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AMAG - Upcoming FDA Decision on Feraheme

|Includes:AGN, AMAG Pharmaceuticals, Inc. (AMAG), FMS, SNY, SSRX

AMAG - Upcoming FDA Decision on Feraheme

  
Event Highlights:
 
Event: FDA approval of Feraheme
 
Expectation: Positive
 
Timing: June 29, 2009
 
Est. Peak Sales/Mkt Cap: 49.08%
 
Licensing Partner: 3SBio Inc. (NASDAQ:SSRX)
 
Direct Competitors: The existing intravenous/IV (injected in the veins) iron replacement therapies like Venofer from Fresenius Medical Care AG & Co. (NYSE:FMS)/Vifor International and Ferrlecit from Watson Pharmaceuticals, Inc./Sanofi-Aventis (WPI/SNY)
 
Upcoming Event Summary:
 
By June 29, 2009, we expect the U.S. Food and Drug Administration (FDA) to decide on the marketing application of AMAG Pharmaceuticals, Inc.’s (NASDAQ:AMAG) Feraheme (formerly known as Ferumoxytol), designed for the treatment of iron deficiency in anemia patients with chronic kidney disease (CKD), including dialysis dependent and non-dialysis dependent CKD patients.
 
  • Anemia is a condition of abnormally low levels of red blood cells (RBCs) in the blood and hemoglobin. Hemoglobin is a protein present in RBCs that is responsible for transporting oxygen to the body tissues. Deficiency of iron is one of the reasons behind the development of anemia in CKD patients.
  • Kidney disease eventually leads to kidney failure, a condition in which the kidney fails to perform its functioning of removing wastes from the body in the form of urine. Regular dialysis is required when both the kidneys have stopped working. Dialysis is a medical procedure of removing impurities and waste products from the blood, when the kidneys are unable to do so.

Feraheme, the lead pipeline candidate of AMAG, is being tested for the treatment of iron deficiency in anemia patients with CKD and as an agent to improve the visibility of internal bodily structures (contrast agent) during magnetic resonance angiography (MRA) in peripheral artery disease (PAD) patients. MRA is a non-invasive medical imaging technique, which is used to produce detailed three-dimensional images of the blood flow in the blood vessels.
 
  • PAD is a condition that reduces the blood flow in the legs.
Anemia is a major problem associated with CKD. Iron replacement therapy, currently available in both oral and intravenous/IV (injected in the veins) formulations, is the existing standard treatment for anemic CKD patients. However, oral iron replacement therapies are associated with various side effects (like diarrhea and cramping) and the injectable products take a long time to be administered.
 
If successfully developed and approved, Feraheme could emerge as the preferred iron replacement therapy for anemia patients with CKD, promoting safety and faster administration. We estimate the peak revenue potential of the drug at approximately $450 million, or 49.08% of the company’s current market capitalization.
 
Potential Impact:
 
AMAG, a biopharmaceutical company, focuses on the development and commercialization of iron compounds to treat anemia and diagnose cancer and cardiovascular (heart-related) diseases. Currently, GastroMARK, for defining the intestines in abdominal imaging, is the only marketed product of AMAG, generating sales of $393 million for the three months ended on March 31, 2009. Feridex IV, for the diagnosis of liver lesions (liver wound or injury), is the other approved product of the company, however, in November 2008, AMAG decided to stop the manufacturing and commercialization of the product. Feraheme, the lead pipeline candidate of AMAG, is under evaluation for the treatment of iron deficiency in anemia patients with CKD (including dialysis dependent and non-dialysis dependent patients) as well as a contrast agent for MRA in PAD patients. On May 25, 2008, AMAG entered into an agreement with 3SBio Inc. (SSRX), whereby SSRX obtained the exclusive rights to develop and commercialize Feraheme for CKD in China. In addition to this, AMAG is exploring potential partnership opportunities for the drug in other countries. In December 2007, AMAG filed a New Drug Application (NDA) with the FDA for the approval of Feraheme for the treatment of iron deficiency in anemia patients with CKD. In October 2008, the company received a Complete Response Letter (NYSE:CRL) from the FDA for the drug. In this letter, the FDA requested for additional information regarding the clinical trial data of Feraheme that had been submitted by AMAG and the company subsequently provided the relevant information to the FDA. However, in December 2008, the FDA issued another CRL to the drug. AMAG responded by resubmitting the NDA of Feraheme. The next crucial event for AMAG, the decision on the marketing application of Feraheme by the FDA, is expected by June 29, 2009.
 
  • NDA - an application submitted by the drug manufacturer to the U.S. FDA regarding the approval and marketing of a new drug.
  • The FDA has made certain amendments in its way of communicating a decision to a drug manufacturer regarding its application for the approval of a new drug or a generic drug. According to the amendment, from August 11, 2008 onwards, the FDA started issuing CRLs instead of Approvable Letters and Not Approved Letters to the drug manufacturer if any deficiency in the marketing application had been found and the agency decided that the drug was not ready to be marketed.
  • Previously, the FDA used to send one of three responses to the drug manufacturer (Approval Letter, Approvable Letter or Not Approved Letter), when taking action on the marketing applications.
  • The FDA would issue an Approval Letter if it found the drug’s safety and efficacy to be satisfactory and felt that the drug should be approved for marketing.
  • If the agency would find any deficiency in the marketing application regarding the drug’s safety or efficacy or both, then it used to issue either Approvable Letters or Not Approved Letters.
  • An Approvable Letter was issued if the drug appeared almost (but not completely) ready to be marketed but the FDA still felt that it needed a little more information prior to making a final decision. However, if the FDA felt that the application of the drug was not at all satisfactory and required lot more information to be added regarding the clinical success and safety of the drug, then a Not Approved Letter was issued.
  • After the amendment, the FDA will issue either an Approval Letter or a CRL depending on whether the drug is ready or not ready for marketing, respectively.
 
CKD is characterized by a decline in the kidney functioning of an individual for a period of 3 months or more. Anemia, an under-recognized but characteristic feature of CKD, is associated with severe consequences such as cardiovascular disorders, hospitalizations and can even lead to death in the advanced stage CKD patients. In fact, anemia becomes more prevalent as the kidney functioning declines in the advanced stages, ranging from approximately 27% in the initial stages of CKD to 76% in the most advanced stages. Anemia occurs due to iron deficiency in CKD patients, who require iron replacement therapy to manage their condition. Currently, iron replacement therapies are available in both oral and IV formulations. Oral iron replacement therapies suffer from the problem of being poorly absorbed in anemic patients and have a poor tolerability profile, thereby causing side effects like diarrhea and cramping, often resulting in discontinuation of treatment. Though IV therapies are far more effective than the orally administered ones, they also suffer from certain limitations. Some of the existing IV therapies like Venofer from Fresenius Medical Care AG & Co. (FMS)/Vifor International, a subsidiary of Galenica AG, which is a Switzerland-based company, and Ferrlecit from Watson Pharmaceuticals, Inc./Sanofi-Aventis (WPI/SNY) need to be administered slowly and periodically in small dosages to meet the total dosage requirement of patients. Most patients require a total of 1,000mg Venofer to obtain treatment benefit, however, this 1,000mg cannot be administered in a single administration. In non-dialysis dependent anemic CKD patients, the total dosage of Venofer is divided into 5 sub-dosages (200mg each), with each sub-dosage requiring 5-10 minutes for administration. These 5 sub-dosages are given at 5 different occasions distributed over a 14-day period. In dialysis dependent anemic CKD patients, the total dosage of Venofer is divided into 10 sub-dosages (100mg each) and each sub-dosage requires 5-10 minutes for administration. All these 10 sub-dosages are administered at 10 different occasions. Ferrlecit is only approved for dialysis dependent anemic CKD patients and has to be furnished at a dosage totaling 1,000mg to show treatment effect. However, the entire dosage of Ferrlecit can also not be administered in a single administration and is broken into 8 sub-dosages (125mg each), with each sub-dosage taking approximately 10 minutes (which sometimes extends to 1 hour) for administration. These 8 sub-dosages are given over 8 consecutive dialysis sessions.
 
Another disadvantage of the IV therapies is that they are associated with rare and life-threatening anaphylactic reactions (severe, life-threatening allergic reactions, which are characterized by symptoms such as low blood pressure, wheezing, vomiting and diarrhea). All these factors have left the market open for more effective treatment options in development for this condition.
 
Feraheme demonstrates many benefits over the currently available iron replacement therapies. Previous clinical trials indicate that Feraheme does not cause the side effects associated with oral iron replacement therapies. Unlike the inconvenient dosing schedule of the existing IV iron replacement therapies, Feraheme can be rapidly administered in two 17-second injections. Moreover, no cases of serious anaphylactic reactions have been observed in the clinical trials of Feraheme. Driven by these advantages, Feraheme could emerge as a therapy of choice for anemia patients with CKD. The U.S. IV iron replacement therapy market (currently approximately $570 million) represents an attractive opportunity for AMAG, with approximately 354,000 CKD dialysis dependent patients and 1.6 million CKD non-dialysis dependent patients, being currently eligible for Feraheme treatment. We believe Feraheme could generate peak revenues of approximately $450 million, or 49.08% of the company’s current market capitalization.
 
Expectations:
 
We expect the FDA to approve of Feraheme for the treatment of iron deficiency in anemic CKD patients, including dialysis dependent and non-dialysis dependent ones by June 29, 2009.
 
In December 2007, AMAG submitted the marketing application of the IV formulation of Feraheme for the treatment of iron deficiency in anemic CKD patients. The filing was primarily based on the data from three Phase III efficacy and safety trials and one Phase III safety trial.
 
Among the 4 Phase III trials, the first and second were identical efficacy and safety trials, which were conducted in non-dialysis CKD patients. In both these trials, patients were randomized in a 3:1 ratio to receive either 510mg IV dosages of Feraheme twice a week or 200mg/day oral iron replacement therapy for 3 weeks. The first and second Phase III trial enrolled 304 and 303 non-dialysis CKD patients, respectively. The results from both the trials demonstrated that Feraheme patients achieved a significantly greater mean increase in the hemoglobin levels on the 35th day after the first dosage of Feraheme (the primary endpoint), as compared to the oral iron replacement therapy group (p-value<0.0001)*.
 
In the first Phase III trial, the Feraheme group experienced a mean increase of 0.82grams per deciliter (gm/dl) in their hemoglobin levels versus 0.16gm/dl in the oral iron replacement therapy group. The second Phase III trial demonstrated a 1.22gm/dl and a 0.52gm/dl increase in the hemoglobin levels in the Feraheme group and in the oral iron replacement therapy group, respectively.
 
  • Anemia is a condition characterized by abnormally low levels of RBCs as well as hemoglobin. CKD patients suffer from anemia. Thus, an increase in the hemoglobin levels indicates treatment success.
Additionally, only 35.5% Feraheme patients experienced adverse events (like constipation, chills, tingling, rash and pain at the injection site), as compared to 52.0% oral iron replacement therapy patients in the first Phase III trial. In the second Phase III trial, 55.9% Feraheme patients experienced adverse events, as compared to 58.1% oral iron replacement therapy patients. The third Phase III trial was an efficacy trial in CKD patients, who were on dialysis. The data from this trial demonstrated a statistically significant increase in the hemoglobin levels in the Feraheme patients group on the 35th day after the first dosage of Feraheme, as compared to oral iron replacement therapy (p-value=0.0002). In this trial, 230 dialysis patients, who were on Erythropoietin Stimulating Agents (ESAs), received either two dosages of 510mg Feraheme within one week or 200mg/day of oral iron replacement therapy for 3 weeks. The trial demonstrated that the Feraheme group experienced a mean increase of 1.02gm/dl in their hemoglobin levels versus 0.46gm/dl in the oral iron replacement therapy group.
 
  • Erythropoietin, a hormone secreted by the kidney, stimulates RBC production and reduces anemia. Since the kidneys of CKD patients are damaged, they do not produce enough erythropoietin to stimulate sufficient amounts of RBCs. Thus, ESAs, the synthetic versions of the natural erythropoietin, are used to increase the levels of erythropoietin in the body, which, in turn, increases the RBC levels in anemic patients. 
 
The fourth Phase III safety trial, which enrolled 750 CKD patients (including both dialysis dependent and non-dialysis dependent), compared a single dosage of 510mg Feraheme to placebo (normal saline). The results demonstrated that 21.3% Feraheme patients experienced adverse events, as compared to 16.7% placebo patients.
 
Across all the Phases of the clinical trials, a total of approximately 2,800 dosages of Feraheme had been administered. However, there were no cases of anaphylactic reactions and no incidences of any drug-related deaths reported in the Feraheme patient group. Additionally, throughout the clinical trials, only three (0.17%) out of the 1,726 Feraheme patients experienced serious adverse events like cardiac problems, while one (0.35%) among the 289 oral iron replacement therapy patients and one (0.13%) of the 781 placebo patients experienced serious adverse events.
 
On October 20, 2008, the FDA issued a CRL to Feraheme, which reflected their view that the drug was not ready for approval. In the CRL, the FDA requested for additional information regarding the clinical trial data submitted by AMAG. The agency also asked for certain clarifications regarding its inspection of one of the Phase III trial sites of Feraheme in addition to raising a question regarding a pre-approval inspection of AMAG’s manufacturing facilities. AMAG indicated that all of these issues were addressable and submitted its response to the CRL on the basis of the existing clinical trial data and stated that no additional trial was needed to be initiated. The FDA accepted the response to the CRL on November 13, 2008 and assigned Feraheme a new approval date of December 30, 2008.
 
However, on December 22, 2008, AMAG announced that it had received a second CRL for Feraheme. This time also the FDA had raised some additional queries regarding the pre-approval inspection of AMAG’s manufacturing facilities. Additionally, there were some questions regarding Feraheme’s labeling-related decisions. Though the company is seeking an FDA approval of Feraheme for the treatment of iron deficiency anemia in all CKD patients, patients who are on dialysis and patients who are not on dialysis, it is the FDA who has to decide on the final labeling of Feraheme. In the CRL, the FDA mentioned that it is yet to take a final decision regarding the labeling of the drug.
 
On May 1, 2009, AMAG declared that all the outstanding issues related to the manufacturing sites of Feraheme had been successfully and satisfactorily settled with the FDA. Additionally, the company stated that it had successful interactions with the FDA regarding the content of the label of Feraheme. Given that all the manufacturing issues related to the drug have been resolved, the company is optimistic that the FDA will be able to take a final decision regarding the labeling of Feraheme.
 
On May 12, 2009, AMAG announced that their response to the second CRL has been accepted by the FDA and the agency has designated it a Class I resubmission, assigning it a new approval date of June 29, 2009.
 
  • Class I resubmission deals with minor application deficiencies, such as labeling issues, commitments to perform post-marketing studies, safety updates and other minor clarifying information. Class I resubmission starts a new 60 days review cycle.
Based on the fact that the company succeeded in satisfactorily answering the FDA’s queries regarding the manufacturing of Feraheme, the major concern of the agency, which was highlighted in both the CRLs, we are optimistic about the company receiving approval this time for Feraheme by June 2009.
 
The Product:
 
Chronic kidney disease (CKD) patients often suffer from anemia, a condition of abnormal reduction in the number of red blood cells (RBCs) and hemoglobin (the iron-containing protein present in RBCs) in the body. Hemoglobin carries oxygen to the body’s tissues.
 
The production of RBCs depends upon two factors: firstly a hormone called erythropoietin, which is produced by the kidneys, and secondly iron. Erythropoietin, after being released by the kidneys, travels to the bone marrow (the soft tissue in the center of bones, responsible for the blood cell production) via the blood. Upon reaching the bone marrow, erythropoietin stimulates RBC production. An adequate concentration of iron is also essential for the bone marrow to produce the hemoglobin part of RBCs since iron is an integral component of hemoglobin.
 
Both erythropoietin and iron should work together to produce the required amounts of RBCs in the blood. An imbalance in the erythropoietin and iron levels leads to anemia.
 
  • The diseased kidneys in CKD patients do not produce the required amounts of erythropoietin. As a result, the bone marrow produces lesser amounts of RBCs, which is insufficient to meet the body’s RBC requirement. Additionally, CKD patients suffer from increased iron loss due to inadequate nutrition (which results in poor dietary iron intake), blood loss caused by multiple blood draws, dialysis (if needed), gastrointestinal bleeding and surgical procedures. Iron deficiency and an inadequate supply of erythropoietin together make patients anemic.
Anemic CKD patients are often treated with Erythropoietin Stimulating Agents (ESAs), like Amgen Inc.’s (NASDAQ:AMGN) Epogen, to increase the production of RBCs. ESAs are synthetic versions of the natural erythropoietin and function in a similar manner to the natural hormone. The initiation of ESAs result in rapid increase in the production of RBCs. Besides erythropoietin, iron is another prime requirement for the production of RBCs. Thus, the rapid increase in RBC production on the initiation of ESAs involves an increased usage of iron in the body. CKD patients have low levels of iron in the body. Long-term usage of ESAs depletes the existing iron reserves in these patients and the consequent iron deficiency limits the effectiveness of ESAs. As a result, the majority of CKD patients require iron replacement therapy to replenish their iron levels.
 
Feraheme, an intravenously (IV) administered iron replacement therapy, works to replenish the iron levels, which is lost in anemic CKD patients with iron deficiency.
 
Advantages of Feraheme:
 
Avoids the Side Effects Associated with Oral Iron Replacement Therapies – Oral iron replacement therapies have limited efficacy and they do not adequately increase the body's iron levels in anemic CKD patients. Additionally, oral iron replacement therapies are poorly absorbed in anemic CKD patients, resulting in unwanted side effects such as diarrhea and cramping, often leading to the discontinuation of treatment. In contrast, the IV formulation of Feraheme provides greater amounts of iron in anemic CKD patients, while avoiding the side effects linked with oral iron replacement therapies.
 
Rapid Administration and Less Frequent Dosing – The existing IV iron replacement therapies (like Venofer from FMS/Vifor International and Ferrlecit from WPI/SNY) need to be administered slowly and in small dosages over several sessions to meet the body’s total iron requirement. The recommended dosage of Venofer is 1,000mg, which cannot be administered at a single go. 
 
  • In non-dialysis dependent CKD patients, the total dosage (1,000mg) of Venofer is divided into 5 sub-dosages (200mg each), with each sub-dosage requiring 5-10 minutes for administration. The 5 sub-dosages are given in 5 different occasions within a 14-day period. 
 
  • In dialysis dependent CKD patients, the total dosage (1,000mg) of Venofer is divided into 10 sub-dosages (100mg each), with each sub-dosage administration requiring 5-10 minutes. All these sub-dosages are administered in 10 different occasions.

Ferrlecit, which is approved only for dialysis dependent CKD patients, has a recommended dosage of 1,000mg. Like Venofer, Ferrlecit cannot be given in single administration. The total dosage is broken into 8 sub-dosages (125mg each), taking approximately 10 minutes (which sometimes can extend to an hour) for administration of each sub-dosage. These 8 sub-dosages are given over 8 consecutive dialysis sessions.

In contrast, Feraheme is rapidly administered in two 17-second injections, making it more patient friendly.

 
The Market:
 
Chronic kidney disease (CKD) is the gradual and usually permanent loss of kidney functioning, which occurs as a result of physical injury or a disease (such as high blood sugar or high blood pressure) that damages both the kidneys. This loss of kidney functioning is gradual that may take even months or years. In CKD, the tiny filters in the kidneys (called nephrons) are damaged and the kidneys ability to remove wastes from the body gets declined.
 
Based on the severity of the disease, CKD is divided into 5 categories ranging from Stage 1 to Stage 5. Stage 5 is the most severe condition, which is characterized by total or near-total loss of kidney functioning and patients requiring dialysis or kidney transplantation to stay alive.
 
Anemia, an abnormal reduction in RBCs, is a rational consequence of CKD. This is because the damaged kidneys are incapable of producing sufficient amounts of erythropoietin, a hormone stimulating RBC production. Thus, CKD patients are at high risk for developing anemia and the treatment of anemia in CKD patients is extremely important to keep them healthy.
 
To increase RBC production, anemic CKD patients are treated with ESAs. The production of RBCs also requires iron, thus increasing the utilization of the existing iron stores of the body. The continuous usage of ESAs initiates an increased usage of iron in the body, thereby causing a progressive reduction in the body’s iron reserves, resulting in an iron deficiency. This decreases the effectiveness of ESAs as a treatment of anemia. Additionally, blood loss caused by multiple blood draws, surgical procedures, dialysis as well as due to gastrointestinal bleeding, reduces the iron levels in CKD patients. Therefore, a majority of CKD patients eventually develop iron deficiency anemia, requiring iron replacement therapy.
 
Disease: - IV iron replacement therapy in anemic CKD patients
 
Market Size: - U.S.: Approximately $570 million

Patient Population: - U.S.: 354,000 anemic dialysis dependent CKD patients and 1.6 million anemic non-dialysis CKD dependent patients

 
 
The data below gives our estimated peak revenues of Feraheme:
 
·         Estimated Peak Sales - $450 M
 
·         Peak Sales/Current Market Cap - 49.08%
 
If approved, Feraheme may face competition from the existing IV iron replacement therapies, such as Venofer from Fresenius Medical Care AG & Co. (FMS)/Vifor International and Ferrlecit from Watson Pharmaceuticals, Inc./Sanofi–Aventis (WPI/SNY).
 
AMAG – Feraheme
 
  • Status: CRL Received
  • Chemical Composition: Carbohydrate-coated very small iron oxide particles
  • Rate of Infusion: Rapid
  • Time Taken for Infusion: 17 seconds
  • Session for Infusion: 2 injections
 
  • Licensing Partner: Licensing Partner: 3SBio Inc. (SSRX)

 

 
Other IV Iron Replacement Therapies
 
  • Status - Venofer: Approved     Ferrlecit: Approved
  • Chemical Composition - Iron preparations such as iron sucrose (Venofer), iron gluconate (Ferrlecit)
  • Rate of Infusion - Slow
  • Time Taken for Infusion - Venofer - at least 5 - 10 minutes   Ferrlecit - 10 minutes - 1 hour
 
  • Session for Infusion - Venofer - 5 different sessions within a 14-day period in non-dialysis dependent CKD patients and over 10 consecutive dialysis sessions in dialysis dependent CKD patients
Ferrlecit - 8 sequential dialysis sessions in dialysis dependent CKD patients
 
  • Marketing Partner - Venofer: Vifor International  Ferrlecit: Sanofi-Aventis (NYSE:SNY)
 


Agreement for Feraheme:

AMAG entered into an agreement with 3SBio Inc. (SSRX) on May 25, 2008, which granted SSRX the right to develop and commercialize Feraheme in China, initially only for the CKD indication, with an option to expand to include additional indications. The agreement is for a period of 13 years and will be automatically renewed for another pre-determined term if minimum sales levels are achieved. AMAG has received an upfront payment of $1 million and will receive additional milestone payments upon the regulatory approval of Feraheme in China for CKD and other additional indications. AMAG is also slated to receive double-digit royalties of up to 25% on the sales of Feraheme in China.
 
AMAG Product Pipeline:
 
Feraheme (Ferumoxytol) for Iron Deficiency Anemia In Patients With Chronic Kidney Disease (CKD)
 
  • Status - Complete Response Letter (CRL) Received
 
  • Patient Population - U.S.: 354,000 anemic dialysis dependent CKD patients and 1.6 million anemic non-dialysis CKD dependent patients

Feraheme (Ferumoxytol) for Magnetic Resonance Angiography (MRA)

  • Status - Phase II
  • Patient Population - U.S.: Approximately 1.5 million procedures performed annually

 

Financial Information  (Data as of May 14, 2009)

Current price : $53.85

52 wk range : $18.33 - $55.98
 
Market Cap : ($MM) - $916.76
 
EPS (FY08) : -$4.22
 
Chg in EPS (FY09E) : -21.56%
 
Revenue ($MM) FY08 : $1.90
 
Revenue ($MM) FY09E : $29.00
 
Cash per Share : $8.01
 
Historic Cash Burn /share : $4.77
 
Est. Cash Burn /share : $9.61
 
 
R&D ($MM) FY08 : $31.72
 
Source: Revere Research        
 
 
Disclosure: No Position

 

Stocks: AMAG, SSRX, AGN, FMS, SNY