In response to winning FDA approval for a new product, shares of AMAG Pharmaceuticals (NASDAQ:AMAG) and Antares Pharma (NASDAQ:ATRS) rose by double-digits in early morning trading on Thursday. Shares were up 26% and 8%, respectively, as of 11:10 a.m. EST.
AMAG announced Thursday that the FDA has approved it's Makena subcutaneous auto-injector drug-device combination product. Makena is a drug used to reduce the risk of preterm birth in at-risk women. This new prefilled auto-injector is designed to make it easier for patients to inject themselves with Makena.
Antares Pharma stock is also rising on this news because the newly approved device utilizes the company's QuickShot technology. Under the terms of the agreement between these two companies, Antares will assemble the final product and then sell it back to AMAG at cost plus a markup. Antares is then eligible to receive royalties on net product sales plus milestone payments.
Given the news, it isn't hard to figure out why shares of both companies are rising.
This approval comes at an opportune time for AMAG. The company's orphan drug exclusivity for Makena expired a few weeks ago, which opens the door for generic competition. That could spell bad news for AMAG's financials since Makena represents about two-thirds of total company revenue. Management is hoping the auto-injector will help the company maintain its market share as generics start to hit pharmacy shelves.
As for Antares, this approval should allow the company's top line to continue growing at a fast rate. That increases the odds that the company will be able to eek out a small profit in 2018 as Wall Street expects.
The bottom line is that this FDA approval is a clear win for both AMAG and Antares. Investors who were bullish on either of those stocks on Wednesday have all the more reason to remain excited on Thursday.