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AMAG realigns operating cost structure, closes Cambridge plant

Thursday, June 28, 2012

AMAG Pharmaceuticals of Lexington, Mass., has announced a number of changes to its operating expenses that further align its cost structure with the company’s focus on advancing Feraheme and expanding its product portfolio with commercial stage assets.

First, AMAG is moving to an outsourced manufacturing model and intends to divest the company’s manufacturing facility in Cambridge, Mass. Additionally, the company’s global phase III broad iron deficiency anemia (IDA) clinical program for Feraheme, which will support an sNDA filing later this year, will conclude this year. Along with the natural attrition of external development costs associated with the conclusion of the IDA development program, AMAG is reducing internal development expenses to match the reduced activities, and will continue to adapt development resources to meet the company’s future development needs.

“The decision to eliminate positions is never easy and I want to thank the impacted individuals who have contributed greatly to AMAG over the years. Today’s announcement signals a continuation of AMAG’s transformation into a highly focused, commercially oriented specialty pharmaceutical company,” said William Heiden, president and CEO of AMAG. “The actions that the company took in November 2011, coupled with the actions announced today, mark continuing progress in implementing a strategy to become a leaner and nimbler company focused on providing specialty drugs to hematology/oncology and hospital sites of care. These changes will allow AMAG to more efficiently make decisions, react quickly to changing market dynamics and rapidly identify and evaluate new product opportunities.”

By year-end 2012, AMAG expects to reduce its workforce by approximately 45 positions, the majority of which are expected to be associated with the company’s manufacturing and development infrastructure. Some of the eliminated positions are budgeted, open positions that the company will not fill. The company expects to incur approximately $1 million in charges associated with the restructuring, which will be spread over the remainder of 2012, with $500,000 expected to be recognized in the second quarter of 2012.

With the intended divestiture of the company’s manufacturing facility, AMAG will stop producing GastroMark and has entered into agreements with the commercial parties that sell GastroMark in the U.S. and E.U. AMAG will incur one-time costs associated with the GastroMark agreements of $1.6 million in the second quarter of 2012.

The changes implemented in 2012 will result in reduced employee-related operating expenses beginning in 2013. In addition, external R&D expenses associated with the company’s broad IDA clinical development program planned for 2012 will not recur, leading to further reductions in the company’s 2013 operating expenses. The full impact of these reductions will be communicated when the company issues its 2013 financial guidance, later this year.

The expected change in manufacturing supply chain strategy for the company will lower the costs associated with the manufacture of Feraheme. The company expects that these changes will result in lower costs of goods sold beginning in 2014.

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