AMAG Pharmaceuticals (AMAG) Q4 2018 Earnings Conference Call Transcript

AMAG Pharmaceuticals (AMAG)
Q4 2018 Earnings Conference Call
Feb. 7, 2019 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants
  
  See all our earnings call transcripts.

Prepared Remarks:

Operator

Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the AMAG Pharmaceuticals 2018 earnings call. [Operator instructions]It is now my pleasure to turn today's call over to Ms. Linda Lennox, vice president, investor relations.

Linda Lennox -- Vice President, Investor Relations

Thank you, Regina. Good morning and welcome to the AMAG Pharmaceuticals conference call to discuss our 2018 financial results. Earlier this morning, we issued a press release. For those of you who don't have a copy, you can access it in the Investors section of our website at amagpharma.com.

Please be reminded that remarks made during this call may include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. We want to emphasize that these forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those discussed in such forward-looking statements. Please refer to our 2017 Form 10-K and subsequent filings with the SEC for a full review of the risks and uncertainties associated with our business. On today's call, we will discuss certain non-GAAP financial measures with respect to our performance.

We use these non-GAAP measures for financial and operational decision-making and as a means to evaluate our performance because we believe they better represent the ongoing economics of our business. The definitions of our non-GAAP measures are set forth in our earnings press release which was filed with the SEC today. Copies may be obtained at sec.gov and in the Investors section of our website. With me on today's call are Bill Heiden, our president and chief executive officer; Nik Grund, our chief commercial officer; Dr.

Julie Krop, our chief medical officer; and Ted Myles, our chief financial officer. Let me quickly run through the agenda for this morning's call. Bill will briefly review the accomplishments of 2018. Nik will then provide a quick update of our commercial product portfolio.

Julie will review the product set we have in development. Today, we'll be providing a bit more background on our Ciraparantag program so that everyone gets a bit more detail on this product and why we're so enthusiastic about its potential. And then Ted will provide a review of the 2018 financials as well as looking ahead to our plans for 2019, and then we'll open up the call for Q&A. With that, it's my pleasure to now turn the call over to Bill.

Bill?

Bill Heiden -- President and Chief Executive Officer

Thank you, Linda, and good morning to all of you joining us on the phone. So, let's get started with a quick review of the achievements 2018. I won't go through each and every accomplishment listed here. It's a long list, and we're proud of the progress we made last year.

The two big themes for 2018 that strike were, first, strong development and regulatory success, specifically, with two important FDA approvals and the acceptance for filing of a new drug application; and second, the continuing transformation of the company to a more balanced story of commercial and development-stage products. We acquired two novel drug candidates in areas of high unmet medical need and also sold the business, enabling the early repayment of a $475 million high-yield note. In terms of financial accomplishments, you can see on this slide, the progression of increasing guidance three times last year and the final achievement highlighted in the box in green of our final results that are consistent with the preliminary financial results we released last month, $474 million in total revenue, $47 million operating loss, and a $121 million in adjusted EBITDA. Versus the original guidance issued in January of 2018, revenues exceeded by $64 million and adjusted EBITDA exceeded by $50 million.

The biggest contributors to that revenue success were the products that we have been focused on at the company over the last few years, Feraheme and Makena. And Nik can provide a bit more color on those products, 2018 performance, and prospects for 2019. Nik?

Nik Grund -- Chief Commercial Officer

Thanks, Bill. Feraheme team had a phenomenal year with record revenue of $135 million, compared to almost $106 million in 2017. That's 27% increase over last year in a highly competitive marketplace. This growth was driven by our strong commercial engagement with customers, where we highlighted Feraheme's expanded clinical utility and strong differentiation as a result of the product label approved in February 2018.

In addition, performance-based contracting helped drive significant volume increases in existing customers and new customers while maintaining stable year-over-year net price per gram. Highlighting just one element of Feraheme's success in 2018, the number of customers ordering Feraheme in quarter four increased greater than 20% versus the prior year. Throughout 2018, we continued to take market share and in quarter four reached an average market share of 16.6%, up 5 percentage points from quarter four of 2017 and an even higher market share in the hematology oncology segment. And we not only grew share, but we also participated in the market that grew significantly versus the prior year with market volume growing 8% in 2018.

So, excellent progress in a growing market, where we grew market share and revenue with the expanded label and we expect this growth to continue in 2019. Turning to Makena. On the left of Slide 8, you can see that 2018 sales of Makena were just over $322 million, and you can see how that [Inaudible] intramuscular subcutaneous auto-injectors can authorize generics. In the fourth quarter, the subcu auto-injector contributed $35 million.

You may recall that we mentioned in January that we had some short-term supply constraints with the subcu auto-injector in the fourth quarter, which resulted in our reduction in channel inventory in the quarter and impacted fourth-quarter net revenues. That has now been resolved, and so we expect Q1 revenues to be positively impacted as inventory levels return to normal. Makena subcu auto-injector continues to have broad payer coverage and strong customer support with the help from Makena Care Connection, where we see the results of the strong physician office support with nearly 60% of Makena prescriptions being written -- dispensed as written. Also, in the fourth quarter, the subcu auto-injector captured 46% market share of all FDA-approved hydroxyprogesterone caproate or HPC, prescription volume.

[Inaudible] authorized generic held 27% of the market in the quarter. So what that means is that 75% of hydroxyprogesterone caproate in the market is supplied by AMAG. We continue to work hard to defend the Makena brand and continue to feel good about our ability to maintain a portion of this market with our next-generation auto-injector and that [Inaudible] will continue to be a strong player in the generic IM market segment.

Bill Heiden -- President and Chief Executive Officer

Thanks, Nik. Now as we look to the future, there is a much longer list of key value drivers for AMAG. Feraheme and Makena are important pieces of the strategy as these two products will continue to perform and will provide the bulk of the funding for the launch and development of the rest of the company's portfolio. So, let's start with an update on the launch of Intrarosa.

Nik Grund -- Chief Commercial Officer

Thanks, Bill. As shown on the left of Slide 10, sales of Intrarosa in 2018 were just over $16 million. The vulvovaginal atrophy or VVA market grew over 13% in 2018. Importantly, the number of total prescriptions for Intrarosa grew to over 159,000 as the healthcare provider base grew to more than 13,000 prescribers in 2018.

Overall, prescription market share continues to grow, and our share in those patients covered by commercial insurance tripled in 2018 to 6.4%. As a reminder, we have had no access to Medicare patients, where the older estrogen products were covered by Medicare. It's important to note that for those physicians actively writing Intrarosa in quarter for for commercially insured patients, Intrarosa has garnered approximately a 24% market share, demonstrating very strong support for Intrarosa by writing physicians. At the start of the new year, we launched a new patient co-pay plan designed to provide patients with an affordable co-pay, but cap with monthly benefit per prescription.

With this new program we designed, we expect to see a meaningful increase in our average net selling price per unit for Intrarosa in 2019. In September, we launched our direct-to-consumer branding campaign, and we've seen excellent engagement from women. This campaign includes an integrated media plan and patient support program as well as an option for visitors to immediately discuss treatment with a telemedicine physician. In fact, we've already seen a number of women put through to our telemedicine partner, where we believe a portion have already received an Intrarosa prescription.

The campaigns have reached over more than 20 million women with more than 1 million visitors to the unbranded website and more than 700,000 visitors to Intrarosa.com. Our goal is to access the 90% of women with [Inaudible], who are not on prescription therapy and who tell us the No.1 reason that they don't pursue treatment is that they do not want estrogen therapy. Since launch, we have been focused on our strategy in building up to a patient-focused strategy. When we launched Intrarosa in July of 2017, our priority was to create affordable access for all patients and to increase market awareness among healthcare providers.

Our co-pay savings card was an important part of ensuring early, unencumbered access for patients, who then provided positive feedback to their physicians on the clinical benefits of Intrarosa. In 2018, our goal was to increase the number of healthcare providers and to make Intrarosa their first choice in treatment of dyspareunia. As we have discussed, we launched our unbranded condition-awareness campaign, which included digital advertising and a significant presence on Facebook with the help of an Emmy-nominated actress Cheryl Hines. With the branded campaign, we wanted to then initiate action by women to ask their physicians for Intrarosa.

As we entered 2019, our branded consumer campaign is in full swing and we discussed we are seeing good initial engagement. Our combined sales force, focused on Intrarosa and Makena subcutaneous auto-injector, allows us to maximize our strong relationships with OB/GYNs, ensuring continued high level share of voice. Our co-pay card redesigned will bolster ASP, and I look forward to continuing to update you on the progress throughout the year.

Bill Heiden -- President and Chief Executive Officer

Thank you, Nik. And so, the three commercial products are forecasted to continue to generate revenues of nearly $400 million in 2019. And in terms of new product development, we expect meaningful progress across each of these three programs, which Julie will now tell you about.

Julie Krop -- Chief Medical Officer

Thanks, Bill. As you can see on the slides, there are a number of significant milestones throughout 2019 and the first half of 2020 and a lot of work in front of us. I'll start off with Vyleesi, which is currently under review with the FDA for the treatment of low libido associated with the stress. As we recently disclosed, FDA has requested that we conduct a short-duration ambulatory blood pressure monitoring study in a small number of healthy volunteers.

We've initiated that study and expect to have results submitted to the agency prior to the PDUFA date of June 23. We look forward to the FDA's decision and the potential launch of Vyleesi in the second half of the year. AMAG-423 is currently in development for the treatment of severe preeclampsia, which represents a large unmet medical need, with very serious potential health consequences for both the mother and the baby. We have reiterated we -- sorry, we have reinitiated study sites in the Phase 3b/3a study and are in the process of initiating additional investigator sites both in and outside the U.S.

We are aggressively targeting to complete patient enrollment by the end of this year and report top-line data in the first half of 2020. Ciraparantag is the newest addition to our development pipeline, and I will review this program in more detail over the next few slides. Let me start by providing a little bit of background on the anticoagulants. These are an important class of drugs designed to reduce the risk of abnormal clot confirmation.

The most common reasons for prescribing an anticoagulant are to reduce the risk of stroke in patients with atrial fibrillation and to reduce the risk of pulmonary emboli in patients with deep vein thrombosis or DVTs. The need for anticoagulants is rapidly expanding as the baby boomer population ages and currently approximately 2% of the population in developed countries are taking an oral anticoagulant. No acts were introduced to the market in 2010. Agents in this class include Xarelto, Eliquis, [Inaudible], and Pradaxa.

There are currently 6 million patients in the United States on these agents, and that is expected to increase. In fact, this past October, an expanded label was approved for Xarelto to reduce the risk of major cardiovascular events in patients with underlying coronary or peripheral vascular -- peripheral artery disease. In addition, just last month, the American Heart Association issued new guidelines that recommend the use of NOACs over warfarin in the majority of patients with atrial fibrillation. Despite their many advantages, NOACs, like other anticoagulants, place patients at increased risk for serious bleeds, which occur in about 1.5% to 2% of these patients annually.

For these patients, a rapid-acting reversal agent could be lifesaving. Reversal agents may also be critically important in patients taking NOACs that experience severe trauma or require emergency surgery. There are currently two approved reversal agents on the market today. For completeness, I have included the product characteristics for both on the table shown but what I want to focus on is the differentiated profile of Ciraparantag, which has many potential advantages over existing reversal agents.

Ciraparantag is a small molecule that binds to and blocks the effect of the most commonly prescribed NOACs as well as [Inaudible], a low-molecular weight [Inaudible]. What is most important to a clinician taking care of the patient, who has a serious bleed while on a NOAC, is to have the ability to rapidly reverse its anticoagulant effect so the patient's bleeding can be quickly controlled. Limiting the time from arrival in the hospital to administration of the reversal agent is a paramount importance, so a drug like Ciraparantag that does not require any preparation and is immediately ready for use is ideal. Importantly, in clinical studies, Ciraparantag has demonstrated a sustained reversal effect that persists up to 24 hours, which is important for patients, who must undergo an emergent surgical procedure that requires maintenance of normal clotting capacity throughout the duration of the procedure.

Finally, from a safety perspective, Ciraparantag has not demonstrated any pro-coagulant signals to date and, therefore, we do not anticipate a box warning. Pictured here is schematic of the blood-clotting cascade. It is a complicated process with multiple steps. But what I want to focus you on is specifically the role of Factor Xa, an enzyme required for the conversion of prothrombin to thrombin and is necessarily for clot formation.

As you can see, the NOACs all work by blocking the factor and thereby inhibiting normal clot formation. Preclinical data suggests that Ciraparantag directly binds to the NOACs, preventing them from blocking Factor Xa and thus is able to restore the blood's normal coagulation pathway. When assessing the effectiveness of a NOAC or a reversal agent in healthy volunteers, the most clinically relevant endpoint is the time it takes to form a blood clot or whole-blood clotting time. With NOAC treatment, the whole-blood clotting time is increased by approximately 30% and an effective reversal agent should return whole-blood clotting time back to normal pre-anticoagulation level.

Perosphere Technologies, an independent company, is developing a small automated device called a coagulometer to more consistently and precisely measure whole-blood clotting time in our upcoming Phase 3a clinical trial. This device is currently undergoing validation and an IDE, or investigational drug exemption approval for its use will be obtained prior to study initiation. Whole-blood clotting time was the clinical endpoint used to evaluate the effectiveness of Ciraparantag in the Phase 2b clinical study. In that study, healthy volunteers were placed on NOAC therapy to increase their whole-blood clotting time and then Ciraparantag or placebo was administered to reverse or return their whole-blood clotting time to baseline pre-anticoagulation levels.

Let's now review preliminary results from that study. The data I'm going to show you now is specifically from the Xarelto cohort. A similar data was generated for Eliquis and Savaysa. In this cohort, 20 milligrams of Xarelto was dosed daily for three days to reach steady-state drug concentration.

On the third day, a simple dose of either 60 or 120 or 180 milligrams of Ciraparantag or placebo was administered. What you see on the left side of this slide is a graph of the times with the last dose of Ciraparantag or placebo on the X-axis and percent of baseline whole-blood clotting time on the Y-axis. The colored lines represent the mean whole-blood clotting time by time points for placebo and the three active doses of Ciraparantag. As you can see, all three doses of Ciraparantag rapidly returned the whole blood clotting time toward the mean baseline values versus the placebo arm in black, which naturally returns to baseline over about 8 hours, the time at which Xarelto is cleared from the circulation.

Return to normal is defined as return to within 10% of the mean baseline value. Within a half an hour, mean whole-blood clotting time for all three doses returned to below that threshold value. Even more relevant is the graph on the right side of the slide of individual response rates. In this analysis, we defined responders as individuals, who returned to within 10% or less of their baseline whole-blood clotting time value within 30 minutes of receiving Ciraparantag and remained at that level for 24 hours.

As you can see, based on this analysis, there is a clear dose response effect for the responder rate, with only the highest dose, the 180 milligram cohort, achieving 100% response rate. We believe this outcome should translate into meaningful clinical benefit for patients that experience a serious bleed while taking a NOAC. Ciraparantag has demonstrated a favorable safety profile in over 250 healthy treated subjects. The most common adverse events to date are transient mild sensations of coolness, warmth or tingling, skin flushings, and alterations in taste.

Importantly, there have been no laboratory markers indicating a pro-coagulant effect and no thrombotic or serious adverse events related to Ciraparantag in the clinical trials thus far. We have quite a few important clinical and regulatory milestones for the Ciraparantag program this year. I'm going to focus on the more near-term milestones. In the first half of this year, we plan to apply for both orphan and breakthrough designations, which will enable us to work more closely with the FDA and hopefully, expedite the overall development program.

We anticipate that the end of Phase 2b median with the FDA will take place mid-2019, followed shortly by the initiation of the Phase 3a study. At the end of Phase 2b meeting, we expect to gain alignment with the FDA on the actual design of both the 3a and 3b studies. However, based on precedent from the [Inaudible] Phase 3 program, we anticipate that the 3a trial will be a placebo-controlled study in approximately 60 to 90 healthy subjects per cohort, evaluating whole-blood clotting time as the key endpoint. Very soon after the completion of the 3a studies, we will initiate the Phase 3b/4 trial in patients and expect to submit the NDA in the first half of 2021 with the potential approval in the second half of that year.

So, a lot going on, and we'll be updating you on this program as we learn more from the end of Phase 2b meetings. Ted will now walk you through a review of our financial results and 2019 financial guidance. Ted?

Ted Myles -- Chief Financial Officer

Thanks, Julie. As a quick reminder, all of the financial information that we're presenting this morning excludes the historical results of CBR. That divestiture was accounted for as discontinued operations, and those operating results and the impact of the transaction itself appears in a separate section of our consolidated income statements. I will also note that while we typically file the 10-K within a day or two after our conference call, we decided to move this call up by a day -- by a week to align with the timing of the implementation of our sales force consolidation.

We expect to file our 10-K in the middle of February consistent with prior years. As Bill stated earlier, 2018 was a remarkable year for AMAG, and the financial story reflects this. Recall that we increased our financial guidance three times during the year, most recently on our November 1st third-quarter earnings call. I'll call your attention to $474 million of total revenue and $121 million of adjusted EBITDA.

Both of these final results were within our recently updated range and represent a substantial beat as compared to the original guidance that we published at the beginning of 2018. On the right side of the slide are a few selected key components of our financial results. Nik already covered a lot of the details behind the success in our commercial products, but I'll highlight an important component of our Intrarosa results. While the product realized significant volume growth, our net realized price was lower than we had planned to achieve in 2018.

We revised the co-pay program at the beginning of 2019, and we, therefore, believe net price will improve from its 2018 average of $77 per script. Over the course of 2019, we expect to see net price for Intrarosa improve to between $110 million and $120 per script. Importantly, we've recently entered the next phase of the Intrarosa launch, and our emphasis has shifted to a more balanced approach, where we had been focused almost exclusively on the physician call point, we are now shifting additional emphasis on direct-to-consumer engagement as a compliment to a continued physician call. Moving down the P&L.

I'll briefly call your attention to a couple of important line items. Our cost of product sales grew from $161 million to $215 million during 2018. A key driver was an increase of $28 million of noncash amortization of intangible assets. However, a shift to higher cost products is also noteworthy.

As we move from 2017 to 2018, a greater proportion of our revenues were derived from the Makena subcu auto-injector and Intrarosa. Both of these newer products have royalty obligations and higher manufacturing costs as a percentage of net revenues. We expect this mixed shift trend to continue in 2019 as both of these products grow. You'll note that R&D declined in 2018 relative to our 2017 levels.

This was based on the completion of several clinical programs in late 2017 or late 2018, notably the Feraheme IDA study and the Makena subcutaneous auto-injector program. As we look to 2019, we expect R&D spend to increase significantly, and I'll provide more detail momentarily. The increase in SG&A was consistent with our stated plans as we successfully launched Intrarosa, Feraheme broad label, and the Makena subcu auto-injector. Continued investment in the growth of these products is also contemplated in our 2019 financial guidance.Slide 22 presents the financial guidance that we published at the JP Morgan conference on January 7.

I'll spend a few minutes unpacking some of the assumptions and considerations that went into this guidance, but it's important to highlight that these numbers remain unchanged from the initial publication. At the midpoints, we are guiding to revenue of $390 million and adjusted EBITDA loss of $50 million. I'll start with R&D. Our financial guidance includes an increase in R&D spending from $40 million in 2018 to approximately $100 million in 2019.

We are investing aggressively in R&D, as we have two exciting programs that could create significant shareholder value in the near term. Key drivers of our increased investments in development include the enrollment of the Phase 2b /3a clinical trials for AMAG-423 and the recently acquired Ciraparantag program, which includes the completion of the Phase 2b trial and the initiation of the Phase 3 trial. We also plan to increase our spending in SG&A. The consolidation of our women's and maternal health sales forces that we announced today was accounted for in the development of our 2019 budget and is, therefore, fully included in our 2019 guidance.

Taking this action now represents a number of key points that I want to touch on. First, the maternal health sales force had been promoting Makena and CBR. Since the divestiture of CBR in August of 2018, the remaining reps had been focused exclusively on the Makena subcu auto-injector. And this focus has helped drive our success, converting a substantial portion of the market.

The second point is the phase of launch for Intrarosa. As mentioned earlier, the women's health sales force has done a terrific job, creating a high degree of awareness among HCPs and 13,000 physicians have written scripts for Intrarosa. With this solid foundation of awareness and physician adoption, we are entering the next phase of launch, which is more balanced between physician call point and direct-to-consumer patient engagement. This is consistent with the launch plans that we've been outlining for many quarters.

Based on the success of these products, we made the decision to combine the sales forces, creating a single sales force of 125 top-performing reps, who are well positioned to continue to drive both products. In addition to the consolidation of the two sales forces, which included the elimination of approximately 100 physicians, we also eliminated approximately 10 physicians in general and administrative functions to increase our operational efficiency. Also embedded in our guidance are the planned launch costs for Vyleesi, pending FDA approval in June, and a modest expansion of our [Inaudible] team to drive continued growth of Feraheme. While decisions like this are never taken lightly, we are confident that this was the right move at the right time for AMAG.

As we execute our plan throughout 2019, we are positioning ourselves to exit the year with a clear line of sight on the return to profitability and near-term clinical data on two potentially paradigm-shifting therapies. The strong cash flow generation from our commercial products, in combination with our strong balance sheet shown here on Slide 23, puts AMAG in a unique position. With our transformed financial profile, we're able to self-fund a number of exciting product launches and clinical development programs. We ended 2018 with $394 million of cash on hand.

Our balance sheet supports our ambitious plans. I'll now turn it back to Bill to present our key goals for 2019. Bill?

Bill Heiden -- President and Chief Executive Officer

Thank you very much, Ted. 2019 will be a pivotal year for AMAG, as we continue to expand the number of patients we touch through the growth of our three commercial products and the advancement of our three products in development. We expect to continue to have an active business development effort, pursuing both in-licensing opportunities for additional new products as well as potential out-licensing opportunities for our products in ex-U.S. territories.

We'll continue to work hard to meet or exceed the financial guidance numbers that we presented in January and that Ted has reviewed here this morning. And with that, we will conclude our prepared remarks and open the call for questions. Regina? 

Questions and Answers:

Operator

[Operator instructions] Our first question will come from the line of Ami Fadia with SVB Leerink. Please go ahead.

Ami Fadia -- SVB Leerink -- Analyst

Good morning. Thanks for the question. I've got two questions. Firstly on Intrarosa.

With the change in the copay program -- I know we were expecting some type of a dip in the prescription trends and we've sort of seen that in the last couple of weeks. Where do you see that bottoming out? And when do we expect to see the average realized price sort of get back to the $110 to $120 of script as you indicated? And then the second question is, we saw a nice uptick in the market share as well as sort of the absolute volume for the subcutaneous version of Makena. Where do you see that growing to? I understand that in order to get to your guidance range of $40 million to $50 million a quarter, you do need to see increase in your market share, where do we expect that to go and how do see pricing dynamics evolve with another generic entrant getting approved? Thank you.

Nik Grund -- Chief Commercial Officer

Thanks, Ami. It's Nik here. We'll start with the Intrarosa co-pay and then your question was where do we really see prescriptions bottoming out. I think when you look at the full year regardless of co-pay redesign, the beginning of the year for patients is a difficult time because a lot of folks are resetting their deductibles at the beginning of the year and that puts extra cash burden on patients regardless of what we've done with our co-pay program.

Then you institute a co-pay program, where, frankly, what we are doing is we are really calling out the unprofitable patients as we move forward. So I think you've already seen it. And from here on out, we've seen good growth in the last couple of weeks. So we think we're back on track, we think we've increased the profitability of our overall portfolio, including Intrarosa.

But when you specifically look at ASP, the question was when. And so I think almost immediately since 50% of our prescriptions are still new prescription volume, you're initiating those patients with $35 co-pay as opposed to the old program that was zero. So on 50% of the patients you get $35 more. You can kind of do the math and get to about '17, '18 immediately.

The rest, I think, will come throughout 2019. So, a little bit of a mix between immediate impact and some longer-term throughout 2019. Your second question is really subcu. Yes, we're very pleased with the uptake of subcu in the first part of the year.

We're seeing great acceptance to physicians. If you recall, we've had some supply constraints in quarter four that kind of pushed down on some new patient starts but we're seeing physicians reengage with subcu. Supply crisis is behind us, the channel is almost fully stocked at this point. So we're seeing really, really nice uptick.

We talked about this stabilization coming out of Q3 into Q4. And we've guided to kind of this $40 million to $50 million per quarter, and that's exactly what we're seeing. We're seeing no additional price constraints with the launch of the third generic in the marketplace, no real active payer because remember, that third generic launch was only the 5 ml formulation. So we've actually seen everything kind of fall our way at the beginning of the year.

But if another generic launches to market, we may have to give a little bit of price back to make sure we're ensuring that patients and physicians have access to what we believe is a better therapeutic option with the subcu auto-injector.

Ami Fadia -- SVB Leerink -- Analyst

Got it. Thank you.

Bill Heiden -- President and Chief Executive Officer

Thanks, Ami.

Operator

Our next question will come from the line of David Buck with B. Riley FBR. Please go ahead.

David Buck -- B. Riley FBR -- Analyst

Yes. Thanks for taking the question. First one maybe for Julie. Can you talk a little bit about for -- for your NOAC antidote, what is the hurdle to actually get breakthrough therapy? What bogey do you need to show for the FDA to agree with that? And maybe just one for Nik.

Can you talk a little bit about the IM generic market? I saw in FDA's website that there was a supply shortage listed for the intramuscular. Has that actually been solved there or will that be solved shortly? And then just maybe for Ted, can you talk a little bit about the phasing of expenses first quarter, second quarter, where do they start out, lower and then trend down or what's the phasing of some of the expenses? Thanks.

Bill Heiden -- President and Chief Executive Officer

Thanks, David. I'll ask Julie to take the first question on Ciraparantag.

Julie Krop -- Chief Medical Officer

Yes. So good question, Dave. Breakthrough designation really requires us to be able to differentiate from any existing therapeutic on the markets when existing reversal agents. I think the slides that I shared with you on the product characteristics of Ciraparantag versus the other programs -- the other products on the market, I'd say we feel very confident about especially around the ability to administer the product more rapidly, given that it doesn't need to be refrigerated, that it can be -- doesn't have to be reconstituted and can be given right away, that's key.

The lack of a procoagulant effect is another key factor that I think is strongly differentiating and then the persistence of the fact that would allow it to be used in a surgical setting unlike [Inaudible], where there is a short duration of action after completing the two-hour infusion. So, I think all those are the sort of story that we'll put together to be able to put the breakthrough designation application together, and we feel pretty confident that we can tell that story.

Ted Myles -- Chief Financial Officer

Great. Nik, you want to comment on the Makena IM?

Nik Grund -- Chief Commercial Officer

Yes. And so we can think about the generic markets or the IM market in general, we've talked about in quarter four that we really have no branded product. Our guidance doesn't anticipate branded product coming back as our third-party manufacturer. They're still having difficulty releasing lots around -- for the branded IM.

That being said, we have our secondary supplier that's really focused on producing AG material, authorized generic material for Prasco, they've done a really nice job taking market share and have about a 50% market share of the generic market. They currently have products and we anticipate another shipment to them in the next couple of weeks. So really good partnership with Prasco. But again, no branded IM in our current guidance.

Bill Heiden -- President and Chief Executive Officer

And then Ted, anything you want to say about that phasing of expenses through 2019?

Ted Myles -- Chief Financial Officer

Sure. Thanks, David. So as you know, we don't guide quarterly, we provided the guidance for the full year. But in terms of trends, a big driver of costs is, obviously, the cadence of the clinical trials.

I mean, Julie and her team are working very hard. We've transitioned the AMAG-423 trial, patients are coming through, but there's a big effort to expand the number of sites and expand the flow of patients and that's obviously a key driver of costs. So look for the patient flow more in the back half of the year.

Operator

Our next question will come from the line of Eun Yang with Jefferies. Please go ahead.

Eun Yang -- Jefferies -- Analyst

Thank you. I think you mentioned that Feraheme -- you guys expect the Feraheme to continue to grow in 2019. Are you implying the growth rate, would it be similar to what we saw in 2018?

Nik Grund -- Chief Commercial Officer

Hey, Eun, good question. If you look at Q4 alone, Q4 grew 47% in terms of volume versus the prior year. And so that was when we didn't have the broader label. So I think, it won't be that high moving forward.

Do I expect double digit growth out of Feraheme next year? Absolutely. Especially in the first quarter because we didn't get the IDA label expansion till February. So I expect a lot of that team, I think it is a little much to ask him to grow another 50% next year, but we do expect double digit increase for Feraheme.

Bill Heiden -- President and Chief Executive Officer

The only other thing I'd add, Eun, this is Bill, is as we mentioned, I just don't want to gloss over this. We saw a really nice volume growth in the market in 2018, so 8% volume growth. You could almost translate that to 8% more patients are being treated with intravenous iron in the United States, so that's nice growth. And as Ted mentioned, we are expanding, it's a modest expansion, but we are expanding our Feraheme sales force to allow our reps to call on a broader set of physicians, gastroenterologists, OB/GYNs to see if we can facilitate that market growth.So I think what you should expect to see in 2019 is continued market share growth as well as market growth, and obviously those are multiplicative when you've got market share growing as well as market growth.

So we're optimistic that 2019 will be another great year for Feraheme.

Eun Yang -- Jefferies -- Analyst

OK. And then I just want to make sure that I heard you correctly, Nik. You mentioned that R&D -- non-GAAP R&D for this year would be about $100 million?

Ted Myles -- Chief Financial Officer

Yes, Eun, this is Ted. So I tried to unpack the guidance a little bit implicit in the $50 million operating loss for 2019 is a significant investment in R&D and a little extra detail was approximately $100 million of R&D spend during the year.

Bill Heiden -- President and Chief Executive Officer

Some of that is headcount and some of that is, obviously, programs.

Ted Myles -- Chief Financial Officer

Right.

Eun Yang -- Jefferies -- Analyst

OK. And then SG&A, so you made some changes in the sales structure, but do you anticipate Vyleesi approval in second half of this year? Do you need to add a significant number of reps at the point?

Nik Grund -- Chief Commercial Officer

Yes, Eun, this is Nik. So we are anticipating Vyleesi approval in the second half of the year. We went through and we really worked with a number of folks, outside consultants and whatnot to come up with the appropriate sizing for our sales force. In anticipation of Vyleesi fitting into their bag, and remember it's six months from now.

So subcu and Intrarosa will -- and that training of the sales force will have already taken place. And they'll have the capacity and the desire, frankly, to bring this product to market. So we're pretty excited that this will fit nicely into the bag.

Eun Yang -- Jefferies -- Analyst

OK. And the last question, what's the kind of discontinuation rate for Intrarosa currently and average therapy duration? And what do you think you would need to do to improve this continuation rate? Thank you.

Nik Grund -- Chief Commercial Officer

Yes, it's kind of a magic question. I mean, this is a category where women are, unfortunately, going off therapy at a roughly 2.5 months of therapy. We're actually doing better in retention rates than all other products beside Estring, which is really a longer-based therapy anyway. So we're seeing -- we'll call it, modest improvements with the standard of care.

But it is the kind of the Holy Grail of how do you keep people on therapy because it's a disease state, which if you feel better, you have almost this desire of, "I'm better now, so I can stop taking my therapy." When in a chronic condition, it doesn't work like that. So we're trying to unlock through a number of biddings, including our DTC campaign around how to help women understand the need to stay on therapy. So we're happy with where we're at, but we're not happy that women are falling off therapy after about three months of being on treatment.

Bill Heiden -- President and Chief Executive Officer

Eun, I'll just add, this is Bill. One of the things that we've seen historically is women who are utilizing the co-pay card stay on therapy longer. And in 2019 we have changed the program such that almost all women will actually be partaking in the co-pay program. And so I think that's going to facilitate better chronicity on therapy.

Our new co-pay program should help keep women on therapy longer.

Eun Yang -- Jefferies -- Analyst

So, by six months, the discontinuation rate stands at around 50%?

Bill Heiden -- President and Chief Executive Officer

That's right. Yes.

Eun Yang -- Jefferies -- Analyst

Okay. Thank you.

Bill Heiden -- President and Chief Executive Officer

Yes. There's lots of opportunities -- yes, there's lots of opportunity to improve. Last year, our co-pay program, there were elements of it that needed to be changed. But as well, when we looked at the data, we saw that women who had the co-pay card, where staying on therapy longer.

Women who did not have a co-pay card, were dropping off therapy earlier. And so in 2019 almost all women will actually be funneled into our co--pay program. That should help.

Eun Yang -- Jefferies -- Analyst

OK. Thank you very much.

Bill Heiden -- President and Chief Executive Officer

Thanks, Eun.

Operator

Your next question will come from the line of Jessica Fye with JP Morgan. Please go ahead.

Jessica Fye -- JP Morgan

Hey, guys. Good morning. I have a couple. First up in Makena, can you remind us when you expect to report the results of the confirmatory trial? And then second one on Makena is, I think you gave the Makena subcu share of all HP volume, but I think you used to give the share of the overall market, including off-guidance mothers.

Can you provide the 4Q share based on the overall market? And I've got a couple more on the other products. I can rattle those off or let you speak to Makena first.

Bill Heiden -- President and Chief Executive Officer

Why don't we talk about Makena first, Jess? This is Bill. So you've got two questions, one, in terms of the confirmatory trial, which I'll let Julie talk about, and then Nik on the commercial side for Makena.

Julie Krop -- Chief Medical Officer

So, for the confirmatory trial we're hoping to be able to report the results by the end of the first quarter of this year, and that's on track.

Bill Heiden -- President and Chief Executive Officer

Great.

Nik Grund -- Chief Commercial Officer

So, when you think about share, I mean, the whole measure while appropriate at the time, now the number of variables are starting to increase, right, and so we don't get great data on compounding out there. We have to do an annual study on the off-guidance piece, whether that be vaginal progesterone or folks that are not taking product help. And then there is the generic piece, which in any data is always open to some variation though it is IMS data, so we feel fairly good that it's somewhat accurate. And so it starts to be hard and so this measure that we're going with now is really our go-forward measure.

But if you wanted to translate, it would be roughly 20% in comparison for subcu only, about 20%.

Jessica Fye -- JP Morgan

OK.

Bill Heiden -- President and Chief Executive Officer

All right. So, sorry. You're saying that the compounded segment would be how much of all patients [Inaudible]?

Nik Grund -- Chief Commercial Officer

Roughly 25% -- 20%, right in that range.

Bill Heiden -- President and Chief Executive Officer

Yes. Jess, this is Bill. The other -- I think this is reflective of our strategy. If you look back for the first two, three years that we were out there with Makena, the goal was to move people away from compounding, to move physicians, who were not following guidance and have those -- them follow guidance and put patients on Makena.

Obviously, since the launch of the subcu auto-injector, the strategy has really been to ensure that patients, who are going on Makena get put on the subcu auto-injector and if, unfortunately, have to go on an IM, that they're being put on the [Inaudible] generic. And that's really why we are reporting that data -- the way we're reporting it today because it's consistent with our strategy.

Jessica Fye -- JP Morgan

OK. Maybe switching to a couple of pipeline assets. On Vyleesi, Nik, I just want to make sure we're clear. You're talking about launching in the back half of 2019.

Are you expecting approval of Vyleesi by the June 23rd PDUFA? And how much time do you expect the FDA will need to review the blood pressure data?

Julie Krop -- Chief Medical Officer

Yes. This is Julie, I'll just answer the first part and then hand it over. So, we are definitely expecting the Vyleesi approval this year. And we -- by the PDUFA date, and we expect to be able to get the data to the FDA in time for them to be able to review it prior to making a decision so we're confident that we can do that.

Nik Grund -- Chief Commercial Officer

And from a commercial standpoint, we're expecting Julie's team to absolutely crush it. And so we're going to be planning for a launch in the second half of the year.

Bill Heiden -- President and Chief Executive Officer

Yes. There's a quite a bit of work going on right now, Jess, in terms of positioning. Because there is a lot of work, we are gearing up for a second half approval, June approval, and second half launch for Vyleesi.

Jessica Fye -- JP Morgan

OK. Great. And then last one on Ciraparantag. Just thinking about your ability to get credit for the [Inaudible] deal, and I appreciate you laying out the time lines for the pathway for sort of the drug side.

But among other things, in the near term, it seems like getting credit for the product's ability to advance sort of appears to hinge on convincing The Street that the [Inaudible] technology's coagulometer will be acceptable to the FDA. So I guess, prior to outright IDE approval, is there anything you'll be able to communicate that will give us a better sense of that? And can you outline your expected time line for the IDE approval?

Julie Krop -- Chief Medical Officer

Yes, so we are right now in the process of getting the pre-submission package together for the FDA, which is pre -- which we have a meeting, in other words to discuss the IDE approval and get confidence, again, in all of the validation measures that we are putting together and all the analytics that are being done right now to feel confident that we'll be able to get that approval by the mid-year of 2019. So I think there is a lot of work going on right now, making sure that all the testing -- the sophisticated device testing to assure consistency of the device precision and all that is being done with the same rigor that the FDA expects. And so I think that pre-submission meeting will be critical and that then the next step will be the IDE submission.

Bill Heiden -- President and Chief Executive Officer

Jess, just to be clear, the coagulometer is done. So the device has been made, has been tested. It's now in validation, which is the rigorous part where we collect data in preparation for the submission to the FDA. So we feel very good about this.

It's a good question. We may think about may be how we can help investors understand that the coagulometer has been significantly derisked. It's an important part of this program.

Julie Krop -- Chief Medical Officer

Yes. And I will add to that, Jess, is that we, not being a device company, but a couple of really strong device experts and to make sure that everything that has been done in the preparation and the manufacturing of the device was done to the highest standards, and that was part of our due diligence into the program. So we had an analytics person that was looking very carefully of how the validation was being done, which is in large part, a lot of the data is already that has been generated. And in addition, making sure that the device itself and the manufacturing process is currently have GMP devices, as Bill said.

So I think that gave us a great deal of confidence, knowing that we had external eyes on it as well.

Jessica Fye -- JP Morgan

OK. Is the IDE approval gating for you requesting the end of Phase 2b meeting or could you put that request and sort of have them running in parallel?

Julie Krop -- Chief Medical Officer

We can be running them in parallel. Yes, and in fact, the pre-submission meeting includes both CDRH as well as CDAR. So there are, hopefully, discussions as well around both the drug and device side.

Bill Heiden -- President and Chief Executive Officer

And we're not asking for approval for the device at this stage.

Julie Krop -- Chief Medical Officer

No, this is not approval. Just to be clear, IDE exemption is not approval, the device that would be 510(k) approval. This is purely just to convince, in other words, the agency that this is -- that the device is appropriate to be used as an endpoint in the clinical study.

Jessica Fye -- JP Morgan

OK. Great. Thank you.

Bill Heiden -- President and Chief Executive Officer

Thanks, Jess.

Operator

Your next question comes from the line of Serge Belanger with Needham & Company. Please go ahead.

Serge Belanger -- Needham and Company -- Analyst

Hi, good morning. A couple of questions on Makena. I think you had some pretty good visibility last year on the number and timing on generic approvals. Just wanted to see, what is your outlook for generics in 2019 and whether you have that same kind of visibility?

Nik Grund -- Chief Commercial Officer

Yes. Good question, Serge. So we obviously still have some visibility, it's always a little bit sketchy, because they don't have to file an ANDA, as you guys, know but we anticipate one or two additional generics here in the first half of the year as we kind of talked about previously.

Bill Heiden -- President and Chief Executive Officer

Yes. They have been approved a little later than as we mentioned previously, we had expected that there could be multiple generics in 2018 that didn't happen. So, there has been some delay. I think the good news is the market has settled, and it appears to be in a good place such that we continue to feel good about our ability to be very successful with the subcu auto-injector.

Serge Belanger -- Needham and Company -- Analyst

OK. And then a couple of pipeline questions. First on Vyleesi, do you still expect -- or do you have any more visibility for an AdCom there? And the Prasterone Phase 3 program in [Inaudible], it's listed on the ClinicalTrials.gov, but it's not in your slide deck, so just wanted to see if there was any update there.

Julie Krop -- Chief Medical Officer

Yes.

Bill Heiden -- President and Chief Executive Officer

Yes. Julie, I want to ask you to touch on Vyleesi and I'll be happy to talk about Intrarosa.

Julie Krop -- Chief Medical Officer

OK. Sure. So on the Vyleesi side, as far as an AdCom, we don't have any further information or we -- again, the FDA bass players told us that they've canceled obviously the January AdComs and that they are going to base their decision after the review of the ambulatory blood pressure monitoring study. So I think we feel pretty confident that if that -- look, reassuring to the FDA that we likely will not need one.

But again, that will be up to the FDA to make the final decision.

Bill Heiden -- President and Chief Executive Officer

And then in terms of HSDD, that was a trial that we were working closely with Endoceutics. Endoceutics is the discovery company and developer of Intrarosa. The CEO, unfortunately, passed away a few weeks ago and he was really the driving force behind this HSDD study. And so that's the first phase of that study.

The initial Phase 3 should be completed and we should be able to see those results once things settle down, I think, at Endoceutics, we should be able to see the results of that trial. But right now given the passing of Dr. Labrie, it's just -- been a little bit quiet and we'll have to reengage on that once things settle out in Endoceutics.

Serge Belanger -- Needham and Company -- Analyst

Thank you. Next question?

Bill Heiden -- President and Chief Executive Officer

Thanks, Serge.

Operator

Our final question will come from the line of David Buck with B. Riley FBR. Please go ahead.

David Buck -- B. Riley FBR -- Analyst

Yes, thanks. Just a follow-up question maybe for Ted, obviously, R&D spending going to about $100 million in 2019 and from $42 million or so in 2018 and SG&A going up significantly from the $258 million. Can you talk maybe -- you've talked about having a line of sight to return to profitability. I know you're not giving 2020 and beyond outlook, but what -- can you maybe give some comments on what you think the normal level of the spend for those line items might be once we get through some of bolus of clinical programs and the launch of Vyleesi? Thanks.

Ted Myles -- Chief Financial Officer

Yes, David. Thanks for the question. I'm reluctant to get into beyond 2019 guidance. We're very comfortable with the guidance and a lot has to happen in 2019.

We have a lot of belief in the products, the three commercial products growing and then adding a fourth commercial product. So, if you fast forward and they continue to grow into 2020 and at the same time, we reached the crest of clinical spending in terms of AMAG-423, some of the Ciraparantag trials, maybe those spend -- that spending goes down in 2020 a bit, narrowing the loss all things equal. But I made that commentary in the context of the sales force consolidation and a shift in spending to direct-to-consumer campaign. As we get -- as we exit 2019 with continued growth in the products, we could be in a position of seeing profitability, but I don't want to commit to that in 2020.

We're continuing to invest in our business to drive long-term shareholder value and we'll continue to do so.

David Buck -- B. Riley FBR -- Analyst

And maybe if I can sneak one in, what's the gross margin expectation that's baked for 2019?

Ted Myles -- Chief Financial Officer

Yes, that's a bit too granular at this point. What I did want to make sure everyone was aware of this that as subcutaneous auto-injector replaces IM, obviously, with the royalty burden in the high-single digits and slightly higher cost to manufacture that product, overall, gross margins will go down. Similarly with Intrarosa, there's a royalty burden there. And so as that continues to become a bigger piece of our total revenues, higher cost of goods, all things equal.

Bill Heiden -- President and Chief Executive Officer

We're still out to seek solid margins [Inaudible] margins.

Ted Myles -- Chief Financial Officer

Absolutely, yes. Yes.

Bill Heiden -- President and Chief Executive Officer

Yes, great. Thanks, David.

Operator

I will now turn the call back over to Bill Heiden for closing remarks.

Bill Heiden -- President and Chief Executive Officer

Great. Thank you, Regina, and thanks everybody for joining us here on the call today. Summary 2018 was a year full of many very important accomplishments here at AMAG, and I want to thank my colleagues for all their hard work, getting us to where we've got to and we are even more excited about the year ahead. Thank you very much.

Operator

[Operator signoff]

Duration: 59 minutes

Call Participants:

Linda Lennox -- Vice President, Investor Relations

Bill Heiden -- President and Chief Executive Officer

Nik Grund -- Chief Commercial Officer

Julie Krop -- Chief Medical Officer

Ted Myles -- Chief Financial Officer

Ami Fadia -- SVB Leerink -- Analyst

David Buck -- B. Riley FBR -- Analyst

Eun Yang -- Jefferies -- Analyst

Jessica Fye -- JP Morgan -- Analyst

Serge Belanger -- Needham and Company -- Analyst

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