(Adds CEO and analyst comments, background, updates stock price)
By Vidya L Nathan
Sept 29 (Reuters) - Amag Pharmaceuticals Inc entered the women’s healthcare business by acquiring privately held Lumara Health Inc for $675 million in its biggest deal ever, sending its shares up as much as 23 percent to a four-year high.
The cash and stock deal gives Amag access to Lumara’s Makena, the only approved product designed to reduce the risk of preterm birth, and Amag CEO William Heiden said his company was on the hunt for more such deals.
“We’ll target to acquire or license additional assets within the women’s health segment,” Heiden said in a conference call.
The deal will exclude a portfolio of women’s health products, which Lumara, formerly known as K-V Pharmaceuticals Inc, said it would sell to Perrigo Co Plc for $82 million in cash.
Analysts said Makena’s addition to Amag sales channel works well with the company’s lead product Feraheme to treat iron deficiency in patients suffering from chronic kidney disease (CKD).
“Makena ... has the potential to be very complementary if Feraheme’s label were someday broadened beyond CKD to include iron deficiency anemia (IDA) since women’s health is the second largest segment for IDA behind CKD,” Leerink Partners LLC analyst Joseph Schwartz said in a note.
However, the U.S. Food and Drug Administration had denied approval to market Feraheme as a treatment for iron deficiency anemia, asking for more data on risks of serious hypersensitivity, heart problems and deaths.
“If every eligible patient were treated with Makena, this represents greater than a $1 billion market potential,” Heiden said.
Makena has sales of more than $130 million in the 12 months ending Aug. 31, Amag said, while Amag’s total sales were $39.6 million in the six months ended June 30.
Amag said its expects the deal to add to profit immediately and the two drugs to generate sales of $350 million in 2015.
Perrigo said the portfolio it is buying had sales of more than $15 million in the year ended March 31.
Since its approval in February 2011, Makena had faced stiff competition from pharmacies compounding a similar, and far cheaper, drug using over-the-counter ingredients.
That practice was halted in November 2013 when the U.S. Congress enacted the Drug Quality and Security Act, which effectively prohibited compounding any drug, Heiden said.
Lumara is eligible to receive an additional $350 million based on hitting certain sales milestone.
Amag said it would fund the deal, which has a cash component of $600 million, through term loan financing from Jefferies Finance LLC, cash on hand and $75 million raised by issuing stock.
Amag’s shares rose 23 percent to $28.50 in late afternoon trading.
Leerink Partners LLC and J.P. Morgan are Amag’s financial advisers, while Latham & Watkins LLP and Goodwin Procter LLP are its legal advisers.
Lumara’s financial advisers are Perella Weinberg Partners and T.R. Winston & Co, while its legal adviser is Dechert LLP. (Reporting by Vidya L Nathan; Editing by Ted Kerr and Savio D’Souza)