AMAG's Got Room to Run

Feraheme -- approved at last.

The injectable iron replacement therapy from AMAG Pharmaceuticals(AMAG Quote) was granted final marketing approval by U.S. regulators Tuesday night, ending a long-delayed process begun in December 2007.

Shares of AMAG were up 3.4% to $56.50 in recent trading.

AMAG will begin selling Feraheme later this month. The drug, given in two, 17-second injections about a week apart, will be used by doctors to correct anemia in patients with chronic kidney disease.

Sales of injectable iron products totals about $500 million in the U.S., primarily in kidney dialysis patients but also in patients not yet on dialysis. Feraheme's more convenient dosing and broader treatment label gives it an advantage over its competitors -- mainly Venofer, sold by Luitpold Pharmaceuticals and American Regent.

AMAG will announce Feraheme's price when it launches, but the Street is generally expecting the product to be priced at a 20-30% premium to its competitors. Consensus peak sales for Feraheme currently stands around $300 million, although that will increase significantly if/when AMAG expands Feraheme's use into other indications.

Is it too late to buy AMAG? Investors not in the stock today missed out, especially last fall when the skepticism over Feraheme's approval was at its peak and AMAG shares dipped to the low $20s. But even with the stock in the high $50s, AMAG still only carries an $800 million-plus enterprise value -- which means there's upside in the stock easily into the mid-$60s based on the current Feraheme commercial opportunity.