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Amag CEO to step down as troubled pharma looks to sell 2 drugs

  • Amid falling sales, Amag Pharmaceuticals on Thursday ​released a sweeping restructuring plan for 2020 that includes selling two marketed drugs and parting ways with its chief executive officer.
  • The Waltham, Massachusetts-based drugmaker seeks to divest two women’s sexual health drugs: Vyleesi, an injection to increase female sexual desire, and Intrarosa, a steroid to alleviate pain during sex. Amag has received “preliminary expressions of interest” to acquire the rights to both drugs, the company said.
  • Amag CEO William Heiden will also step down, with the board beginning a search for his replacement. Heiden will stay on until a successor is named, said Amag, which expects to complete its search process by mid-2020. Company shares were down more than 10% at one point Thursday morning.

Amag had a turbulent 2019 that included layoffs for more than 100 staff, its former top-selling drug failing in a critical trial and an activist investor fight with the hedge fund Caligan Partners.

Along with its restructuring plan, the drugmaker also released early fourth quarter sales estimates that fell short of Wall Street expectations, capping the disappointing year.

The revenue drop was primarily driven by Makena, which may be pulled from market in 2020 after it failed a confirmatory study last March that was designed to show the drug prevents preterm births.

In an October meeting, a panel of experts convened by the Food and Drug Administration voted 9-7 to recommend the agency withdraw the drug’s approval. (The seven dissenting votes were in favor of keeping Makena on market and requiring another confirmatory trial.)

Those developments derailed Amag in 2019, leading company executives to slash its annual sales estimates. According to Thursday’s preliminary results, 2019 revenue dropped approximately 31% from a year ago.

Amag’s leaders expect the lackluster financial results to continue, putting out guidance for this year’s revenue to fall between $230 million and $280 million, which would represent a 22% year-over-year decline at the range’s midpoint. Executives said this takes into account the uncertainty on Makena’s continued status.

As Amag’s challenges unfolded, Caligan Partners began buying up shares and calling for immediate changes, including a request in September for four board seats. Amag and Caligan reached an agreement in October to add two directors.

The corporate shake-up emerged from a business review that Amag paid Goldman Sachs to help conduct. Two executives staying on will take additional roles: Ted Myles will serve as both chief operating officer and chief financial officer, while Joseph Vittiglio will become chief business officer and general counsel.

Heiden’s imminent resignation will end a nearly 8-year tenure as Amag’s CEO. The separation agreement, signed Tuesday, will pay Heiden two years of salary after leaving, worth about $1.5 million based on his salary last year, and an accelerated vesting timetable for his stock options and equity awards. He is also eligible for a prorated 2020 bonus that could be up to 85% of his base salary, and Amag agreed to reimburse him for legal expanses related to the separation.

SVB Leerink analyst Ami Fadia wrote these changes “should be viewed positively,” but said the sales result “raises concerns on the sustainability of the company’s revenue base that is being retained.”

After peaking at more than $75 per share in 2015, Amag’s stock has steadily fallen, shedding more than 80% of its value in the past few years. Shares opened Thursday trading at $12 apiece.