Amag to slash workforce, shares rise

Amag to slash workforce, shares rise

Stock Market Predictions

(Global Markets) - Amag Pharmaceuticals Inc's (AMAG.O) chief executive resigned and the biopharmaceuticals company said it will cut its workforce by a quarter to slash costs, sending its shares up 16 percent in early trade on Friday.

The restructuring comes just two weeks after Amag's plan to buy Allos Therapeutics Inc (ALTH.O) fell apart, after its shareholders refused to approve the deal.

The company expects to record restructuring charges of about $3.2 million -- most of them in the fourth quarter -- but hopes to reduce 2012 operating expenses by $20-$25 million.

Amag itself had received a buyout offer from private equity firm MSMB Capital Management in August.

"I don't think we have ruled out anything at this point among the alternatives," Senior Vice President Chris White said on a conference call with analysts, hinting that the company may be open to selling itself.

The Lexington, Massachusetts-based company expects a low double-digit growth for its flagship product Feraheme -- an anemia drug -- next year.

Amag's Chief Executive Brian Pereira would leave, effective immediately, and Chief Financial Officer Frank Thomas would take over as the interim CEO, the company said.

For the quarter ended September 30, the company posted a net loss of $16.6 million, or 78 cents a share, compared with a loss of $17 million, or 81 cents a share, in the year-ago period. Revenue was up 10 percent at $17.6 million.

Analysts expected a loss of $1 a share on revenue of $16 million, according to Thomson Global Markets I/B/E/S.

Amag shares were up 14 percent at $15.71 on Friday morning on Nasdaq after earlier touching a high of $15.98 -- a level last seen in July.

(Reporting by Zeba Siddiqui in Bangalore; Editing by Joyjeet Das)