What happened

After the company reported third-quarter financial results that failed to impress, shares in AMAG Pharmaceuticals (AMAG) lost 12.7% of their value on Thursday.

So what

AMAG Pharmaceuticals has a problem on its hands. Its best-selling drug, Makena, has lost exclusivity; generic alternatives are starting to cut away at its sales, despite the company's efforts to move patients to a new subcutaneous auto-injector.

A man slapping his forehead, in front of a chart of a declining share price


In the third quarter, management reported revenue of $122.2 million, down from $124.3 million in the third quarter of last year because Makena revenue declined 18% to $80.2 million. The company was able to offset some of Makena's weakness with sales growth for its other drugs, Feraheme and MuGard; their combined revenue grew 41% to $37.1 million. Sales of Intrarosa, which launched in Q3 2017, were $4.9 million in the period.

The revenue failed to overcome $141.6 million in operating expenses in the quarter, so the company reported a net loss of $64.7 million.

Now what

AMAG Pharmaceuticals did make some progress on its balance sheet in the quarter, but it still owes a lot of money. This summer, it sold its Cord Blood Registry business for $530 million, which it used to pay off $475 million of high-yield debt. That move eliminates about $40 million in annual interest expense.

Nevertheless, AMAG Pharmaceuticals still has $341 million in total short- and long-term debt -- and that debt, plus ongoing losses, makes the $427.5 million in cash on its books less compelling. The company is guiding for full-year 2018 revenue of $470 million to $490 million, and an operating loss of $62 million to $72 million.

Until we get more insight into how 2019 sales will shape up, given the risk to Makena's sales, I'd wait on the sidelines on this stock.