Agog Over Amag After FDA News

Can we all just stop and have a group hug around Amag Pharmaceuticals (AMAG - commentary - Cramer's Take)?

Great news Thursday: The company announced that the FDA designated the ferumoxytol resubmission as a Class 1 (two-month) response, which sets the approval decision date for Dec. 30.

This indicates that there are no major problems or significant issues outstanding and that the FDA is positively inclined to approve ferumoxytol (an injectable iron replacement therapy to treat anemia in patients with chronic kidney disease) sooner rather than later. If the opposite were true, the FDA would have classified Amag's response as a Class 2, giving the agency six months to complete the review.

Amag shares were soaring $14.90 Thursday to $33.26 on the news, signaling a sharp turnaround in investor sentiment since Oct. 20, when the FDA issued a complete response letter on ferumoxytol and asked Amag to submit additional information.

I've been an Amag bull for quite some time, although lately it's been a frustrating and painful position to hold. In a column last April I laid out the contentious issues around ferumoxytol's FDA review. On Oct. 20, I added Amag as a long pick to the Biotech Select model portfolio.

Unfortunately, worries over the ferumoxytol review, mainly tied to the drug's safety and the adequacy of Amag's approval package, have battered the stock ever since. The bear market didn't help. At one point this week, Amag was down more than 50% in the model portfolio.

I spoke briefly with Amag CEO Brian Pereira Thursday morning. Clearly, he was happy. He's not guaranteeing approval on Dec. 30 -- he'd be foolish to do so -- but throughout this process he's been resolute in his statements that the outstanding regulatory issues surrounding ferumoxytol were anticipated and would be addressed with alacrity. The company will launch ferumoxytol shortly after its approval, he says, which means January if the FDA comes through on Dec. 30.

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At the time of publication, Feuerstein's Biotech Select model portfolio was long AMAG.

Adam Feuerstein writes regularly for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.