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Expert Financial Analysis and Reporting

AMAG Pharmaceuticals: Will FDA Approve Makena SC (AMAG, Neutral, $21.75)

Importance of Makena SC to AMAG?

AMAG is engaged in a high stakes clinical development program in which it is endeavoring to gain approval of a subcutaneous dosage form of its key drug Makena. Management has guided that sales of Makena reached $333 to $336 million in 2016 (about 63% of total sales) and issued guidance of $410 to $440 million for 2017. The Company currently markets an intramuscular dosage of Makena (hereinafter referred to as Makena IM), whose Orphan Drug exclusivity expires on February 3, 2018. Sometime thereafter, generics to the intramuscular dosage can enter the market. AMAG has developed a subcutaneous dosage of Makena (hereinafter referred to as Makena SC) that subjects the patient to much less pain and significantly reduces provider time and costs to administer. AMAG hopes to have this product on the market in 4Q, 2017.

I picked up coverage of AMAG because of its collaboration with Antares on developing Makena SC; Antares is one of my recommendations. Wall Street is wrestling with AMAG/ Makena investment equation that includes: (1) when (or if) Makena SC is approved, (2) when generics to the Makena IM come to market (it could be much later than February 3, 2018) and most critically (3) how much of Makena IM will be switched into Makena SC and how much to the generics.

Investment Thesis

I wrote a detailed report on this complex investment situation in my January 26, 2017 report   “AMAG and Antares: Update on the Development of Makena SC (AMAG, Neutral, $24.40) (ATRS, Buy, $2.04)”.I refer you to that report for my analysis of AMAG. The crux of my thinking was that there would be a great deal of uncertainty for AMAG in regard to gaining approval of the Makena SC sNDA, the timing of approval and launch, and then how much of the current Makena IM market could be switched into Makena SC. These are considerable uncertainties for investors.

Given the overwhelming importance of the Makena franchise to AMAG, I have since my initiation report “AMAG Pharmaceuticals: Initiation of Research on a Complex but Potentially Very Interesting Investment Situation (AMAG, Neutral, $24)” of June 26, 2016 been neutral on the stock. I think that there is a reasonable chance that much of the Makena franchise will be converted to Makena SC and that will lead to good, perhaps excellent stock performance. However, if my projection proves incorrect, investors could be pummeled. I don’t like the risk/ reward at this time.

Antares is different. It has a broad pipeline. Success of Makena SC would be very material to earnings for Antares. However, it has such a broad pipeline of exciting new drugs that I think the Company and its stock would do very well even if Makena SC is an abject failure (again I don’t think this will be the case). I like the risk/ reward and hence my Buy on ATRS.

Registration Plan for Makena SC

The plan of AMAG is to submit a sNDA on Makena SC in 2Q, 2017. The sNDA is based on a pharmacokinetic study that compares Makena SC to Makena IM. The standard review time is six months and if the FDA adheres to this guideline, Makena SC would be approved in 3Q, 2017 and marketed in 4Q, 2017. On February 2, 2017 AMAG issued a  that stated that topline results in the study were successful and that it continues with its plan to file the NDA in 2Q, 2017 as scheduled. However, the stock traded down. Why was that?

The press release commented on the data as follows: “Makena administered subcutaneously demonstrated bioequivalence to the IM injection on area under the curve (AUC 0-to-inf 2,386 ng/mL compared to 2,086 ng/mL), with the 90 percent confidence interval for the ratio of AUC (105.17 to 124.39) falling within the 80 to 125 percent range, which the FDA uses to define bioequivalence. The mean maximum or peak plasma concentration (Cmax) for Makena subcutaneous was slightly higher than for the IM (7.3 ng/mL compared to 6.3 ng/mL), with the 90 percent confidence interval for the ratio of Cmax (96.6 to 138.7 percent) falling outside of the bioequivalence range of 80 to 125 percent.”

The study was successful on the AUC measure, but not on Cmax. Does this mean the study failed? First of all, what is AUC and what is Cmax? Area under the curve (AUC) is a measure of the extent of a patient’s exposure to a drug over the time following administration and is dependent on the dose and rate of elimination of the drug from the body. AMAG maintains that AUC is the most critical measure for assessing the comparability of Makena IM and Makena SC as both are given as weekly injections. From this standpoint, results were quite positive.

Cmax is a measure of the maximum (or peak) blood serum concentration that a drug achieves following one administration and before the administration of a second dose. AMAG has stated that this is a more important measure for a drug that is intended to be given just once. EpiPen for anaphylactic shock is an example. However, AUC is the key measure for Makena SC.

Will Makena SC Be Approved?

AMAG has filed the sNDA and believes that it has shown bioavailability between Makena IM and Makena SC. The FDA will require a written explanation of why missing on the Cmax measure should not prevent approval. This is a very esoteric subject and I am reluctant to try to project the probability of approval. However, there is precedent for AMAG’s position.

Evzio (naloxone) is a hand held auto-injector that is an emergency treatment to reverse known or suspected opioid overdose. Like Makena SC, it is a subcutaneous dosage that is intended to replace an intra-muscular injection. The Cmax was 15% higher for Evzio and outside the confidence interval as was the case with Makena SC. Encouragingly, the FDA approved the drug on February 3, 2014 without any request for additional data. This is encouraging, but we shall have to wait and see if the FDA takes the same path with Makena SC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


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1 Comments

  1. Thanks Larry. Their company spokes people are extremely pleased with the AUC, all good on that front. On the flip side, they don’t seem concerned at all about the Cmax. They are the ones who’ve been dealing with the FDA on this filing, so I’ll defer to their judgement.

    Your last paragraph section – has AMAG already filed their sNDA?

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