This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Next Step for Amag's Board: Fire CEO, Sell the Company.

LEXINGTON, Mass. ( TheStreet) -- Amag Pharmaceuticals (AMAG - Get Report) shareholders did the right thing Friday by rejecting the proposed merger with Allos Therapeutics (ALTH).

The next step should be just as clear: Amag's board needs to wake up, fire CEO Brian Pereira begin a formal auction process to find an appropriate buyer for the company's only valuable asset, the therapeutic iron compound Feraheme.

By killing the Allos deal, Amag shareholders are sending a very clear message to the board that they have no confidence in Pereira's leadership. Pereira had his chance to turn Amag around but he failed. It's time to put someone else in charge.

"We recognize the need to augment our leadership to align the skill sets of the management team with the needs of a multi-product specialty pharmaceutical company and have embarked on this effort," said Amag spokeswoman Amy Sullivan in response to my question about whether Pereira should resign.

Does "augmenting our leadership" mean sending Pereira packing? Sullivan didn't say, but let's hope so. Adding another layer of middle managers at Amag isn't going to solve the problem.

On a conference call following the vote, Pereira says he's heard from shareholders who believe in his strategy of adding new drugs to leverage the commercial infrastructure built to market Feraheme. Yet if that's true, why was Pereira's first choice to bolster Amag's portfolio -- the floppish cancer drug Folotyn -- so universally panned?

Sure, it would be great if Amag could license or acquire additional drugs to diversify beyond Feraheme, but Pereira isn't going to be the guy to accomplish that goal. He botched the Feraheme launch then delivered the Allos deal dead on arrival. With Amag's credibility even more tarnished now, Pereira isn't likely to buy or license other new drugs.

Feraheme can be a moneymaking drug in the hands of a company with an existing commercial infrastructure. Amag's board needs to reach out to Amgen (AMGN - Get Report), Johnson & Johnson (JNJ - Get Report), Takeda and others. Feraheme's value to a potential buyer is likely to increase if results are positive from an ongoing phase III study in iron deficiency anemia.

The road ahead for Amag's board is simple: Fire Pereira. Sell the company.

Shareholders have suffered enough. It's time to do something right by them.

--Written by Adam Feuerstein in Boston.

>To contact the writer of this article, click here: Adam Feuerstein.

>To follow the writer on Twitter, go to http://twitter.com/adamfeuerstein.

>To submit a news tip, send an email to: tips@thestreet.com.

Follow TheStreet on Twitter and become a fan on Facebook.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AMAG $70.70 2.37%
AMGN $154.99 0.96%
JNJ $98.47 1.04%
AAPL $126.60 0.94%
FB $86.91 1.34%

Markets

DOW 17,757.91 +138.40 0.79%
S&P 500 2,077.42 +14.31 0.69%
NASDAQ 5,013.1230 +26.2560 0.53%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs