The ongoing bull-bear tug of war over
centers on one key question: Has the company studied enough patients using its intravenous iron therapy over a long enough time period to satisfy the safety requirements of U.S. regulators?
Lately, the bears have been winning this battle, especially since Merrill Lynch biotech analyst Andrew Berens jumped onto their side of the rope.
Berens' answer to the question above is an emphatic "no," which he spelled out when he downgraded AMAG from neutral to sell on April 9. Berens' negativity toward AMAG, which actually began in February, has helped push the stock down roughly 40% this year.
AMAG shares closed Monday at $35.57.
AMAG's intravenous iron therapy, known as ferumoxytol, can be administered in two, 17-second injections, far faster than conventional intravenous irons to treat anemia.
Ferumoxytol is being developed initially for use in patients with chronic kidney disease, including those on and off dialysis. AMAG completed four phase III studies and filed for approval in the U.S. last year. The Food and Drug Administration is expected to issue its decision by Oct. 19.
Berens, citing discussions with FDA officials, claims that AMAG has taken shortcuts with the clinical development of ferumoxytol -- too few patients, too little follow-up, not enough dosing in "real world" situations to meet regulatory guidelines. Berens claims that AMAG is seeking approval of ferumoxytol as a "chronic use" treatment, which means that patients will need to be dosed repeatedly over time. As such, the FDA's safety standards are higher.
"We believe it unlikely that AMAG will be able to convince the FDA that the current development program accurately characterizes the safety profile of the drug as it is likely to be used in the 'real world' where dialysis patients receive 'repeated, intermittent use' of iron indefinitely," writes Berens in his April 9 note.
Berens further claims that AMAG's current database under review by the FDA only includes studies in which kidney disease patients received small doses of ferumoxytol for short periods of time.
The end result, says Berens: The FDA probably won't approve ferumoxytol this October, as the bulls expect. In fact, it's likely that before the October approval date arrives, the FDA will send a letter to AMAG instructing the company to run another year-long safety trial. This will push back ferumoxytol's launch in the U.S. by three years to 2011, he believes.
Is Berens right? Absolutely not, argues AMAG CEO Brian Pereira.
To hear Periera explain it, ferumoxytol is not a chronic therapy in the strict definition of the term because kidney disease patients, whether they are on dialysis or not, will only receive ferumoxytol if and when their iron stores are depleted.
ferumoxytol filing proposes is to treat iron-deficient anemia," says Pereira. Importantly, ferumoxytol will not be used to prevent iron-deficient anemia, he adds, which means that patients won't be dosed with the drug unless they need it to replenish iron in their system.
A regimen where ferumoxytol is administered to kidney disease patients quickly, only when their iron stores are depleted, is more an episodic treatment that truly mimics the real world setting in which these patients are treated, says Pereira. He rejects Berens' claim that giving repeated doses of ferumoxytol, whether patients need or not, is something the FDA requires.
Yes, some patients will receive repeat doses of ferumoxytol, but Periera says the company has data filed with the FDA to satisfy the agency's safety and exposure requirements.
"We worked closely with the FDA with respect to the design of our trials, the number of patients enrolled, the safety and efficacy database and the endpoints. How can he
Berens have a better understanding of the agency's requirements than us," says Pereira.
I'm the first one to say not to trust everything said by the CEO of a drug or biotech company. There are countless examples of investors led down the wrong path by management exaggerations or misstatements.
But in this case, I find it hard not to side with Pereira in the ferumoxytol argument. It's not that Berens doesn't present some good arguments. He does, and handicapping an FDA decision these days, especially one that seems to hinge on safety, is fraught with risk.
But when you speak with Pereira, or witness him answer questions about ferumoxytol in an investor meeting, he comes across as highly credible and assured. Moreover, this is not a guy learning the ins and outs of kidney disease and anemia on the job. Pereira is a highly trained physician and noted expert on kidney disease. He's a past president of the National Kidney Foundation and, literally, helped put together one of the seminal textbooks in the field.
So, in the Berens vs. Pereira fight, the edge, at least in my book, goes to Pereira.
There is no argument about ferumoxytol's efficacy, and the safety data presented so far at medical meetings comes up benign in terms of stuff to worry about from an FDA perspective. Intravenous iron has been a mainstay treatment for chronic kidney disease patients for years. Ferumoxytol is a much-needed improvement especially for non-dialysis patients, but it's still intravenous iron, which the FDA understands well.
Before the FDA issues its approval decision in October, look for the agency to possibly schedule an advisory committee meeting this summer to review the ferumoxytol data with a panel of kidney disease experts. This could be the first real view inside the FDA's thinking on the drug.
In the meantime, expect the bull-bear tug of war over ferumoxytol to continue.
As originally published, this story contained an error. Please see Corrections and Clarifications
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;
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