Assistant Managing Editor

AMAG Pharmaceuticals Inc. is picking up $60 million up front in a potential $280 million deal with Takeda Pharmaceutical Co. Ltd. for iron replacement therapy Feraheme (ferumoxytol), some much-needed good news for the small biotech still dealing with fallout from the drug's safety data reported earlier this year.

The drug had an impressive launch following its July approval, but a single analyst downgrade in February based on reports of adverse events sent the stock dropping. Lexington, Mass.-based AMAG held an emergency conference call and managed to convince analysts that the serious adverse events rate of 0.1 percent was well within expectations, but the damage was already done.

AMAG now faces a class-action lawsuit alleging that it withheld information about adverse reactions in some patients taking Feraheme, though the company responded in an SEC filing that the claims were "without merit," and said it intends to "vigorously" defend against those allegations.

Takeda clearly isn't worried. The Osaka, Japan-based company offered financial terms that Leerink Swann analyst Joseph Schwartz called "better than we expected, given the genericized nature" of the iron replacement markets outside the U.S.," and will add Feraheme to its growing armament of anemia treatments.

The pharma firm already has rights to Hematide, a Phase III-stage peptide-based alternative to existing erythropoiesis-stimulating agents from Affymax Inc., of Palo Alto, Calif. That drug would be a nice complement to Feraheme in the chronic kidney disease space, though AMAG CEO Brian Pereira assured investors that Feraheme would still be able to "stand on its own" if Hematide encounters a development or regulatory hitch.

"The synergies in the nephrology space are great, but they're not a must" for Feraheme, he added. Takeda also has a "broad reach in multiple segments," which will be important when the companies seek to expand the indications beyond the CKD market.

Under the terms, Takeda will be responsible for commercialization in Europe, Canada, Turkey, the Commonwealth of Independent States and the Asia Pacific countries excluding Japan, China and Taiwan. It's possible that Japan could be added later, though, for now, that territory has not been a priority in Feraheme's development plan.

Given its previous clinical success with Feraheme, AMAG will continue being responsible for development, with trials in iron deficiency anemia slated to start sometime this year. The biotech also will handle the regulatory filing for Europe, expected around midyear. A new drug application was submitted to Canadian authorities late in 2009.

Since its launch in the U.S., Feraheme sales have bested expectations. For the fourth quarter, AMAG posted net revenues of $12.8 million.

Part of that is due to the fact Feraheme is priced at a premium, about 40 percent higher than market-leading Venofer (iron sucrose) from Bad Homburg, Germany-based Fresenius Biotech. That's unlikely to happen in Europe, where there already are low-cost iron replacement generics.

But, on the plus side, the iron replacement market in Europe is growing, Pereira estimated the EU iron market currently to be about $150 million. And, he pointed out, physicians overseas are more likely than U.S. doctors to prescribe an iron therapy before increasing ESA doses.

Takeda has final authority over pricing the drug in its territories.

AMAG has not disclosed how it will recognize funding from the transaction, though David Arkowitz, the firm's chief financial officer and chief business officer, said none of the up-front money will be recognized in first-quarter earnings.

Not that AMAG is hurting for cash. The company reported cash, equivalents and short-term investments totaling $129.5 million as of Dec. 31.

Shares of AMAG (NASDAQ:AMAG) closed Thursday at $35.02, up 11 cents.