AMAG Pharmaceuticals to buy Lumara's maternal health unit for potentially more than $1 billion

AMAG Pharmaceuticals entered a definitive agreement to acquire Lumara Health's maternal health business, including the pre-term labour drug Makena (hydroxyprogesterone caproate), under a deal potentially worth more than $1 billion, the companies announced Monday. Shares in AMAG rose as much as 21 percent on the news.

The transaction includes a $600-million cash component, as well as $75 million in stock, plus an additional contingent consideration of up to $350 million based on the achievement of certain sales milestones for Makena. Lumara, previously known as KV Pharmaceutical, will function as a separate business within AMAG, reporting directly to AMAG CEO William Heiden, while current Lumara executives are expected to join the company's leadership team by the time the agreement is finalised. Further, AMAG stated that the deal is expected to generate combined product sales of $350 million next year and be immediately accretive, with cost synergies of at least $20 million annually.

"This is a truly transformative transaction that will propel AMAG into a profitable, high-growth multi-product specialty pharmaceutical company," remarked Heiden. He added that the deal "will facilitate future product acquisitions in an attractive new therapeutic area and is an excellent strategic fit" with the company's plans to expand the market for its iron-deficiency anaemia drug Feraheme (ferumoxytol).

AMAG said Makena, which was approved in 2011 by the FDA to reduce the risk of pre-term births in pregnant women who delivered at least one pre-term baby spontaneously in the past, amassed more than $130 million in revenue in the 12 months ended August 31, up 72 percent year-over-year. The drugmaker added that based on sales for the three-month period ended August 31, Lumara's maternal health business, including Makena, is expected to generate more than $180 million in annualised net sales.

Lumara Health also announced a separate agreement Monday to divest its women's healthcare business to Perrigo for $82 million. The assets acquired by Perrigo include Clindesse (clindamycin), Gynazole-1 (butoconazole) and Evamist (estradiol). Perrigo CEO Joseph Papa remarked that the drugmaker "is uniquely positioned to realise potential manufacturing synergies given the fact that we currently manufacture two of the three products included in this portfolio for Lumara."

The transactions, which have been approved by the boards of the three companies, are expected to close by the end of the year.

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