Last year, the U.S. Food and Drug Administration (FDA) approved Vyleesi, the second-ever treatment for premenopausal women who have low sexual desire (known as generalized hypoactive sexual desire disorder). Although investors' expectations were high, efforts by AMAG Pharmaceuticals (NASDAQ:AMAG) to commercialize the drug have gone haywire. A closer look into the drug's clinical data may reveal why.

Vyleesi is an agonist (a chemical that binds to receptors in the body) targeting melanocortin receptors in the central nervous system, which regulate sexual function. The drug is injected under the skin at least 45 minutes before sexual activities take place.

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The drug works, but just barely

According to the FDA, "HSDD is characterized by low sexual desire that causes marked distress or interpersonal difficulty and is not due to a co-existing medical or psychiatric condition, problems within the relationship or the effects of a medication or other drug substance."

In the original clinical studies, about 25% of patients taking Vyleesi saw improvement in their sexual desire, compared with about 17% of patients taking placebo. In addition, about 35% of patients taking Vyleesi saw reductions in related distress, compared with about 31% of patients taking placebo.

But let's digest these numbers for a minute. If we subtract the response in the treatment cohort from the response in the placebo cohort, then only 8% and 4% of patients taking Vyleesi saw improvements in their sexual desire and decrease in related distress, respectively. Even from an optimist's point of view, the benefit is marginal.

Also, the endpoints used during the trial were not based on anything related to physiology. While Viagra's clinical trials evaluated erectile maintenance, patients in Vyleesi's approval trials took a series of subjective questionnaires regarding their sexual activity, making efficacy claims highly prone to error even with statistical analysis involved.

Furthermore, this means three out of four women who took Vyleesi saw little to no improvement in their sexual desire. Unfortunately, pharmaceutical companies generally don't issue refunds if a treatment doesn't work. So it's very likely patients will try the drug once, see that it has little to no effect, and then never ask for a prescription again. Keep in mind that a pack of just four injectors -- enough for four sexual encounters -- cost a staggering $899, and is not covered by Medicare.

To make matters worse, the drug is intended to improve desire for sexual activities, not to enhance the experience of sexual relations, making its utility even more restricted. Indeed, three years after acquiring it from Palatin Technologies, AMAG Pharmaceuticals is now planning to divest the asset by the end of the second quarter of 2020.

But is the rest of the company worth a shot?

In short, no. Currently, AMAG has a market cap north of $250 million, is not profitable, and has recently announced its business operations will be materially impacted by the effects of COVID-19. Its entire women's health portfolio may be at risk of shutting down; this includes Makena, a drug intended to reduce the risk of preterm births but which showed no benefit upon further investigation of its clinical trial. Last year, a panelist of FDA experts voted overwhelmingly that confirmatory trials studying Makena did not demonstrate efficacy. Out of the 16 committee members, nine voted in favor of withdrawing the product from the market entirely. It is worth noting however, the drug is still being commercialized.

Another drug in this portfolio, Intrarosa, is being commercialized to alleviate pain during sex for women during and after menopause. This asset, however, is also being divested, just like Vyleesi.

The company also markets Feraheme, a nanoparticle used to treat anemia in patients with chronic kidney disease. The drug brought in nearly $167 million in revenue last year, but will lose market exclusivity as early as 2021.

In addition, AMAG has more than $100 million in net debt on its balance sheet. Overall, as its core product portfolio becomes smaller and smaller over the next two years, this is a stock biotech investors should stay well away from.