For AMAG, FDA Delay Only a Flesh Wound

Editor's note: This article originally appeared in Senior Columnist Adam Feuerstein's Biotech Select newsletter on Dec. 23 and is being offered as a bonus to TheStreet.com and Real Money readers. Please click the following link to learn about subscribing to the Biotech Select newsletter.

Shares of AMAG Pharmaceuticals(AMAG Quote) fell Tuesday after the company said that unresolved manufacturing issues contributed to a delay in the approval of its injectable iron replacement therapy.

AMAG Pharmaceuticals said it had received a second complete response letter from the U.S. Food and Drug Administration, ahead of the agency's expected Dec. 30 approval decision date.

The company is seeking FDA approval for ferumoxytol, now known by its brand name Feraheme, as a treatment for iron-deficiency anemia in patients with chronic kidney disease.

AMAG Pharmaceuticals shares were down 12 cents, or 0.4%, to $33.95 in recent trading.

Clearly the Feraheme approval delay is a disappointment, and so weakness in AMAG Pharmaceuticals shares today isn't a surprise. However, the news could have been far worse. While manufacturing issues with Feraheme continue to hold up approval, the company said the FDA didn't raise any new issues or concerns in the second complete response letter.

On a conference call Tuesday morning, AMAG Pharmaceuticals CEO Brian Pereira said rather explicitly that the rate-limiting step on Feraheme's approval is the FDA sign off on all the remedial steps and plans submitted by the company to address the Feraheme manufacturing issues.

The company submitted these new manufacturing plans to the FDA in October after the receipt of the first complete response letter. It's simply taking more time than anticipated for the FDA to go through AMAG Pharamceuticals' response, Pereira said.

Most important, there have not been any new issues or problems with Feraheme's manufacturing since the FDA's previous inspection of the company's Cambridge, Mass., facility.