regulatory application in Europe for use of Feraheme in chronic kidney disease, an event expected sometime mid-2010.

Analysts reacted positively to the partnership, noting the terms seemed fair, especially given novel iron agents face stiff competition from generics in many countries outside the U.S.

The deal was also significant in light of safety problems that surfaced in early February and sent AMAG stock sliding from its January high of $51.32 to a yearly low of $34.17 on March 1. The tie-up provides "additional validation for the safety profile of Feraheme, as Takeda likely spent significant time vetting this," wrote J.P. Morgan analyst Geoffrey Meacham in a same day research note to investors.

Investors weren't exactly bowled over. The stock barely moved on news of the Takeda deal, nudging up 11 cents or less than 1 percent to close at $35.02 Thursday.

AMAG is frequently cited as a take-out candidate, with many large drug makers hungry for pipeline-filling substrate likely to find a marketed product poised for expansion an appealing prospect. Importantly, the tie-up with Takeda does not appear to diminish AMAG's appeal to would-be buyers. In a regulatory filing, AMAG revealed "certain standstill limitations" that appear to reduce the likelihood that Takeda would acquire AMAG during the life of the deal.

Opportunity Outside the Dialysis Setting

Feraheme competes with a number of older and more established IV iron therapies, including Forest's Ferrlecit and Luitpold's Venofer . The chronic kidney disease market is estimated to be worth $500 million annually in the U.S. Costing more than $400 per gram, the product is priced at a premium to both competitors in part because two doses of Feraheme administered within days of each other provide the same level of iron supplementation as five to 10 injections of older drugs given over a 30-day time span (Also see "Ironing Out the Future: AMAG Hopes Its Novel Iron Therapy For CKD Wins Approval Next Week" - Pink Sheet, 24 June, 2009.).

Feraheme launched in July 2009 and has beat analyst expectations. Net revenues in the fourth quarter were $12.8 million, nearly $4 million more than the Street's consensus estimates thanks in part to significant use in small- to mid-sized dialysis centers and in nephrology and hematology outpatient settings (Also see "Nothing Anemic About Ferahame: The Med Helps Amag Exceeds Street Expectations" - Pink Sheet, 14 January, 2010.). Of the more than 1,300 providers that purchased Feraheme through mid-February 2010, more than 1,100 treat patients outside the dialysis setting and more than 60 percent are repeat customers.

This is critical; analysts and AMAG execs anticipate the real growth opportunity for Feraheme is outside dialysis centers. That's because the Centers for Medicare and Medicaid Services plans to implement a composite rate payment structure - also known as bundling - for dialysis services come January 2011. Since bundling results in lump-sum payments to providers, one way to manage costs is to adopt the cheapest IV iron therapy available on the market (Also see "2009 Medicare Budget Plan Pushes For ESA Bundling With Dialysis Rates" - Pink Sheet, 15 February, 2008.).

Takeda's Muscle Will Be Useful As Feraheme's Label Expands

Market expansion also hinges on the approval of Feraheme in other regions and other indications, including abnormal uterine bleeding, GI bleeding, and cancer. Here Takeda's marketing muscle and relationships with numerous payers in Europe will be helpful.

AMAG CEO Pereira pegged the European market for IV iron around $150 million and growing, with the average price for the dominant player in the marketplace, Venofer, ranging from $260- to $325-a-gram in the top five EU nations. AMAG has also been working with global regulatory authorities to finalize protocols for registration trials to test the drug as a treatment of IDA regardless of underlying cause. The company plans to initiate this Phase III study by mid-year.

AMAG is paying for the clinical work in regions licensed by Takeda, and the structure and costs of those trials sparked analyst concern. Pereira noted the company plans two concurrent trials, one in the U.S. and one in Europe, involving a total 1,400 patients. Chief business officer David Arkowitz estimated they would cost between $70 and $80 million to complete.

Beyond IDA, Feraheme, which is comprised of extremely small, coated superparamagnetic iron oxide nanoparticles, also has potential use as an imaging agent. Under the current agreement, Takeda's license does not extend to such use, but the Japanese drug maker has first right of negotiation for the product should AMAG look for a partner in this arena.

Similarly, the deal terms deliberately exclude Japan and China. AMAG in May 2008 licensed Chinese rights to 3SBio in a deal worth $1 million up front plus downstream milestones and royalties (Also see "3SBio And AMAG Ink Deal To Develop Ferumoxytol In China" - Scrip, 5 June, 2008.). On Thursday's conference call, Pereira downplayed Takeda's decision not to license rights in its home country, noting that drug maker is primarily interested in later stage assets that bolster its commercial presence. To date, AMAG has not actively pursued Feraheme development in Japan because it would be extremely difficult to compete on price. IV irons used in that country typically cost just $30 to $40-a-gram.

Pereira didn't rule out the possibility that Takeda and AMAG could later amend their deal to include Japan. "We haven't yet reached a final decision as it relates to Japanese rights. So it's something that we will undoubtedly have further discussions with Takeda subsequently," he said.

- Ellen Foster Licking (e.licking@elsevier.com)

[Editor's note: This article also appeared in 'The Pink Sheet' DAILY - April 1, 2010.]

AMAG Pharmaceuticals Irons Out Ex-US Deal With Takeda For Feraheme

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