AMAG Pharma Should Jump on Jefferies Note

Jefferies is with a big call on AMAG Pharma (NASDAQ:AMAG), saying they insights provided by 2 key nephrology consultants, they feel confident that: 1) the FDA does not require chronic dosing studies for approval of new IV irons; and 2) ferumoxytol is well positioned for first-pass approval. Recent sell-off has created a buying opportunity. Reiterate Buy and $99 price target.

Consultant #1 met with FDA just 5 weeks ago to solicit advice on the appropriate clinical development program for a new IV iron. Importantly, he met with members of the division of Hematology and Medical Imaging, the same division currently reviewing the ferumoxytol NDA (PDUFA is October 19th). According to the consultant, the FDA reiterated its long-standing historical position that chronic exposure studies are not required for approval of IV irons. The FDA continues to view IV iron as a "repletion therapy for a deficiency state," which only requires a short course of treatment, and not as a long-term chronic therapy in the traditional sense.

Consultant #2 attended two meetings between AMAG and FDA to get advice on the design of the ferumoxytol clinical trial program. Our consultant noted that the FDA guidance provided to AMAG was "crystal clear," with "no room for misinterpretation." Firm continues to believe AMAG carefully followed the advice provided by the FDA.

Both consultants called speculation that AMAG will need to do additional long-term ferumoxytol studies "overblown." Both also predicted first-pass approval for both dialysis and non-dialysis CKD.

Notablecalls: I'm going to call this one Actionable here. The main problem in AMAG is tied to fears the FDA will ask for more data (meaning more trials & longer time-to-market) on its ferumoxytol drug.

Now, Jeffco is out with a call (backed by two consultants w/ at least one having first-hand experience w/ the FDA regarding this matter) saying the FDA will likely not ask for any more data.

AMAG stock has been doing the dying swan act (see Lord Tennyson) for quite some time. The chart looks good for a bounce and I would not be surprised to see the stock hit $42 as soon as today. It's certainly ready to squeeze some bear crotch.