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AMAG Fails to Get Sufficient Votes for Acquisition of Allos

AMAG Pharmaceuticals Inc., maker of the anemia drug Feraheme, said today it didn’t get enough investor votes to support its $184.8 million acquisition of Allos Therapeutics Inc.

Allos, maker of the cancer medicine Folotyn, will receive $2 million to cover expenses related to the proposed deal, Lexington, Massachusetts-based AMAG said today in a statement. The drugmaker had been working with Westminster, Colorado-based Allos to complete the all-stock acquisition valued at $2.44 a share when announced in July. Based on yesterday’s closing price the value had fallen to $1.75 a share.

The accord had faced opposition from investors including hedge fund MSMB Capital Management, which said the company was overpaying. The drugmaker now is finalizing plans to “align our expense structure” with sales projections for Feraheme, Chief Executive Officer Brian J.G. Pereira said in the statement.

“It was not the most-popular deal,” Christopher Raymond, an analyst with Robert W. Baird & Co. in Chicago, wrote in a research note today. “Feraheme as a stand-alone business does have inherent value, and we continue to believe a focused, efficient commercial effort to grow the drug is likely to be just as helpful for the stock.”

Shares React

Allos rose 0.7 percent to $1.47 at 4 p.m. New York time. The shares are down 68 percent this year. AMAG fell 0.6 percent to $13.56, and the shares have fallen 25 percent this year.

“While our strategy of adding products to our portfolio to leverage our infrastructure is important to our long-term success, we are committed to pursuing all opportunities to enhance stockholder value,” AMAG’s Pereira said.

AMAG had wanted to buy Allos to gain Folotyn, which AMAG said has a common customer base.

MSMB, which owned 5.9 percent of AMAG as of Oct. 7, had made an unsolicited bid to buy the company in August for $18 a share, or $378 million. Martin Shkreli, MSMB’s chief investment officer, said today his plans still stand.

“I have a whole management team and board of directors ready to go tomorrow,” Shkreli said in a telephone interview today. On AMAG’s plans for its cost structure, Shkreli said the company should cut jobs.

“We’ve identified 70 jobs that can be cut from AMAG,” the investor said. None of the reductions would be from the sales force, which he’d like to expand, he said.

Allos Shareholders Vote

Allos shareholders voted for the deal in a separate meeting today, Allos said in a statement. The company is “well-capitalized to fund operations through early 2014,” Monique Greer, a spokeswoman for Allos, said in a telephone interview today.

“We’re prepared right now to continue operating as we always have been,” Greer said. As for selling the company, “there’s no urgency, but of course it would be the board’s fiduciary responsibility to review any reasonable offers we might receive,” she said.

Allos had received another offer from an unidentified bidder, for $2.20 a share in cash and stock. That company withdrew its offer earlier this month, Allos said.

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