UPDATE 1-AMAG finds safety issues with kidney drug, slashes jobs

* To cut workforce by 24 percent

* Found safety issues for key drug Feraheme

* Says rate of serious events in line with drug package

* In discussions with FDA concerning label changes

* Shares fall 25 percent

Oct 28 (Reuters) - AMAG Pharmaceuticals AMAG.O found potential safety issues with its key kidney drug Feraheme, which reported declining sales, and said it will cut about a fourth of its workforce, sending the stock crashing 25 percent in extended trade.

The company said that while the 146 cases of serious adverse events it had found in a post-marketing study were within the serious event rate contained in its U.S. packaging insert, it also found life-threatening and fatal events following the study.

Feraheme is indicated for the treatment of iron deficiency anemia in adult patients with chronic kidney disease.

“During the third quarter, several factors contributed to the decline in Feraheme revenue -- provider demand in the dialysis segment declined and the overall IV iron market contracted,” Gary Zieziula, AMAG’s chief commercial officer, said.

The company said it will incur about $2.7 million in charges associated with the restructuring, the majority of which will be recognized during the fourth quarter of 2010.

The Lexington, Massachusetts-based company also reported a loss of $17.0 million, or 81 cents a share, on revenue of $16.9 million.

Analysts were expecting a loss $1.10 a share on revenue of $20.2 million, according to Thomson Reuters I/B/E/S.

AMAG shares, which have lost about half their value since it reported second-quarter results on July 28, were trading at $14.84 after the bell. They closed at $19.30 on Nasdaq. (Reporting by Rajarshi Basu in Bangalore; Editing by Anthony Kurian and Vinu Pilakkott)