AMAG Pharmaceuticals' (AMAG) CEO Bill Heiden On Q2 2014 Results - Earnings Call Transcript

| About: AMAG Pharmaceuticals, (AMAG)

AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG)

Q2 2014 Earnings Conference Call

July 29 2014 8:00 AM ET


Katie Payne -Director, Corporate Communications & Investor Relations

Bill Heiden - President and Chief Executive Officer

Frank Thomas - Chief Operating Officer

Scott Holmes - Vice President, Finance and IR


Joseph Schwartz - Leerink Partners

Mike - JPMorgan

Robert W Baird

Eun Yang - Jefferies


Good morning. My name is Adrian and I will be your conference operator today. At this time, I would like to welcome everyone to the AMAG Pharmaceuticals Second Quarter Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. (Operator Instructions). Thank you.

At this time, I would like to turn the call over to Katie Payne. Please go ahead.

Katie Payne

Thank you, Adrian. Good morning, and welcome to the AMAG Pharmaceuticals conference call to discuss our second quarter 2014 financial results. We issued a press release announcing results this morning. For those of you who don't have a copy of the release, you can access it on the Investor section of our website at

Before proceeding with this call, please be reminded that any statements we make during the course of the conference call that are other than historical facts are forward-looking statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. We want to emphasize that these forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those discussed in such forward-looking statements. Please refer to our recent filings with the SEC for a full review of the risks and uncertainties associated with our business.

Let me quickly run through the topics we will cover this morning. Bill Heiden, our President and CEO will review the highlights for the second quarter and provide updates on Feraheme and MuGard. Frank Thomas, our Chief Operating Officer will discuss our business development activities. Scott Holmes, our Senior Vice President of Finance and Investor Relations will review our financial results and our updated guidance for 2014. And finally, Bill will wrap up with a summary of our goals for the remainder of 2014. After our prepared remarks, we will open the call for Q&A.

I will now turn the call over to Bill.

Bill Heiden

Thanks, Katie. I am pleased that all of you could join us today for our quarterly financial update as well as an update on our progress in building a profitable, multi product specialty pharmaceutical company. So let's start with a quick overview of the second quarter results on Slide 4. I am pleased to announce that we generated the largest quarterly sales level for Feraheme in the U.S. in our company's history. With 22.2 million in ex-factory sale, a 27% increase over the same quarter last year. That was driven by an 18% volume increase and 9% price appreciation or increase in net revenue per gram. Based on our commercial success, I am pleased to tell you today that we are increasing our sales guidance for the full year. And Scott Holmes will tell you more about that in a few minutes.

Our in market physician demand level performance was equally impressive in the second quarter. AMAG's commercial team drove Feraheme physician level demand up 16.4% to a record of approximately 39,000 grams versus the same quarter a year ago in an IV iron market that also experienced strong growth of 10%. We achieved an important milestone as a company this quarter when we crossed the 1 million patient exposure mark for Feraheme in the U.S. since launch. It's rewarding to think about all of the patients that we helped over the last five years. And speaking of making a difference in patients' lives demand from MuGard climbed 49% this quarter from last quarter. I'll tell you more about that in a few minutes.

We were cash flow positive in the second quarter and ended the quarter with just under $400 million in cash and investments. I believe that our strong cash position enhances our ability to compete and close business development transactions to expand our portfolio. Finally, I'll provide an update on our regulatory interactions in both the U.S. and Europe.

So let's start with a bit more about our Q2, 2014, Feraheme and MuGard commercial performance. As you may know from following the company, our commercial team has performed exceptionally well over the past several quarters, reinvigorating the Feraheme brand and driving accelerated quarterly growth. This quarter was no different. In fact, our commercial team drove usage of Feraheme to its biggest quarter ever since launch. I joined AMAG in the second quarter of 2012. And so for me it's especially gratifying to look at the outstanding volume growth generated by our world class commercial team in this graph on slide 6 over that same timeframe. Physician-level demand as reported by IMS grew more than 16% in the second quarter of 2014 versus the second quarter of 2013. Feraheme grew 6% faster than the overall market growth achieving an Evolution Index of 106, meaning we continue to take share from our competitors. As background, we compare quarterly results versus the same quarter last year due to seasonality in the IV iron market. Generally speaking, Q1 and Q4 tend to be lighter in overall market volume as compared to Q2 and Q3. You can see the main segments where we compete broken out here with the green oncology, hematology segment growing about 15% while we maintain a 25% market share, and in the hospital segment our sales are up just over 26% with a nice jump in market share from 9.6% same time last year to 11.4% this quarter.

On this next Slide, slide 7, you can see that Feraheme's market share increased to 16.3% of the total non-dialysis IV iron market, up from 15.3% a year ago. So we are taking share from competing IV iron and we are also driving overall market growth. The IV iron market is up 10% this most recent quarter versus second quarter 2013 to a total of approximately 900,000 grams on annual basis. As we predicted, the combination of our promotional efforts and new competitor have led to increased market growth rate.

We are currently approved to treat iron deficiency anemia or IDA for adult patients with chronic kidney disease or CKD. So we compete for about half of this IV iron market which represents a $250 million revenue opportunity for Feraheme. This is the opportunity that we are focused on today. Our 16.3% share of the total market translates to Feraheme holding about a third of the IDA CKD market. In other words, we don't have two thirds of our currently indicated market and so we believe there is a plenty of room to grow and that's where our commercial team is focused today.

And looking ahead, we believe that a significant expansion opportunity exist for Feraheme in the potential regulatory approval for the broader IDA non-CKD patient population in the U.S. We believe that regulatory approval for IDA would double the market opportunity from our current addressable market to a total of more than $500 million per year. The good news is that should we pursue and receive regulatory approval, this market is served by the very same physicians that we call on today who use Feraheme in their IDA CKD patients. So there wouldn't be a need for big expansion of our commercial footprint. Indeed, we could leverage existing relationships with key prescribers.

I am now going to provide a brief regulatory update on Feraheme in the U.S. and Rienso, the trade name for ferumoxytol in Europe. In response to the complete response letter we received earlier this year related to the sNDA for the broader IDA label, we held a productive end of review meeting with the FDA in June. That meeting was collegial and informative. The FDA provided feedback to the company on information and proposals that we have sent to them prior to the meeting. I expect that we will continue to interact with the FDA in the near term with the goal of gaining agreement on pathway that the company may pursue towards a potential IDA label approval, and this would likely include providing additional safety data to the FDA. While I can't provide much more information at this point since these discussions are on going, we look forward to providing more information once we reach agreement with the FDA on those next steps. We continue to believe that regulatory approval of the Feraheme sNDA would provide physicians with an important treatment option for patients with IDA who have failed or cannot tolerate oral iron.

As previously disclosed in June, 2014, we proposed changes to the current U.S. Feraheme label aimed at strengthening the warnings and precautions section in order to enhance patient safety. The FDA have up to six months to review those proposed changes and provide feedback.

In Europe, Rienso was approved by the European Medicines Agency or the EMA in 2012 for the treatment of IDA in adult patients with CKD. Takeda has been commercializing Rienso in Europe currently in nine countries. In May, the EMA's Pharmacovigilance Risk Assessment Committee or PRAC met to discuss the benefit and risks balance of Rienso. At its July meeting PRAC confirmed the benefits of Rienso outweigh risks along with recommended label changes that Rienso should be administered to patients by infusion over 15 minutes replacing injection and that it should be contraindicated with patients with known history of drug allergy. PRAC made their recommendation to the committee from additional products for human use or CHMP which included these recommended label changes. The CHMP met last week and informed Takeda that it had affirmed PRAC's recommendation with the final decision. The committee also informed Takeda that it expects to discuss Takeda's application for the broad IDA label expansion of Rienso at a meeting in the fourth quarter of the year. Should Takeda receive a positive CHMP decision then a subsequent EMA decision for the broad IDA indication in Europe would be expected no more than 67 days following the opinion. In addition to milestone payments should approve be granted, our license and collaboration agreement provides for tiered-double digit royalties on sales in Takeda territories.

On Slide 11, we believe that the current IV iron market shown in blue is really just the tip of the iceberg and that there is a also an opportunity for significant growth of this market because there are more than 4 million patients in the U.S. already diagnosed with IDA, most of whom are first put on oral iron. Now it's an appropriate initial step but many patients failed oral iron and left untreated these patients continue to live with the signs and symptoms of anemia which may include crippling fatigue and headache. It is interesting to note that these 4 million patients include IDA associated with CKD in orange for which Feraheme is indicated today. And also non-CKD patients in yellow. So where are these patients? Where are they diagnosed? Many of these not yet treated with IV iron patients with CKD are under the care of nephrologists and oncologist who we call on today with our existing sales force. The 10% market growth rate seen this quarter is in part due to our success of market growth strategies with existing customers.

I'll now discuss our second commercial product, MuGard which we in-license in the middle of last year. MuGard is a prescription product used to manage oral mucositis which is a common and potentially serious side effect of cancer chemotherapy and radiation treatment. MuGard forms a protective coating over the oral mucosa to shield the membranes of the mouth and tongue. An oral mucositis is not only common and potentially dangerous but less than treated it can be very expensive to the healthcare system. This quarter, our field sales team has continued to call on a sub section of the Feraheme prescribers primarily hematology and oncology clinic as well as select radiation oncologist. The recently published study feature on the cover of the journal Cancer really differentiates MuGard from other oral prescription oral mucositis products. MuGard is one of the only products in this category which is supported by data from a perspective randomized head-to-head multi-center trial. To expand patient access, we are making progress on increasing insurance coverage of MuGard and to have the product listed on key managed care formulary. We are also starting to gauge with key GPO or group purchasing organization whose members include physicians dispensing pharmacies and some of the largest oncology practices in the country. For example, we've recently contracted with the large hematology, oncology GPO to streamline the process by which patients can access MuGard at physicians dispensing pharmacies of that particular GPO's members. We believe that the value of MuGard can be significant for patients at risk for developing severe oral mucositis and we've recently adjusted our pricing to reflect that value. While much of that increase will not come through in revenue until next year due to preexisting contract, it's all part of a longer-term strategy for MuGard.

So lot's of good activity for MuGard in the second quarter of 2014. And I am happy to report this resulted in significant market growth and market share growth on the next slide. So in terms of the total market, oral mucositis affects approximately 400,000 U.S. cancer patients annually. The less than 5% of those patients are currently being treated with a prescription product. So we estimate that the total MuGard market opportunity would be greater than $500 million if all those patients would treated with MuGard. In the second quarter of this year, you can see just at the lower right of the pie chart that the efforts of our sales team helped drive 22% growth in the overall oral mucositis prescription market. Within that growing market, we are also seeing an increase in MuGard's market share up to 16.2% in the most recent quarter. You can see that in the bar on the right hand side of the slide. Physician prescriptions for MuGard have increased almost 50% from the first quarter of this year. That means we grew 22% faster than the market or achieved an Evolution Index of 122. Having said all that, dollar sales of MuGard have not yet reached our company's threshold for reporting as a separate line item. So while there is still much work ahead to build this market, we believe that this kind of market growth and market share increase are good indicators of significant sales potential in the future.

So now let me turn it over to Frank who will discuss our business development and strategy to expand our product portfolio. Frank?

Frank Thomas

Thanks, Bill. As many of you know an important card of our five year strategic plan and growth strategy is built around the objective of portfolio expansion. We plan to expand our portfolio through business and corporate development transaction, utilizing our strong balance sheet where we have more than $385 million in cash. If needed we believe we have ample access to future capital to help complete the right deal for AMAG. In fact, we raised $200 million earlier this year to position us for success with business development. Over the past several months we've taken close look at many BD opportunities and we remained encouraged by the activity in our current business development pipeline and the new opportunities that have recently surfaced through our internal team.

As you may have seen last month we hired Melissa Bradford Klug as Senior Vice President of Business Development and Strategy. Melissa came to AMAG from Mallinckrodt Pharmaceuticals and before that Covidien. Importantly, much of her experience is involved in-licensing and acquisitions. So she knows what it takes to execute on these types of transactions. She is quickly come up to speed on BD activity currently underway at AMAG, and has already added tremendous value to our BD process and pipeline of opportunities.

So let me spend the next three slides discussing our business development plan. Specifically trying to provide you with our perspective on the following three questions. First, what are our business development objectives? Second, how do we target and prioritize BD activities? And finally, what does success in business development look like for AMAG at the end of our five year strategic plan?

On Slide 16, we laid out our key objectives for business development at AMAG, which we have established last year through the development of our long-term five year strategic plan. The graphic on this slide depicts the combined growth of both existing and newly acquired products over the next five years. To achieve this growth, our objectives are focused on in-licensing or acquiring commercial, revenue generating products to achieve top line growth. Feraheme has performed well and set the bar high in recent quarters. And we want to build on that success through new product acquisitions. We are also looking to acquire late stage development assets which we believe have been sufficiently de-risked to allow for a clear path to regulatory approval. These are product that we believe have significant peak sales and growth potential.

Next we want to capitalize on the benefits of our existing corporate infrastructure and leverage our commercial expertise with these new products by spreading the cost of this infrastructure over multiple products.

Last, we want to build a diversified product portfolio that provide sales, regulatory and clinical inflection points for building shareholder value. Which brings us to Slide 17 giving you some details of our targeting strategy for new products or assets?

Let me now spend a few minutes discussing our selection and targeting criteria. We previously used a bull's eye graphic summarize our target. I think this graphic captures the broader view of how we search for and evaluate potential products or companies. We use a number of filters when examining a list of potential products to ensure they meet the high standards we have in order to be strategic fit for AMAG. In the upper left, one obvious filter is to look for product that have a therapeutic focus which can leverage our current relationships within our commercial and medical team. This means the sweet spot for us remains with physicians in the hematology, oncology and nephrology spaces. We believe the MuGard is a good example of the execution on that strategy as it is a product that it is prescribed by many of our currently called on oncology physicians and nurses. This filter also includes therapeutic that would be aligned with Feraheme's growth strategy in the broader IDA market where anemia can play an important role. We've also looked at many orphans products that can also provide immediately accretive revenue stream without a significant investment and new infrastructure.

Moving to the right on the slide, we are also looking at products or companies that leverage channels in which we have demonstrate success with Feraheme. These channels include certain specialty call point, hospital products and products that are clinical based or reimbursed through buy and bill mean. Our knowledge of and experience with these distribution channels as well as the reimbursement and pricing expertise that we developed, positioned us for success with products aligned with these channels.

And finally, we are evaluating a broader set of opportunities that fall into the category of being more financially driven transactions. These are opportunities that are driven more from a pure cost energy's perspective, are financially attractive in terms of accelerating profitability, or transactions that could help optimize our after tax cash flows and provide us with access to new pools of capital to drive future growth. This would include both late stage development opportunities with significant peak sales and growth potential. As well as already approved commercial products with immediate cash flow and their accretive to earnings.

As slide 17 depicts we have a robust process for identifying, prioritizing and evaluating each potential opportunity to ensure we transact deals that we believe have the potential for sustained profit, are strategic fit for our company and appropriately extend our core business. The second quarter was a busy one for us at AMAG and the business development front. During the quarter, we progressed several projects; they are currently active in a number of potential deals. And we will only take one or two of these transactions to transform AMAG.

Slide 18 answers the final question. What does success look like in business development at AMAG? This slide gives you a sense of where we are today, how far we come and how we view success in the future. With an end game in mind shown on the far right of the slide, we have set our goal time we intend to succeed. We've done a lot of work over the past few years to remake the company into an operationally and financially strong entity on which we can drive accelerated future growth. We are now looking to the future, leveraging that strong financial base to accelerate the growth of our current products and expand the portfolio. Success will be achieved when we build a diversified, commercial product portfolio and have a maturing late stage development pipeline, each of which have contributed to significant shareholder value through growing sales and multiple catalyst for future value creation.

With that I'll turn the call over to Scott Holmes, our Senior Vice President of Finance and Investor Relations to review our second quarter financial performance.

Scott Holmes

Thanks, Frank. Let's start with Feraheme sales where we continue to produce double digit growth including the second quarter where we reported 27% growth over the second quarter of last year. This slide 20 shows the Feraheme growth trajectory over the last several quarters. During the second quarter, we benefited from continued improvement in our net revenue per gram with growth of 9% versus the second quarter of 2013. Over the last couple of years we've taken small periodic price increases to help reverse earlier deteriorating net revenue per gram of Feraheme. We are successful throughout 2013 with net revenue per gram contributing to our growth. The same has been true so far in 2014 with increasing net revenue per gram each of the first two quarters this year. Our plan is to continue to focus on optimizing our pricing and contracting strategy each quarter to maximize Feraheme revenues.

Now let's dig deeper into our second quarter 2014 financial results. Total revenues for the second quarter were $24.8 million, an increase of 26% from the second quarter of last year. The increase in the second quarter was primarily attributable to higher U.S. Feraheme net product sales which totaled an all time quarterly high of $22.2 million.

Feraheme second quarter gross margin was 88% for global Feraheme product sales compared to approximately 82% in the same period last year. This resulted in Feraheme gross profit increasing to $19.8 million. This increase is partially related to our decision to transition to an outsourced manufacturing model. Operating expenses for the quarter totaled $20.8 million consisting of $4.5 million in R&D expenses and $16.3 million in SG&A expense which you can see broken out separately on this slide. The $1.6 million or 8% increase in total operating expenses as compared to the second quarter of last year was primarily due to expenses associated with the commercialization of MuGard which was not in our portfolio until June of 2013.

Increased U.S. Feraheme revenues and gross margins as well as disciplined expense management led us to operating income of $1.2 million this quarter which compares favorably to a $2.8 million operating loss in the second quarter of 2013.

Finally, we ended the quarter with $386.5 million in cash and investments which reflect a positive cash flow of $1 million for the second quarter.

In February, we issued our financial guidance for 2014. We later updated this guidance to reflect the impact of our first quarter $200 million convertible debt offering. Based on our year-to-date performance and our current expectations for the remainder of 2014, we are increasing our revenue guidance today, taking a range up to $93 million to $102 million in total revenue. With the increase due to U.S. Feraheme product sales which we now expect to be between $80 million and $87 million for the year. This revised guidance is above our previous U.S. Feraheme product sales range of $75 million to $85 million. Operating expenses are now expected to come within a range of $87 million to $92 million. A slight increase from the original estimate of $80 million to $85 million, mostly due to business development activities including the diligence and market research necessary to evaluate potential transaction throughout the year.

Finally, we now anticipate Feraheme cost of goods sold to be within a range of 13% to 15% of global Feraheme net sales for the full year of 2014. Given an increased guidance on revenue line, a slight increase in expense guidance coupled with some improvements in COGS, we now expect a net loss of between $12 million and $14 million. It's important to note that approximately $11 million of the expected net loss is attributed to cash and non-cash interest expense associated with our February convertible debt financing.

We now expect our yearend cash and investments balance to be between $388 million and $393 million. Please keep in mind that our guidance does not include the impact of business development transactions or potential expenses associated with further clinical development of Feraheme for the broad IDA indication in the United States. Further, the company's guidance for 2014 does not include the potential milestone payment from Takeda for the broad IDA approval in Europe.

I'll now turn it back over to Bill who will discuss our 2014 goals and make some closing remarks.

Bill Heiden

Great, thanks, Scott. Well, I am very proud of the many achievements of the second quarter. And I want to congratulate and thank my colleagues here at AMAG for all their efforts. I believe that we are very well positioned to continue to build across the list of ambitious business goals. For Feraheme continue as we did in the first half of the year to drive market and market share growth within our current IDA CKD indication and optimize Feraheme net revenue per gram. Potential label expansion for the broad IDA label continues to be an area of focus. We work with the FDA to define the potential path forward in the U.S. and are waiting a CHMP decision later this year in Europe. And finally for Feraheme, we will work to expand the IV iron market currently focusing on CKD patients already diagnosed with IDA specifically within nephrology and oncology where we have a strong commercial presence. For MuGard, drive market growth and increase market share to realize the potential of this product. Business development remains a high priority activity at AMAG and our strong cash position gives us increased resources to acquire quality products and or companies. And finally, we'll operate the business with financial discipline, maintaining a close eyes on operating expenses with a goal of meeting or exceeding our realized financial guidance for the year.

And with that we will close our prepared remarks. And Adrian, we would like to open up the call for questions.

Question-and-Answer Session


(Operator Instructions). Our first question comes from the line of Joseph Schwartz with Leerink Partners.

Joseph Schwartz - Leerink Partners

Oh great, thank you. Good morning and congratulation on a strong quarter. I was wondering if you could update us in a little bit more detail as far as your dialogue with the FDA and how that has gone so far regarding the sNDA. How much more dialogue do you think will be required before you can gain some clarity on a path forward for this broader indication and when can we expect an update there? Thanks.

Bill Heiden

Thanks, Joe. This is bill. Regarding the FDA, the end of review meeting as I mentioned was held in June. It was quite a bit of preparation of that went into that meeting. As I said we submitted some information proposal to the agency prior to that meeting so we can make it as productive as possible. Coming out of that meeting, it's clear that there is still some interaction that needs to take place before we come to an agreement. And so I would expect that say the next quarter to the next three months as we continue the dialogue with the agency. My hope is that we can come to an agreement -- I can't promise that because there is another party here. And it depends how long deliberations take on their end. But the discussions that we've had today were -- have been really productive. We gotten a lot of good information exchanged, some perspective an so my hope is that within the next 90 days we'll get some clarity but again I can't guarantee that just given the nature of these kind of discussions.

Joseph Schwartz - Leerink Partners

Okay. And then I mean it's been a while since you began looking for commercial assets in -- you did a nice job with MuGard. I was wondering as time goes on do you see any more likelihood of late stage commercial asset versus an immediately accretive already revenue generating one now. Can you talk a little bit about how the process has been evolving and maybe the deals that you have not done and why that -- those were the case?

Frank Thomas

Sure, Joe. This is Frank. I mean we continue to believe that a commercial stage revenue generating product is important for us to sign and is certainly a big part of our focus whenever you have a sales force and commercial infrastructure, you want to leverage that as much as possible. And while Feraheme and MuGard are important assets, we still think there is some capacity to add additional commercial stage product. But we've always also looked opportunistically at late stage development assets, especially those that have the potential for near-term revenue. So there are continued to be significant competition for marketed products. And in many cases, these aren't as interesting as some of the late stage development assets that we've come across. So I would say going forward, we continue to focus on commercial but also would be open to a late stage development asset. If it was the right fit, if it met the right financial metrics for us and if it was one that we think could add value for shareholders. So I would say it's always a balance and one that we are open to.


(Operator Instructions)

The next question comes from the line of Geoff Meacham with JPMorgan.

Mike Ulz - JPMorgan

Hi, it's actually Mike in for Geoff. Thanks for taking the question. Just wondering if you could maybe comment on the competitive landscape in the U.S. for Feraheme and just way you are seeing in terms of Injectafer competition and what sort of driving the dynamic there. Thanks.

Bill Heiden

Sure, Mike. This is Bill. And thanks for the question. So the competitive dynamic is playing out very much the way we had predicted, Injectafer is growing and it's taking share primarily from InFeD in the indicated patient population of non-CKD. Feraheme continues to grow and take market share from both InFeD and Venofer. And importantly with two companies out promoting IV iron, the market is growing, is growing stronger than we've seen in the recent past when we were out there alone and the market was growing to low single digit. And you can see in this most recent quarter, it crossed over into double digit market growth, 10% market growth. So I see things playing out pretty much the way we had predicted. Contracting and the financial aspects of how we deal with our customers such as GPOs continues to be an important -- play an important role for us and imagined it does for our competitor as well. So again things are playing out as we had predicted. There is some older IV iron that is no longer promoted. And so I think there is a plenty of room for Injectafer to continue to take share in the non-CKD market. And as mentioned plenty of room for Feraheme to continue to grow in its currently indicated population and then in the future with the potential for broader label. Really significant growth in the future.


(Operator Instructions)

The next question comes from the line of Chris Raymond with Robert W Baird.

Unidentified Analyst

(Inaudible) filling in for Chris. Congratulation on the quarter. I know you mentioned the proposed label update was submitted last month. Just wondering what impact would you anticipate these changes having on usage going forward?

Bill Heiden

So it's a good question, thank you. The label changes that we've recommended we do not believe will have any commercial impact. Obviously, now they are going to be reviewed by the agency and we'll have some back and forth with the agency. So I can't predict what those ultimate changes would be. But the changes that we've recommended, we felt was a right thing to do in order to maximize patient safety with the use of Feraheme. We don't believe there would be any negative impact on the commercial side for Feraheme.


The next question comes from the line of Eun Yang with Jefferies.

Eun Yang - Jefferies

Thank you very much. Just a quick question on -- so Feraheme sales in the second quarter. When you look at quarter-over-quarter from the first quarter of this year, our sales increases 28% but on the line demand based on the Feraheme just sold is about 13%. So including 6% price increase in the first half of this year, it seems like there is a close to like 6%, close to net improvement, is that correct?

Scott Holmes

Hey, Yang, this is Scott. So the demand this between volume ex- factory and demand was about 1% in the quarter. So demand growth quarter-over-quarter was roughly 16% as Bill reported in his slide. So you take that 16% to 18% difference between demand and ex-factory. And then 9% price appreciation reported gets you to the full growth of 28%. So is that help? Is that answers your question?

Bill Heiden

In terms of net revenue per gram?

Scott Holmes

Sure. I mean net revenue per gram basis we were up from the first quarter roughly $20 per gram.

Bill Heiden

Yes, so we did see a pretty nice jump from Q1 to Q2. Yes, all right, yes roughly 4%.

Eun Yang - Jefferies

Okay, so do you think they would continue? Or is it going to be fluctuating quarter-over-quarter?

Scott Holmes

Yes. It tends to fluctuate quarter-over-quarter. I think we generally guided towards for the year is in the neighborhood of 6% growth on price.

Eun Yang - Jefferies

Okay. And the second question is on interest expense. So on $200 million debt at 2.5% I mean I think you mentioned that -- I think Scott mentioned that cash and non-cash share interest expense, so what is the non- cash interest expense that make up to $11 million in interest expenses?

Scott Holmes

Yes. So the cash interest expense for the year is almost full year so it's roughly the $5 million. The non-cash piece has to do with the amortization of the debt and debt discount that flows through the P&L.


(Operator Instructions)

And there are no further question.

Bill Heiden

Great, well, thank you very much Adrian. As you've seen today we had a very strong first half of 2014. I am really proud of our progress today. And I want to again thank my colleagues at AMAG whose hard work everyday drives the results that we report here today. We still have much work in front of us. Many goals to be achieved over the next two quarters. And we look forward to updating you on our progress. So thanks again for joining us today. And this will conclude our call this morning.


This concludes today's conference call. You may now disconnect.

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