AMAG Pharmaceuticals Inc. is a biopharmaceutical company that utilizes its proprietary nanoparticle technology for the development and commercialization of therapeutic iron compounds to treat anemia and novel imaging agents to aid in the diagnosis of cancer and cardiovascular disease. Ferumoxytol the company's key product candidate is being developed for use as an intravenous iron replacement therapeutic for the treatment of iron deficiency anemia in chronic kidney disease patients.Combidex? the company's other product under development is an investigational functional molecular imaging agent consisting of iron oxide nanoparticles for use in conjunction with magnetic resonance imaging to aid in the differentiation of cancerous from normal lymph nodes. In March 2005 the company received an approvable letter from the FDA with respect to Combidex subject to certain conditions. Amag Pharmaceuticals Inc. has a market cap of $694 million; its shares were traded at around $40.54 with and P/S ratio of 358.1.
Highlight of Business Operations:Total revenues were $3.0 million and $0.3 million for the three months ended September 30, 2009 and 2008, respectively, representing an increase of approximately $2.7 million, or greater than 100%. In June 2009, the FDA approved Feraheme for use as an IV iron replacement therapy for the treatment of IDA in adult patients with CKD and in July 2009, we began shipping product to our authorized wholesalers and distributors. As a result, the increase in revenues was primarily due to product sales of Feraheme during the three months ended September 30, 2009 following its commercial launch in July 2009.
During the three months ended September 30, 2009 certain dialysis organizations purchased Feraheme from us under our Launch Incentive Program. These purchases were made under agreements which provided these customers with an opportunity to purchase Feraheme through September 30, 2009 at discounted pricing and further provided for extended payment terms and expanded rights of return. As a result, in accordance with current accounting guidance which requires that we defer recognition of revenues until we can reasonably estimate returns related to those shipments, we have deferred the recognition of any revenues associated with these purchases until our customers report to us that such inventory has been utilized in their operations. Any purchases returned to us will not be recorded as revenue. Accordingly, as of September 30, 2009, we have recorded $10.9 million in deferred revenues, representing all product purchased under the Launch Incentive Program and held by the dialysis organizations at September 30, 2009, net of any applicable discounts and estimated rebates, which are included in our products sales accruals as of September 30, 2009. In addition, we have deferred the related cost of product sales of approximately $0.4 million and recorded such amount as finished goods inventory held by others as of September 30, 2009. Because we are unable to reasonably estimate the amount of inventory that may be returned under this program, if any, we cannot provide any assurance that amounts reported as deferred revenue and associated with this program will be utilized by our customers and thereby recorded by us as product revenues in our future condensed consolidated statements of operations.
We incurred $0.1 million and $3,000 of costs associated with product sales, or 4% and 13% of net product sales, during the three months ended September 30, 2009 and 2008, respectively. Our cost of product sales for the three months ended September 30, 2009 was comprised primarily of manufacturing costs associated with Feraheme. Based on our policy to expense costs associated with the manufacture of our products prior to regulatory approval, certain of the costs of Feraheme sold during the three months ended September 30, 2009 were previously expensed prior to FDA approval, and therefore are not included in the cost of product sales during this period. We continue to hold Feraheme inventory that has been previously expensed, and once such inventory has been fully depleted, we expect our cost of product sales will increase, reflecting the full manufacturing cost of the inventory. We anticipate that costs of product sales will increase as sales volume increases, and we also expect our cost of product sales to increase as a percentage of net product sales as previously expensed Feraheme inventory is depleted. We cannot predict when such previously expensed materials will be exhausted, as this will be dependent on the commercial success of Feraheme in the U.S.
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