Amag Pharmaceuticals Inc (NASDAQ:AMAG)

zzlangerhans (99.78) Submitted: 11/17/2011 12:14:15 PM : Start Price: $16.37 AMAG Score: +10.83

AMAG used to be one of my favorite trading stocks when Feraheme was still a bouncy little baby, full of potential. But Feraheme grew into a surly teen and is now a full-fledged juvenile delinquent, consistently delivering less in sales than the cost of marketing it. My only consolation is that I escaped my last purchase of the stock with a profit just before it began its steep plunge.

AMAG has rebounded somewhat recently on changes in management, workforce reduction, and the termination of an ill-advised merger plan with Allos. Those developments are all well and good, but do nothing to assuage the reality that Feraheme sales will continue to wallow and the company will continue to burn cash. They still have 229M, but in the current environment their market cap should be closer to 250M than 350M.

I suspect most of the ebullience in the stock is related to speculation of a buyout, as the company has retained Jefferies to search for ways to "maximize shareholder value". But is there anyone who can make Feraheme work? AMAG had no shortage of resources for marketing, but the realities of reimbursement in the dialysis market worked against them. The buyout may still happen but I'd put those odds at less than 20%. In the meantime, the best way for shareholders to maximize value is likely to sell their stock.