AMAG Pharmaceuticals, Inc.
Annual Report 2012

Plain-text annual report

Use these links to rapidly review the documentTABLE OF CONTENTS ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATATable of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-KCommission file number 001-10865AMAG Pharmaceuticals, Inc.(Exact Name of Registrant as Specified in Its Charter)Delaware(State or Other Jurisdiction ofIncorporation or Organization) 04-2742593(I.R.S. EmployerIdentification No.)100 Hayden AvenueLexington, Massachusetts(Address of Principal ExecutiveOffices) 02421(Zip Code)(617) 498-3300(Registrant's Telephone Number, Including Area Code)Securities registered pursuant to Section 12(b) of the Act: Common Stock, par value $0.01 per share, NASDAQ Global Select MarketSecurities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes oo No (MarkOne)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934For the Fiscal Year Ended December 31, 2012oro TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGEACT OF 1934For the transition period from to  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes oo No  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days. Yes  No oo Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). Yes  No oo Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained,to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10-K.  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See definition of "accelerated filer," "large accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Checkone): Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes oo No  The aggregate market value of the registrant's voting stock held by non-affiliates as of June 30, 2012 was approximately $329,200,000 based onthe closing price of $15.40 of the Common Stock of the registrant as reported on the NASDAQ Global Select Market on such date. As of February 15,2013, there were 21,541,891 shares of the registrant's Common Stock, par value $0.01 per share, outstanding.DOCUMENTS INCORPORATED BY REFERENCE Portions of the Proxy Statement to be filed in connection with the solicitation of proxies for the Annual Meeting of Stockholders are incorporatedby reference into Part III of this Annual Report on Form 10-K. Large accelerated filer o Accelerated filer  Non-accelerated filer o(Do not check if a smallerreporting company) Smaller Reporting Company oTable of ContentsAMAG PHARMACEUTICALS, INC.FORM 10-KFOR THE YEAR ENDED DECEMBER 31, 2012TABLE OF CONTENTS PART I Item 1. Business 2Item 1A. Risk Factors 28Item 1B. Unresolved Staff Comments 55Item 2. Properties 55Item 3. Legal Proceedings 56Item 4. Mine Safety Disclosures 57 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases ofEquity Securities 58Item 6. Selected Financial Data 61Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 62Item 7A. Quantitative and Qualitative Disclosures About Market Risk 91Item 8. Financial Statements and Supplementary Data 93Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 136Item 9A. Controls and Procedures 136Item 9B. Other Information 136 PART III Item 10. Directors, Executive Officers and Corporate Governance 137Item 11. Executive Compensation 137Item 12. Security Ownership of Certain Beneficial Owners and Management and Related StockholderMatters 137Item 13. Certain Relationships and Related Transactions, and Director Independence 137Item 14. Principal Accountant Fees and Services 137 PART IV Item 15. Exhibits and Financial Statement Schedules 138Table of ContentsPART I Except for the historical information contained herein, the matters discussed in this Annual Report on Form 10-K may be deemed to be forward-looking statements that involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor provisions of the PrivateSecurities Litigation Reform Act of 1995 and other federal securities laws. In this Annual Report on Form 10-K, words such as "may," "will," "expect,""intend," and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended toidentify forward-looking statements. Examples of forward-looking statements contained in this report include statements regarding the following: our expectation to expand ourportfolio through the in-license or purchase of additional specialty pharmaceutical products, our expectation that we may receive a decision from theU.S. Food and Drug Administration on our supplemental New Drug Application sometime in the fourth quarter of 2013, our expectation that TakedaPharmaceutical Company Limited plans to file a Type II Variation with the European Medicines Agency in 2013 for the treatment of iron deficiencyanemia in adult patients, our expectation that the enrollment of our ongoing pediatric studies will take several years to complete, our intention tocommence a pediatric iron deficiency anemia study once the appropriate dose is determined, our plan to begin enrollment in the second quarter of2013 for a post-approval trial to assess the safety and efficacy of repeat doses of Feraheme for the treatment of iron deficiency anemia, our expectationthat 3SBio, Inc. will begin a clinical trial if approved by the Chinese State Food and Drug Administration, our expectation of costs to be incurred inconnection with and revenue sources to fund our future operations, our expectation that the majority of all Feraheme utilization in the U.S. will be inthe non-dialysis chronic kidney disease patient population, our expectation that final data from IDA-303 will be available in 2013, our expectationsregarding the success of our collaboration with Takeda Pharmaceutical Company Limited, including any potential milestone payments, product salesor royalties we may receive, our intention to no longer commercially manufacture or sell GastroMARK after completion of our obligations to ourlicensees in the first quarter of 2013, our expectation that we will sell our Cambridge, Massachusetts manufacturing facility in the near future, ourexpectations regarding the manufacture of all Feraheme/Rienso drug substance and drug product at our third-party manufacturers, our expectationsregarding the timing of regulatory approval by the European Medicines Agency on our new assay, our expectations regarding the validity of ourEuropean patent and timing of the appeals process, our expectation that dialysis sales will not be significant in 2013, our expectation that our reservesas a percentage of gross sales will increase slightly in 2013, our expectation that increases in the Branded Drug Fee under the Health Care ReformAct will not be material to our results of operations or financial condition, our expectation that our license fee and other collaboration revenues willdecrease in 2013, our expectation that we will not achieve new milestones under the Amended Takeda Agreement in 2013, our expectation that ourcosts of product sales as a percentage of net product sales and royalties will decrease in 2013, our expectation that our research and developmentexpenses will decrease in 2013, our expectations regarding the amount of external expenses we expect to incur and the timing of our planned researchand development projects, our expectation that selling, general and administrative expenses will remain relatively stable in 2013, our expectationregarding our dividend and interest income, our expectations regarding our short- and long-term liquidity and capital requirements and our ability tofinance our operations, our expectations regarding our future cash flows, our belief regarding the potential impact of the adoption of newly issued andfuture accounting guidance on our financial statements, our expectations that the aggregate of our cash, cash equivalents and investments balanceswill decrease in 2013, and information with respect to any other plans and strategies for our business. Our actual results and the timing of certainevents may differ materially from the results discussed, projected, anticipated or indicated in any forward-looking statements. Any forward-lookingstatement should be considered in light of the factors discussed in Part I, Item 1A below under "Risk Factors" and elsewhere in this Annual Report onForm 10-K. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date they are made.We disclaim any obligation, except as specifically required by law and the rules of the United States Securities and Exchange Commission to publiclyupdate or revise any such statements to reflect any change in company expectations or in events, conditions or circumstances on which any suchstatements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.1Table of ContentsITEM 1. BUSINESS: Overview AMAG Pharmaceuticals, Inc., a Delaware corporation, was founded in 1981. We are a specialty pharmaceutical company focused on thedevelopment and commercialization of Feraheme® (ferumoxytol) Injection for Intravenous, or IV, use to treat iron deficiency anemia, or IDA.Currently, our principal source of revenue is from the sale of Feraheme, which was approved for marketing in the U.S. in June 2009 by the U.S. Foodand Drug Administration, or the FDA, for use as an IV iron replacement therapy for the treatment of IDA in adult patients with chronic kidney disease,or CKD. We began commercial sale of Feraheme in the U.S. in July 2009 through our own commercial organization, including a specialty sales force.We sell Feraheme to authorized wholesalers and specialty distributors, who in turn, sell Feraheme to healthcare providers who administer Ferahemeprimarily within hospitals, hematology and oncology centers, and nephrology clinics. We are working to continue to grow Feraheme in the U.S. CKD market and to drive additional growth of Feraheme through both international andlabel expansion. To further build our business, we intend to expand our portfolio through the in-license or purchase of additional marketed specialtypharmaceutical products. We are seeking complementary products that will leverage our commercial infrastructure and focus on hematology andoncology centers, hospital infusion centers or other sites of care where IV iron is administered or where IDA patients are diagnosed or treated. We mayalso pursue more strategic transactions which complement our future market expansion goals for Feraheme.International Expansion Outside of the U.S., ferumoxytol has been granted marketing approval in Canada, Switzerland and the European Union, or EU, for use as an IViron replacement therapy for the treatment of IDA in adult patients with CKD. The European marketing authorization is valid in the current EU memberstates as well as in Iceland and Norway. Under our amended agreement with Takeda Pharmaceutical Company Limited, or Takeda, Takeda has anexclusive license to market and sell ferumoxytol in Canada, the EU and Switzerland, as well as certain other geographic territories. In Canada, Takedapromotes ferumoxytol under the trade name Feraheme and in the EU and Switzerland, Takeda promotes ferumoxytol under the trade name Rienso®30mg/ml solution for Injection.Label Expansion We believe that a significant opportunity exists in the U.S. for Feraheme beyond the treatment of IDA in adult patients with CKD. In the U.S. in2012, approximately 800,000 grams of IV iron were administered for the treatment of non-dialysis patients with IDA. We believe that approximatelyhalf, or 400,000 grams, of the IV iron administered in the U.S. is for the treatment of non-dialysis patients with CKD and the other half is for non-CKDpatients with IDA due to other causes, including patients with gastrointestinal diseases or disorders, abnormal uterine bleeding, or AUB, inflammatorydiseases, and chemotherapy-induced anemia. In 2012, we completed a phase III clinical program for Feraheme in patients with IDA who had failed to or could not use oral iron. The IDAprogram consisted of two controlled, multi-center phase III clinical trials, or IDA-301 and IDA-302, including more than 1,400 patients, whichevaluated the safety and efficacy of ferumoxytol for the treatment of IDA in this broader patient population. Both studies met the primary efficacyendpoints related to improvements in hemoglobin. In these studies no new safety signals were observed with Feraheme treatment and the types ofreported adverse events, or AEs, were consistent with those seen in previous studies and those contained in the approved U.S. package insert forFeraheme. In addition, patients from IDA-301 were eligible to enroll in an open-label extension study, or IDA-303, and receive treatment withFeraheme, as defined in the protocol.2Table of Contents In December 2012, we submitted a supplemental new drug application, or sNDA, to the FDA, seeking approval for Feraheme for the treatment ofIDA in adult patients who have failed to or could not use oral iron. The sNDA submission was primarily based on the data from IDA-301 and IDA-302. In addition, the sNDA included data from an interim analysis of IDA-303 and a previously completed post-approval clinical study evaluatingFeraheme treatment compared to treatment with another IV iron. We believe that approval for Feraheme for this expanded indication would effectivelydouble the market opportunity for Feraheme, by allowing us to access the half of the IV iron market that is beyond our current approved indication.Assuming a normal review cycle, we expect a decision from the FDA on our sNDA sometime in the fourth quarter of 2013. We expect that Takeda will file a Type II Variation, which is the EU equivalent of a U.S. sNDA, with the European Medicines Agency, or EMA,in 2013 seeking marketing approval for Rienso for the treatment of IDA in adult patients.Takeda Collaboration In March 2010, we entered into a License, Development and Commercialization Agreement, or the Takeda Agreement, with Takeda under whichwe granted exclusive rights to Takeda to develop and commercialize Feraheme/Rienso as a therapeutic agent in Europe, certain Asia-Pacific countries(excluding Japan, China and Taiwan), the Commonwealth of Independent States, Canada, India and Turkey. In June 2012, we entered into anamendment to the Takeda Agreement, or the Amended Takeda Agreement, which removed the Commonwealth of Independent States from theterritories under which Takeda has the exclusive rights to develop and commercialize Feraheme/Rienso. In addition, the Amended Takeda Agreementmodified the timing and pricing arrangements for a supply agreement to be entered into between us and Takeda in the future, the terms related to primaryand secondary manufacturing for drug substance and drug product, certain patent related provisions, and the re-allocation of certain of the agreed-uponmilestone payments. In 2012, we received a total of $33.0 million in milestone payments from Takeda associated with the EU approval and thecommercial launches of Feraheme/Rienso in Canada and the EU. In addition, in connection with the commercial launches of Feraheme/Rienso byTakeda, we recorded revenue from product sales to Takeda and royalties on sales by Takeda of $0.1 million in 2012.Clinical Development of Feraheme We have initiated two randomized, active-controlled pediatric studies of Feraheme for the treatment of IDA in pediatric CKD patients to meet ourFDA post-approval Pediatric Research Equity Act requirement to support pediatric labeling of Feraheme in the U.S. One study covers dialysis-dependent CKD pediatric patients, and the other covers CKD patients not on dialysis. Each study will assess the safety and efficacy of Ferahemetreatment as compared to oral iron in approximately 144 pediatric patients. Both of these pediatric studies are currently open for enrollment withenrollment expected to take several years to complete. Our pediatric investigation plan, which was a requirement for submission of the Marketing Authorization Application, or MAA, for ferumoxytol,was approved by the EMA in December 2009 and amended in 2012, and includes the two pediatric studies needed to meet the requirements of thePediatric Research Equity Act in the U.S. described above, and two additional pediatric studies requested by the EMA. These studies include a rolloverstudy in pediatric CKD patients and a study in pediatric patients with IDA regardless of the underlying cause. The rollover study is open for enrollment.The pediatric IDA study will commence once the appropriate dose of Feraheme is determined from the study data resulting from the two ongoingpediatric studies of Feraheme for the treatment of IDA in pediatric CKD patients, described above. The amendment to our pediatric investigation plan in2012 was intended to increase the rate of enrollment for these studies through modifications to the patient entry criteria.3Table of Contents As part of our obligations under the Amended Takeda Agreement and as part of our post-approval commitments to the EMA, we are planning toinitiate a multi-center clinical trial to determine the safety and efficacy of repeat doses of ferumoxytol for the treatment of IDA in patients withhemodialysis dependent CKD. As part of the post-approval commitment we made to the EMA as a condition of the approval of the MAA forferumoxytol in the EU this study includes a treatment arm with iron sucrose as well as a magnetic resonance imaging, or MRI, study which willevaluate the potential for iron to accumulate in the body following treatment with IV iron, specifically in the heart and liver, and, where possible, othermajor organs following repeated IV iron administration over a two year period. We currently expect enrollment to begin in the second quarter of 2013.The costs related to the MRI portion of this study are subject to our established cost sharing arrangement with Takeda. From time to time, we or our licensees may sponsor pilot clinical studies or collaborate with investigators on their research ideas to evaluate thesafety and efficacy of Feraheme in new indications or alternative dosing regimens. In addition, certain clinical trials may be necessary to secure desired pricing in various European markets. If so, the cost of any future trials may beallocated between us and Takeda according to the Amended Takeda Agreement. In December 2009, our licensee in China, 3SBio Inc., or 3SBio, filed an application with the Chinese State Food and Drug Administration, or theSFDA, to obtain approval to begin a clinical trial necessary to file for marketing approval of Feraheme in China. If approved by the SFDA, 3SBioplans to commence a multi-center randomized efficacy and safety study of Feraheme in China involving approximately 200 CKD patients.Other information Prior to the 2009 U.S. approval and commercial launch of Feraheme, we devoted substantially all of our resources to our research anddevelopment programs. Since then, we have incurred substantial costs related to the commercialization and development of Feraheme. We expect tocontinue to incur significant expenses as we continue to manufacture, market and sell Feraheme/Rienso as an IV iron replacement therapeutic for use inadult CKD patients in the U.S., to seek marketing approval for Feraheme for the treatment of IDA in a broad range of patients, and to continue to obtainmarketing approval for Feraheme in countries where Feraheme/Rienso has yet to receive approval. Prior to the U.S. commercial launch of Feraheme,we financed our operations primarily from the sale of our equity securities, cash generated by our investing activities, and payments from our licensees.Since 2009, our revenues have been primarily attributable to product sales of Feraheme/Rienso, along with milestone and license fee payments fromTakeda. We currently expect to fund our future operations from cash from sales of Feraheme in the U.S., milestone payments we expect to earn fromTakeda, product sales and royalties we may receive with respect to sales of Feraheme/Rienso outside of the U.S., cash generated by our investingactivities, and the sale of our equity or debt securities, if necessary. As of December 31, 2012, we had an accumulated deficit of approximately$456.7 million and a cash, cash equivalents and investments balance of approximately $227.0 million. Our common stock trades on the NASDAQ Global Select Market, or NASDAQ, under the trading symbol "AMAG."4Table of ContentsOur Core Technology Our core technology is based on coated superparamagnetic iron oxide particles and their characteristic properties. Our core competencies includethe ability to design such particles for particular applications and to manufacture the particles in controlled sizes. Our technology and expertise enable usto synthesize, sterilize and stabilize these iron oxide particles in a manner necessary for use in pharmaceutical products such as IV iron replacementtherapeutics. Our iron oxide particles are composed of bioavailable iron that is easily utilized by the body and incorporated into the body's iron stores. As aresult, our core technology is well suited for use as an IV iron replacement therapy product. Our rights to our technology are derived from and/orprotected by license agreements, patents, patent applications and trade secret protections. See "Patents and Trade Secrets."Products The following table summarizes the uses and potential uses of ferumoxytol, the names of our principal licensees, the current U.S. and foreignregulatory status, and the primary markets for ferumoxytol. For a discussion of the substantive regulatory requirements applicable to the development and regulatory approval process in the U.S. and othercountries, see "Government Regulation."Feraheme for the treatment of IDA in patients with CKDOverview In June 2009, Feraheme was approved for marketing in the U.S. by the FDA for use as an IV iron replacement therapy for the treatment of IDAin adult patients with CKD. In July 2009, we began to market and sell Feraheme in the U.S. in both the dialysis and non-dialysis CKD markets,including to nephrologists, hematologists, dialysis organizations, hospitals and other end-users who treat patients with CKD. Beginning in 2010, due tochanges in the way the federal government reimburses providers5Product Uses/Potential Uses Licensees U.S. Regulatory Status Foreign Regulatory StatusFeraheme® (ferumoxytol)Injection IV iron replacement therapeuticagent for the treatment of IDA inadult patients with CKD. Takeda (Europe, certain Asia-Pacificcountries (excluding Japan, Chinaand Taiwan), Canada, India andTurkey).3SBio (China). Approved and marketed. Approved and marketed as Ferahemein Canada.Approved and marketed as Rienso inthe European Union andSwitzerland.Filed for CKD registrational trialwith the SFDA in China, December2009.Feraheme® (ferumoxytol)Injection IV iron replacement therapeuticagent in patients with IDA,regardless of the underlying cause. Takeda (Europe, certain Asia-Pacificcountries (excluding Japan, Chinaand Taiwan), Canada, India andTurkey).3SBio (China) (option to extendlicense into additional therapeuticindications). sNDA filed in December 2012. Type II Variation expected to befiled with the EMA by Takeda in2013.Table of Contentsfor the care of dialysis patients, the utilization of Feraheme shifted from primarily dialysis patients to non-dialysis patients. Accordingly, we have sincefocused our commercial efforts entirely on building Feraheme utilization in non-dialysis CKD patients. We anticipate the majority of all Ferahemeutilization in the U.S. will continue to be in the non-dialysis CKD patient population until, and if, the Company achieves a broader label to include non-CKD patients. In December 2011, ferumoxytol was granted marketing approval in Canada, under the trade name Feraheme, for use as an IV iron replacementtherapy for the treatment of IDA in adult patients with CKD. In June 2012, the European Commission granted marketing authorization for ferumoxytol,under the trade name Rienso, for use as an IV iron replacement therapy for the treatment of IDA in adult patients with CKD. The marketingauthorization is valid in the current EU member states as well as in Iceland and Norway. In August 2012, ferumoxytol was granted marketing approvalin Switzerland under the trade name Rienso for use as an IV iron replacement therapy for the treatment of IDA in adult patients with CKD. Under ouramended agreement with Takeda, Takeda has an exclusive license to market and sell ferumoxytol in Canada, the EU and Switzerland, as well as certainother geographic territories.Chronic kidney disease, anemia, and iron deficiency Based on data contained in a 2007 publication in the Journal of the American Medical Association, it is estimated that approximately 10 to 15% ofthe U.S. adult population is affected by CKD, a condition generally characterized by damaged kidneys, or a reduction in kidney function below 50% ofnormal. Anemia, a common condition among CKD patients, is associated with cardiovascular complications, decreased quality of life, hospitalizations,and increased mortality. Anemia develops early during the course of CKD and worsens with advancing kidney disease. Iron deficiency is a commoncause of anemia in CKD patients and can result from multiple blood draws, hospitalizations and interventional procedures, gastrointestinal bleeding, orpoor nutritional intake. Regardless of the cause of anemia, iron replacement therapy is essential to increase iron stores and raise hemoglobin levels. Ironis also essential for effective treatment with erythropoiesis stimulating agents, or ESAs, which are commonly used in anemic patients to stimulate redblood cell production. Based on data contained in a 2009 publication in the Journal of the American Society of Nephrology, we estimate there areapproximately 1.6 million adults in the U.S. with IDA and stages 3 through 5 CKD, who are patients in the later stages of CKD but not yet on dialysisand could therefore benefit from receiving iron. Currently there are two methods used to treat IDA in CKD patients: oral iron supplements and IV iron. Oral iron is currently the first line ironreplacement therapy of choice of most physicians in both the U.S. and abroad. However, oral iron supplements are often not absorbed well by thegastrointestinal tract and frequently have unpleasant side effects, such as constipation, diarrhea, and cramping, which can cause patients to stop takingtheir medication. In addition, it can take an extended time for hemoglobin levels to improve following the initiation of oral iron treatment, and even thenmay not reach the targeted hemoglobin levels. Conversely, iron given intravenously allows larger amounts of iron to be provided to patients whileavoiding many of the side effects and treatment compliance issues associated with oral iron, and can result in faster rises in hemoglobin levels. Theadministration of IV iron has been shown to be effective in treating anemia either when used alone and also in combination with an ESA. Current U.S.treatment guidelines indicate that treating first with iron alone may delay, reduce or eliminate the need for ESA therapy. We believe that a small fractionof non-dialysis CKD patients in the U.S. with IDA are currently being treated with IV iron, and thus a significant opportunity remains to grow themarket for IV iron in this patient population.Feraheme for the treatment of IDA in a broad range of patients IDA not associated with CKD is widely prevalent in many different patient populations. For many of these patients, treatment with oral iron isunsatisfactory. These patients include patients with6Table of Contentsgastrointestinal diseases or disorders, women with AUB, patients with inflammatory diseases, and cancer patients. It is estimated that more than4 million patients in the U.S. have IDA (CKD and non-CKD). Currently, we estimate that approximately 5 to 10% of these patients are treated with IViron. In December 2012, we submitted a sNDA to the FDA for Feraheme to expand the approved indication for ferumoxytol beyond the currentindication for treatment of IDA in adult patients with CKD to adult IDA patients who have failed or could not use oral iron. The sNDA included datafrom two controlled, multi-center phase III clinical trials, IDA-301 and IDA-302, including more than 1,400 patients, which served as the primary datasupporting the safety and efficacy of ferumoxytol for the treatment of IDA in this target patient population. In addition, the sNDA included data from aninterim analysis of the IDA open-label extension study, IDA-303, and a previously completed post-approval clinical study evaluating Ferahemetreatment compared to treatment with another IV iron. Assuming a standard review cycle, we expect a decision from the FDA on our sNDA sometimein the fourth quarter of 2013. We expect that Takeda will file a Type II Variation, which is the EU equivalent of a U.S. sNDA, with the EMA in 2013 seeking marketingapproval for Rienso for the treatment of IDA in adult patients. IDA-301 was a double-blind, placebo-controlled trial designed to compare the safety and efficacy of two doses of 510 milligrams each ofFeraheme to that of placebo in a total of 808 patients with IDA at 136 sites in the U.S., Canada, India, Latvia, Hungary, and Poland. The patientsenrolled in this study had a history of unsatisfactory response to, or could otherwise not use, oral iron and had IDA associated with various conditionsincluding gastrointestinal diseases or disorders, AUB, inflammatory diseases, and chemotherapy-induced anemia. Patients in this study were randomized to receive a one gram IV course of either Feraheme or saline as placebo and the study was designed todemonstrate superiority on efficacy. Of the 808 patients enrolled in this study, 608 patients were randomly assigned to receive Feraheme and 200 wererandomly assigned to receive placebo. The demographics and all baseline parameters of patients who participated in this study were well balancedbetween the two treatment groups. The primary efficacy endpoint of the study for the FDA was the proportion of patients who achieved an increase inhemoglobin of greater than 2.0 grams per deciliter at any time from the date of determination of their baseline hemoglobin level, or baseline, to the fifthweek following administration of the study drug, or week five. The primary efficacy endpoint of the study for the EU regulatory authorities was themean change in hemoglobin from baseline to week five. Patients enrolled in this study were eligible to enter IDA-303, a recently completed open-labelextension study to evaluate repeat dosing with Feraheme. We have closed enrollment in this extension study with 637 patients. These patients werefollowed for six months and were eligible to receive two doses of 510 milligrams each of Feraheme whenever they met treatment criteria. Final datafrom IDA-303 is expected to be available in 2013. In the IDA-301 study, Feraheme achieved both primary efficacy endpoints evaluated. Patients treated with Feraheme in the IDA-301 trialachieved a statistically significant mean increase in hemoglobin at week five of 2.7 grams per deciliter, as compared to a mean increase of 0.1 grams perdeciliter in patients who received placebo. In addition, a greater than 2.0 grams per deciliter increase in hemoglobin at any time from baseline to weekfive was achieved in a statistically significantly greater proportion of patients treated with Feraheme in this study, 81.1%, as compared with 5.5% ofpatients who received placebo. Further, data from IDA-301 also showed a direct correlation between a rise in hemoglobin and improvement in fatigue,as assessed by patient reported outcome measures. No new safety signals were observed with Feraheme in the IDA-301 trial and the types of reported AEs were consistent with those seen in ourprevious studies and those contained in the approved U.S. package insert for Feraheme. Overall, AEs were reported in 49.2% of Feraheme-treatedpatients as7Table of Contentscompared to 43.0% of patients who received placebo. Patients in both treatment groups experienced protocol-defined AEs of special interest, includingmild to severe hypotension or hypersensitivity reactions, ranging from fever alone to an anaphylactoid reaction. Of the Feraheme-treated patients, 3.6%experienced protocol-defined AEs of special interest as compared to 1.0% of patients who received placebo. Cardiovascular AEs were reported in 0.8%of Feraheme-treated patients, all of which were considered unrelated to study drug by the investigators, and none were reported in the placebo group.Serious adverse events, or SAEs, were reported at a comparable frequency in both treatment groups, with SAEs reported in 2.6% of Feraheme-treatedpatients and 3.0% of patients who received placebo. Four of the SAEs in Feraheme-treated patients, or 0.7%, were reported as related to study drug byinvestigators. IDA-302 was a multi-center, open-label, active-controlled international clinical trial designed to compare treatment with Feraheme to treatment withIV iron sucrose in a total of 605 patients with IDA at 74 sites in Europe, Asia Pacific and Australia. The patients enrolled in the study had a history ofunsatisfactory response to, or could not otherwise use, oral iron therapy and had IDA associated with various conditions including gastrointestinaldiseases or disorders, AUB, inflammatory diseases, and chemotherapy-induced anemia. Patients in IDA-302 were randomized to receive a one gram IV course of either Feraheme or iron sucrose and the study was designed todemonstrate non-inferiority on efficacy. Of the 605 patients enrolled in the study, 406 patients were randomly assigned to receive Feraheme and 199were randomly assigned to receive iron sucrose. The demographics and all baseline parameters of patients who participated in this study were wellbalanced between the two treatment groups. The primary efficacy endpoint of the study for the FDA was the proportion of patients who achieved agreater than or equal to 2.0 grams per deciliter increase in hemoglobin at any time from baseline to week five. The primary efficacy endpoint of the studyfor EU regulatory authorities was the mean change in hemoglobin from baseline to week five. In the IDA-302 study, Feraheme achieved both primary efficacy endpoints evaluated. Patients treated with Feraheme in the IDA-302 trialachieved a mean increase in hemoglobin at week five of 2.7 grams per deciliter as compared to a mean increase of 2.4 grams per deciliter in patientstreated with IV iron sucrose. In addition, an increase of 2.0 grams per deciliter or more in hemoglobin at any time from baseline to week five wasachieved in 84% of patients treated with Feraheme as compared to 81% of patients treated with IV iron sucrose. No new safety signals were observed with Feraheme in the IDA-302 trial and the types of reported AEs were consistent with those seen in ourprevious studies and those contained in the approved U.S. package insert for Feraheme. Overall, AEs experienced by patients in the two treatmentgroups were comparable, with AEs reported in 41.4% of Feraheme-treated patients as compared to 44.2% of patients treated with IV iron sucrose.Patients in both treatment groups experienced protocol-defined AEs of special interest, including moderate to severe hypotension or hypersensitivityreactions, ranging from fever alone to an anaphylactoid reaction. Of the Feraheme-treated patients, 2.7% experienced protocol-defined AEs of specialinterest as compared to 5.0% of patients who received IV iron sucrose. Cardiovascular AEs were comparable between the two treatment groups, withcardiovascular AEs reported in 1.0% of both the Feraheme-treated patients and the patients in the IV iron sucrose group. SAEs were reported in 4.2%of Feraheme-treated patients as compared to 2.5% of patients treated with IV iron sucrose. Two of the SAEs in Feraheme-treated patients, or 0.5%,were reported as related to study drug by the investigators.8Table of Contents Multiple underlying conditions are associated with the development of IDA including gastrointestinal diseases or disorders, AUB, inflammatorydiseases, and chemotherapy-induced anemia. IDA in patients with gastrointestinal diseases or disorders is likely caused by blood loss and/or theinadequate intake or absorption of iron due primarily to bariatric surgeries, inflammatory bowel disease, chronic gastrointestinal bleeding and certainmalabsorption disorders. Based on market research, we estimate that more than 500,000 patients who have gastrointestinal diseases or disorders in theU.S. also have IDA. Oral iron has been used to treat IDA in patients with gastrointestinal diseases or disorders, but its efficacy is variable due toinconsistent bioavailability and absorption, the high incidence of gastrointestinal side effects and patient noncompliance. AUB is defined as chronic, heavy, or prolonged uterine bleeding that can result from multiple causes, including uterine abnormalities, blooddisorders, pregnancy, intrauterine devices, medications, and heavy menstrual bleeding. IDA is commonly associated with AUB, and based on marketresearch, we estimate that approximately 1 million women in the U.S. have both IDA and AUB and are treated with a variety of surgical and/or medicalmanagement techniques. IDA in patients with AUB, regardless of the cause, requires treatment with iron supplementation, either by oral or IVadministration. IDA is also common in patients with cancer, and based on market research, we estimate that nearly 400,000 cancer patients in the U.S. have IDA.Iron supplementation through both oral and IV administration plays an important role in treating anemia in cancer patients. While there may be somedifferences in the underlying causes of anemia and iron deficiency in cancer patients who are receiving chemotherapy and those who are not, patients inboth categories may develop IDA due to blood loss and/or the inadequate intake or absorption of iron. Oral iron has been used to treat IDA in cancerpatients, but its efficacy is variable due to inconsistent bioavailability and poor absorption, a high incidence of gastrointestinal side effects, potentialinteractions with other treatments, and patient noncompliance. IV iron has been shown in small clinical trials to be well tolerated in the cancer patientpopulation in both patients who are receiving chemotherapy and those who are not. Currently, only INFeD® and Dexferrum® are approved in the U.S. for the treatment of a broader group of patients with IDA in whom oral iron isunsatisfactory or impossible. All of the other currently marketed IV iron products, including Feraheme, are only approved in the U.S. for either thetreatment of IDA in CKD patients or CKD patients on hemodialysis. We believe that a new entrant into the broader IDA U.S. market could significantlyincrease the number of patients who will be treated with IV iron.GastroMARK GastroMARK®, which is marketed and sold under the trade name Lumirem® outside of the U.S, is our oral contrast agent used for delineating thebowel during MRI and is approved and marketed in the U.S., Europe and other countries through our licensees. In the second quarter of 2012, weterminated our commercial license agreements for GastroMARK. Following the completion of our obligations under these agreements in the first quarterof 2013, we intend to cease commercially manufacturing or selling GastroMARK. Pursuant to the terms of the respective termination agreements, inJune 2012, we paid our licensees aggregate termination fees of $1.6 million, which we recorded in selling, general and administrative expenses in ourconsolidated statement of operations.Licensing, Marketing and Distribution Arrangements Although we are commercializing Feraheme in the U.S. through our own commercial organization, our commercial strategy also includes theformation of collaborations with other companies to facilitate9Table of Contentsthe development, manufacture, sale and distribution of our products in the U.S. and abroad. At present we are parties to the following collaborations:Takeda In March 2010, we entered into the Takeda Agreement, under which we granted exclusive rights to Takeda to develop and commercializeFeraheme/Rienso as a therapeutic agent in certain agreed-upon territories. In June 2012, we entered into the Amended Takeda Agreement, whichremoved the Commonwealth of Independent States from the territories under which Takeda has the exclusive rights to develop and commercializeFeraheme/Rienso. In addition, the Amended Takeda Agreement modified the timing and pricing arrangements for a supply agreement to be entered intobetween us and Takeda in the future, the terms related to primary and secondary manufacturing for drug substance and drug product, certain patentrelated provisions, and the re-allocation of certain of the agreed-upon milestone payments. In December 2011, ferumoxytol was granted marketing approval in Canada, under the trade name Feraheme, for use as an IV iron replacementtherapy for the treatment of IDA in adult patients with CKD. In June 2012, the European Commission granted marketing authorization for ferumoxytolunder the trade name Rienso for use as an IV iron replacement therapy for the treatment of IDA in adult patients with CKD. The marketing authorizationis valid in the current EU member states as well as in Iceland and Norway. In August 2012, ferumoxytol was granted marketing approval inSwitzerland under the trade name Rienso for use as an IV iron replacement therapy for the treatment of IDA in adult patients with CKD. During 2012,we received $33.0 million in milestone payments related to the EU regulatory approval and the commercial launches of Feraheme/Rienso in Canada andthe EU. In addition, in connection with the commercial launches of Feraheme/Rienso by Takeda, we recorded revenue from product sales to Takeda androyalties on sales by Takeda of $0.1 million in 2012. Under the Amended Takeda Agreement, except under limited circumstances, we have retained the right to manufacture Feraheme/Rienso and,accordingly, are responsible for supply of Feraheme/Rienso to Takeda at a fixed price per unit, which is capped for a certain period of time. We are alsoresponsible for conducting, and bearing the costs related to, certain pre-defined clinical studies with the costs of future modifications or additionalstudies to be allocated between the parties according to an agreed-upon cost-sharing mechanism. In connection with the execution of the original TakedaAgreement, we received a $60.0 million upfront payment from Takeda in April 2010. We have received and may also receive additional regulatoryapproval and performance-based milestone payments, reimbursement of certain out-of-pocket regulatory and clinical supply costs, defined payments forsupply of Feraheme/Rienso, and tiered double-digit royalties on net product sales in the agreed-upon territories. The remaining milestone payments wemay be entitled to receive under the agreement could over time equal up to $186.0 million. We can make no assurances as to the amount of milestonepayments, if any, we will actually receive under the agreement.Packaging Coordinators, Inc. In May 2009, we entered into a commercial packaging services agreement with Packaging Coordinators, Inc. (formerly Catalent PharmaSolutions, LLC), or PCI, as amended in January 2013, or the PCI Agreement. Under the provisions of the PCI Agreement, PCI provides certainlabeling, packaging and storage services for final U.S. Feraheme drug product and storage services for Canadian and Swiss Feraheme/Rienso drugproduct. This agreement will renew automatically for successive established time periods unless either party provides written notice of its desire not torenew within certain time constraints. In addition, either party has the right to immediately terminate the agreement based on certain bankruptcy-relatedconditions or if the other party materially breaches any provision of this agreement and such breach is not cured within a certain period of time. Further,we may terminate the PCI Agreement for any reason or no reason with ninety days' written notice to PCI. PCI10Table of Contentshas two qualified facilities in the U.S., which we can utilize for our labeling, packaging and storage needs. Rienso labeling and packaging for sale in theEU and Switzerland is currently conducted in Italy and is the responsibility of Takeda.Integrated Commercialization Services, Inc. In October 2008, we entered into a commercial outsourcing services agreement with Integrated Commercialization Services, Inc., or ICS, asamended, or the ICS Agreement. Under the provisions of the ICS Agreement, ICS agreed to be our exclusive third-party logistics provider to perform avariety of functions related to the sale and distribution of Feraheme in the U.S., including services related to warehousing and inventory management,distribution, chargeback processing, accounts receivable management and customer service call center management. This agreement, as amended, willcontinue in effect until January 31, 2014, unless terminated earlier. The term of the agreement may be extended upon written mutual agreement of theparties six months prior to the expiration of the term. In addition, the ICS Agreement may be terminated under certain conditions such as non-paymentof amounts due, failure to perform any material obligations under the agreement, or upon the occurrence of certain bankruptcy-related events.3SBio In 2008, we entered into a Collaboration and Exclusive License Agreement, or the 3SBio License Agreement, and a Supply Agreement, or the3SBio Supply Agreement, with 3SBio for the development and commercialization of Feraheme as an IV iron replacement therapeutic agent in China.The 3SBio License Agreement grants 3SBio an exclusive license for an initial term of thirteen years to develop and commercialize Feraheme as atherapeutic agent in China for an initial indication for the treatment of IDA in patients with CKD and an option to expand into additional therapeuticindications. In consideration of the grant of the license, we received an upfront payment of $1.0 million. We are eligible to receive certain other specifiedmilestone payments upon regulatory approval of Feraheme in China for CKD and other indications. We are also entitled to receive tiered royalties of upto 25% based on net sales of Feraheme by 3SBio in China. We retained all manufacturing rights for Feraheme under these agreements. In addition,pursuant to the 3SBio Supply Agreement, 3SBio has agreed to purchase from us, and we have agreed to supply to 3SBio, Feraheme at a predeterminedper unit price for use in connection with 3SBio's development and commercialization obligations for so long as the 3SBio License Agreement is ineffect. If approved by the SFDA, 3SBio currently plans to begin a clinical trial necessary to file for marketing approval of Feraheme in China.Manufacturing In the third quarter of 2012, we ceased our manufacturing operations at our Cambridge, Massachusetts manufacturing facility, where wepreviously manufactured Feraheme for U.S. commercial sale and for use in human clinical trials. We currently rely solely on third parties for themanufacture of Feraheme/Rienso for our commercial and clinical requirements of ferumoxytol in the U.S., the EU and Switzerland. Our third-partycontract manufacturing facilities are subject to current good manufacturing practices, or cGMP, regulations enforced by the FDA and equivalent foreignregulatory agencies through periodic inspections to confirm such compliance. Although we and Takeda are currently working to establish and qualifyalternative manufacturing facilities for both drug substance and finished drug product of Feraheme/Rienso, we do not currently have an alternativemanufacturer for our Feraheme/Rienso drug substance and finished drug product. We target to maintain sufficient inventory levels of our projected U.S.near-term demand of Feraheme drug product in order to minimize risks of supply disruption at points in our single source supply chain. We intend tocontinue to outsource the manufacture and distribution of Feraheme/Rienso for the foreseeable future, and we11Table of Contentsbelieve this manufacturing strategy will enable us to direct our financial resources to the commercialization of Feraheme. Prior to ceasing our manufacturing operations in 2012, we manufactured Feraheme drug substance and drug product for use in the Canadianmarket at our Cambridge facility. Although we and Takeda are working to obtain regulatory approval of the manufacturing facilities at our current third-party contract manufacturers to produce Feraheme for sale in Canada, we do not currently have manufacturing facilities for this geography. Prior toclosing our Cambridge manufacturing facility, we produced what we believe to be sufficient inventory to satisfy Takeda's Canadian supply needs untilwe have obtained regulatory approval at our third-party manufacturing facilities. We have also established certain testing and release specifications with the FDA and other foreign regulatory agencies. This release testing must beperformed in order to allow the finished product to be used for commercial sale. In addition, variations in the regulatory approval of Feraheme/Rienso inthe currently approved territories require that our third-party manufacturers follow different manufacturing processes and analytical testing methods. Inlate 2012, we produced a batch of Rienso which did not meet our release specifications in the EU. As a result, we are incurring additional costsassociated with the development, validation and technology transfer to Takeda of a more accurate assay in order to be able to release this batch and anyfuture batches produced for sale in the EU. This new assay will require review and approval by the EMA, which we expect will occur in the first half of2013.Sigma-Aldrich, Inc. In August 2012, we entered into a Commercial Supply Agreement, or the SAFC Agreement, with Sigma-Aldrich, Inc., or SAFC, pursuant towhich SAFC agreed to manufacture and we agreed to purchase from SAFC, the active pharmaceutical ingredient, or API, or the drug productintermediate, or DPI, for use in the finished product of ferumoxytol for U.S. commercial sale, for sale outside of the U.S. by Takeda, as well as for usein clinical trials. Subject to certain conditions, the SAFC Agreement provides that we purchase from SAFC certain minimum quantities of API or DPIeach year, but we are not obligated to use SAFC as our sole supplier of API or DPI. In addition, the prices for each batch will decline as batches areproduced in greater quantities throughout each year of the agreement. The SAFC Agreement will continue in force until June 22, 2015 and may beextended thereafter for additional two year periods, unless cancelled by us or SAFC within an agreed-upon notice period. The SAFC Agreement mayalso be terminated by either party at any time in the event of a material breach of the agreement by the other party provided that the breaching party failsto cure such breach within an agreed-upon notice period.DSM Pharmaceuticals, Inc. In January 2010, we entered into a Pharmaceutical Manufacturing and Supply Agreement, or the DSM Agreement, with DSMPharmaceuticals, Inc., or DSM, pursuant to which DSM agreed to manufacture ferumoxytol finished drug product for U.S. commercial sale, for saleoutside of the U.S., as well as for use in clinical trials at a fixed price per vial. The DSM Agreement will continue in force until January 13, 2015. TheDSM Agreement may be terminated at any time upon mutual written agreement by us and DSM or at any time by us subject to certain noticerequirements and early termination fees. In addition, the DSM Agreement may be terminated by either us or DSM in the event of a material breach ofthe agreement by the other party provided that the breaching party fails to cure such breach within an agreed-upon notice period. To support the global commercialization of Feraheme/Rienso, we have developed a fully integrated manufacturing support system, includingquality assurance, quality control, regulatory affairs and inventory control policies and procedures. These support systems are intended to enable us tomaintain high standards of quality for our products.12Table of ContentsRaw Materials We and our third-party manufacturers currently purchase certain raw and other materials used to manufacture Feraheme/Rienso from third-partysuppliers and at present do not have any long-term supply contracts with these third parties. Although certain of our raw or other materials are readilyavailable, others may be obtained only from qualified suppliers. Certain materials used in Feraheme/Rienso may from time to time be procured from asingle source without a qualified alternative supplier. The qualification of an alternative source may require repeated testing of the new materials andgenerate greater expenses to us or our third-party manufacturers if materials that we or they test do not perform in an acceptable manner. In addition, weor our third-party manufacturers sometimes obtain raw or other materials from one vendor only, even where multiple sources are available, to maintainquality control and enhance working relationships with suppliers, which could make us or our third-party manufacturers susceptible to price inflation bythe sole supplier, thereby increasing our production costs. As a result of the high quality standards imposed on our raw and other materials used tomanufacture Feraheme/Rienso, we or our third-party manufacturers may not be able to obtain such materials of the quality required to manufactureFeraheme/Rienso from an alternative source on commercially reasonable terms, or in a timely manner, if at all.Patents and Trade Secrets We consider the protection of our technology to be material to our business. Because of the substantial length of time and expense associated withbringing new products through development and regulatory approval to the marketplace, we place considerable importance on obtaining patent and tradesecret protection for our products. Our success depends, in large part, on our ability to maintain the proprietary nature of our technology and other tradesecrets. To do so, we must prosecute and maintain existing patents, obtain new patents and ensure trade secret protection. We must also operate withoutinfringing the proprietary rights of third parties or allowing third parties to infringe our rights. Our policy is to aggressively protect our competitive technology position by a variety of means, including applying for patents in the U.S. and inappropriate foreign countries. We currently hold a number of U.S. and foreign patents, which expire at various times through 2020. Our Ferahemepatents currently expire in 2020, however, our primary U.S. patent for Feraheme may be subject to an extension to 2023 under U.S. patent law andFDA regulations. Our foreign patents may also be eligible for extension in accordance with applicable law in certain countries. We also have patent applications pending in the U.S. and have filed counterpart patent applications in certain foreign countries. Although furtherpatents may be issued on pending applications, we cannot be sure that any such patents will be issued on a timely basis, if at all. In addition, any issuedpatents may not provide us with competitive advantages or may be challenged by others, and the existing or future patents of third parties may limit ourability to commercialize Feraheme/Rienso. For example, in July 2010, Sandoz GmbH, or Sandoz, filed with the European Patent Office, or the EPO, anopposition to our previously issued patent that covers ferumoxytol in the EU. In October 2012, at an oral hearing, the Opposition Division of the EPOrevoked our European ferumoxytol patent. In December 2012, our notice of appeal was recorded with the EPO, which suspends the revocation of ourpatent. We will continue to defend the validity of this patent throughout the appeals process, which we expect to take two to three years. In the event theappeals process is unfavorable to us, it could result in a loss of proprietary rights in the EU and may allow other companies in the EU to use ourproprietary technology without a license from us, and may also result in a loss of future royalty or milestone payments to us from Takeda. We cannotpredict the outcome of our appeal of the EPO decision. In the event that we do not experience a successful outcome from the appeals process, under EUregulations ferumoxytol would still be entitled to eight years of data protection and ten years of market exclusivity from the date of approval, which webelieve would create13Table of Contentsbarriers to entry for any generic version of ferumoxytol into the EU market until sometime between 2020 and 2022. We also rely on the benefits of market exclusivity in protecting our intellectual property rights for Feraheme in the U.S. The FDA previouslydetermined that ferumoxytol did not qualify as a new chemical entity, or NCE, and instead granted Feraheme a three-year "new use" market exclusivity,which expired in June 2012. In March 2010 and December 2012, we formally requested that the FDA reconsider its determination with respect toFeraheme's NCE status, which, if granted, would provide Feraheme with exclusivity until June 2014, or five years from the date of Feraheme's U.S.approval. We cannot give any assurances as to whether the FDA will accept our most recent request for reconsideration, that the FDA will make thisreconsideration in a timely manner, or that Feraheme will be granted NCE exclusivity. The regulatory approval process for NCE status is discussed inmore detail below under the heading "U.S. Approval Process—Marketing Exclusivity" and the associated risks are discussed in more detail in Part I,Item 1A below under "Risk Factors" under the heading, "Competitors could file applications seeking a path to U.S. approval of a generic ferumoxytol." Frequently, the unpredictable nature and significant costs of patent litigation leads the parties to settle to remove any uncertainty related to the statusof their patents. Settlement agreements between branded companies and generic applicants may allow, among other things, a generic product to enter themarket prior to the expiration of any or all of the applicable patents covering the branded product, either through the introduction of an authorizedgeneric or by providing a license to the applicant for the patents in suit.Competition The pharmaceutical and biopharmaceutical industry is intensely competitive and subject to rapid technological change. We and Takeda compete inthe marketing and sale of Feraheme/Rienso and many of our competitors are large, well-known pharmaceutical companies. One or more of ourcompetitors may benefit from significantly greater financial, sales and marketing capabilities, greater technological or competitive advantages, and otherresources. Our competitors may develop products that are more widely accepted than ours and may receive patent protection that dominates, blocks oradversely affects our product development or business. The iron replacement therapy market is highly sensitive to several factors including, but not limited to, the actual or perceived safety and efficacyprofile of the available products, the ability to obtain appropriate insurance coverage and reimbursement rates and terms, price competitiveness, andproduct characteristics such as convenience of administration and dosing regimens. Although Feraheme is approved in the U.S. for the treatment of IDA in adult patients with CKD, including both dialysis and non-dialysis CKDpatients, our U.S. commercial strategy is now entirely focused on growing the utilization of Feraheme in non-dialysis dependent adult CKD patientswith IDA. We believe there is a significant opportunity in the U.S. for Feraheme for the treatment of IDA in CKD patients not yet on dialysis. The U.S.non-dialysis IV iron market is comprised primarily of three sites of care where a substantial number of CKD patients are treated: hematology andoncology centers, hospitals, and nephrology clinics. There are currently two iron replacement options for treating IDA in CKD patients: oral iron supplements and IV iron. The National KidneyFoundation's Kidney Disease Outcomes Quality Initiative guidelines recommend either oral or IV iron for peritoneal dialysis patients and non-dialysispatients with stages 1 through 5 CKD. Oral iron is currently the first-line iron replacement therapy of choice of most physicians in both the U.S. andabroad. However, oral iron supplements are poorly absorbed by many patients, which may adversely impact their effectiveness, and are associated withcertain side effects that may adversely affect patient compliance in using such products. The alternative to oral iron for the treatment of IDA is IV iron.14Table of Contents Feraheme currently competes with the following IV iron replacement therapies in the U.S. for the treatment of IDA in CKD patients:•Venofer®, an iron sucrose complex, which is approved for use in hemodialysis, peritoneal dialysis, non-dialysis dependent CKDpatients and pediatric CKD patients and is marketed in the U.S. by Fresenius Medical Care North America and American RegentLaboratories, Inc., or American Regent, a subsidiary of Luitpold Pharmaceuticals, Inc., or Luitpold; •Ferrlecit®, a sodium ferric gluconate, which is marketed by Sanofi-Aventis U.S. LLC, is approved for use only in hemodialysis patients;•A generic version of Ferrlecit® marketed by Watson Pharmaceuticals, Inc., or Watson; •INFeD®, an iron dextran product marketed by Watson, which is approved in the U.S. for the treatment of patients with documented irondeficiency in whom oral iron administration is unsatisfactory or impossible; and •Dexferrum®, an iron dextran product marketed by American Regent, which is approved in the U.S. for the treatment of patients withdocumented iron deficiency in whom oral iron administration is unsatisfactory or impossible. In addition to the currently marketed products described above, Feraheme may also compete in the U.S. with Injectafer®, which is known asFerinject® in Europe and which is discussed below, which is in development in the U.S. for the treatment of IDA. In September 2011, Luitpoldsubmitted an NDA to the FDA seeking marketing approval for Injectafer® for the treatment of IDA. In July 2012, Luitpold received a CompleteResponse letter from the FDA withholding approval of Injectafer®. If approved in the U.S., Injectafer® is expected to be marketed by AmericanRegent, the current distributor of Venofer®. Pharmacosmos A/S, or Pharmacosmos, the producer of another IV iron, Monofer® (iron isomaltoside1000), which is approved in Europe, is also conducting clinical trials in the U.S. and may try to gain regulatory approval in the U.S. for Monofer®. Outside of the U.S., Feraheme/Rienso also competes with a number of branded IV iron replacement products, including Venofer®, Ferrlecit®,Monofer®, Ferinject® (ferric carboxymaltose injection) (the brand name for Injectafer® outside the U.S.) and certain other iron dextran and ironsucrose products. Monofer® is an injectable iron preparation developed by Pharmacosmos, which is currently approved for marketing in approximately23 countries for the treatment of IDA. Ferinject® is an IV iron replacement therapy developed by Vifor Pharma, the pharmaceuticals business unit ofthe Galenica Group, and is currently approved for marketing in approximately 43 countries worldwide, including 29 countries within Europe, for thetreatment of iron deficiency where oral iron is ineffective or cannot be used. In December 2010, Vifor Pharma and Fresenius Medical Care NorthAmerica announced that they had created a new company which will hold the commercialization rights to Venofer® and Ferinject® outside of the U.S.Venofer® and Ferrlecit® have been marketed in many countries throughout the world, including most of Europe and Canada, for many years.Feraheme/Rienso competes primarily with Venofer®, Ferinject® and Ferrlecit® in both the Canadian and European markets. Currently, all other IViron products currently approved and marketed in the EU are approved for marketing to a broader group of patients with IDA. Feraheme/Rienso wasapproved only for use in CKD patients, which could put Feraheme/Rienso at a competitive disadvantage unless and until it receives approval for abroader indication outside of the U.S. The market opportunity for Feraheme/Rienso in the U.S. and abroad could also be negatively affected by approved generic IV iron replacementtherapy products that achieve commercial success. For example, in 2011, Watson launched a generic version of Ferrlecit® in the U.S. which isapproved for marketing in the U.S. for the treatment of IDA in adult patients and in pediatric patients age six years and older undergoing chronichemodialysis who are receiving supplemental epoetin therapy. Sagent Pharmaceuticals, Inc. has also indicated its intention to introduce a generic ironsucrose in the15Table of ContentsU.S. in the future. There are also a number of approved generic IV iron products in countries outside the U.S. which directly compete withFeraheme/Rienso, including a generic version of Venofer®. The Drug Price Competition and Patent Term Restoration Act of 1984, as amended, or the Hatch-Waxman Act, requires an applicant whosesubject drug is a drug with an FDA listed patent to notify the patent-holder of their application and potential infringement of their patent rights. If anapplicant for ferumoxytol notifies us of such application, we would have 45 days upon receipt of that notice to bring a patent infringement suit in federaldistrict court against the applicant seeking approval of a product. If such a suit is commenced, the FDA is generally prohibited from granting approvalof an application until the earliest of 30 months from the date the FDA accepted the application for filing, the conclusion of litigation in the generic'sfavor, or expiration of the patent(s). If the litigation is resolved in favor of the applicant or the challenged patent expires during the 30-month stayperiod, the stay is lifted and the FDA may thereafter approve the application based on the applicable standards for approval. A generic version of Feraheme can be marketed only with the approval of the FDA of the respective application for such generic version. InDecember 2012, the FDA issued draft guidance making recommendations regarding establishing bioequivalence with Feraheme, pursuant to which aparty could seek approval of a generic version of that product through an abbreviated new drug application, or ANDA. The FDA generally publishesproduct-specific bioequivalence guidance after it has received an inquiry from a generic drug manufacturer about submitting an ANDA for the productin question; thus, it is possible that a generic drug manufacturer has approached the FDA requesting guidance about submitting an ANDA forferumoxytol, the active ingredient in Feraheme, and that such an ANDA may be filed in the near future. The ANDA process is discussed in more detailbelow under the heading "U.S. Approval Process—Marketing Exclusivity." Companies that manufacture generic products typically invest far fewer resources in research and development than the manufacturers of brandedproducts and can therefore price their products significantly lower than those branded products already on the market. Therefore, competition fromgeneric IV iron products could limit our U.S. sales and any royalties we may receive from Takeda on sales outside of the U.S. Please see the discussionin Part I, Item 1A below under "Risk Factors" under the heading, "Competitors could file applications seeking a path to U.S. approval of a genericferumoxytol." For IV iron replacement therapy in patients with CKD, the total therapeutic course of iron typically used in clinical practice is 1,000 milligrams, orone gram. Venofer® is typically administered as a slow intravenous injection over two to five minutes in doses of 100 to 200 milligrams, thus requiringfive to ten physician visits to reach a standard one gram therapeutic course. The recommended dose of Ferrlecit® and the generic version of Ferrlecit®is 125 milligrams administered by intravenous infusion over one hour per dialysis session or undiluted as a slow intravenous injection per dialysissession, thus requiring eight physician visits to reach a standard one gram therapeutic course. The recommended dose of INFeD® and Dexferrum® is aslow push in 100 milligram doses and require up to ten physician visits to receive a standard one gram therapeutic course. Feraheme/Rienso isadministered as a 510 milligram injection followed by a second 510 milligram injection three to eight days later, each of which can be administered inless than one minute at a regular office visit without the use of infusion equipment or prolonged medical intervention. In 2011, the FDA requiredchanges to the product labels of Venofer®, Ferrlecit® and Feraheme, to include a 30 minute observation period to monitor patients for signs andsymptoms of hypersensitivity during and following the administration of these products. There is no observation period for the iron dextran products. We believe that our and Takeda's ability to successfully compete with other IV iron products in the U.S. and internationally depends on a numberof factors, including the actual or perceived safety and efficacy profile of Feraheme/Rienso as compared to alternative iron replacement therapeutics, ourability to obtain and maintain favorable pricing, insurance coverage and reimbursement rates and terms for16Table of ContentsFeraheme/Rienso, the timing and scope of regulatory approval of Feraheme/Rienso for the broad IDA indication and of products or additionalindications by our competitors, our ability to implement effective marketing campaigns, the effectiveness of our sales force, our ability to maintainfavorable patent protection for Feraheme/Rienso, market acceptance of Feraheme/Rienso, and our ability to manufacture sufficient quantities ofFeraheme/Rienso at commercially acceptable costs. In addition, our ability to effectively compete with these products in the U.S. non-dialysis CKDmarket depends in part upon our ability to gain formulary access in hospitals and effectively promote Feraheme within group purchasing organizations,or GPOs, and to physicians who treat non-dialysis CKD patients. Based on sales data provided to us in February 2013 by IMS Health Incorporated, or IMS, we estimate that the size of the total 2012 U.S. non-dialysis IV iron replacement therapy market was approximately 806,000 grams, which represented an increase of approximately 2% over 2011. Basedon this IMS data, the following represents the 2012 and 2011 U.S. market share allocation of the total non-dialysis IV iron market based on the volumeof IV iron administered: The market share data listed in the table above is not necessarily indicative of the market shares in dollars due to the variations in prices among theIV iron products.Sales, Marketing and Distribution In July 2009, we began U.S. commercial sale of Feraheme, which is being marketed and sold in the U.S. through our own commercialorganization, including a specialty sales force. We sell Feraheme to authorized wholesalers and specialty distributors who, in turn, sell Feraheme tohealthcare providers who administer Feraheme primarily within hospitals, hematology and oncology centers and nephrology clinics. Since manyhospitals and hematology, oncology and nephrology practices are members of GPOs, which leverage the purchasing power of a group of entities toobtain discounts based on the collective bargaining power of the group, we also routinely enter into pricing agreements with GPOs in these markets sothe members of the GPOs have access to Feraheme and the related discounts. In addition, we outsource a number of our product supply chain servicesto ICS, our third-party logistics provider, including services related to warehousing and inventory management, distribution, chargeback processing,accounts receivable management and customer service call center management. Our sales and marketing teams use a variety of common pharmaceutical marketing strategies to promote Feraheme including sales calls topurchasing entities, such as hospitals, hematology and oncology centers and nephrology practices in addition to individual physicians or other healthcareprofessionals, medical education symposia, personal and non-personal promotional materials, local and national educational programs, scientificmeetings and conferences and informational websites. In addition, we provide customer service and other related programs for Feraheme includingphysician reimbursement support services, a patient assistance program for uninsured or under-insured patients and a customer service call center. Our commercial strategy currently focuses on the non-dialysis dependent CKD market in the U.S. Based on data contained in a 2009 publication inthe Journal of the American Society of Nephrology, we estimate there are 1.6 million adults in the U.S. with stages 3 through 5 CKD and IDA, and webelieve17 2012 U.S. Non-dialysisIV Iron Market(806,000 grams) 2011 U.S. Non-dialysisIV Iron Market(792,000 grams) Venofer® 46% 48%INFeD® 20% 20%Feraheme 14% 12%Generic sodium ferric gluconate 10% 5%Ferrlecit® 7% 11%Dexferrum® 3% 4%Table of Contentsthat a small fraction of those patients are currently being treated with IV iron. We believe there is a significant opportunity in this market to provide IViron to non-dialysis CKD patients, and our sales team has been working to educate physicians who treat CKD patients on the benefits of IV iron and thedosing profile of Feraheme in order to change existing treatment paradigms and expand the IV iron use in physicians' offices, clinics, and hospitalswhere CKD patients are treated for IDA. Feraheme/Rienso has been granted marketing approval in Canada, the EU, Iceland, Norway and Switzerland for use as an IV iron replacementtherapy for the treatment of IDA in adult patients with CKD and was commercially launched in Canada, Switzerland and the EU in late 2012. Under ouramended agreement with Takeda, Takeda is solely responsible for Feraheme/Rienso commercialization efforts in these areas including the deploymentof a specialized sales force, pricing and reimbursement negotiations with national, provincial or local health authorities and customers, and developmentof market access strategies. The following table sets forth customers who represented 10% or more of our total revenues for the years ended December 31, 2012, 2011, and2010. Revenues from Takeda include collaboration revenue recognized in connection with the Amended Takeda Agreement, milestone payments wereceived in 2012 and revenues from product sales to Takeda and royalties received from Takeda in 2012.Government RegulationOverview The development, manufacture and commercialization of pharmaceutical products are subject to extensive regulation by numerous governmentalauthorities in the U.S. and abroad. In the U.S., the Federal Food, Drug and Cosmetic Act, or the FDC Act, and other federal and state statutes andregulations govern, among other things, the research and development, manufacturing, quality control (testing), labeling, record-keeping, approval,storage, distribution, and advertising and promotion of pharmaceutical products. In addition, many of our activities in the U.S. are subject to thejurisdiction of various other federal regulatory and enforcement departments and agencies, such as the Department of Health and Human Services, theFederal Trade Commission and the Department of Justice. Individual states, acting through their attorneys general, have become active as well, seekingto regulate the marketing of prescription drugs under state consumer protection and false advertising laws. A number of states, along with the federalgovernment, have also enacted, or are considering enacting, legislation to control pharmaceutical marketing activities, such as the federal PhysicianPayment Sunshine Act, or the Sunshine Act. Our activities outside of the U.S. are also subject to regulatory requirements governing the testing, approval, safety, effectiveness, manufacturing,labeling and marketing of Feraheme/Rienso. These regulatory requirements vary from country to country. The approval process may be more or lessrigorous from country to country and the time required for approval may also vary from country to country. In Europe, Canada and some otherinternational markets, the government provides healthcare at low direct cost to consumers and regulates pharmaceutical prices or patient reimbursementlevels to control costs for the government-sponsored healthcare system.18 Years Ended December 31, 2012 2011 2010 AmerisourceBergen Drug Corporation 34% 41% 36%Takeda Pharmaceuticals Company Limited 31% 13% <10%McKesson Corporation 17% 21% <10%Cardinal Health, Inc. 12% 13% <10%Metro Medical Supply, Inc. <10% <10% 21%Table of Contents Failure to comply with any of the applicable U.S. or foreign regulatory requirements may result in a variety of administrative or judicially imposedsanctions including, among other things, the regulatory agency's refusal to approve pending applications, withdrawals of approval, clinical holds,warning letters, product recalls, product seizures, total or partial suspension of operations, injunctions, fines, civil penalties or criminal prosecution. The development and approval of a product candidate requires a significant number of years of work and the expenditure of substantial resources,and is often subject to unanticipated delays and may be subject to new legislation or regulations. In addition to complying with requirements as theycurrently exist, a sponsor could be negatively impacted by changes in the regulatory framework. From time to time, legislation is introduced that couldsignificantly alter laws pertaining to the approval, manufacturing, pricing, and/or marketing of drug products. Even without changes to relevant laws,U.S. and foreign regulatory agencies could release new guidance or revise its implementation of current regulations in a manner that significantly affectsus and our products, including our ability to receive marketing approval for new indications for Feraheme/Rienso. It is impossible to predict whetherlegislative changes will be enacted, or whether regulations or guidance will be amended or supplemented, or the potential impact of such changes.U.S. Approval ProcessClinical Development Before new human pharmaceutical products may be marketed or sold commercially in the U.S., the FDA requires the following steps: (a) pre-clinical laboratory tests, pre-clinical safety and efficacy studies and formulation studies; (b) the submission to the FDA of an Investigational New DrugApplication, or IND, for human clinical testing, which must become effective before human clinical trials may commence; (c) adequate and well-controlled human clinical trials under current good clinical practices to establish the safety and efficacy of the drug for its intended use; (d) submissionof an NDA to the FDA; (e) approval and validation of manufacturing facilities used in production of the pharmaceutical product under cGMP; and(f) review and approval of the NDA by the FDA. Pre-clinical studies include the laboratory evaluation of product chemistry and animal studies to assess the potential safety and efficacy of a productand its formulation. The results of such laboratory tests and animal studies are submitted to the FDA as a part of an IND and are reviewed by the FDAprior to and during human clinical trials. If there are no objections from the FDA within 30 days of filing an IND, a sponsor may proceed with initialstudies in human volunteers, also known as clinical trials. Clinical trials are typically conducted in the following three sequential phases, which may overlap in some instances:•Phase I: Clinical trials which involve the initial administration of the study drug to a small group of healthy human volunteers (or, morerarely, to a group of selected patients with the targeted disease or disorder) under the supervision of a principal investigator selected bythe sponsor. These Phase I trials are designed to test for safety, dosage tolerance, absorption, distribution, metabolism, excretion andclinical pharmacology and, if possible, early indications of effectiveness. •Phase II: Clinical trials which involve a small sample of the actual intended patient population and aim to: (a) provide a preliminaryassessment of the efficacy of the investigational drug for a specific clinical indication; (b) ascertain dose tolerance and optimal doserange; and (c) collect additional clinical information relating to safety and potential adverse effects. •Phase III: If an investigational drug is found through Phase I and Phase II studies to have some efficacy and an acceptable clinicalsafety profile in the targeted patient population, Phase III19Table of Contentsstudies can be initiated. Phase III studies are well-controlled comparative studies designed to gather additional information within anexpanded patient population in geographically dispersed clinical trial sites in order to further establish safety and efficacy in conditionsthat the drug will be used if approved for marketing. The FDA may suspend clinical trials at any point in this process if it concludes that patients are being exposed to an unacceptable health risk. Inaddition, clinical trial results are frequently susceptible to varying interpretations by scientists, medical personnel, regulatory personnel, statisticians andothers, which may delay, limit or prevent further clinical development or regulatory approvals of a product candidate.Submission and FDA Review of an NDA Following the successful completion of adequate and well-controlled human clinical trials, the results of the trials, together with the results of pre-clinical tests and studies, are submitted to the FDA as part of an NDA. The NDA must also include information related to the preparation andmanufacturing of the new drug, analytical methods, and proposed product packaging and labeling. When the NDA is submitted, the FDA has 60 daysfrom receipt to determine whether the application is sufficiently complete to merit a substantive review and should therefore be "filed." If the FDAdetermines that the application is incomplete, it must notify the sponsor through a "refusal-to-file" letter, and the sponsor then has the option to resubmitthe NDA after addressing the concerns raised by the FDA. If the FDA accepts the NDA for filing, the NDA undergoes a series of reviews intended toconfirm and validate the sponsor's conclusion that the drug is safe and effective for its proposed use. Under the Food and Drug Administration Modernization Act, an NDA is designated for either Standard Review or Priority Review. A PriorityReview designation may be given if a new drug offers major advancements in treatment or provides a treatment where no adequate therapy exists. InJuly 2012, the Food and Drug Administration Safety and Innovation Act of 2012, or FDASIA, was enacted. The FDASIA includes the reauthorizationof the Prescription Drug User Fee Act, or PDUFA, that provides FDA with the necessary resources to maintain a predictable and efficient reviewprocess for human drug and biologic products. The FDA has, pursuant to PDUFA, as reauthorized by FDASIA, set a goal that it review and act upon90% of NDAs with a Standard Review designation within ten months of the FDA's acceptance of the filing and 90% of NDAs with a Priority Reviewdesignation within six months of the filing date. However, whether an NDA is designated for a Standard or Priority Review, there is no guarantee thatany single submission will be acted on within these time frames, and the FDA's goals are subject to change from time to time. In addition, FDA reviewof a drug development program may proceed under its "Fast Track" programs, which are intended for a combination of a product and a claim thataddresses an unmet medical need. Fast Track is designed to facilitate the development and expedite the review of new drugs that are intended to treatserious or life threatening conditions and demonstrate the potential to address unmet medical needs. A Fast Track designation provides the sponsor thebenefits of scheduling meetings when needed to receive FDA input into development plans, the option of submitting an NDA in sections rather than allcomponents simultaneously, or a rolling review, and the option of requesting evaluation of studies using surrogate endpoints. Fast Track status doesnot, however, necessarily lead to a Priority Review, as described above, or Accelerated Approval designation, which provides earlier approval of drugsto treat serious diseases and that fill an unmet medical need.20Table of Contents If the FDA's evaluations of the NDA and the sponsor's manufacturing facilities are favorable, the FDA will issue an approval letter, and thesponsor may begin marketing the drug in the U.S. for the approved indications, subject to certain universal post-approval requirements described furtherbelow. The FDA may also impose drug-specific conditions on its approval, such as requirements for additional post-marketing testing or surveillance.If the FDA determines that it cannot approve the NDA in its current form, it will issue a complete response letter to indicate that the review cycle for anapplication is complete and that the application will not be approved in its current form. The complete response letter usually describes the specificdeficiencies that the FDA identified in the application and may require additional clinical or other data or impose other conditions that must be met inorder to obtain final approval of the NDA. Addressing the deficiencies noted by the FDA could be impractical or costly and may result in significantdelays prior to final approval.Adverse Event Reporting The FDA requires a sponsor to submit reports of certain information on side effects and AEs associated with its products that occur either duringclinical trials or after marketing approval. These requirements include specific and timely notification of certain serious, unexpected and/or frequent AEs,as well as regular periodic reports summarizing adverse drug experiences. Failure to comply with these FDA safety reporting requirements may resultin FDA regulatory action that may include civil action or criminal penalties. In addition, as a result of these reports, the FDA could create a TrackedSafety Issue for a product in the FDA's Document Archiving, Reporting and Regulatory Tracking System, place additional limitations on an approvedproduct's use, such as through labeling changes, or, potentially, could require withdrawal or suspension of the product from the market.FDA Post-Approval Requirements Even if initial approval of an NDA is granted, such approval is subject to a wide-range of regulatory requirements, any or all of which mayadversely impact a sponsor's ability to effectively market and sell the approved product. Furthermore, the FDA may require the sponsor to conductPhase IV clinical trials, also known as post-marketing requirements or post-marketing commitments, to provide additional information on safety andefficacy. The results of such post-market studies may be negative and could lead to limitations on the further marketing of a product. Also, under thePediatric Research Equity Act, the FDA may require pediatric assessment of certain drugs unless waived or deferred due to the fact that necessarystudies are impossible or highly impractical to conduct or where there is strong evidence that suggests the drug would be ineffective or unsafe or that thedrug does not represent a meaningful therapeutic benefit over existing therapies and is not likely to be used in a substantial number of pediatric patients.In addition, the FDA may require a sponsor to implement a Risk Evaluation Mitigation Strategy, or REMS, a strategy to manage a known or potentialserious risk associated with the product. The FDA may, either prior to approval or subsequent to approval if new safety data arises, require a REMS ifit determines that a REMS is necessary to ensure that the benefits of the product outweigh its risks. A REMS may include a medication guide, patientpackage insert, a plan for communication with healthcare providers, elements to ensure safe use of the product, and an implementation system. A REMSmust also include a timetable for submission of assessments of the strategy at specified time intervals. Failure to comply with a REMS, includingsubmission of a required assessment, may result in substantial civil penalties. Where a sponsor wishes to expand the originally approved prescribing information, such as adding a new indication, it must submit and obtainapproval of a sNDA. Changes to an indication generally require additional clinical studies, which can be time-consuming and require the expenditure ofsubstantial additional resources. Under PDUFA, the target timeframe for the review of a sNDA to add a new clinical indication is ten months from thedate of filing.21Table of ContentsMarketing Exclusivity Market exclusivity provisions under the FDC Act can delay the submission or the approval of certain applications. Under Sections 505(c)(3)(E)(ii)and 505(j)(5)(F)(ii) of the FDC Act, as amended by the Hatch-Waxman Act, an NCE that is granted regulatory approval may be eligible for five yearsof marketing exclusivity in the U.S. following regulatory approval. A drug is an NCE if the FDA has not previously approved any other new drugcontaining the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the exclusivity period, the FDAmay not accept for review an ANDA or a Section 505(b)(2) NDA submitted by another company for another version of such drug where the applicantdoes not own or have a legal right of reference to all the data required for approval. However, an ANDA may be submitted after four years if it containsa certification of patent invalidity or non-infringement, or the Paragraph IV certification. An ANDA differs from the typical NDA described above inthat it is an application containing information to demonstrate that the proposed product is identical to a previously approved product. ANDA applicantsare not required to conduct costly and time-consuming clinical trials to establish the safety and efficacy of their products; rather, they are permitted torely on the innovator's data regarding safety and efficacy, and an applicant usually needs to only submit data demonstrating that its product has the sameactive ingredient(s) and is bioequivalent to the branded product, in addition to any data necessary to establish that any difference in strength, dosageform, inactive ingredients, or delivery mechanism does not result in different safety or efficacy profiles, as compared to the reference drug. Likewise, aSection 505(b)(2) NDA differs from the typical NDA in that it allows a sponsor to rely, at least in part, on the FDA's findings of safety and/oreffectiveness for a previously approved drug. Thus, generic manufacturers can sell their products at prices much lower than those charged by theinnovative pharmaceutical or biotechnology companies which have incurred substantial expenses associated with the research and development of a newdrug. The FDC Act also provides three years of marketing exclusivity for an NDA, Section 505(b)(2) NDA or supplement to an existing NDA if newclinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to theapproval of the application (for example, for new indications, dosages, or strengths of an existing drug). This three-year exclusivity covers only theconditions associated with the new clinical investigations and does not prohibit the FDA from approving ANDAs for drugs containing the originalactive agent. Five-year and three-year exclusivity will not delay the submission or tentative approval of a full NDA; however, an applicant submitting afull NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trialsnecessary to demonstrate safety and effectiveness.FDA Regulation of Product Marketing and Promotion The FDA also regulates all advertising and promotional activities for products, both prior to and after approval, including but not limited to direct-to-consumer advertising, sales representative communications to healthcare professionals, promotional programming, and promotional activitiesinvolving the internet, publications, radio and TV as well as other media. Approved drug products must be promoted in a manner consistent with theirterms and conditions of approval, including the scope of their approved use. The FDA may take enforcement action against a company for promotingunapproved uses of a product, or off-label promotion, or for other violations of its advertising and labeling laws and regulations. Failure to comply withthese requirements could lead to, among other things, adverse publicity, product seizures, civil or criminal penalties, or regulatory letters, which mayinclude warnings and require corrective advertising or other corrective communications to healthcare professionals.22Table of ContentsFDA Regulation of Manufacturing Facilities Manufacturing procedures and quality control for approved drugs must conform to cGMP, which practices are described in the FDC Act andFDA guidance. cGMP requirements must be followed at all times, and domestic manufacturing establishments are subject to periodic inspections by theFDA in order to assess, among other things, cGMP compliance. In addition, prior to approval of an NDA or sNDA, the FDA will perform a pre-approval inspection of the sponsor's manufacturing facility, including its equipment, facilities, laboratories and processes, to determine the facility'scompliance with cGMP and other rules and regulations. Vendors that supply finished products or components to the sponsor that are used tomanufacture, package and label products are subject to similar regulation and periodic inspections. If the FDA identifies deficiencies during aninspection, it may issue notices on FDA Form 483, which may be followed by warning letters if observations are not addressed satisfactorily listingconditions the FDA investigators believe may violate cGMP or other FDA regulations. FDA guidelines specify that a warning letter be issued only forviolations of "regulatory significance" for which the failure to adequately and promptly achieve correction may be expected to result in an enforcementaction. Product approval may be delayed or denied due to cGMP non-compliance or other issues at the sponsor's manufacturing facilities or contractorsites or suppliers included in the NDA or sNDA, and the complete resolution of these inspectional findings may be beyond the sponsor's control. Ifafter a successful completion of an FDA inspection of a sponsor's manufacturing facilities, the sponsor makes a material change in manufacturingequipment, location or process, additional regulatory review may be required. Re-inspection of the sponsor's manufacturing facilities or contractor sitesor suppliers may also occur. If the FDA determines that the sponsor's equipment, facilities, laboratories or processes do not comply with applicableFDA regulations and conditions of product approval, the FDA may seek civil, criminal or administrative sanctions and/or remedies against the sponsor,including suspension of its manufacturing operations. To supply products for use outside of the U.S., our third-party manufacturers must comply with cGMP and are subject to periodic inspection bythe FDA or by regulatory authorities in certain other countries. In complying with these requirements, manufacturers, including a drug sponsor's third-party contract manufacturers, must continue to expend time, money and effort in the area of production and quality to ensure compliance. Failure tomaintain compliance with cGMP regulations and other applicable manufacturing requirements of various regulatory agencies could result in fines,unanticipated compliance expenditures, recall, total or partial suspension of production, suspension of the FDA's review of future sNDAs, enforcementactions, injunctions or criminal prosecution.Fraud and abuse regulation Our general operations, and the research, development, manufacture, sale and marketing of our products, are subject to extensive federal and stateregulation, including but not limited to FDA regulations, the Federal Anti-Kickback Statute, the Federal False Claims Act, and the Foreign CorruptPractices Act, and their state analogues. Anti-kickback laws make it illegal to solicit, offer, receive or pay any remuneration in exchange for, or toinduce, the referral of business, including the purchase or prescription of a particular drug, that is reimbursed by a state or federal program. False claimslaws prohibit anyone from knowingly presenting, or causing to be presented for payment to third-party payers, including Medicare and Medicaid, falseor fraudulent claims for reimbursed drugs or services, claims for items or services not provided as claimed, or claims for medically unnecessary items orservices. The Foreign Corrupt Practices Act and similar foreign anti-bribery laws generally prohibit companies and their intermediaries from makingimproper payments to non-U.S. officials for the purpose of obtaining or retaining business. Our activities relating to the sale and marketing of ourproducts may be subject to scrutiny under these laws. If we or our representatives fail to comply with any of these laws or regulations, a range of fines,penalties and/or other sanctions could be imposed on23Table of Contentsus, including, but not limited to, restrictions on how we market and sell Feraheme, significant fines, exclusions from government healthcare programs,including Medicare and Medicaid, litigation, or other sanctions.Other U.S. Regulatory Requirements We are also subject to regulation under local, state and federal law regarding occupational safety, laboratory practices, handling of chemicals,environmental protection and hazardous substances control. We possess a Byproduct Materials License from the Commonwealth of Massachusetts forreceipt, possession, manufacturing and distribution of radioactive materials and Registration Certificates from the federal Drug Enforcement Agency andthe Commonwealth of Massachusetts Department of Public Health for handling controlled substances. We are also registered with the federalEnvironmental Protection Agency, or EPA, as a generator of hazardous waste. All hazardous waste disposals must be made in accordance with EPAand Commonwealth of Massachusetts requirements. We are subject to the regulations of the Occupational Safety and Health Act and have a safetyprogram in effect to assure compliance with all of these regulations. We believe our procedures for handling and disposing of hazardous materials usedin our research and development activities comply with all applicable federal, state and local requirements. Nevertheless, the risk of accidentalcontamination or injury from these materials cannot be completely eliminated and, in the event of an accident or injury, we could be held liable for anydamages that result. Certain states also require that we obtain licenses or permits as an out-of-state distributor or manufacturer in order to market, sell and/or ship ourpharmaceutical products into their state. We have obtained licenses and permits in some states and, depending on our future activities, may also need toobtain additional licenses or permits in other areas where we decide to manufacture, market or sell our products. New laws, regulations or judicialdecisions, or new interpretations of existing laws and regulations, may require us to modify our development programs, revise the way we manufacture,market and sell our products, require additional clinical trials or post-approval safety studies, or limit coverage or reimbursement rates and terms for ourproducts. In recent years, several states have enacted legislation requiring pharmaceutical companies operating within the state to establish marketing andpromotional compliance programs or codes of conduct and/or file periodic reports with the state or make periodic public disclosures on sales, marketing,pricing, clinical trials and other activities. Similar legislation is being considered by additional states and by Congress. In addition, as part of The PatientProtection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or the Health Care Reform Act, thefederal government has enacted the Sunshine Act provisions. Beginning in August 2013, manufacturers of drugs are required to publicly report giftsand payments made to physicians and teaching hospitals. Many of these requirements are new and uncertain, and the penalties for failure to comply withthese requirements are unclear. Failure to comply with any of these laws could result in a range of fines, penalties and/or other sanctions.Foreign Regulatory Process In our efforts to market and sell Feraheme/Rienso outside of the U.S., we and our licensees are subject to foreign regulatory requirements.Approval of a drug by applicable regulatory agencies of foreign countries must be secured prior to the marketing of such drug in those countries. Theregulatory approval process in countries outside of the U.S. vary widely from country to country and may in some cases be more rigorous thanrequirements in the U.S. Certain foreign regulatory authorities may require additional studies or studies designed with different clinical endpoints and/orcomparators than those which we are conducting or have already completed. In addition, any adverse regulatory action taken by the FDA with respect toan approved product in the U.S. may affect the24Table of Contentsregulatory requirements or decisions made by certain foreign regulatory bodies with regard to the regulatory approval of products outside of the U.S. To obtain regulatory approval of a drug in the EU, marketing authorizations may be submitted under a centralized, mutual recognition ordecentralized procedure or national procedure (single country). Under the centralized procedure, the sponsor can submit a single application to the EMAwhich, if approved, permits the marketing of a product in all EU Member States and certain non-member states, including Iceland and Norway. Underthe mutual recognition procedure, the sponsor applies for national marketing authorization in one state, and upon approval can then seek simultaneousapproval in all other EU Member States. Under the decentralized procedure, the sponsor can file simultaneously to several EU Member States,identifying a single reference member state to act as the primary reviewer of the application. Upon approval, the product will be licensed only in thereference member state and the other countries to which it applied. Once an applicant receives marketing authorization in an EU Member State, throughany application route, the applicant is then required to engage in pricing discussions and negotiations with a separate pricing authority in that country. Incertain countries, commercial sales are only able to commence once pricing approval has been received. In addition, all products, irrespective of themethod of filing, are afforded 10 years of market exclusivity and eight years of data protection upon approval. In June 2012, Rienso was grantedmarketing approval in the EU for the treatment of IDA in CKD patients and commercially launched in late 2012. The Canadian pharmaceutical industry is subject to federal regulation by Health Canada, the public health department of the Canadian governmentcharged with overseeing healthcare-related regulatory matters, pursuant to the Canadian federal Food and Drugs Act. Health Canada's criteria forobtaining and maintaining marketing approval is generally similar to that of the FDA. In December 2011, Feraheme was granted marketing approval byHealth Canada for use as an IV iron replacement therapy for the treatment of IDA in adult patients with CKD and commercially launched in late 2012. The pharmaceutical industry in Switzerland is subject to federal regulation by Swissmedic, the Swiss Agency for Therapeutic Products. In August2012, Rienso was granted marketing approval by Swissmedic and commercially launched in late 2012.Reimbursement In both the U.S. and foreign markets, our and Takeda's ability to successfully commercialize Feraheme/Rienso is dependent, in significant part, onthe availability and extent of reimbursement to end-users from third-party payors for the use of Feraheme/Rienso, including governmental payors,managed care organizations, and private health insurers. Reimbursement by third-party payors may depend on a number of factors, including the third-party's determination that the product is competitively priced, safe and effective, appropriate for the specific patient, and cost-effective. Third-partypayors are increasingly challenging the prices charged for pharmaceutical products and have instituted and continue to institute cost containmentmeasures to control or significantly influence the purchase of pharmaceutical products. For example, to reduce expenditures associated withpharmaceutical products, many third-party payors use cost containment methods, including: (a) formularies, which limit coverage for drugs not includedon a predetermined list; (b) variable co-payments, which may make a certain drug more expensive for patients as compared with a competing drug;(c) utilization management controls, such as requirements for prior authorization before the payor will cover the drug; and (d) other coverage policiesthat limit access to certain drugs for certain uses based on the payor-specific coverage policy. In addition, U.S. and many foreign governments continue to attempt to curb health care costs through legislation, including legislation aimed atreducing the pricing and reimbursement of pharmaceutical products. The Health Care Reform Act was enacted in the U.S. in March 2010 and25Table of Contentsincludes certain cost containment measures including an increase to the minimum rebates for products covered by Medicaid programs, the extension ofsuch rebates to drugs dispensed to Medicaid beneficiaries enrolled in Medicaid managed care organizations and the expansion of the 340B DrugDiscount Program under the Public Health Service Act. In addition, the heightened focus on the health care industry by the federal government couldresult in the implementation of significant federal spending cuts including cuts in Medicare and other health related spending in the near term, such as apotential 2% across the board sequestration of Medicare expenditures. In recent years, some states have also passed legislation to control the prices ofdrugs as well as begun a move toward managed care to relieve some of their Medicaid cost burden. These and any future changes in governmentregulation or private third-party payors' reimbursement policies may reduce the extent of reimbursement for Feraheme/Rienso and adversely affect ourfuture operating results. Currently, in U.S. physician clinic settings, Medicare Part B generally reimburses for physician-administered drugs at a rate of 106% of the drug'saverage selling price, or ASP. ASP is defined by statute based on certain historical sales and sales incentive data, including rebates and chargebacks, fora defined period of time. Manufacturers submit the required information to the Centers for Medicare and Medicaid Services, or CMS, on a quarterlybasis. In advance of the quarter in which the payment limit for drugs reimbursed under Medicare Part B program will go into effect, CMS confirms andpublishes the payment limit. Under this methodology, payment rates change on a quarterly basis, and significant downward fluctuations in ASP, andtherefore reimbursement rates, could negatively impact sales of a product. Because ASP is defined by statute, and changes to Medicare paymentmethodologies require legislative change, it is unclear if and when ASP reimbursement methodology will change. While Medicare is the predominantpayor for treatment of patients with CKD, Medicare payment policy, in time, can also influence pricing and reimbursement in the non-Medicare markets,as private third-party payors and state Medicaid plans frequently adopt Medicare principles in setting reimbursement methodologies. We cannot predictthe impact that any changes in reimbursement policies may have on our ability to compete effectively. In January 2011, a prospective payment system for dialysis services provided to Medicare beneficiaries who have end-stage renal disease, orESRD, became effective under which all costs of providing dialysis services are bundled together into a single prospective payment per treatment. Thisbundled approach to reimbursement has and will likely continue to alter the utilization of physician-administered drugs in the ESRD market as well asput downward pressure on the prices pharmaceutical companies can charge ESRD facilities for such drugs, particularly where alternative products areavailable. In the U.S., Feraheme is sold at a price that is substantially higher than alternative IV iron products in the dialysis setting, and as a result, thedemand for Feraheme in the dialysis setting has largely disappeared. In addition, it is also possible that this "bundled" approach may be applied tospecific disease states other than ESRD. For example, one large insurer in the U.S has attempted to bundle certain costs related to the treatment of cancerpatients. In addition, in the U.S. hospital in-patient setting, Feraheme is reimbursed by Medicare under a diagnosis related group payment system, whichprovides a per discharge reimbursement based on the diagnosis and/or procedure rather than actual costs incurred in patient treatments, therebyincreasing the incentive for a hospital to limit or control expenditures. As a result, Feraheme has not been nor do we expect it to be broadly used in thehospital in-patient setting. In countries outside of the U.S., market acceptance may also depend, in part, upon the availability of reimbursement within existing healthcarepayment systems. Generally, in Europe and other countries outside of the U.S., the government sponsored healthcare system is the primary payor ofhealthcare costs of patients and therefore enjoys significant market power. Some foreign countries also set prices for pharmaceutical products as part ofthe regulatory process, and we cannot guarantee that the prices set by such governments will be sufficient to generate substantial revenues or allow salesof Feraheme/Rienso to be profitable in those countries.26Table of Contents If adequate reimbursement levels are not maintained by government and other third-party payors for Feraheme/Rienso, our and Takeda's ability tosell Feraheme/Rienso may be limited and/or our and Takeda's ability to establish acceptable pricing levels for Feraheme/Rienso may be impaired,thereby reducing anticipated revenues and our prospects of achieving profitability.Backlog We had a $1.7 million and $0.1 million product sales backlog as of December 31, 2012 and 2011, respectively. The $1.7 million backlog as ofDecember 31, 2012 was largely due to increased orders from certain of our licensees and to the timing of orders received from our third-party logisticsprovider. Generally, product orders from our customers are fulfilled within a relatively short time of receipt of a customer order.Employees As of February 15, 2013, we had 129 employees. We also utilize consultants and independent contractors on a regular basis to assist in thedevelopment and commercialization of Feraheme. Our success depends in part on our ability to attract, retain and motivate qualified executive, sales,technical operations, managerial, scientific and medical personnel. Although we believe we have been relatively successful to date in obtaining andretaining such personnel, we may not be successful in the future. None of our employees is represented by a labor union, and we consider our relationship with our employees to be good.Foreign Operations We have no foreign operations. Revenues from customers outside of the U.S. amounted to approximately 32%, 14% and 10% of our totalrevenues for the years ended December 31, 2012, 2011 and 2010, respectively, and were principally related to collaboration revenues recognized inconnection with our agreement with Takeda, which is based in Japan. During 2012, our revenues from customers outside of the U.S includedapproximately $20.0 million related to milestone payments we received from Takeda.Research and Development We have dedicated a significant portion of our resources to our efforts to develop our products and product candidates, particularly Feraheme. Weincurred research and development expenses of $33.3 million, $58.1 million and $54.5 million during the years ended December 31, 2012, 2011 and2010, respectively. We expect our research and development expenses to decrease in 2013 due to the completion in 2012 of our Phase III clinicalprogram for Feraheme in patients with IDA regardless of the underlying cause. However, we will continue to incur significant expenses in 2013 andbeyond related to our pediatric clinical studies and our clinical trial to determine the safety and efficacy of repeat doses of Feraheme for the treatment ofIDA in patients with hemodialysis dependent CKD.Code of Ethics Our Board of Directors has adopted a code of ethics that applies to our officers, directors and employees. We have posted the text of our code ofethics on our website at http://www.amagpharma.com in the "Investors" section. In addition, should any changes be made to our code of ethics, weintend to disclose within four business days, on our website (or in any other medium required by law or the NASDAQ): (1) the date and nature of anyamendment to our code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, orpersons performing similar functions and (2) the nature of any waiver, including an implicit waiver,27Table of Contentsfrom a provision of our code of ethics that is granted to one of these specified officers, the name of such person who is granted the waiver, and the dateof the waiver.Available Information Our internet website address is http://www.amagpharma.com. Through our website, we make available, free of charge, our annual reports onForm 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy and registration statements, and all of our insider Section 16 reports(and any amendments to such filings), as soon as reasonably practicable after such material is electronically filed with, or furnished to, the U.S.Securities and Exchange Commission, or the SEC. These SEC reports can be accessed through the "Investors" section of our website. The informationfound on our website is not part of this or any other report we file with, or furnish to, the SEC. Paper copies of our SEC reports are available free ofcharge upon request in writing to Investor Relations, AMAG Pharmaceuticals, Inc., 100 Hayden Avenue, Lexington, MA 02421. The content on anywebsite referred to in this Form 10-K is not incorporated by reference into this Form 10-K unless expressly noted. For additional information regarding our segments, refer to Note L of the Notes to Financial Statements included in Part II, Item 8 "FinancialStatements and Supplementary Data" of this Annual Report on Form 10-K.ITEM 1A. RISK FACTORS: The following information sets forth material risks and uncertainties that may affect our business, including our future financial and operationalresults and could cause our actual results to differ materially from those contained in forward-looking statements we have made in this Annual Reporton Form 10-K and elsewhere as discussed in the introduction to Part I above. You should carefully consider the risks described below, in addition tothe other information in this Annual Report on Form 10-K, before making an investment decision. The risks and uncertainties described below are notthe only ones we face. Additional risks not presently known to us or other factors not perceived by us to present material risks to our business at thistime also may impair our business operations.We are solely dependent on the success of Feraheme/Rienso. We currently derive and expect to continue to derive substantially all of our revenue from sales of Feraheme/Rienso by us in the U.S. and by ourlicensees, including Takeda Pharmaceutical Company Limited, or Takeda, outside of the U.S. and, therefore, our ability to become profitable is solelydependent on our and our licensees' successful commercialization and development of Feraheme/Rienso. Accordingly, if we are unable to generatesufficient revenues from sales of Feraheme/Rienso, or from milestone payments and royalties we may receive related to Feraheme/Rienso, we maynever be profitable, our financial condition will be materially adversely affected, and our business prospects will be limited. We intend to continue to dedicate significant resources to the development and commercialization of Feraheme/Rienso. However, we or Takedamay not be successful in our efforts to successfully commercialize Feraheme/Rienso in its current chronic kidney disease, or CKD, indication or toexpand the approved indication of Feraheme/Rienso to include additional indications. Although we filed a supplemental New Drug Application, orsNDA, in the U.S. for our global registration program for Feraheme in patients with iron deficiency anemia, or IDA, who had failed to or could not useoral iron, the U.S. Food and Drug Administration, or the FDA, may not accept or approve our sNDA, or may require that we narrow the scope of ourproposed indication. In addition, we expect that Takeda will file a Type II Variation, which is the European Union, or EU, equivalent of a U.S. sNDA,with the European Medicines Agency, or EMA, in 2013 seeking marketing approval for Rienso for the treatment of IDA in adult patients. However, wehave no control over Takeda's process, timeline or interactions28Table of Contentswith the European regulatory agencies, Takeda may not be successful in filing a Type II Variation in a timely manner, or at all, and we cannot beassured that the EMA will accept and approve the filing. We are not currently conducting or sponsoring research to expand our product developmentpipeline beyond Feraheme. Therefore, our revenues and operations will not be as diversified as some of our competitors which have multiple productsor product candidates. Any failure by us or Takeda to gain marketing approval for Feraheme/Rienso for the treatment of IDA regardless of theunderlying cause could limit long-term shareholder value and adversely affect the future prospects of our business.Competitors could file applications seeking a path to U.S. approval of a generic ferumoxytol. Under Sections 505(c)(3)(E)(ii) and 505(j)(5)(F)(ii) of the Federal Food, Drug, and Cosmetic Act, or FDC Act, as amended by The Drug PriceCompetition and Patent Term Restoration Act of 1984, as amended, or the Hatch-Waxman Act, a new chemical entity, or NCE, that is grantedregulatory approval may be eligible for five years of marketing exclusivity in the U.S. following regulatory approval. A drug can be classified as anNCE if the FDA has not previously approved any other drug containing the same active moiety, which is the molecule or ion responsible for the actionof the drug substance. The FDA previously determined that ferumoxytol did not qualify as an NCE and instead granted Feraheme a three-year "newuse" market exclusivity, which expired in June 2012. In March 2010 and December 2012, we formally requested that the FDA reconsider itsdetermination with respect to Feraheme's NCE status. The FDA may deny our request for reconsideration of NCE status for Feraheme, in which caseFeraheme may be subjected to early generic competition. NCE status, if granted, would preclude approval during the exclusivity period of certain applications made under Section 505(b)(2) of the FDCAct, as amended by the Hatch-Waxman Act, or a Section 505(b)(2) new drug application, or NDA, and abbreviated new drug application, or ANDA,submitted by another company for another version of the subject drug; however, under governing law an application may be submitted four years afterapproval of the subject drug (even with a five year exclusivity period prohibiting approval) if it contains a certification of patent invalidity or non-infringement pursuant to Paragraph IV of the Hatch-Waxman Act, or the "Paragraph IV" certification procedure. In recent years, generic manufacturershave used Paragraph IV certifications extensively to challenge the applicability of Orange Book-listed patents on a wide array of innovativepharmaceuticals, and we expect this trend to continue. If we are not able to gain or exploit marketing exclusivity beyond the initial three year exclusivityperiod that expired in June 2012, we may face significant future competitive threats to our commercialization of Feraheme from other manufacturers,including the manufacturers of generic alternatives through the submission of Section 505(b)(2) NDAs and ANDAs. Further, even if Feraheme isgranted NCE status and we are able to gain marketing exclusivity until June 2014, another company could challenge that decision and seek to overturnthe FDA's determination. Although costly, another company could also gain such marketing exclusivity under the provisions of the FDC Act, asamended by the Hatch-Waxman Act, if such company can, under certain circumstances, complete a human clinical trial process and obtain regulatoryapproval of its product. In addition, in December 2012, the FDA published draft guidance regarding new draft product-specific bioequivalence for drug productscontaining ferumoxytol. The FDA generally publishes product-specific bioequivalence guidance after it has received an inquiry from a generic drugmanufacturer about submitting an ANDA for the product in question; thus, it is possible that a generic drug manufacturer has approached the FDArequesting guidance about submitting an ANDA for ferumoxytol, the active ingredient in Feraheme, and that such an ANDA may be filed in the nearfuture. Because the FDA may deny our request for reconsideration of NCE status for Feraheme and because the published bioequivalence guidancecould encourage a generic entrant seeking a path to approval of a generic ferumoxytol to file an ANDA, we could face generic competition in the near-term or have to engage in extensive litigation with a generic competitor to protect our patent rights, either29Table of Contentsof which could adversely affect our business and results of operations. Companies that manufacture generic products typically invest far fewerresources in research and development than the manufacturers of branded products and can therefore price their products significantly lower than thosebranded products already on the market. Therefore, competition from generic intravenous, or IV, iron products could limit our U.S. sales and anyroyalties we may receive from Takeda, which would have an adverse impact on our business and results of operations.We are completely dependent on third parties to manufacture Feraheme/Rienso and any difficulties, disruptions or delays in the Feraheme/Riensomanufacturing process, including our transition to alternative source manufacturing facilities, could increase our costs, or adversely affect ourprofitability and future business prospects. In the third quarter of 2012, we ceased our manufacturing operations at our Cambridge, Massachusetts manufacturing facility. Consequently, wecurrently rely solely on our third-party contract manufacturers to manufacture Feraheme/Rienso for our commercial and clinical use in the U.S., the EUand Switzerland. We do not currently have an alternative manufacturer for our Feraheme/Rienso drug substance and finished drug product and we maynot be able to enter into agreements with manufacturers whose facilities and procedures comply with current good manufacturing practices, or cGMP,regulations and other regulatory requirements on terms that are favorable to us, if at all. Prior to ceasing our manufacturing operations in 2012, wemanufactured Feraheme drug substance and drug product for use in the Canadian market at our Cambridge facility. Although we and Takeda areworking to obtain regulatory approval of the manufacturing facilities at our current third-party contract manufacturers to produce Feraheme for sale inCanada, we do not currently have manufacturing facilities for this geography. Our ability to have Feraheme/Rienso manufactured in sufficient quantities and at acceptable costs to meet our commercial demand and clinicaldevelopment needs is dependent on the uninterrupted and efficient operation of our third-party contract manufacturing facilities. Any difficulties,disruptions or delays in the Feraheme/Rienso manufacturing process could result in product defects or shipment delays, recall or withdrawal of productpreviously shipped for commercial or clinical purposes, inventory write-offs or the inability to meet commercial demand for Feraheme/Rienso in atimely and cost-effective manner. Our current third-party manufacturer does not manufacture for us exclusively and may exhaust some or all of itsresources meeting the demand of other customers. Insufficient manufacturing capacity due to scheduling conflicts at our third-party manufacturers toproduce sufficient quantities of Feraheme/Rienso to meet our demand forecasts or any potential manufacturing delays resulting from our efforts to gainregulatory approval of a new assay for the production of Rienso for sale in the EU, could result in our inability to meet our commercial demand forFeraheme/Rienso. In addition, the transition of the manufacturing processes to third-party contract manufacturers and the oversight of such third parties could take asignificant amount of time and may increase the risk of certain problems, including cost overruns, process reproducibility, stability issues, the inabilityto deliver required quantities of product that conform to specifications in a timely manner, or the inability to manufacture Feraheme/Rienso inaccordance with cGMP. If we are unable to have Feraheme/Rienso manufactured on a timely or sufficient basis because of these or other factors, wemay not be able to meet commercial demand or our clinical development needs for Feraheme/Rienso or may not be able to manufactureFeraheme/Rienso in a cost-effective manner, particularly in light of the fixed price at which we are required to supply Feraheme/Rienso to Takeda underour License, Development and Commercialization Agreement, as most recently amended in June 2012, or the Amended Takeda Agreement. As a result,we may lose sales, fail to generate increased revenues, suffer regulatory setbacks and/or we may lose money on our supply of Feraheme/Rienso toTakeda, any of which could have an adverse impact on our potential profitability and future business prospects.30Table of ContentsSignificant safety or drug interaction problems could arise with respect to Feraheme/Rienso, which could result in restrictions in theFeraheme/Rienso label, recalls, withdrawal of Feraheme/Rienso from the market, an adverse impact on Feraheme/Rienso sales, or our need toalter or terminate current or future Feraheme development programs, any of which would adversely impact our future business prospects. Significant safety or drug interaction problems could arise with respect to Feraheme/Rienso, including an increase in the severity or frequency ofknown problems or the discovery of previously unknown problems, and may result in a variety of adverse regulatory actions. In the U.S., under theFood and Drug Administration Amendments Act of 2007, the FDA has broad authority to force drug manufacturers to take any number of actions ifsafety or drug interaction problems arise, including, but not limited to the following:•Requiring manufacturers to conduct post-approval clinical studies to assess known risks or signals of serious risks, or to identifyunexpected serious risks; •Mandating labeling changes to a product based on new safety information; or •Requiring manufacturers to implement a Risk Evaluation Mitigation Strategy where necessary to assure safe use of the drug. Similar laws and regulations exist in countries outside of the U.S. In addition, previously unknown safety or drug interaction problems could resultin product recalls, restrictions on the product's permissible uses, or withdrawal of the product from the U.S. and/or foreign markets. For example, in November 2010, following discussions with the FDA, we revised the Feraheme package insert, which includes essentialinformation regarding the FDA-approved use of Feraheme, including, among other things, the approved indication, side effects, and dosageinstructions, to include bolded warnings and precautions that describe events that have been reported during post-marketing review after Ferahemeadministration, including life-threatening hypersensitivity reactions and clinically significant hypotension. We directly alerted healthcare providers of thechanges to the Feraheme package insert. During June 2011, we made further changes to the Feraheme package insert based on additional post-marketing data. These or any future changes to the Feraheme package insert could adversely impact our or Takeda's ability to successfully compete inthe IV iron market and could have an adverse impact on potential sales of Feraheme and our future business prospects. The data submitted to both the FDA as part of our NDA and to the EMA as part of the Marketing Authorization Application for Feraheme/Riensoin the CKD indication was obtained in controlled clinical trials of limited duration. New safety or drug interaction issues may arise as Feraheme/Riensois used over longer periods of time by a wider group of patients, some of whom may be taking numerous other medicines or by patients with additionalunderlying health problems. In addition, as we conduct and complete other clinical trials for Feraheme, new safety issues may be identified which couldnegatively impact our ability to successfully complete these studies, the use and/or regulatory status of Feraheme/Rienso for the treatment of IDA inpatients with CKD in the U.S., EU or other territories, and the prospects for approval of future sNDAs, such as our December 2012 sNDA submissionfor Feraheme for the treatment of IDA regardless of the underlying cause. For example, the FDA may determine that our sNDA for our IDA globalregistrational program does not establish a sufficiently acceptable safety profile for the approval of a broader Feraheme label. As more data become available and an increased number of patients are treated with Feraheme/Rienso, new safety or drug interaction issues mayarise and require us to, among other things, provide additional warnings and/or restrictions on the Feraheme/Rienso package insert, including a boxedwarning in the U.S. or similar warnings outside of the U.S., directly alert healthcare providers of new safety information, narrow our approvedindications, alter or terminate current or future trials for additional uses of Feraheme, or even remove Feraheme/Rienso from the market, any of whichcould31Table of Contentshave a significant adverse impact on potential sales of Feraheme/Rienso or require us to expend significant additional funds.Our and Takeda's ability to grow revenues from sales of Feraheme/Rienso could be limited if we or Takeda do not obtain approval, or if we orTakeda experience significant delays in our or Takeda's efforts to obtain approval to market and sell Feraheme/Rienso for the treatment of IDA ina broad range of patients. In December 2012, we submitted a sNDA to the FDA for Feraheme for the treatment of IDA in a broad range of patients. In addition, we expectthat Takeda will file a Type II Variation, which is the EU equivalent of a U.S. sNDA, with the EMA in 2013 seeking marketing approval forFeraheme/Rienso for the treatment of IDA in adult patients. Before applying for regulatory approval in the U.S. or foreign countries for the commercialmarketing and sale of Feraheme/Rienso for the broad IDA indication, we have to demonstrate, through extensive human clinical trials, thatFeraheme/Rienso is safe and effective for use in this broader patient population. Conducting these and other clinical trials is a complex, time-consumingand expensive process that requires adherence to a wide range of regulatory requirements. The FDA and foreign regulatory agencies have substantialdiscretion in the approval process and may decide that the results of our recently completed clinical trials are insufficient for approval or thatFeraheme/Rienso is not effective or safe in indications other than IDA in adult patients with CKD. For example, in our Phase III clinical trial in thebroader patient population, Feraheme-treated patients experienced a 0.6% rate of related serious adverse events, or SAEs, as compared to a 0.2% rate ofrelated SAEs from our current Feraheme label for treatment of IDA patients with CKD. Clinical and other data is often susceptible to varyinginterpretations, and many companies that have believed their product candidates performed satisfactorily in clinical trials have nonetheless failed toobtain FDA or EMA approval for their products. There is no guarantee that the FDA or EMA will determine that the results of our clinical trials in ourglobal registrational program for Feraheme/Rienso in a broad range of patients with IDA will adequately demonstrate that Feraheme/Rienso is safe andeffective in such a patient population to grant approval. The FDA or EMA could also determine that our clinical trials and/or our manufacturing processes were not properly designed, were not conductedin accordance with applicable laws and regulations, or were otherwise not properly managed. In addition, under the FDA's current good clinicalpractices regulations, or cGCP, we are responsible for conducting, recording and reporting the results of clinical trials to ensure that the data and resultsare credible and accurate and that the trial participants are adequately protected. The FDA may conduct inspections of clinical investigator sites which areinvolved in our clinical development programs to ensure their compliance with cGCP regulations. If the FDA determines that we, our clinical researchorganizations or our study sites fail to comply with applicable cGCP regulations, the clinical data generated in our clinical trials may be deemedunreliable and the FDA may disqualify certain data generated from those sites or require us to perform additional clinical trials before approving ourmarketing application, which could adversely impact our ability to obtain marketing approval in the U.S. for Feraheme/Rienso in the broad IDAindication. Any such deficiency in the design, implementation or oversight of our clinical development programs could cause us to incur significantadditional costs, experience significant delays or prevent us from obtaining marketing approval for Feraheme/Rienso for the broad IDA indication. Inaddition, any failure by us or Takeda to obtain approval for the broad IDA indication could adversely affect the commercialization of Feraheme/Riensoin its current indication. If, for any of these or other reasons, we or Takeda do not obtain approval, or if we or Takeda experience significant delays inour or Takeda's efforts to obtain approval to market and sell Feraheme/Rienso for the treatment of IDA in a broad range of patients, our cash position,our ability to increase revenues, our ability to achieve profitability, and the future prospects of our business could be materially adversely affected.32Table of ContentsWe may not be able to expand our product portfolio by entering into business development transactions, such as in-licensing arrangements,acquisitions, or collaborations or if such arrangements are entered into they could disrupt our business, decrease our profitability, result indilution to our stockholders or cause us to incur debt or significant additional expense. As part of our business strategy to expand our product portfolio and achieve profitability, we are seeking to acquire or in-license other productsthat we believe would be complementary to our existing business. We have limited experience with respect to these business development activities andthere can be no assurance that we will be able to identify or complete any such transaction in a timely manner, on a cost-effective basis, or at all, and wemay not realize the anticipated financial benefits of any such transaction. We may not be successful in acquiring or in-licensing a product or productcandidate that will provide us with commercial, development and/or financial synergies with Feraheme and our current organization such that we will beable to eliminate expenses either from our existing operations or from the cost structure of the acquired product. In addition, proposing, negotiating and implementing collaborations, in-licensing arrangements or acquisition agreements may be a lengthy andcomplex process. Other companies, including those with substantially greater financial, marketing and sales resources, may compete with us for thesearrangements, and we may not be able to enter into such arrangements on acceptable terms or at all. Further, any such strategic transactions by us couldresult in large and immediate write-offs or the incurrence of debt and contingent liabilities, any of which could adversely impact our operating results.Management of a license arrangement, collaboration, or other strategic arrangement and/or integration of an acquired asset or company may also disruptour ongoing business, require management resources that otherwise would be available for ongoing development of our existing business and our U.S.commercialization of Feraheme. In addition, to finance any such strategic transactions, we may choose to issue shares of our common or preferredstock as consideration, which would result in dilution to our stockholders. Alternatively, it may be necessary for us to raise additional funds throughpublic or private financings, and such additional funds may not be available on terms that are favorable to us, if at all. If we are unable to successfullyobtain rights to suitable products or if any acquisition or in-license arrangement we make is not successful, our business, financial condition andprospects for growth could suffer.The success of Feraheme in the U.S. depends on our ability to maintain the proprietary nature of our technology. We rely on a combination of patents, trademarks and copyrights in the conduct of our business. The patent positions of pharmaceutical andbiopharmaceutical firms are generally uncertain and involve complex legal and factual questions. We may not be successful or timely in obtaining anypatents for which we submit applications. The breadth of the claims obtained in our patents may not provide sufficient protection for our technology.The degree of protection afforded by patents for proprietary or licensed technologies or for future discoveries may not be adequate to preserve ourability to protect or commercially exploit those technologies or discoveries. The patents issued to us may provide us with little or no competitiveadvantage. In addition, there is a risk that others will independently develop or duplicate similar technology or products or circumvent the patents issuedto us. Our U.S. ferumoxytol patents are currently scheduled to expire in 2020. These and any other patents issued to us may be contested or invalidated.There has been substantial litigation and other proceedings regarding patent and other intellectual property rights in the pharmaceutical andbiotechnology industries. We may become a party to patent litigation and other proceedings, including interference and reexamination proceedingsdeclared by the United States Patent and Trademark Office.33Table of Contents In addition, claims of infringement or violation of the proprietary rights of others may be asserted against us. If we are required to defend againstsuch claims or to protect our own proprietary rights against others, it could result in substantial financial and business costs, including the business costattributable to the resulting distraction of our management. An adverse ruling in any litigation or administrative proceeding could prevent us frommarketing and selling Feraheme, increase the risk that a generic version of Feraheme could enter the market to compete with Feraheme, limit ourdevelopment and commercialization of Feraheme, or otherwise harm our competitive position and result in additional significant costs. In addition, anysuccessful claim of infringement asserted against us could subject us to monetary damages or an injunction, preventing us from making or sellingFeraheme. We also may be required to obtain licenses to use the relevant technology. Such licenses may not be available on commercially reasonableterms, if at all. Frequently, the unpredictable nature and significant costs of patent litigation leads the parties to settle to remove this uncertainty.Settlement agreements between branded companies and generic applicants may allow, among other things, a generic product to enter the market prior tothe expiration of any or all of the applicable patents covering the branded product, either through the introduction of an authorized generic or byproviding a license to the applicant for the patents in suit. We also rely upon unpatented trade secrets and improvements, unpatented know-how and continuing technological innovation to develop andmaintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our corporate licensees, collaborators, contractmanufacturers, employees and consultants. These agreements, however, may be breached. We may not have adequate remedies for any such breaches,and our trade secrets might otherwise become known or might be independently discovered by our competitors. In addition, we cannot be certain thatothers will not independently develop substantially equivalent or superseding proprietary technology, or that an equivalent product will not be marketedin competition with Feraheme, thereby substantially reducing the value of our proprietary rights. Our inability to protect Feraheme through our patentsand other intellectual property rights prior to their expiration could have a material adverse effect on our business, financial condition and prospects.The success of Feraheme/Rienso abroad depends on our ability to protect our intellectual property rights and the laws of foreign countries maynot provide the same level of protection as do the laws of the U.S. The laws of foreign countries may not protect our intellectual property rights to the same extent as do the laws of the U.S. and therefore, in additionto similar risks to those describe above under the heading "The success of Feraheme in the U.S. depends on our ability to maintain the proprietarynature of our technology" our intellectual property rights may be subject to increased risk abroad, including opposition proceedings before the patentoffices for other countries, such as the European Patent Office, or the EPO, or similar adversarial proceedings, regarding intellectual property rightswith respect to Feraheme/Rienso. For example, in July 2010, Sandoz GmbH, or Sandoz, filed with the EPO an opposition to one of our previouslyissued patents which covers ferumoxytol in the EU. In October 2012, at an oral hearing, the Opposition Division of the EPO revoked our Europeanferumoxytol patent. In December 2012, our notice of appeal was recorded with the EPO. The appeals process is costly and time-consuming and if itresults in an unfavorable outcome to us, it could result in a loss of proprietary rights in the EU and may allow Sandoz or other companies to use ourproprietary technology without a license from us, which may also result in a loss of future royalty or milestone payments to us, as well as the possibilitythat Takeda may determine that the terms of our agreement are no longer viable. We cannot predict the outcome of our appeal of the EPO decision. Thisor any future patent interference proceedings involving our patents may result in substantial costs to us, distract our management from day-to-daybusiness operations and responsibilities, prevent us or Takeda from marketing and selling Feraheme/Rienso or increase the risk that a generic version ofFeraheme/Rienso could enter the market to compete with Feraheme/Rienso. In countries where we do not have or have not applied for patents forferumoxytol, such as in China, where we license certain development34Table of Contentsand commercial rights to Feraheme to 3SBio, Inc., we may be unable to prevent others from developing or selling similar products. In addition, injurisdictions outside the U.S. where we have patent rights, we may be unable to prevent unlicensed parties from selling or importing products ortechnologies derived elsewhere using our proprietary technology. Any such limitation on our intellectual property rights would cause substantial harmto our competitive position and to our ability to develop and commercialize Feraheme/Rienso. Our inability to protect Feraheme/Rienso through ourpatents and other intellectual property rights in any territory prior to their expiration could have a material adverse effect on our business, financialcondition and prospects.Competition in the pharmaceutical and biopharmaceutical industries is intense. If we fail to compete effectively, our business and market positionwill suffer. The pharmaceutical and biopharmaceutical industry is intensely competitive and subject to rapid technological change. We and Takeda compete inthe marketing and sale of Feraheme/Rienso and many of our competitors are large, well-known pharmaceutical companies. One or more of ourcompetitors may benefit from significantly greater financial, sales and marketing capabilities, greater technological or competitive advantages, and otherresources. Our competitors may develop products that are more widely accepted than ours and may receive patent protection that dominates, blocks oradversely affects our product development or business. The iron replacement therapy market is highly sensitive to several factors including, but not limited to the following:•the actual and perceived safety and efficacy profile of the available products; •the ability to obtain appropriate insurance coverage and reimbursement rates and terms; •price competitiveness; and •product characteristics such as convenience of administration and dosing regimens. The introduction by our competitors of alternatives to Feraheme/Rienso that would be, or are perceived to be, more efficacious, safer, cheaper,easier to administer, or more favorable insurance coverage or reimbursement could reduce our revenues and the value of our product developmentefforts. Feraheme/Rienso may not receive the same level of market acceptance as competing iron replacement therapy products, in part because most ofthese products have been on the market longer and are currently widely used by physicians in the U.S. and abroad. In addition, certain of the IV ironproducts that we compete with are approved for the treatment of IDA in a broader group of patients than Feraheme/Rienso. We or Takeda may not beable to convince physicians and other healthcare providers or payers to switch from using the other IV iron therapeutic products to Feraheme/Rienso. Ifwe or Takeda are not able to differentiate Feraheme/Rienso from other marketed IV iron products, our ability to maintain a premium price, our ability togenerate revenues and achieve and maintain profitability, and our long-term business prospects could be adversely affected. Feraheme currently competes with several IV iron replacement therapies in the U.S., If these or other iron replacement products are approved formarketing and sale in the U.S. or are approved for a broader IDA indication than Feraheme, our efforts to market and sell Feraheme in the U.S. and ourability to generate additional revenues and achieve profitability could be adversely affected. Feraheme/Rienso also competes with a number of branded IV iron replacement and certain other iron dextran and iron sucrose products outside ofthe U.S. If Takeda is unable to convince physicians and other healthcare providers to switch from using the competing IV iron products toFeraheme/Rienso, our ability to generate revenues from royalties we may receive from Takeda will be limited and our operating results will benegatively affected. In addition, all other IV iron products currently35Table of Contentsapproved and marketed and sold in the EU are approved for marketing to a broader group of patients with IDA. Feraheme/Rienso was approved onlyfor use in adult CKD patients, which could put Feraheme/Rienso at a competitive disadvantage unless and until it receives approval for a broaderindication outside of the U.S.Feraheme/Rienso may not be widely adopted by physicians, hospitals, patients, or healthcare payors, which would adversely impact our potentialprofitability and future business prospects. The commercial success of Feraheme/Rienso in the U.S. and in other territories depends upon its level of market adoption by physicians, hospitals,patients, and healthcare payors, including managed care organizations and group purchasing organizations, or GPOs. If Feraheme/Rienso does notachieve or maintain an adequate level of market adoption for any reason, our potential profitability and our future business prospects will be severelyadversely impacted. Feraheme/Rienso represents an alternative to other products and might not be adopted if perceived to be no safer, less safe, no moreeffective, less effective, no more convenient, or less convenient than currently available products. In addition, the pricing and/or reimbursement rates andterms for Feraheme/Rienso may not be viewed as advantageous to potential prescribers and payors as the pricing and/or reimbursement rates and termsof alternative IV iron products. The degree of market acceptance of Feraheme/Rienso in the U.S. and abroad depends on a number of factors, includingbut not limited to the following:•Our and Takeda's ability to demonstrate to healthcare providers, particularly hematologists, oncologists, hospitals, nephrologists, andothers who may purchase or prescribe Feraheme/Rienso, the clinical efficacy and safety of Feraheme/Rienso as an alternative tocurrently marketed IV iron products which treat IDA in CKD patients; •Our and Takeda's ability to convince physicians and other healthcare providers to use IV iron, and Feraheme/Rienso in particular, ratherthan oral iron, which is the current treatment of choice of most physicians for treating IDA in CKD patients; •The actual or perceived safety and efficacy profile of Feraheme/Rienso as compared to alternative iron replacement therapeutic agents,particularly if unanticipated adverse reactions to Feraheme/Rienso result in further changes to or restrictions in the Feraheme/Riensopackage insert and/or otherwise create safety concerns among potential prescribers; •The relative level of available reimbursement in the U.S. for Feraheme from payors, including government payors, such as Medicare andMedicaid, and private payors as compared to the level of available reimbursement for alternative IV iron products; •The relative price and/or level of reimbursement of Feraheme/Rienso outside of the U.S. as compared to alternative iron replacementtherapeutic agents; •The actual or perceived convenience and ease of administration of Feraheme/Rienso as compared to alternative iron replacementtherapeutic agents, including iron administered orally; and •The effectiveness of our and Takeda's commercial organizations and distribution networks in marketing, selling and supplyingFeraheme/Rienso. The key component of our U.S. commercialization strategy is to market and sell Feraheme for use in non-dialysis adult CKD patients. The currentU.S. non-dialysis CKD market is comprised primarily of three sites of care where a substantial number of CKD patients are treated: hematology andoncology centers, hospitals, and nephrology clinics. IV iron therapeutic products are not currently widely used by certain physicians who treat non-dialysis CKD patients in the U.S., particularly nephrologists, due to safety concerns and the inconvenience and often impracticability of administeringIV iron therapeutic products in their offices. It is often difficult to change physicians' existing treatment paradigms even when supportive clinical data isavailable. In addition, our ability to effectively market36Table of Contentsand sell Feraheme in the U.S. hospital market depends in part upon our ability to achieve acceptance of Feraheme onto hospital formularies. Sincemany hospitals and hematology, oncology and nephrology practices are members of GPOs, which leverage the purchasing power of a group of entitiesto obtain discounts based on the collective bargaining power of the group, our ability to attract customers in these sites of care also depends in part onour ability to effectively promote Feraheme to and enter into pricing agreements with GPOs. If we are not successful in capturing a significant share ofthe U.S. non-dialysis CKD market or if we are not successful in securing and maintaining formulary coverage for Feraheme, our potential profitabilityas well as our long-term business prospects could be adversely affected.We derive a substantial amount of our revenue from a limited number of customers and the loss of one or more of these customers or a decline inrevenue from one or more of these customers could have an adverse impact on our results of operations and financial condition. In the U.S., we sell Feraheme primarily to wholesalers and specialty distributors and therefore a significant portion of our revenues is generated bya small number of customers. Four customers accounted for 94% of our total revenues during the year ended December 31, 2012, and three customersaccounted for 94% of our accounts receivable balance as of December 31, 2012. We pay these wholesalers and specialty distributors a fee for theservices that they provide to us. Because our business is concentrated with such a small number of wholesalers and specialty distributors, we could beforced to accept increases in their fees in order to maintain the current distribution networks through which Feraheme is sold. Any increase in feescould have a negative impact on our current and future sales of Feraheme in the U.S. and could have a negative impact on the reimbursement rate anindividual physician, hospital or clinic would realize upon using Feraheme. In addition, a significant portion of our U.S. Feraheme sales are generatedthrough a small number of contracts with GPOs. For example, approximately 32% of our end-user demand in the year ended December 31, 2012 wasgenerated by members of a single GPO with which we have contracted. As a result of the significant percentage of our end-user demand beinggenerated by a single GPO, we may be at a disadvantage in future contract or price negotiations with such GPO and that GPO may be able to influencethe demand for Feraheme from its members in a particular quarter through communications they make to their customers. In addition, the loss of,material reduction in sales volume to, or a significant adverse change in our relationship with any of our key wholesalers, distributors or GPOs couldhave a material adverse effect on our revenue in any given period and may result in significant annual or quarterly revenue fluctuations.We depend, to a significant degree, on the availability and extent of reimbursement from third-party payors for the use of Feraheme/Rienso, and areduction in the availability or extent of reimbursement could adversely affect our Feraheme/Rienso sales revenues and results of operations. In both the U.S. and foreign markets, our and Takeda's ability to successfully commercialize Feraheme/Rienso is dependent, in significant part, onthe availability and extent of reimbursement to end-users from third-party payors for the use of Feraheme/Rienso, including governmental payors,managed care organizations and private health insurers. Reimbursement by third-party payors depends on a number of factors, including the third-party's determination that the product is competitively priced, safe and effective, appropriate for the specific patient, and cost-effective. Third-partypayors are increasingly challenging the prices charged for pharmaceutical products and have instituted and continue to institute cost containmentmeasures to control or significantly influence the purchase of pharmaceutical products. If these entities do not provide coverage and reimbursement forFeraheme/Rienso or provide an insufficient level of coverage and reimbursement, physicians and other healthcare providers may choose to usealternative IV iron replacement products, which would have an adverse effect on our ability to generate revenues.37Table of Contents In addition, U.S. and many foreign governments continue to propose and pass legislation designed to reduce the cost of health care for patients. Inthe U.S., the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or the HealthCare Reform Act, was enacted in March 2010 and includes certain cost containment measures including an increase to the minimum rebates forproducts covered by Medicaid programs, the extension of such rebates to drugs dispensed to Medicaid beneficiaries enrolled in Medicaid managed careorganizations and the expansion of the 340B Drug Discount Program under the Public Health Service Act. In addition, the heightened focus on thehealth care industry by the federal government could result in the implementation of significant federal spending cuts, including cuts in Medicare andother health related spending in the near-term, such as a potential 2% across-the-board sequestration of Medicare expenditures. The full impact of theselaws on our business is uncertain. In recent years some states have also passed legislation to control the prices of drugs as well as begun a move towardmanaged care to relieve some of their Medicaid cost burden. While Medicare is the predominant payor for treatment of patients with CKD, Medicarepayment policy, in time, can also influence pricing and reimbursement in the non-Medicare markets, as private third-party payors and state Medicaidplans frequently adopt Medicare principles in setting reimbursement methodologies. These and any future changes in government regulation or privatethird-party payors' reimbursement policies may reduce the extent of reimbursement for Feraheme/Rienso and adversely affect our future operatingresults. In January 2011, a prospective payment system for dialysis services provided to Medicare beneficiaries who have end-stage renal disease, orESRD, became effective under which all costs of providing dialysis services are bundled together into a single prospective payment per treatment. Thisbundled approach to reimbursement has and will likely continue to alter the utilization of physician-administered drugs in the ESRD market as well asput downward pressure on the prices pharmaceutical companies can charge ESRD facilities for such drugs, particularly where alternative products areavailable. In the U.S., Feraheme is sold at a price that is substantially higher than alternative IV iron products in the dialysis setting, and as a result, thedemand for Feraheme in the dialysis setting has largely disappeared. In addition, it is also possible that this "bundled" approach may be applied tospecific disease states other than ESRD. For example, one large insurer in the U.S has attempted to bundle certain costs related to the treatment of cancerpatients. Further changes in the Medicare reimbursement rate, which result in lower payment rates from payors, including Medicare payors, wouldfurther limit our ability to successfully market and sell Feraheme in the U.S. In addition, in the U.S. hospital in-patient setting, Feraheme is reimbursedby Medicare under a diagnosis-related group payment system, which provides a per discharge reimbursement based on the diagnosis and/or procedurerather than actual costs incurred in patient treatments, thereby increasing the incentive for a hospital to limit or control expenditures. As a result,Feraheme has not been nor do we expect it to be broadly used in the hospital in-patient setting. In countries outside of the U.S., market acceptance may also depend, in part, upon the availability of reimbursement within existing healthcarepayment systems. Generally, in Europe and other countries outside of the U.S., the government sponsored healthcare system is the primary payor ofhealthcare costs of patients and therefore enjoys significant market power. Some foreign countries also set prices for pharmaceutical products as part ofthe regulatory process, and we cannot guarantee that the prices set by such governments will be sufficient to generate substantial revenues or allow salesof Feraheme/Rienso to be profitable in those countries. Any such limitations on the reimbursement for Feraheme/Rienso in countries outside of theU.S. would have an adverse impact on Takeda's ability to generate product sales of Feraheme/Rienso in such territories, which would, in turn, limit theamount of royalties we may receive under our amended agreement with Takeda.38Table of ContentsWe are substantially dependent upon our collaboration with Takeda to commercialize Feraheme/Rienso in certain regions outside of the U.S.,including Canada, Switzerland and the EU, and if Takeda fails to successfully fulfill its obligations, or is ineffective in its commercialization ofFeraheme/Rienso in the licensed territories, or if our collaboration is terminated, our plans to commercialize Feraheme/Rienso outside of the U.S.may be adversely affected. In March 2010, we entered into our initial agreement with Takeda, which was amended in June 2012, under which we granted exclusive rights toTakeda to develop and commercialize Feraheme/Rienso as a therapeutic agent in Europe, certain Asia-Pacific countries (excluding Japan, China andTaiwan), Canada, India and Turkey. We are highly dependent on Takeda for certain regulatory filings outside of the U.S. with respect toFeraheme/Rienso and the commercialization of Feraheme/Rienso outside of the U.S., including in Canada, Switzerland and the EU. If Takeda fails toperform its obligations under the Amended Takeda Agreement or is ineffective in its commercialization of Feraheme/Rienso in the agreed-uponterritories, or if we fail to effectively manage our relationship with Takeda, our ability to and the extent to which we obtain regulatory approvals forFeraheme/Rienso and our Feraheme/Rienso commercialization efforts outside of the U.S. would be significantly harmed, which would have an adverseeffect on milestone payments and royalties we may receive under the Amended Takeda Agreement. Further, if we fail to fulfill certain of our obligationsunder the Amended Takeda Agreement, Takeda has the right to assume the responsibility of clinical development and manufacturing ofFeraheme/Rienso in the agreed-upon territories, which would increase the cost of and delay the Feraheme/Rienso development program outside of theU.S. Takeda has the unilateral right to terminate the Amended Takeda Agreement under certain conditions, including without cause. If Takeda terminatesthe agreement and we chose to continue to commercialize Feraheme/Rienso in Takeda's territories, we would be required to either enter into alternativearrangements with third parties to commercialize Feraheme/Rienso in Takeda's territories, which we may be unable to do, or to increase our internalinfrastructure, both of which would likely result in significant additional expense and the disruption or failure of commercial efforts outside of the U.S.In addition, such a termination would prevent us from receiving the milestone payments and royalties we may receive under the Amended TakedaAgreement.Our contract manufacturers may not be able to operate their manufacturing facilities in compliance with current good manufacturing practices,release specifications and other FDA and equivalent foreign regulations, which could result in a suspension of our contract manufacturers'ability to manufacture Feraheme/Rienso, the loss of Feraheme/Rienso inventory, an inability to manufacture sufficient quantities ofFeraheme/Rienso to meet U.S. or foreign demand, or other unanticipated compliance costs. Our third-party contract manufacturing facilities are subject to cGMP regulations enforced by the FDA and equivalent foreign regulatoryregulations and agencies through periodic inspections to confirm such compliance. Our contract manufacturers must continually expend time, moneyand effort in production, record-keeping and quality assurance and control to ensure that these manufacturing facilities meet applicable regulatoryrequirements. Failure to maintain ongoing compliance with cGMP or similar regulations and other applicable manufacturing requirements of variousU.S. or foreign regulatory agencies could result in, among other things, the issuance of warning letters, fines, the withdrawal or recall ofFeraheme/Rienso from the marketplace, total or partial suspension of Feraheme/Rienso production, the loss of Feraheme/Rienso inventory, suspensionof the review of any future sNDAs or equivalent foreign filings, enforcement actions, injunctions or criminal prosecution. A government-mandatedrecall or a voluntary recall could divert managerial and financial resources, could be difficult and costly to correct, could result in the suspension of salesof Feraheme/Rienso, and could have a severe adverse impact on our potential profitability and the future prospects of our business. If any U.S. orforeign regulatory agency inspects any of these manufacturing facilities and determines that they are not in compliance with cGMP or similar regulationsor our contract manufacturers otherwise determine that they are not in compliance with these regulations, our contract manufacturers could experience aninability to manufacture sufficient quantities of Feraheme/Rienso to meet U.S. or foreign demand or incur unanticipated compliance expenditures.39Table of Contents We have also established certain testing and release specifications with the FDA and other foreign regulatory agencies. This release testing must beperformed in order to allow the finished product to be used for commercial sale. If our finished product does not meet these release specifications or ifthe release testing is variable, we may not be able to supply product to meet our projected demand. In addition, variations in the regulatory approval ofFeraheme/Rienso in the currently approved territories require that our third-party manufacturers follow different manufacturing processes and analyticaltesting methods. For example, in late 2012, we produced a batch of Rienso which did not meet our release specifications in the EU. As a result, we areincurring additional costs associated with the development, validation and technology transfer to Takeda of a more accurate assay in order to be able torelease this batch and any future batches produced for sale in the EU. This new assay will require review and approval by the EMA. If we are unable todevelop, validate, transfer or gain regulatory approval for the new release test, our ability to supply product to the EU will be adversely affected. Suchsetbacks could have an adverse impact on Feraheme/Rienso sales, our potential profitability and the future prospects of our business.Our inability to obtain raw and other materials used in the manufacture of Feraheme/Rienso could adversely impact our ability to manufacturesufficient quantities of Feraheme/Rienso, which would have an adverse impact on our business. We and our third-party manufacturers currently purchase certain raw and other materials used to manufacture Feraheme/Rienso from third-partysuppliers and at present do not have any long-term supply contracts with these third parties. These third-party suppliers may cease to produce the raw orother materials used in Feraheme/Rienso or otherwise fail to supply these materials to us or our third-party manufacturers or fail to supply sufficientquantities of these materials to us or our third-party manufacturers in a timely manner for a number of reasons, including but not limited to thefollowing:•Unexpected demand for or shortage of raw or other materials; •Adverse financial developments at or affecting the supplier; •Regulatory requirements or action; •An inability to provide timely scheduling and/or sufficient capacity; •Manufacturing difficulties; •Labor disputes or shortages; or •Import or export problems. If any of our third-party suppliers cease to supply certain raw or other materials to us or our third-party manufacturers for any reason we could beunable to manufacture Feraheme/Rienso in sufficient quantities, on a timely basis, or in a cost-effective manner until we are able to qualify an alternativesource. For example, one of the key components in ferumoxytol is produced specifically for us by a third-party supplier and if our third-party supplieris no longer able to supply it to us we will be unable to manufacture Feraheme/Rienso until we are able to identify and qualify an alternative supplier.This or any other interruption in our third-party supply chain could adversely affect our ability to satisfy commercial demand and our clinicaldevelopment needs for Feraheme/Rienso. The qualification of an alternative source may require repeated testing of the new materials and generate greater expenses to us if materials that wetest do not perform in an acceptable manner. In addition, we or our third-party manufacturers sometimes obtain raw or other materials from one vendoronly, even where multiple sources are available, to maintain quality control and enhance working relationships with suppliers, which could make ussusceptible to price inflation by the sole supplier, thereby increasing our production costs. As a result of the high quality standards imposed on our rawor other materials, we or our third-party manufacturers may not be able to obtain such40Table of Contentsmaterials of the quality required to manufacture Feraheme/Rienso from an alternative source on commercially reasonable terms, or in a timely manner, ifat all. Even if we are able to obtain raw or other materials from an alternative source, if these raw or other materials are not available in a timely manner oron commercially reasonable terms, we would be unable to manufacture Feraheme/Rienso, both for commercial sale and for use in our clinical trials, on atimely and cost-effective basis, which could cause us to lose money. Any such difficulty in obtaining raw or other materials could severely hinder ourability to manufacture Feraheme/Rienso and could have a material adverse impact on our ability to generate additional revenues and to achieveprofitability.We have a history of net losses, and we may not be able to generate sufficient revenues to achieve and maintain profitability in the future. We have a history of significant operating losses, we may not be profitable in the future, and if we do attain profitability, such profitability may notbe sustainable. In the past, we have financed our operations primarily from the sale of our equity securities, cash from sales of Feraheme/Rienso, cashgenerated by our investing activities, and payments from our licensees. As of December 31, 2012, we had an accumulated deficit of approximately$456.7 million. Our losses were primarily the result of costs incurred in our efforts to manufacture, market and sell Feraheme/Rienso, including costsassociated with maintaining our commercial infrastructure and marketing and promotion costs, research and development costs, such as costs associatedwith our clinical trials, and selling, general and administrative costs. We expect to continue to incur significant expenses as we continue to manufacture,market and sell Feraheme as an IV iron replacement therapeutic for use in adult CKD patients in the U.S., and as we further develop and seek marketingapproval for Feraheme for the treatment of IDA in a broad range of patients. As a result, we will need to generate sufficient revenues in future periodsto achieve and maintain profitability. We anticipate that the majority of any revenue we generate in the next twelve months will be from sales ofFeraheme/Rienso as an IV iron replacement therapeutic agent for use in adult CKD patients in the U.S. and royalties we may receive with respect tosales of Feraheme/Rienso in Canada and the EU under the Amended Takeda Agreement, which we originally entered into with Takeda in 2010. Wehave never independently marketed or sold any products prior to Feraheme, and we or Takeda may not be successful in marketing or sellingFeraheme/Rienso. If we or Takeda are not successful in marketing and selling Feraheme/Rienso, if revenues grow more slowly than we anticipate or ifour operating expenses exceed our expectations, or if we are otherwise unable to achieve, maintain or increase profitability on a quarterly or annualbasis, our business, results of operations and financial condition could be materially adversely affected and the market price of our common stock maydecline.We have limited experience independently commercializing a pharmaceutical product, and any failure on our part to effectively execute ourFeraheme commercial plans in the U.S. would have an adverse impact on our business. Prior to our commercialization of Feraheme in the U.S., we had never independently marketed or sold a drug product as we had relied on ourlicensees to market and sell our previously approved products. We have an internal commercial infrastructure to market and sell Feraheme in the U.S.,and if we are unsuccessful in maintaining an effective commercial function or experience a high level of employee turnover, then the commercializationof Feraheme could be severely impaired. For example, we reduced our workforce in 2011 as part of an overall corporate restructuring, including certainpositions within our commercial function, with further restructuring occurring in 2012. These workforce reductions or any future reductions ordepartures, could harm our ability to attract and retain qualified personnel, which could prevent us from successfully commercializing Feraheme in theU.S., impair our ability to maintain sales levels and/or impair our ability to support potential sales growth and sales of Feraheme for any additionalindications we may commercialize in the future. Any failure by us to41Table of Contentssuccessfully commercialize Feraheme in the U.S. could have a material adverse impact on our ability to generate revenues, our ability to achieveprofitability, and the future prospects for our business.Our success depends on our ability to attract and retain key employees, and any failure to do so may be disruptive to our operations. Because of the specialized nature of our business, our success depends to a significant extent on the continued service of our executive officers andon our ability to continue to attract, retain and motivate qualified executive, sales, technical operations, managerial, scientific, and medical personnel. Wehave entered into employment agreements with most of our current senior executives, but such agreements do not guarantee that these executives willremain employed by us for any significant period of time, or at all. There is intense competition for qualified personnel in the areas of our activities, andwe may not be able to continue to attract and retain the qualified personnel necessary for the development of our business. Previously implemented workforce reductions could residually harm our ability to attract and retain qualified personnel. In addition, anyrestructuring plans we may initiate in the future may be disruptive to our operations and could harm our ability to attract and retain qualified keypersonnel. For example, cost saving measures may distract management from our core business, harm our reputation, or yield unanticipatedconsequences, such as attrition beyond planned reductions in workforce, increased difficulties in our day-to-day operations, reduced employeeproductivity and a deterioration of employee morale. Any workforce reductions could also harm our ability to attract and retain qualified executive,sales, technical operations, managerial, scientific, and medical personnel who are critical to our business. Furthermore, because we are currentlyoperating with fewer employees and service providers, any further turnover, whether occurring as part of a restructuring plan or otherwise, could causesignificant disruption if we are unable to implement or maintain a sufficient succession plan for certain personnel or departments. Any failure to attract,retain or replace qualified personnel could prevent us from successfully commercializing and developing Feraheme, impair our ability to maintain saleslevels and/or support potential sales growth. Moreover, although we believe it is necessary to reduce the cost of our operations to improve our performance, these initiatives may preclude usfrom making potentially significant expenditures that could improve our competitiveness over the longer term. We cannot guarantee that any costreduction measures, or other measures we may take in the future, will result in the expected cost savings, or that any cost savings will beunaccompanied by these or other unintended consequences.We have limited experience independently distributing a pharmaceutical product, and our Feraheme/Rienso commercialization plans could sufferif we fail to effectively manage and maintain our supply chain and distribution network. We do not have significant experience in managing and maintaining a supply chain and distribution network, and we are placing substantialreliance on third parties to perform product supply chain services for us. Such services include packaging, warehousing, inventory management, storageand distribution of Feraheme/Rienso. We have contracted with Packaging Coordinators, Inc. (formerly Catalent Pharma Solutions, LLC), or PCI, toprovide certain labeling, packaging and storage services for final U.S. and Canadian Feraheme drug product. In addition, we have contracted withIntegrated Commercialization Services, Inc., or ICS, to be our exclusive third-party logistics provider to perform a variety of functions related to the saleand distribution of Feraheme in the U.S., including services related to warehousing and inventory management, distribution, chargeback processing,accounts receivable management and customer service call center management. If ICS or PCI are unable to provide uninterrupted supply chain servicesor labeling, packaging and storage services, respectively, we may incur substantial losses of sales to wholesalers or other purchasers of Feraheme.42Table of Contents In addition, the packaging, storage and distribution of Feraheme/Rienso in the U.S. and abroad requires significant coordination among our andTakeda's manufacturing, sales, marketing and finance organizations and multiple third parties including our third-party logistics provider, packaging,labeling and storage provider, distributors, and wholesalers. In most cases, we do not currently have back-up suppliers or service providers to performthese tasks. If any of these third parties experience significant difficulties in their respective processes, fail to maintain compliance with applicable legalor regulatory requirements, fail to meet expected deadlines or otherwise do not carry out their contractual duties to us, or encounter physical or naturaldamages at their facilities, our ability to deliver Feraheme/Rienso to meet U.S. or foreign commercial demand could be significantly impaired. The lossof any of our third-party providers, together with a delay or inability to secure an alternate distribution source for end-users in a timely manner, couldcause the distribution of Feraheme/Rienso to be delayed or interrupted, which would have an adverse effect on our business, financial condition andresults of operations.We rely on third parties in the conduct of our business, including our clinical trials and manufacturing, and if they fail to fulfill their obligations,our commercialization and development plans may be adversely affected. We rely and intend to continue to rely on third parties, including clinical research organizations, third-party manufacturers, third-party logisticsproviders, packaging and labeling providers, wholesale distributors and certain other important vendors and consultants in the conduct of our business.As a result of the current volatile and unpredictable global economic situation, there may be a disruption or delay in the performance or satisfaction ofcommitments to us by our third-party contractors or suppliers. For example, our distributors, customers or suppliers may experience difficulty inobtaining the financial resources necessary to purchase inventory or raw or other materials, may begin to maintain lower inventory levels or maybecome insolvent. If such third parties are unable to adequately satisfy their contractual commitments to us in a timely manner, our business could beseverely adversely affected. In addition, we have contracted and plan to continue to contract with certain third parties to provide certain services, including site selection,enrollment, monitoring, data management and other services, in connection with the conduct of our clinical trials and the preparation and filing of ourregulatory applications. We have limited experience conducting clinical trials outside the U.S., and, therefore, we are also largely relying on third partiessuch as clinical research organizations to manage, monitor and carry out these clinical trials. Although we depend heavily on these parties, we do notcontrol them and, therefore, we cannot be assured that these third parties will adequately perform all of their contractual obligations to us. If our third-party service providers cannot adequately fulfill their obligations to us in a timely and satisfactory manner, if the quality and accuracy of our clinical trialdata or our regulatory submissions are compromised due to poor quality or failure to adhere to our protocols or regulatory requirements or if such thirdparties otherwise fail to adequately discharge their responsibilities or meet deadlines, our development plans and planned regulatory submissions both inand outside of the U.S may be delayed or terminated, which would adversely impact our ability to generate revenues from Feraheme/Rienso sales inadditional indications and/or outside of the U.S.Our operating results will likely fluctuate so you should not rely on the results of any single quarter to predict how we will perform over time. Our future operating results will likely vary from quarter to quarter depending on a number of factors, some of which we cannot control, includingbut not limited to:•The magnitude of U.S. Feraheme sales; •The loss of a key customer or GPO;43Table of Contents•The impact of any pricing strategies we have implemented or may implement related to Feraheme, including the magnitude of rebatesand/or discounts we may offer, or changes in pricing by our competitors or a new entrant into the market; •The introduction of new competitive products in the iron replacement therapeutic market, such as Injectafer®, if approved or genericversions of new or currently available drug therapies; •Any expansion or contraction of the overall size of the IV iron market, which could result from a number of factors including but notlimited to changes in treatment guidelines or practices related to IDA; •Any changes to the mix of our business; •Changes in buying patterns and inventory levels of our wholesalers or distributors; •The timing and magnitude of milestone payments, product sales revenues and royalties we may receive from Takeda under the AmendedTakeda Agreement; •The initiation or outcome of any material litigation or patent challenges to which we are or become a party and the magnitude of costsassociated with such litigation; •The timing and magnitude of costs associated with the commercialization of Feraheme in the U.S., including costs associated withmaintaining our commercial infrastructure and executing our promotional and marketing strategy; •The magnitude of costs incurred in connection with business development activities or business development transactions into which weenter; •Changes in accounting estimates related to reserves on revenue, returns, or other accruals or changes in the timing and availability ofgovernment or customer discounts, rebates and incentives; •Changes in the actual or perceived safety or efficacy profile of Feraheme/Rienso, or products that compete with Feraheme/Rienso thatcould cause customers to increase, reduce or discontinue their use of Feraheme/Rienso; •The timing and magnitude of costs associated with commercial-scale manufacturing of Feraheme/Rienso, including costs of raw andother materials and costs associated with maintaining commercial inventory and qualifying additional manufacturing capacities andalternative suppliers; •The timing and magnitude of costs associated with our ongoing and planned clinical studies of Feraheme/Rienso in connection with ourpediatric program, our post-marketing commitments for the EMA and other regulatory agencies, our pursuit of additional indications andour development of Feraheme/Rienso in countries outside of the U.S; •The costs associated with manufacturing batch failures or inventory write-offs due to out-of-specification release testing or ongoingstability testing that results in a batch no longer meeting specifications; •Changes in reimbursement practices and laws and regulations affecting Feraheme/Rienso from federal, state and foreign legislative andregulatory authorities, government health administration authorities, private health insurers and other third-party payors; and •The implementation of new or revised accounting or tax rules or policies. As a result of these and other factors, our quarterly operating results could fluctuate, and this fluctuation could cause the market price of ourcommon stock to decline. Results from one quarter should not be used as an indication of future performance.44Table of ContentsIn the U.S. there have been, and we expect there will continue to be, a number of federal and state legislative initiatives implemented to reform thehealthcare system in ways that could adversely impact our business and our ability to sell Feraheme profitably. In the U.S., there have been, and we expect there will continue to be, a number of legislative and regulatory proposals aimed at changing the U.S.healthcare system. For example, the Health Care Reform Act contains a number of provisions that significantly impact the pharmaceutical industry andmay negatively affect our potential Feraheme revenues. Among other things, the Health Care Reform Act increased the minimum Medicaid drug rebatesfor pharmaceutical companies, extended the rebate provisions to Medicaid managed care organizations, and expanded the 340B Drug Discount Programunder the Public Health Service Act. For example, the percentage of Feraheme business sold to 340B institutions has grown from 5% in 2010 to 14%in 2012. Since these institutions are granted lower prices than those offered to our other customers, any further growth in the 340B business may have anegative impact on our sales price per gram and gross margins. Substantial new provisions affecting compliance have also been added, which mayrequire us to modify our business practices with healthcare providers and potentially incur additional costs. While we are continuing to evaluate thislegislation and its potential impact on our business, this legislation may adversely affect the demand for Feraheme in the U.S. or cause us to incuradditional expenses and therefore adversely affect our financial position and results of operations. In addition, various healthcare reform proposals have emerged at the state level in the U.S. We cannot predict the impact that newly enacted laws orany future legislation or regulation will have on us. We expect that there will continue to be a number of U.S. federal and state proposals to implementgovernmental pricing controls and limit the growth of healthcare costs. These efforts could adversely affect our business by, among other things,limiting the prices that can be charged for Feraheme or the amount of reimbursement rates and terms available from governmental agencies or third-party payors, limiting the profitability of Feraheme, increasing our rebate liability or limiting the commercial opportunity for Feraheme, including itsacceptance by healthcare payors.Wholesaler, distributor and GPO buying patterns and other factors may cause our quarterly results to fluctuate, and these fluctuations mayadversely affect our short-term results. Our results of operations, including, in particular, product sales revenues, may vary from period to period due to a variety of factors, including thebuying patterns of our U.S. wholesalers and distributors, which vary from quarter to quarter. In addition, our contracts with GPOs require certainperformance from the members of the GPOs such as growth over prior periods or certain market share attainment goals in order to qualify for discountsoff the list price of Feraheme and a GPO may be able to influence the demand for Feraheme from its members in a particular quarter throughcommunications they make to their customers. In the event wholesalers and distributors with whom we do business in the U.S. determine to limit theirpurchases of Feraheme, sales of Feraheme could be adversely affected. For example, in advance of an anticipated price increase or a reduction inexpected rebates or discounts, customers may order Feraheme in larger than normal quantities which could cause sales of Feraheme to be lower insubsequent quarters than they would have been otherwise. Further, any changes in purchasing patterns, inventory levels, increases in returns ofFeraheme, delays in purchasing products or delays in payment for products by one of our distributors or GPOs could also have a negative impact onour revenue and results of operations.45Table of ContentsIf the estimates we make, or the assumptions on which we rely, in preparing our consolidated financial statements prove inaccurate, our actualresults may vary from those reflected in our projections and accruals. Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S. The preparationof these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of our assets, liabilities, revenuesand expenses, the amounts of charges accrued by us, and the related disclosure of contingent assets and liabilities. On an ongoing basis, ourmanagement evaluates our critical and other significant estimates and judgments, including among others those associated with revenue recognitionrelated to product sales and collaboration agreements, product sales allowances and accruals, assessing investments for potential other-than-temporaryimpairment and determining the values of investments, estimates used to measure the fair value of our held for sale assets, accrued expenses, incometaxes and equity-based compensation expense. We base our estimates on market data, our observance of trends in our industry, and various otherassumptions that we believe to be reasonable under the circumstances. If actual results differ from these estimates, there could be a material adverseeffect on our financial results and the performance of our stock. As part of our revenue recognition policy, our estimates of product returns, rebates and chargebacks, fees and other discounts require subjectiveand complex judgments due to the need to make estimates about matters that are inherently uncertain. Any significant differences between our actualresults and our estimates could materially affect our financial position and results of operations. For example during the years ended December 31, 2012and 2011, we revised our estimated Medicaid reserve rate, which resulted in a reduction of our estimated Medicaid rebate reserve related to priorFeraheme sales of $0.6 million and $2.5 million, respectively. Further, during the year ended December 31, 2012, we reduced our reserve for productreturns by approximately $2.2 million due to a lower than expected actual returns rate since the 2009 launch of Feraheme as well as a reduction in ourexpected rate of product returns in the future. In addition, to determine the required quantities of Feraheme and the related manufacturing schedule, we also need to make significant judgmentsand estimates based on inventory levels, current market trends, anticipated sales, forecasts from our licensees, including Takeda, and other factors.Because of the inherent nature of estimates, there could be significant differences between our and Takeda's estimates and the actual amount of productneed. For example, the level of our access to wholesaler and distributor inventory levels and sales data in the U.S., which varies based on the wholesaleror distributor, affects our ability to accurately estimate certain reserves included in our financial statements. Any difference between our estimates andthe actual amount of product demand could result in unmet demand or excess inventory, each of which would adversely impact our financial results andresults of operations.Our stock price has been and may continue to be volatile, and your investment in our stock could decline in value or fluctuate significantly. The market price of our common stock has been, and may continue to be, volatile, and your investment in our stock could decline in value orfluctuate significantly. Our stock price has ranged between $12.43 and $18.50 in the fifty-two week period through February 15, 2013. The stockmarket has from time to time experienced extreme price and volume fluctuations, particularly in the biotechnology and pharmaceuticals sectors, whichhave often been unrelated to the operating performance of particular companies. Various factors and events, many of which are beyond our control, mayhave a significant impact on the market price of our common stock. Factors which may affect the market price of our common stock include, amongothers:•Our ability to successfully commercialize Feraheme in the U.S. and Takeda's ability to successfully commercialize Feraheme/Rienso interritories outside of the U.S.;46Table of Contents•The timing and magnitude of Feraheme/Rienso revenue and actual or anticipated fluctuations in our operating results; •Changes in or our failure to meet financial estimates published by securities analysts or our own publicly disclosed financial guidance; •Increases or decreases in our operating expenses or our gross margin on Feraheme/Rienso; •Developments in patents or other proprietary rights by or for the benefit of us or our competitors, such as the recent decision by the EPOregarding our European ferumoxytol patent or decisions regarding Feraheme's NCE status or an ANDA filing by a generic entrant; •The availability of reimbursement coverage for Feraheme/Rienso or changes in the reimbursement policies of U.S. or foreigngovernmental or private payors; •Public announcements of U.S. or foreign regulatory actions with respect to Feraheme/Rienso or products or product candidates of ourcompetitors; •Actual or perceived safety concerns related to Feraheme/Rienso or products or product candidates of our competitors, including anyactions taken by U.S. or foreign regulatory authorities in connection with such concerns; •The status or results of clinical trials for Feraheme or products or product candidates of our competitors; •The acquisition, development or regulatory approvals of technologies, product candidates or products by us or our competitors; •Cash milestones earned, if any, under the Amended Takeda Agreement; •The initiation or outcome of any material litigation or patent challenges to which we are or may become a party; •Significant collaboration, product or business acquisitions, joint venture or similar agreements by us or our competitors; •Shareholder activism and attempts to disrupt our strategy by activist investors; •General market conditions; and •Sales of large blocks of our common stock. Thus, as a result of events both within and beyond our control, our stock price could fluctuate significantly or lose value rapidly.If securities analysts downgrade our stock, cease coverage of us, or if our operating results do not meet analysts' forecasts and expectations, ourstock price could decline. The trading market for our common stock relies in part on the research and reports that industry or financial analysts publish about us and ourbusiness. Currently, seven financial analysts publish reports about us and our business. We do not control these or any other analysts. Furthermore,there are many large, well-established, publicly traded companies active in our industry and market, which may mean that it is less likely that we willreceive widespread analyst coverage. In addition, our future operating results are subject to substantial uncertainty, and our stock price could declinesignificantly if we fail to meet or exceed analysts' forecasts and expectations. If any of the analysts who cover us downgrade our stock or issuecommentary or observations about us or our stock that are perceived by the market as negative, our stock price would likely decline rapidly. In addition,if these analysts cease coverage of our company, we could lose visibility in the market, which in turn could also cause our stock price to decline.47Table of ContentsIf our operating results do not meet our own publicly disclosed financial guidance our stock price could decline. In 2013, we publicly provided financial guidance, including expected 2013 Feraheme/Rienso product revenue, total revenue, estimated operatingexpenses, estimated cost of goods sold as a percent of sales, quarterly cash flow trajectory throughout 2013 and estimated year-end cash and cashequivalents balance. If, for any reason, we are unable to realize our expected revenue growth in 2013 and beyond, including as the result of a lower-than-anticipated impact of our 2013 price increases, we may fail to realize our publicly announced revenue and year-end cash and cash equivalentsbalance guidance. If we fail to realize or if we change or update any element of our publicly disclosed financial guidance or other expectations about ourbusiness, our stock price could decline in value.We may need additional capital to achieve our business objectives. We have expended and will continue to expend substantial funds to successfully commercialize and develop Feraheme. Our long-term capitalrequirements will depend on many factors, including, but not limited to:•Our ability to successfully commercialize Feraheme in the U.S. and Takeda's ability to successfully commercialize Feraheme/Rienso inits licensed territories outside of the U.S.; •The magnitude of U.S. Feraheme sales; •The magnitude of Feraheme/Rienso sales and royalties we may receive from Takeda outside of the U.S.; •Our ability to obtain regulatory approval for Feraheme/Rienso to treat IDA regardless of the underlying cause both within the U.S. andoutside of the U.S., particularly in the EU; •The success, costs and structure of any business or corporate development initiatives to bring additional products into our portfolio; •The outcome of and costs associated with any material litigation or patent challenges to which we are or may become a party; •Our ability to achieve the various milestones and receive the associated payments under the Amended Takeda Agreement; •Costs associated with the U.S. commercialization of Feraheme, including costs associated with maintaining our commercialinfrastructure, executing our promotional and marketing strategy for Feraheme, and conducting our required pediatric clinical studies andany post-marketing clinical studies; •The timing and magnitude of costs associated with qualifying additional manufacturing capacities and alternative suppliers; •Costs associated with our development of Feraheme for the treatment of IDA in a broad range of patients in the U.S.; •Our ability to maintain successful collaborations with our licensees and/or to enter into additional alternative strategic relationships, ifnecessary; and •Our ability to raise additional capital on terms and within a timeframe acceptable to us, if necessary. We estimate that our cash resources as of December 31, 2012, combined with cash we currently expect to receive from sales of Feraheme/Rienso,from earnings on our investments, and potential royalty payments we may receive from Takeda will be sufficient to finance our currently planned48Table of Contentsoperations for at least the next twelve months. We may require additional funds or need to establish additional alternative strategic arrangements toexecute a business development transaction. We may at any time seek funding through additional arrangements with collaborators through public orprivate equity or debt financings. We may not be able to obtain financing or to secure alternative strategic arrangements on acceptable terms or within anacceptable timeframe, if at all. Any additional equity financings or alternative strategic arrangements would be dilutive to our stockholders. In addition, the terms of any debtfinancing could greatly restrict our ability to raise additional capital and may provide rights and preferences to the investors in any such financing whichare senior to those of, and not available to, current stockholders. Our inability to raise additional capital on terms and within a timeframe acceptable to uswhen needed could force us to dramatically reduce our expenses and delay, scale back or eliminate certain of our activities and operations, including ourcommercialization and development activities, any of which would have a material adverse effect on our business, financial condition and futurebusiness prospects.The investment of our cash is subject to risks, which may cause losses or adversely affect the liquidity of these investments and our results ofoperations, liquidity and financial condition. As of December 31, 2012, we had $46.3 million in cash and cash equivalents and $180.8 million in short-term investments. These investments aresubject to general credit, liquidity, market and interest rate risks, which have been and may, in the future, be exacerbated by a U.S. and/or globalfinancial crisis. We may realize losses in the fair value of certain of our investments or a complete loss of these investments if the credit markets tighten,which would have an adverse effect on our results of operations, liquidity and financial condition. The condition of the credit markets remains unpredictable. As a result, we may experience a reduction in value or loss of liquidity with respect toour investments. In addition, should our investments cease paying or reduce the amount of interest paid to us, our interest income would suffer. Further,as part of our determination of the fair value of our investments, we consider credit ratings provided by independent investment rating agencies as of thevaluation date. These ratings are subject to change. These market risks associated with our investment portfolio may have an adverse effect on ourresults of operations, cash position, liquidity and overall financial condition.We are subject to increasingly complex corporate governance, public disclosure and accounting requirements that could adversely affect ourbusiness and financial results. We are subject to changing rules and regulations of U.S. federal and state government as well as the stock exchange on which our common stockis listed. These entities, including the Public Company Accounting Oversight Board, the NASDAQ Stock Market, or NASDAQ, and the U.S.Securities and Exchange Commission, or the SEC, have issued a significant number of new and increasingly complex requirements and regulationsover the last several years and continue to develop additional regulations and requirements in response to laws enacted by Congress. Our efforts tocomply with these requirements have resulted in, and are likely to continue to result in, an increase in our expenses and a diversion of management'stime from other business activities.Our ability to use net operating loss carryforwards and tax credit carryforwards to offset future taxable income may be limited as a result offuture transactions involving our common stock. In general, under Section 382 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an "ownership change" is subject tolimitations on its ability to utilize its pre-change net operating losses and certain other tax assets to offset future taxable income. In general, an ownershipchange occurs if the aggregate stock ownership of certain stockholders increases by more than 50 percentage points over such stockholders' lowestpercentage ownership during the testing period,49Table of Contentswhich is generally three years. An ownership change could limit our ability to utilize our net operating loss and tax credit carryforwards for taxableyears including or following such "ownership change." Limitations imposed on the ability to use net operating losses and tax credits to offset futuretaxable income could require us to pay U.S. federal income taxes earlier than we have estimated would otherwise be required if such limitations werenot in effect and could cause such net operating losses and tax credits to expire unused, in each case reducing or eliminating the benefit of such netoperating losses and tax credits and potentially adversely affecting our financial position. Similar rules and limitations may apply for state income taxpurposes.If we fail to comply with our reporting and payment obligations under U.S. governmental pricing programs, we could be required to reimbursegovernment programs for underpayments and could pay penalties, sanctions and fines which could have a material adverse effect on ourbusiness, financial condition and results of operations. As a condition of reimbursement by various U.S. federal and state healthcare programs for Feraheme, we are required to calculate and reportcertain pricing information to U.S. federal and state healthcare agencies. For example, we are required to provide average selling price information to theCenters for Medicare and Medicaid Services on a quarterly basis in order to compute Medicare Part B payment rates. Price reporting and paymentobligations are highly complex and vary among products and programs. The calculation of average selling price includes a number of inputs from ourcontracts with wholesalers, specialty distributors, GPOs and other customers. It also requires us to make an assessment of whether these agreements aredeemed to be for bona fide services and that the services are deemed to be at fair market value in our industry and for our products. Our processes forestimating amounts due under these governmental pricing programs involve subjective decisions. As a result, our price reporting calculations remainsubject to the risk of errors and our methodologies for calculating these prices could be challenged under the Federal False Claims Act or other laws. Inaddition, the Health Care Reform Act modified the rules related to certain price reports and expanded the scope of pharmaceutical product sales to whichMedicaid rebates apply, among other things. Presently, uncertainty exists as many of the specific determinations necessary to implement this newlegislation have yet to be decided and communicated to industry participants. This uncertainty in the interpretation of the legislation increases the chancesof an error in price reporting, which could in turn lead to a legal challenge, restatement or investigation. If we become subject to investigations,restatements, or other inquiries concerning our compliance with price reporting laws and regulations, we could be required to pay or be subject toadditional reimbursements, penalties, sanctions or fines, which could have a material adverse effect on our business, financial condition and results ofoperations.We and/or Takeda are subject to ongoing U.S. and foreign regulatory obligations and oversight of Feraheme/Rienso, and any failure by us tomaintain compliance with applicable regulations may result in several adverse consequences including the suspension of the manufacturing,marketing and sale of Feraheme/Rienso, the incurrence of significant additional expense and other limitations on our ability to commercializeFeraheme/Rienso. We and/or Takeda are subject to ongoing regulatory requirements and review both in the U.S. and in foreign jurisdictions pertaining toFeraheme/Rienso's manufacture, labeling, packaging, adverse event reporting, storage, marketing, promotion and record keeping. Failure to complywith such regulatory requirements or the later discovery of previously unknown problems with Feraheme/Rienso or our third-party contractmanufacturing facilities or processes by which we manufacture Feraheme/Rienso may result in restrictions on our ability to manufacture, market or sellFeraheme/Rienso, including its withdrawal from the market. Any such restrictions could result in a decrease in Feraheme/Rienso sales, damage to ourreputation or the initiation of lawsuits against us, Takeda, or our third-party contract50Table of Contentsmanufacturers. We and/or Takeda may also be subject to additional sanctions, including but not limited to:•Warning letters; •Civil or criminal penalties; •Suspension or withdrawal of regulatory approvals; •Temporary or permanent closing of the facilities of our third-party contract manufacturers; •Requirements to communicate with physicians and other customers about concerns related to actual or potential safety, efficacy, or otherissues involving Feraheme/Rienso; •Changes to the Feraheme/Rienso package insert, such as potential limitations on the current dosage and administration ofFeraheme/Rienso or IV irons as a class; •Implementation of risk mitigation programs; •Restrictions on our continued manufacturing, marketing or sale of Feraheme/Rienso; or •Recalls or a refusal by regulators to consider or approve applications for additional indications. Any of the above sanctions could have a material adverse impact on our ability to generate revenues and to achieve profitability and cause us toincur significant additional expenses.If we or Takeda market or distribute Feraheme/Rienso in a manner that violates federal, state or foreign healthcare fraud and abuse laws,marketing disclosure laws or other federal, state or foreign laws and regulations, we may be subject to civil or criminal penalties. In addition to FDA and related regulatory requirements in the U.S. and abroad, we are subject to extensive additional federal, state and foreignhealthcare regulation, which includes but is not limited to, the Federal False Claims Act, the Federal Anti-Kickback Statute, the Foreign CorruptPractices Act, and their state analogues, and similar laws in countries outside of the U.S., and government price reporting laws. False claims lawsprohibit anyone from knowingly presenting, or causing to be presented for payment to third-party payors, including Medicare and Medicaid, false orfraudulent claims for reimbursed drugs or services, claims for items or services not provided as claimed, or claims for medically unnecessary items orservices. Anti-kickback laws make it illegal to solicit, offer, receive or pay any remuneration in exchange for, or to induce, the referral of business,including the purchase or prescription of a particular drug, that is reimbursed by a state or federal program. The Foreign Corrupt Practices Act andsimilar foreign anti-bribery laws generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for thepurpose of obtaining or retaining business. Similar laws and regulations exist in many other countries throughout the world in which we intend tocommercialize Feraheme/Rienso through Takeda and our other licensees. We have developed and implemented a corporate compliance program basedon what we believe are current best practices in the pharmaceutical industry, but we cannot guarantee that we, our employees, our consultants or ourcontractors are or will be in compliance with all federal, state and foreign regulations. If we, our representatives, or our licensees, including Takeda, failto comply with any of these laws or regulations, a range of fines, penalties and/or other sanctions could be imposed on us and/or Takeda, including, butnot limited to, restrictions on how we and/or Takeda market and sell Feraheme/Rienso, significant fines, exclusions from government healthcareprograms, including Medicare and Medicaid, litigation, or other sanctions. Even if we are not determined to have violated these laws, governmentinvestigations into these issues typically require the expenditure of significant resources and generate negative publicity, which could also have anadverse effect on our business, financial condition and results of operations.51Table of Contents In recent years, several U.S. states have enacted legislation requiring pharmaceutical companies to establish marketing and promotional complianceprograms or codes of conduct and/or to file periodic reports with the state or make periodic public disclosures on sales, marketing, pricing, clinical trials,and other activities. Similar legislation is being considered by additional states and foreign governments. In addition, as part of the Health Care ReformAct, the federal government has enacted the Physician Payment Sunshine Act and related regulations. Beginning in August 2013, manufacturers ofdrugs are required to publicly report gifts and payments made to physicians and teaching hospitals. Many of these requirements are new and uncertain,and the penalties for failure to comply with these requirements are unclear. Compliance with these laws is difficult, time consuming and costly, and ifwe are found to not be in full compliance with these laws, we may face enforcement actions, fines and other penalties, and we could receive adversepublicity which could have an adverse effect on our business, financial condition and results of operations. If we fail to comply with any federal, state or foreign laws or regulations governing our industry, we could be subject to a range of regulatoryactions that could adversely affect our ability to commercialize Feraheme/Rienso, harm or prevent sales of Feraheme/Rienso, or substantially increasethe costs and expenses of commercializing and marketing Feraheme/Rienso, all of which could have a material adverse effect on our business, financialcondition and results of operations.The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products. If we are found tohave improperly promoted off-label uses, we may become subject to significant fines and other liability. The FDA and other regulatory agencies strictly regulate the promotional claims that may be made about prescription products. In particular, aproduct may not be promoted for uses that are not approved by the FDA or such other regulatory agencies as reflected in the product's approvedlabeling. If we are found to have promoted such off-label uses, we may become subject to significant government fines and other related liability. Forexample, the U.S. government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined severalcompanies from engaging in off-label promotion. The government has also required companies to enter into complex corporate integrity agreementsand/or non-prosecution agreements that can impose significant restrictions and other burdens on the affected companies. In addition, incentives exist under applicable U.S. law that encourage employees and physicians to report violations of rules governing promotionalactivities for pharmaceutical products. These incentives could lead to so called whistleblower lawsuits as part of which such persons seek to collect aportion of moneys allegedly overbilled to government agencies due to, for example, promotion of pharmaceutical products beyond labeled claims. Suchlawsuits, whether with or without merit, are typically time consuming and costly to defend. Such suits may also result in related shareholder lawsuits,which are also costly to defend.Our business could be negatively affected as a result of the actions of activist shareholders. Proxy contests have been waged against many companies in the biopharmaceutical industry over the last few years. For example, in 2011, MSMBCapital Management LLC, or MSMB Capital, filed a preliminary consent solicitation statement with the SEC seeking to remove and replace most of ourthen current directors with MSMB Capital's nominees. The review, consideration and response to efforts by activist shareholders may require theexpenditure of significant time and resources by us and may be a significant distraction for our management and employees. The impact of activistshareholders' efforts due to these or other factors may undermine our business and have a material adverse effect on our results of operations. If facedwith a proxy contest, we may not be able to successfully defend against the contest, which would be disruptive to our business.52Table of ContentsIf we identify a material weakness in our internal controls over financial reporting, our ability to meet our reporting obligations and the tradingprice of our stock could be negatively affected. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonablepossibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Accordingly, amaterial weakness increases the risk that the financial information we report contains material errors. We regularly review and update our internal controls, disclosure controls and procedures, and corporate governance policies. In addition, we arerequired under the Sarbanes-Oxley Act of 2002 to report annually on our internal control over financial reporting. Any system of internal controls,however well designed and operated, is based in part on certain assumptions and can provide only reasonable, not absolute, assurances that theobjectives of the system are met. If we, or our independent registered public accounting firm, determine that our internal controls over our financialreporting are not effective, or we discover areas that need improvement in the future, or we experience high turnover of our personnel in our financialreporting functions, these shortcomings could have an adverse effect on our business and financial results, and the price of our common stock could benegatively affected. If we cannot conclude that we have effective internal control over our financial reporting, or if our independent registered public accounting firm isunable to provide an unqualified opinion regarding the effectiveness of our internal control over financial reporting, investors could lose confidence inthe reliability of our financial statements, which could lead to a decline in our stock price. Failure to comply with reporting requirements could alsosubject us to sanctions and/or investigations by the SEC, NASDAQ or other regulatory authorities.An adverse determination in any current or future lawsuits in which we are a defendant, including the class action lawsuit to which we arecurrently a party, could have a material adverse effect on us. A purported class action complaint was originally filed on March 18, 2010 in the United States District Court for the District of Massachusetts,entitled Silverstrand Investments et. al. v. AMAG Pharm., Inc., et. al., Civil Action No. 1:10-CV-10470-NMG, and was amended on September 15,2010 and on December 17, 2010. The second amended complaint, or SAC, filed on December 17, 2010 alleged that we and our former President andChief Executive Officer, former Executive Vice President and Chief Financial Officer, the then members of our Board of Directors, or Board, andcertain underwriters in our January 2010 offering of common stock violated certain federal securities laws by making certain alleged false andmisleading statements and omissions in a registration statement filed in January 2010. The plaintiff sought unspecified damages on behalf of a purportedclass of purchasers of our common stock pursuant to our common stock offering on or about January 21, 2010. On August 11, 2011, the District Courtissued an Opinion and Order dismissing the SAC in its entirety for failure to state a claim upon which relief could be granted. On September 14, 2011,the plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the First Circuit, or the Court of Appeals. After briefing was completedby all parties, the Court of Appeals heard oral argument on May 11, 2012, and took the matter under advisement. On February 4, 2013, the Court ofAppeals affirmed in part and reversed in part the District Court's Opinion and Order, and remanded the case to the District Court. On February 18,2013, we filed a Petition for Panel Hearing or Rehearing En Banc, asking the Court of Appeals to reconsider its decision. Whether or not the plaintiff'sappeal is successful, this type of litigation is often expensive and diverts management's attention and resources, which could adversely affect theoperation of our business. If we are ultimately required to pay significant defense costs, damages or settlement amounts, such payments could adverselyaffect our operations.53Table of Contents We may also be the target of similar litigation in the future. Any future litigation could result in substantial costs and divert our management'sattention and resources, which could cause serious harm to our business, operating results and financial condition. Though we maintain liabilityinsurance, if any costs or expenses associated with this or any other litigation exceed our insurance coverage, we may be forced to bear some or all ofthese costs and expenses directly, which could be substantial.Product liability lawsuits could divert our resources, result in substantial liabilities and reduce the commercial potential of Feraheme/Rienso. The administration of Feraheme/Rienso to humans, whether in clinical trials or after approval for commercial use, may expose us to liability claims,whether or not Feraheme/Rienso is actually at fault for causing an injury. As Feraheme/Rienso is used over longer periods of time by a wider group ofpatients taking numerous other medicines or by patients with additional underlying health problems, the likelihood of adverse drug reactions orunintended side effects, including death, may increase. Although we maintain product liability insurance coverage for claims arising from the use of ourproducts in clinical trials and commercial use, coverage is expensive, and we may not be able to maintain sufficient insurance at a reasonable cost, if atall. Product liability claims, whether or not they have merit, could also decrease demand for Feraheme/Rienso, subject us to product recalls or harm ourreputation, cause us to incur substantial costs, and divert management's time and attention.Our shareholder rights plan, certain provisions in our charter and by-laws, certain contractual relationships and certain Delaware lawprovisions could discourage an acquisition of us by others, even if an acquisition would be beneficial to our stockholders, and may preventattempts by our stockholders to replace or remove our current members of our Board. In 2009, we adopted a shareholder rights plan, the provisions of which are intended to deter a hostile takeover by making any proposed hostileacquisition of us more expensive and less desirable to a potential acquirer by enabling our stockholders (other than the potential hostile acquiror) topurchase significant amounts of additional shares of our common stock at dilutive prices. The rights issued pursuant to our shareholder rights planbecome exercisable generally upon the earlier of 10 days after a person or group acquires 20% or more of our outstanding common stock or 10business days after the announcement by a person or group of an intention to acquire 20% of our outstanding common stock via tender offer or similartransaction. The shareholder rights plan could delay or discourage transactions involving an actual or potential change in control of us or ourmanagement, including transactions in which stockholders might otherwise receive a premium for their shares over then current prices. In addition, certain provisions in our certificate of incorporation and our by-laws may discourage, delay or prevent a change of control or takeoverattempt of our company by a third-party as well as substantially impede the ability of our stockholders to benefit from a change of control or effect achange in management and our Board. These provisions include:•The ability of our Board to increase or decrease the size of the Board without stockholder approval; •Advance notice requirements for the nomination of candidates for election to our Board and for proposals to be brought before ourannual meeting of stockholders; •The authority of our Board to designate the terms of and issue new series of preferred stock without stockholder approval; •Non-cumulative voting for directors; and •Limitations on the ability of our stockholders to call special meetings of stockholders.54Table of Contents As a Delaware corporation, we are subject to the provisions of Section 203 of the Delaware General Corporation Law, or Section 203, whichprevents us from engaging in any business combination with any "interested stockholder," which is defined generally as a person that acquires 15% ormore of a corporation's outstanding voting stock, for a period of three years after the date of the transaction in which the person became an interestedstockholder, unless the business combination is approved in the manner prescribed in Section 203. These provisions could have the effect of delaying orpreventing a change of control, whether or not it is desired by, or beneficial to, our stockholders. In addition to the above factors, an acquisition of our company could be made more difficult by employment agreements we have in place with ourexecutive officers, as well as a company-wide change of control policy, which provide for severance benefits as well as the full acceleration of vestingof any outstanding options or restricted stock units in the event of a change of control and subsequent termination of employment. Further, our SecondAmended and Restated 2007 Equity Incentive Plan generally permits our Board to provide for the acceleration of vesting of options granted under thatplan in the event of certain transactions that result in a change of control.We are subject to environmental laws and potential exposure to environmental liabilities. Because we use certain hazardous materials in the production of our products, we are subject to various federal, state and local environmental lawsand regulations that govern our operations, including the import, handling and disposal of non-hazardous and hazardous wastes, and emissions anddischarges into the environment. Failure to comply with these laws and regulations could result in costs for corrective action, penalties or the impositionof other liabilities. We also are subject to laws and regulations that impose liability and clean-up responsibility for releases of hazardous substances intothe environment. Under certain of these laws and regulations, a current or previous owner or operator of property may be liable for the costs ofremediating the release or spill of hazardous substances or petroleum products on or from its property, without regard to whether the owner or operatorknew of, or caused, the contamination, and such owner or operator may incur liability to third parties impacted by such contamination. The presence of,or failure to remediate properly the release or spill of, these substances could adversely affect the value of, and our ability to transfer or encumber, ourreal property.ITEM 1B. UNRESOLVED STAFF COMMENTS: None.ITEM 2. PROPERTIES: In May 2008, we entered into a lease agreement for certain real property located at 100 Hayden Avenue, Lexington, Massachusetts for use as ourprincipal executive offices. The term of the lease began on May 22, 2008 and will continue until August 31, 2016 with two successive five yearextension terms at our option. The aggregate size of rentable floor area for the offices is 55,924 square feet, and the rent for the initial term commencedin February 2009. During any extension term, the base rent will be an amount agreed upon by us and the landlord. In addition to base rent, we are also required topay a proportionate share of the landlord's annual operating costs. On May 20, 2008, in connection with our facility lease, we delivered to the landlord asecurity deposit of approximately $0.5 million in the form of an irrevocable letter of credit. The cash securing this letter of credit is classified on ourbalance sheet as a long-term asset and is restricted in its use. Our manufacturing and quality operations were located in a building we own comprised of approximately 25,000 square feet located at 61 MooneyStreet, Cambridge, Massachusetts. In the third quarter of 2012, we ceased our manufacturing operations at our Cambridge, Massachusetts facility and55Table of Contentsmoved to a fully outsourced manufacturing supply chain and intend to sell the land and building in the near future. Employees who manage the contractmanufacturers and quality operations were moved to our headquarters in Lexington, Massachusetts.ITEM 3. LEGAL PROCEEDINGS: We accrue a liability for legal contingencies when we believe that it is both probable that a liability has been incurred and that we can reasonablyestimate the amount of the loss. We review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counseland other relevant information. To the extent new information is obtained and our views on the probable outcomes of claims, suits, assessments,investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. Forthe matters referenced below, the liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. Inaddition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of material loss is at least reasonably possible,we will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, we will provide disclosure to thateffect. A purported class action complaint was originally filed on March 18, 2010 in the United States District Court for the District of Massachusetts,entitled Silverstrand Investments et. al. v. AMAG Pharm., Inc., et. al., Civil Action No. 1:10-CV-10470-NMG, and was amended on September 15,2010 and on December 17, 2010. The second amended complaint, or SAC, filed on December 17, 2010 alleged that we and our former President andChief Executive Officer, former Executive Vice President and Chief Financial Officer, the then members of our Board of Directors, and certainunderwriters in our January 2010 offering of common stock violated certain federal securities laws, specifically Sections 11 and 12(a)(2) of theSecurities Act of 1933, as amended, and that our former President and Chief Executive Officer and former Executive Vice President and Chief FinancialOfficer violated Section 15 of such Act, respectively, by making certain alleged false and misleading statements and omissions in a registrationstatement filed in January 2010. The plaintiff sought unspecified damages on behalf of a purported class of purchasers of our common stock pursuant toour common stock offering on or about January 21, 2010. On August 11, 2011, the District Court issued an Opinion and Order dismissing the SAC inits entirety for failure to state a claim upon which relief could be granted. A separate Order of Dismissal was filed on August 15, 2011. OnSeptember 14, 2011, the plaintiffs filed a Notice of Appeal to the United States Court of Appeals for the First Circuit, or the Court of Appeals. Afterbriefing was completed by all parties, the Court of Appeals heard oral argument on May 11, 2012, and took the matter under advisement. OnFebruary 4, 2013, the Court of Appeals affirmed in part and reversed in part the District Court's Opinion and Order, and remanded the case to theDistrict Court. On February 18, 2013, we filed a Petition for Panel Hearing or Rehearing En Banc, asking the Court of Appeals to reconsider itsdecision. We are currently unable to predict the outcome or reasonably estimate the range of potential loss associated with this matter, if any, and havetherefore not recorded any potential estimated liability as we do not believe that such a liability is probable nor do we believe that a range of loss iscurrently estimable. In July 2010, Sandoz GmbH, or Sandoz, filed with the European Patent Office, or the EPO, an opposition to our previously issued patent whichcovers ferumoxytol in the EU. In October 2012, at an oral hearing, the Opposition Division of the EPO revoked our European ferumoxytol patent. InDecember 2012, our notice of appeal was recorded with the EPO, which suspends the revocation of our patent. We will continue to defend the validityof this patent throughout the appeals process, which we expect to take two to three years. However, in the event that we do not experience a successfuloutcome from the appeals process, under EU regulations ferumoxytol would still be entitled to eight years of data protection and ten years of marketexclusivity from the date of approval, which we believe would create barriers to entry for any generic version of ferumoxytol into the EU market until56Table of Contentssometime between 2020 and 2022. This decision had no impact on our revenues for the year ended December 31, 2012. However, any futureunfavorable outcome in this matter could negatively affect the magnitude and timing of future revenues, including royalties and milestone payments wemay receive from Takeda pursuant to our collaboration agreement with Takeda. We continue to believe the patent is valid and intend to vigorouslyappeal the decision. We may periodically become subject to legal proceedings and claims arising in connection with ongoing business activities, including claims ordisputes related to patents that have been issued or that are pending in the field of research on which we are focused. Other than the above actions, weare not aware of any material claims against us as of December 31, 2012.ITEM 4. MINE SAFETY DISCLOSURES Not Applicable.57Table of ContentsPART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIES: Market Information Our common stock trades on the NASDAQ Global Select Market, or NASDAQ, under the trading symbol "AMAG." On February 15, 2013, theclosing price of our common stock, as reported on the NASDAQ, was $16.91 per share. The following table sets forth, for the periods indicated, thehigh and low sale prices per share for our common stock as reported on the NASDAQ.Stockholders On February 15, 2013, we had approximately 100 stockholders of record of our common stock, and we believe that the number of beneficialholders of our common stock was approximately 23,000 based on responses from brokers to a search conducted by Broadridge FinancialSolutions, Inc. on our behalf.Dividends We have never declared or paid a cash dividend on our common stock. We currently anticipate that we will retain all of our earnings for use in thedevelopment of our business and do not anticipate paying any cash dividends in the foreseeable future.58 High Low Year Ended December 31, 2012 First quarter $19.24 $14.98 Second quarter $16.45 $12.43 Third quarter $17.95 $14.11 Fourth quarter $18.50 $13.85 Year Ended December 31, 2011 First quarter $19.47 $15.93 Second quarter $19.40 $15.18 Third quarter $19.48 $12.65 Fourth quarter $19.62 $13.05 Table of ContentsRepurchases of Equity Securities The following table provides certain information with respect to our purchases of shares of our stock during the fourth quarter of 2012.Securities Authorized for Issuance Under Equity Compensation Plans See Part III, Item 12 for information regarding securities authorized for issuance under our equity compensation plans. Such information isincorporated by reference to our definitive proxy statement pursuant to Regulation 14A, to be filed with the U.S. Securities and Exchange Commission,or the SEC, not later than 120 days after the close of our year ended December 31, 2012.Five-Year Comparative Stock Performance Graph The following graph compares the yearly percentage change in the cumulative total stockholder return on our common stock with the cumulativetotal return on the NASDAQ Global Market Composite Index and NASDAQ Biotechnology Index over the past five years. The comparisons assume59Period Total Numberof SharesPurchased(1) AveragePricePaid perShare Total Number ofShares Purchasedas Part of PubliclyAnnouncedPlans or Programs(2) Maximum NumberofShares that MayYet BePurchased UnderthePlans orPrograms(2) October 1, 2012throughOctober 31,2012 — — — — November 1,2012 throughNovember 30,2012 628 $14.34 — — December 1,2012 throughDecember 31,2012 2,426 $15.03 — — Total 3,054 $14.89 — — (1)Represents shares of our common stock withheld by us to satisfy the minimum tax withholding obligations in connection withthe vesting of restricted stock units held by our employees. (2)We do not currently have any publicly announced repurchase programs or plans.Table of Contents$100 was invested on December 31, 2007 in our common stock, in the NASDAQ Global Market and the NASDAQ Biotechnology Index, andassumes reinvestment of dividends, if any. The stock price performance shown in this performance graph is not necessarily indicative of future price performance. Information used in thegraph was obtained from Zach's Investment Research, Inc., a source we believe is reliable. However, we are not responsible for any errors or omissionsin such information. The material in this section is being furnished and shall not be deemed "filed" with the SEC for purposes of Section 18 of the Exchange Act orotherwise subject to the liability of that section, nor shall the material in this section be deemed to be incorporated by reference in any registrationstatement or other document filed with the SEC under the Securities Act of 1933, except to the extent we specifically and expressly incorporate it byreference into such filing.60 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 AMAGPharmaceuticals, Inc. 100.00 59.62 63.25 30.10 31.45 24.46 NASDAQ GlobalMarket CompositeIndex 100.00 48.80 70.67 84.51 73.26 84.64 NASDAQBiotechnology Index 100.00 87.70 101.70 117.18 131.34 173.75 Table of ContentsITEM 6. SELECTED FINANCIAL DATA: The following table sets forth selected financial data as of and for the years ended December 31, 2012, 2011, 2010, 2009 and 2008. The selectedfinancial data set forth below has been derived from our audited financial statements. This information should be read in conjunction with the financialstatements and the related notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K and Management's Discussion and Analysis ofFinancial Condition and Results of Operations included in Part II, Item 7 of this Annual Report on Form 10-K. 61 Years Ended December 31, 2012 2011 2010 2009 2008 (in thousands, except per share data) Statement of Operations Data Revenues: U.S. product sales, net $58,287 $52,097 $59,339 $15,774 $— International product sales and royalties 120 — — — — License fee and other collaboration revenues 26,475 8,321 6,132 516 959 Other product sales and royalties 496 831 774 888 979 Total revenues 85,378 61,249 66,245 17,178 1,938 Costs and expenses: Cost of product sales 14,220 10,531 7,606 1,013 292 Research and development expenses 33,296 58,140 54,462 36,273 31,716 Selling, general and administrative expenses 53,071 68,863 84,939 77,829 49,536 Restructuring expenses 2,215 3,508 2,224 — — Total costs and expenses 102,802 141,042 149,231 115,115 81,544 Other income (expense): Interest and dividend income, net 1,286 1,747 1,741 3,154 9,139 (Losses) gains on investments, net (1,466) (193) 408 942 (3,024)Fair value adjustment of settlement rights — — (788) (778) 1,566 Total other income (expense) (180) 1,554 1,361 3,318 7,681 Net loss before income taxes (17,604) (78,239) (81,625) (94,619) (71,925)Income tax benefit 854 1,170 472 1,268 278 Net loss $(16,750)$(77,069)$(81,153)$(93,351)$(71,647) Net loss per share—basic and diluted: $(0.78)$(3.64)$(3.90)$(5.46)$(4.22) Weighted average shares outstanding used to compute net loss per share: Basic and diluted 21,392 21,189 20,806 17,109 16,993 December 31, 2012 2011 2010 2009 2008 (in thousands) Balance Sheet Data Working capital (current assets less current liabilities) $221,423 $201,037 $254,073 $85,168 $149,918 Total assets $258,137 $267,224 $336,076 $184,619 $231,955 Long-term liabilities $52,383 $47,634 $54,079 $4,081 $4,149 Stockholders' equity $172,797 $180,596 $245,286 $142,977 $213,414 Table of ContentsITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS: Overview AMAG Pharmaceuticals, Inc., a Delaware corporation, was founded in 1981. We are a specialty pharmaceutical company focused on thedevelopment and commercialization of Feraheme® (ferumoxytol) Injection for Intravenous, or IV, use to treat iron deficiency anemia, or IDA.Currently, our principal source of revenue is from the sale of Feraheme, which was approved for marketing in the U.S. in June 2009 by the U.S. Foodand Drug Administration, or the FDA, for use as an IV iron replacement therapy for the treatment of IDA in adult patients with chronic kidney disease,or CKD. We began commercial sale of Feraheme in the U.S. in July 2009 through our own commercial organization, including a specialty sales force.We sell Feraheme to authorized wholesalers and specialty distributors, who in turn, sell Feraheme to healthcare providers who administer Ferahemeprimarily within hospitals, hematology and oncology centers, and nephrology clinics. We are working to continue to grow Feraheme in the U.S. CKD market and to drive additional growth of Feraheme through both international andlabel expansion. To further build our business, we intend to expand our portfolio through the in-license or purchase of additional marketed specialtypharmaceutical products. We are seeking complementary products that will leverage our commercial infrastructure and focus on hematology andoncology centers, hospital infusion centers or other sites of care where IV iron is administered or where IDA patients are diagnosed or treated. We arealso looking at the potential addition of products outside of our current sales force's call points, which could be synergistic with our Feraheme goal ofexpanding the IV iron market through increased referrals from certain physician specialties, such as gastroenterologists.International Expansion Outside of the U.S., ferumoxytol has been granted marketing approval in Canada, Switzerland and the European Union, or EU, for use as an IViron replacement therapy for the treatment of IDA in adult patients with CKD. The European marketing authorization is valid in the current EU memberstates as well as in Iceland and Norway. Under our amended agreement with Takeda Pharmaceutical Company Limited, or Takeda, Takeda has anexclusive license to market and sell ferumoxytol in Canada, the EU and Switzerland, as well as certain other geographic territories. In Canada, Takedapromotes ferumoxytol under the trade name Feraheme and in the EU and Switzerland, Takeda promotes ferumoxytol under the trade name Rienso®30mg/ml solution for Injection.Label Expansion We believe that a significant opportunity exists in the U.S. for Feraheme beyond the treatment of IDA in adult patients with CKD. In the U.S. in2012, approximately 800,000 grams of IV iron were administered for the treatment of non-dialysis patients with IDA. We believe that approximatelyhalf, or 400,000 grams, of the IV iron administered in the U.S. is for the treatment of non-dialysis patients with CKD and the other half is for non-CKDpatients with IDA due to other causes, including patients with gastrointestinal diseases or disorders, abnormal uterine bleeding, inflammatory diseases,and chemotherapy-induced anemia. In 2012, we completed a phase III clinical program for Feraheme in patients with IDA who had failed to or could not use oral iron. The IDAprogram consisted of two controlled, multi-center phase III clinical trials, or IDA-301 and IDA-302, including more than 1,400 patients, whichevaluated the safety and efficacy of ferumoxytol for the treatment of IDA in this broader patient population. Both studies met the primary efficacyendpoints related to improvements in hemoglobin. In these studies no new safety signals were observed with Feraheme treatment and the types ofreported adverse events were consistent with those seen in previous studies and those contained in the approved U.S.62Table of Contentspackage insert for Feraheme. In addition, patients from IDA-301 were eligible to enroll in an open-label extension study, or IDA-303, and receivetreatment with Feraheme, as defined in the protocol. In December 2012, we submitted a supplemental new drug application, or sNDA, to the FDA, seeking approval for Feraheme for the treatment ofIDA in adult patients who have failed to or could not use oral iron. The sNDA submission was primarily based on the data from IDA-301 and IDA-302. In addition, the sNDA included data from an interim analysis of IDA-303 and a previously completed post-approval clinical study evaluatingFeraheme treatment compared to treatment with another IV iron. We believe that approval for Feraheme for this expanded indication would effectivelydouble the market opportunity for Feraheme, by allowing us to access the half of the IV iron market outside of dialysis that is beyond our currentapproved indication. Assuming a standard review cycle, we expect a decision from the FDA on our sNDA sometime in the fourth quarter of 2013. We expect that Takeda will file a Type II Variation, which is the EU equivalent of a U.S. sNDA, with the European Medicines Agency, or EMA,in 2013 seeking marketing approval for Rienso for the treatment of IDA in adult patients.Takeda Collaboration In March 2010, we entered into a License, Development and Commercialization Agreement, or the Takeda Agreement, with Takeda under whichwe granted exclusive rights to Takeda to develop and commercialize Feraheme/Rienso as a therapeutic agent in Europe, certain Asia-Pacific countries(excluding Japan, China and Taiwan), the Commonwealth of Independent States, Canada, India and Turkey. In June 2012, we entered into anamendment to the Takeda Agreement, or the Amended Takeda Agreement, which removed the Commonwealth of Independent States from theterritories under which Takeda has the exclusive rights to develop and commercialize Feraheme/Rienso. In addition, the Amended Takeda Agreementmodified the timing and pricing arrangements for a supply agreement to be entered into between us and Takeda in the future, the terms related to primaryand secondary manufacturing for drug substance and drug product, certain patent related provisions, and the re-allocation of certain of the agreed-uponmilestone payments. In 2012, we received a total of $33.0 million in milestone payments from Takeda associated with the EU approval and thecommercial launches of Feraheme/Rienso in Canada and the EU. In addition, in connection with the commercial launches of Feraheme/Rienso byTakeda, we recorded revenue from product sales to Takeda and royalties on sales by Takeda of $0.1 million in 2012.Clinical Development of Feraheme We have initiated two randomized, active-controlled pediatric studies of Feraheme for the treatment of IDA in pediatric CKD patients to meet ourFDA post-approval Pediatric Research Equity Act requirement to support pediatric labeling of Feraheme in the U.S. One study covers dialysis-dependent CKD pediatric patients, and the other covers CKD patients not on dialysis. Each study will assess the safety and efficacy of Ferahemetreatment as compared to oral iron in approximately 144 pediatric patients. Both of these pediatric studies are currently open for enrollment withenrollment expected to take several years to complete. Our pediatric investigation plan, which was a requirement for submission of the Marketing Authorization Application, or MAA, for ferumoxytol,was approved by the EMA in December 2009 and amended in 2012, and includes the two pediatric studies needed to meet the requirements of thePediatric Research Equity Act in the U.S. described above, and two additional pediatric studies requested by the EMA. These studies include a rolloverstudy in pediatric CKD patients and a study in pediatric patients with IDA regardless of the underlying cause. The rollover study is open for enrollment.The pediatric IDA study will commence once the appropriate dose of Feraheme is determined from the study data resulting from the two ongoingpediatric studies of Feraheme for the63Table of Contentstreatment of IDA in pediatric CKD patients, described above. The amendment to our pediatric investigation plan in 2012 was intended to increase therate of enrollment for these studies through modifications to the patient entry criteria. As part of our obligations under the Amended Takeda Agreement and as part of our post-approval commitments to the EMA, we are planning toinitiate a multi-center clinical trial to determine the safety and efficacy of repeat doses of ferumoxytol for the treatment of IDA in patients withhemodialysis dependent CKD. As part of the post-approval commitment we made to the EMA as a condition of the approval of the MAA forferumoxytol in the EU this study includes a treatment arm with iron sucrose as well as a magnetic resonance imaging, or MRI, study which willevaluate the potential for iron to accumulate in the body following treatment with IV iron, specifically in the heart and liver, and, where possible, othermajor organs following repeated IV iron administration over a two year period. We currently expect enrollment to begin in the second quarter of 2013.The costs related to the MRI portion of this study are subject to our established cost sharing arrangement with Takeda. From time to time, we or our licensees may sponsor pilot clinical studies or collaborate with investigators on their research ideas to evaluate thesafety and efficacy of Feraheme in new indications or alternative dosing regimens. In addition, certain clinical trials may be necessary to secure desired pricing in various European markets. If so, the cost of any future trials may beallocated between us and Takeda according to the Amended Takeda Agreement. In December 2009, our licensee in China, 3SBio Inc., or 3SBio, filed an application with the Chinese State Food and Drug Administration, or theSFDA, to obtain approval to begin a clinical trial necessary to file for marketing approval of Feraheme in China. If approved by the SFDA, 3SBioplans to commence a multi-center randomized efficacy and safety study of Feraheme in China involving approximately 200 CKD patients with IDA.Critical Accounting Policies Our management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which havebeen prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statementsrequires management to make certain estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses, and therelated disclosure of contingent assets and liabilities. The most significant estimates and assumptions are used in, but are not limited to, revenuerecognition related to product sales and collaboration agreements, product sales allowances and accruals, assessing investments for potential other-than-temporary impairment and determining values of investments, estimates used to measure the fair value of our held for sale assets, accrued expenses,income taxes and equity-based compensation expense. Actual results could differ materially from those estimates. In making these estimates andassumptions, management employs critical accounting policies. Our critical accounting policies include revenue recognition and related sales allowancesand accruals, valuation of investments and equity-based compensation.1. Revenue Recognition and Related Sales Allowances and Accruals We recognize revenue from the sale of Feraheme/Rienso as well as license fee and other collaboration revenues, including milestone payments,other product sale revenues, and royalties we receive from our licensees. We recognize revenue in accordance with current accounting guidance relatedto the recognition, presentation and disclosure of revenue in financial statements, which64Table of Contentsoutlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure of revenue in financial statements. We recognizerevenue when:•Persuasive evidence of an arrangement exists; •Delivery of product has occurred or services have been rendered; •The sales price charged is fixed or determinable; and •Collection is reasonably assured.U.S. Product Sales, Net We record product sales allowances and accruals related to prompt payment discounts, chargebacks, government and other rebates, distributor,wholesaler and group purchasing organization, or GPO, fees, and product returns as a reduction of revenue in our consolidated statement of operationsat the time product sales are recorded. Calculating these gross-to-net sales adjustments involves estimates and judgments based primarily on actualFeraheme sales data, forecasted customer buying patterns and market research data related to utilization rates by various end-users. In addition, we alsomonitor our distribution channel to determine whether additional allowances or accruals are required based on inventory in our sales channel.Classification of U.S. Product Sales Allowances and Accruals Product sales allowances and accruals are primarily comprised of both direct and indirect fees, discounts and rebates, and provisions for estimatedproduct returns. Direct fees, discounts and rebates are contractual fees and price adjustments payable to wholesalers, specialty distributors and othercustomers that purchase products directly from us. Indirect fees, discounts and rebates are contractual price adjustments payable to healthcare providersand organizations, such as certain physicians, clinics, hospitals, GPOs, and dialysis organizations that typically do not purchase products directly fromus but rather from wholesalers and specialty distributors. In accordance with guidance related to accounting for fees and consideration given by avendor to a customer, including a reseller of a vendor's products, these fees, discounts and rebates are presumed to be a reduction of the selling price ofFeraheme. Product sales allowances and accruals are based on definitive contractual agreements or legal requirements (such as Medicaid laws andregulations) related to the purchase and/or utilization of the product by these entities and are recorded in the same period that the related revenue isrecognized. We estimate product sales allowances and accruals using either historical, actual and/or other data, including estimated patient usage,applicable contractual rebate rates, contract performance by the benefit providers, other current contractual and statutory requirements, historical marketdata based upon experience of Feraheme and other products similar to Feraheme, specific known market events and trends such as competitive pricingand new product introductions, current and forecasted customer buying patterns and inventory levels, and the shelf life of Feraheme. As part of thisevaluation, we also review changes to federal and other legislation, changes to rebate contracts, changes in the level of discounts, and changes in productsales trends. Although allowances and accruals are recorded at the time of product sale, certain rebates are typically paid out, on average, up to sixmonths or longer after the sale. Allowances against receivable balances primarily relate to prompt payment discounts, provider chargebacks and certain government agency rebatesand are recorded at the time of sale, resulting in a reduction in product sales revenue and the reporting of product sales receivables net of allowances.Accruals related to Medicaid and provider volume rebates, wholesaler and distributor fees, GPO fees, other discounts to healthcare providers andproduct returns are recorded at the time of sale, resulting in a reduction in product sales revenue and the recording of an increase in accrued expenses.65Table of ContentsDiscounts We typically offer a 2% prompt payment discount to our customers as an incentive to remit payment in accordance with the stated terms of theinvoice, generally thirty days. Because we anticipate that those customers who are offered this discount will take advantage of the discount, we accrue100% of the prompt payment discount, at the time of sale, based on the gross amount of each invoice. We adjust the accrual quarterly to reflect actualexperience.Chargebacks Chargeback reserves represent our estimated obligations resulting from the difference between the prices at which we sell Feraheme to wholesalersand the sales price ultimately paid to wholesalers under fixed price contracts by third-party payors, including governmental agencies. We determine ourchargeback estimates based on actual Feraheme sales data and forecasted customer buying patterns. Actual chargeback amounts are determined at thetime of resale to the qualified healthcare provider, and we generally issue credits for such amounts within several weeks of receiving notification fromthe wholesaler. Estimated chargeback amounts are recorded at the time of sale, and we adjust the allowance quarterly to reflect actual experience.Government and Other Rebates Government and other rebate reserves relate to our reimbursement arrangements with state Medicaid programs or performance rebate agreementswith certain classes of trade. We determine our estimates for Medicaid rebates based on actual Feraheme sales data, forecasted customer buying patternsand market research data related to utilization rates by various end-users blended with historical experience of products similar to Feraheme sold byothers. We currently have limited actual claims payment data, and therefore are not able to solely rely on our actual Feraheme claims experience. Inestimating these reserves, we provide for a Medicaid rebate associated with both those expected instances where Medicaid will act as the primaryinsurer as well as in those instances where we expect Medicaid will act as the secondary insurer. For rebates associated with reaching definedperformance goals, we determine our estimates using actual Feraheme sales data and forecasted customer buying patterns. Rebate amounts generally areinvoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the Medicaid or provider entity.Estimated government and other rebates are recorded at the time of sale and, with the exception of Medicaid as discussed below, we adjust the accrualquarterly to reflect actual experience. During 2012, we revised our estimated Medicaid utilization rate based on actual rebate claims received since the 2009 launch of Feraheme, ourexpectations of state level activity, and estimated rebate claims not yet submitted, which resulted in a $0.6 million reduction of our estimated Medicaidrebate reserve related to prior period Feraheme sales. This change in estimate was reflected as an increase in our net product sales in 2012. As a result,our gross to net percentage for 2012 was slightly lower than it otherwise would have been had we not reduced our Medicaid rebate reserve. Weregularly assess our Medicaid reserve balance and the rate at which we accrue for claims against product sales. If we determine in future periods that ouractual rebate experience is not indicative of expected claims or if other factors affect estimated claims rates, we may be required to change our estimatedMedicaid reserve and/or the current rate at which we estimate our Medicaid claims, which would affect our earnings in the period of the change inestimate and such change could be significant. A 1.0% increase in our estimate of our Medicaid utilization rate for the year ended December 31, 2012would have resulted in approximately a $0.2 million decrease in net product sales.66Table of ContentsDistributor/Wholesaler and Group Purchasing Organization Fees Fees under our arrangements with distributors and wholesalers are usually based upon units of Feraheme purchased during the prior month orquarter and are usually paid by us within several weeks of our receipt of an invoice from the wholesaler or distributor, as the case may be. Fees underour arrangements with GPOs are usually based upon member purchases during the prior quarter and are generally billed by the GPO within 30 daysafter period end. Current accounting standards related to consideration given by a vendor to a customer, including a reseller of a vendor's products,specify that cash consideration given by a vendor to a customer is presumed to be a reduction of the selling price of the vendor's products or servicesand therefore should be characterized as a reduction of revenue. Consideration should be characterized as a cost incurred if we receive, or will receive,an identifiable benefit (goods or services) in exchange for the consideration and we can reasonably estimate the fair value of the benefit received.Because the fees we pay to wholesalers do not meet the foregoing conditions to be characterized as a cost, we have characterized these fees as areduction of revenue. We generally pay such amounts within several weeks of our receipt of an invoice from the distributor, wholesaler, or GPO.Accordingly, we accrue the estimated fee due at the time of sale, based on the contracted price invoiced to the customer. We adjust the accrual quarterlyto reflect actual experience.Product Returns Consistent with industry practice, we generally offer our distributors and wholesaler customers a limited right to return product purchased directlyfrom us principally based upon the product's expiration date which, once packaged, is currently four or five years in the U.S. We estimate productreturns based upon historical experience since the 2009 launch of Feraheme and trends of products similar to Feraheme sold by others. We currentlyhave limited actual returns data, and therefore are not able to solely rely on our actual returns experience. We track actual returns by individualproduction lots. Returns on lots eligible for credits under our returned goods policy are monitored and compared with historical return trends and rates. We consider several additional factors in our product return estimation process, including our internal sales forecasts and inventory levels in thedistribution channel. We expect that wholesalers and healthcare providers will not stock significant inventory due to Feraheme's cost and expense tostore. Based on the level of inventory in the wholesale distribution channel, we determine whether an adjustment to the sales return reserve isappropriate. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as itbecomes available and for known or expected changes in the marketplace. During 2012, we reduced our reserve for product returns by approximately$2.2 million, primarily as a result of a lower than expected rate of product returns as well as the lapse of the product return period on certainmanufactured Feraheme lots that carried a two year expiration. As a result, the product returns provision applied to gross product sales for the yearended December 31, 2012 was a credit of $1.5 million, resulting in an increase to net product sales for the year. The reduction of our estimated productreturns reserve had a positive impact of $0.10 per basic and diluted share for year ended December 31, 2012. We did not significantly adjust our reservefor product returns during 2011 or 2010. Feraheme is still early in its product lifecycle and returns experience may change over time. A future revisionto our product returns estimate would result in a corresponding change to our net product sales in the period in which the change is made and could besignificant. A 1.0% increase in our returns as a percentage of gross sales for the year ended December 31, 2012 would have resulted in approximately a$0.8 million decrease in net product sales.67Table of ContentsInternational Product Sales and Royalties We record all international product sales and royalties for Feraheme/Rienso sold to Takeda in deferred revenues in our consolidated balance sheet.We recognize these deferred revenues, and the associated cost of product sales, in our consolidated statement of operations at the time Takeda reports tous that sales have been made to its customers.Milestone Payments under Multiple Element Arrangements From time to time, we may enter into collaborative license and development agreements with biotechnology and pharmaceutical companies for thedevelopment and commercialization of our products or product candidates. The terms of the agreements may include non-refundable license fees,payments based on the achievement of certain milestones and performance goals, reimbursement of certain out-of-pocket costs, payments formanufacturing services, and royalties on product sales. We evaluate revenue from arrangements that have multiple elements to determine whether the components of the arrangement represent separateunits of accounting as defined in the accounting guidance related to revenue arrangements with multiple deliverables. Under current accountingguidance, which governs any agreements that contain multiple elements that are either entered into or materially modified subsequent to January 1, 2011,companies are required to establish the fair value of undelivered products and services based on a separate revenue recognition process usingmanagement's best estimate of the selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item.Agreements entered into prior to January 1, 2011, that have not been materially modified, including our agreements with Takeda and 3SBio, areaccounted for under previous accounting guidance, which provides that an element of a contract can be accounted for separately if the delivered elementshave standalone value and the fair value of all undelivered elements is determinable. If an element is considered to have standalone value but the fairvalue of any of the undelivered items cannot be determined, all elements of the arrangement are recognized as revenue as a single unit of accounting overthe period of performance for such undelivered items or services. Significant management judgment is required in determining what elements constitutedeliverables and what deliverables or combination of deliverables should be considered units of accounting. When multiple deliverables are combined and accounted for as a single unit of accounting, we base our revenue recognition pattern on the last to bedelivered element. Revenue is recognized using either a proportional performance or straight-line method, depending on whether we can reasonablyestimate the level of effort required to complete our performance obligations under an arrangement and whether such performance obligations areprovided on a best-efforts basis. To the extent we cannot reasonably estimate our performance obligations, we recognize revenue on a straight-line basisover the period we expect to complete our performance obligations. Significant management judgment is required in determining the level of effortrequired under an arrangement and the period over which we are expected to complete our performance obligations under an arrangement. We may haveto revise our estimates based on changes in the expected level of effort or the period we expect to complete our performance obligations. Our collaboration agreements may entitle us to additional payments upon the achievement of performance-based milestones. If a milestone involvessubstantive effort on our part and its achievement is not considered probable at the inception of the collaboration, we recognize the milestoneconsideration as revenue in the period in which the milestone is achieved only if it meets the following additional criteria: (1) the milestone considerationreceived is commensurate with either the level of effort required to achieve the milestone or the enhancement of the value of the item delivered as a resultof a specific outcome resulting from our performance to achieve the milestone; (2) the milestone is related solely to past performance; and (3) themilestone consideration is reasonable68Table of Contentsrelative to all deliverables and payment terms in the arrangement. There is significant judgment involved in determining whether a milestone meets all ofthese criteria. For milestones that do not meet the above criteria and are therefore not considered substantive milestones, we recognize that portion of themilestone payment equal to the percentage of the performance period completed at the time the milestone is achieved and the above conditions are met.The remaining portion of the milestone will be recognized over the remaining performance period using a proportional performance or straight-linemethod. Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in our consolidated balance sheets.Amounts not expected to be recognized within the next 12 months are classified as long-term deferred revenue.Takeda Agreement In March 2010, we entered into the Takeda Agreement which, as discussed above, was amended in June 2012 to, among other things, modify thetiming and pricing arrangements for a supply agreement to be entered into between us and Takeda in the future, the terms related to primary andsecondary manufacturing for drug substance and drug product, certain patent related provisions, and the re-allocation of certain of the agreed-uponmilestone payments. We analyzed the Amended Takeda Agreement and determined that the amended terms did not result in a material modification ofthe original Takeda Agreement based on the fact that there were no changes to the deliverables under the original Takeda Agreement as a result of theamendment, and the change in arrangement consideration as a result of the amendment was not quantitatively material in relation to the total arrangementconsideration. Under the Amended Takeda Agreement, except under limited circumstances, we have retained the right to manufacture Feraheme/Rienso and,accordingly, are responsible for supply of Feraheme/Rienso to Takeda at a fixed price per unit, which is capped for a certain period of time. We are alsoresponsible for conducting, and bearing the costs related to, certain pre-defined clinical studies with the costs of future modifications or additionalstudies to be allocated between the parties according to an agreed-upon cost-sharing mechanism. We have determined that our obligations under theAmended Takeda Agreement have not changed from those under the original Takeda Agreement and include the following four deliverables: thelicense, access to future know-how and improvements to the Feraheme/Rienso technology, regulatory and clinical research activities, and themanufacturing and supply of product. Pursuant to the accounting guidance in effect in 2010, when we signed the original Takeda Agreement and whichgoverned revenue recognition on multiple element arrangements, we evaluated the four deliverables under the original Takeda Agreement anddetermined that our obligation to provide manufacturing supply of product meets the criteria for separation and is therefore treated as a single unit ofaccounting, which we refer to as the supply unit of accounting. Further, we concluded that the license is not separable from the undelivered futureknow-how and technological improvements or the undelivered regulatory and clinical research activities. Accordingly, these deliverables are beingcombined and also treated as a single unit of accounting, which we refer to as the combined unit of accounting. With respect to the combined unit of accounting, our obligation to provide access to our future know-how and technological improvements is thefinal deliverable and is an obligation which exists throughout the term of the Amended Takeda Agreement. In connection with the execution of theoriginal Takeda Agreement, we received a $60.0 million upfront payment from Takeda in April 2010, which we recorded as deferred revenue, as wellas approximately $1.0 million reimbursed to us during 2010 for certain expenses incurred prior to entering the agreement, which we considered anadditional upfront payment. Because we cannot reasonably estimate the total level of effort required to complete the obligations under the combineddeliverable, we are recognizing the entire $60.0 million upfront payment, the $1.0 million reimbursed to us in 2010, as well as any non-substantivemilestone payments69Table of Contentsthat are achieved into revenues on a straight-line basis over a period of ten years from March 31, 2010, the date on which we originally entered theTakeda Agreement, which represented the then current patent life of Feraheme/Rienso and our best estimate of the period over which we willsubstantively perform our obligations. We continue to believe that the then current patent life of Feraheme/Rienso is our best estimate of the period overwhich we will substantively perform our obligations under this agreement. Any potential non-substantive milestone payments that may be received inthe future will be recognized as revenue on a cumulative catch up basis when they become due and payable. Under the terms of the Amended Takeda Agreement, Takeda is responsible for reimbursing us for certain out-of-pocket regulatory and clinical trialsupply costs associated with carrying out our regulatory and clinical research activities under the collaboration agreement. Because we are acting as theprincipal in carrying out these services, any reimbursement payments received from Takeda will be recorded in license fee and other collaborationrevenues in our consolidated statement of operations to match the costs that we incur during the period in which we perform those services.2. Valuation of investments We generally invest in corporate debt securities, U.S. treasury and government agency securities, commercial paper and, in 2011, auction ratesecurities, or ARS. All of our investments are classified as "available-for-sale" and are recorded at their estimated fair value. The fair value of ourinvestments is generally determined from quoted market prices received from independent pricing services based upon market transactions. Independentpricing services normally derive security prices from recently reported trades for identical or similar securities, making adjustments based upon othersignificant observable market transactions. At the end of each reporting period, we perform quantitative and qualitative analyses of prices received fromthird parties to determine whether prices are reasonable estimates of fair value. We also analyze when the volume and level of activity for an asset or liability have significantly decreased and when circumstances indicate that atransaction may not be considered orderly. In order to determine whether the volume and level of activity for an asset or liability have significantlydecreased, we assess current activity as compared to normal market activity for the asset or liability. We rely on many factors such as trading volume,trading frequency, the levels at which market participants indicate their willingness to buy and sell our securities, as reported by market participants, andcurrent market conditions. Using professional judgment and experience, we evaluate and weigh the relevance and significance of all applicable factors todetermine if there has been a significant decrease in the volume and level of activity for an asset, group of similar assets or liabilities. Similarly, in orderto identify transactions that are not orderly, we take into consideration the activity in the market which can influence the determination and occurrence ofan orderly transaction. Also, we inquire as to whether there may have been restrictions on the marketing of the security to a single or limited number ofparticipants. Where possible, we assess the financial condition of the seller to determine whether observed transactions may have been forced. If there isa significant disparity between the trading price for a security held by us as compared to the trading prices of similar recent transactions, we considerwhether this disparity is an indicator of a disorderly trade. Using professional judgment and experience, we evaluate and weigh the relevance andsignificance of all applicable factors to determine if the evidence suggests that a transaction or group of similar transactions is not orderly. Based uponthese procedures, we determined that market activity for our non-ARS assets appeared normal and that transactions did not appear disorderly as ofDecember 31, 2012 and 2011. In order to assess whether our investments in debt securities which experience a decline in fair value below amortized cost basis are other-than-temporarily impaired, we evaluate whether (i) we have the intent to sell the security or (ii) it is more likely than not that we will be required to sell thesecurity prior to recovery of its amortized cost basis. If either of these conditions is met, we recognize the difference between the amortized cost of thesecurity and its fair value at the impairment70Table of Contentsmeasurement date in our consolidated statement of operations. If neither of these conditions is met, we must perform additional analyses to evaluatewhether there could be a credit loss associated with the security. Factors we consider in making this judgment include, but are not limited to:•The extent to which the market value is less than the cost basis; •The length of time that the market value has been less than the cost basis; •Whether the unrealized loss is event-driven, credit-driven or a result of changes in market interest rates or risk premium; •The investment's rating and whether the investment is investment-grade and/or has been downgraded since its purchase; •Whether the issuer is current on all payments in accordance with the contractual terms of the investment and is expected to meet all of itsobligations under the terms of the investment; •Any underlying collateral and the extent to which the recoverability of the carrying value of our investment may be affected by changesin such collateral; •Whether we have a favorable history in redeeming similar securities at prices at or above fair value; •Unfavorable changes in expected cash flows; and •Other subjective factors. If we determine from this analysis that we do not expect to receive cash flows sufficient to recover the entire amortized cost of the security, a creditloss exists, and the impairment is considered other-than-temporary and is recognized in our consolidated statement of operations. Our assessment ofwhether unrealized losses are other-than-temporary requires significant judgment.3. Equity-Based Compensation Under the fair value recognition guidance of equity-based compensation accounting rules, equity-based compensation cost is generally required tobe measured at the grant date (based upon an estimate of the fair value of the compensation granted) and recorded to expense over the requisite serviceperiod, which generally is the vesting period. Because equity-based compensation expense is based on awards ultimately expected to vest, we mustmake certain judgments about whether employees and directors will complete the requisite service period. Accordingly, we have reduced thecompensation expense being recognized for estimated forfeitures. Under current accounting guidance, forfeitures are estimated at the time of grant andrevised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based upon historical experience,adjusted for unusual events such as the corporate restructurings in 2012, 2011 and 2010, which resulted in higher than expected turnover and forfeituresin those years. If factors change and we employ different assumptions in future periods, the compensation expense that we record in the future maydiffer significantly from what we have recorded in the current period. We estimate the fair value of equity-based compensation involving stock options based on the Black-Scholes option pricing model. We estimate thefair value of our restricted stock units whose vesting is contingent upon market conditions using the Monte-Carlo simulation method. These modelsrequire the input of several factors such as the expected option term, the expected risk-free interest rate over the expected option term, the expectedvolatility of our stock price over the expected option term, and the expected dividend yield over the expected option term and are subject to variousassumptions. The fair value of awards whose fair values are calculated using the Black-Scholes option pricing model is generally being amortized on astraight-line basis over the requisite service period and is recognized based on the proportionate amount of the requisite service period that has beenrendered71Table of Contentsduring each reporting period. The fair value of awards with market conditions is being amortized based upon the estimated derived service period. Webelieve our valuation methodologies are appropriate for estimating the fair value of the equity awards we grant to our employees and directors. Ourequity award valuations are estimates and thus may not be reflective of actual future results or amounts ultimately realized by recipients of these grants.These amounts, and the amounts applicable to future quarters, are also subject to future quarterly adjustments based upon a variety of factors, whichinclude, but are not limited to, changes in estimated forfeiture rates and the issuance of new equity-based awards. The fair value of restricted stock unitsgranted to our employees and directors is determined based upon the quoted closing market price per share on the date of grant, adjusted for estimatedforfeitures. As with any accounting policy that applies judgments and estimates, actual results could significantly differ from those estimates or ourestimates could change in the future.Impact of Recently Issued and Proposed Accounting Pronouncements In June 2011, the Financial Accounting Standards Board, or FASB, issued amended guidance on the presentation of comprehensive income infinancial statements. This amendment provides companies the option to present the components of net income and other comprehensive income either asone continuous statement of comprehensive income or as two separate but consecutive statements. This guidance eliminates the option to presentcomponents of other comprehensive income as part of the statement of changes in stockholders' equity. The provisions of this guidance becameeffective in 2012. We have adopted all provisions of this pronouncement by including other comprehensive income as part of our consolidatedstatements of comprehensive loss and such adoption did not have a significant impact on our consolidated financial statements. In May 2011, the FASB issued an amendment to the accounting guidance for fair value measurements and related disclosures. This amendmentclarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimatedusing significant unobservable inputs, or Level 3 measurements. This guidance became effective for interim and annual periods beginning afterDecember 15, 2011. We have adopted all provisions of this pronouncement and such adoption did not have a significant impact on our consolidatedfinancial statements.Results of Operations—Years Ended December 31, 2012, 2011 and 2010Revenues Our total revenues for the years ended December 31, 2012, 2011 and 2010 consisted of the following (in thousands):72 Years Ended December 31, 2012 to 2011change 2011 to 2010change 2012 2011 2010 $ Change %Change $ Change %Change U.S. productsales, net $58,287 $52,097 $59,339 $6,190 12%$(7,242) -12%Internationalproductsales androyalties 120 — — 120 N/A — — License fee andothercollaborationrevenues 26,475 8,321 6,132 18,154 >100% 2,189 36%Other productsales androyalties 496 831 774 (335) -40% 57 7% Total $85,378 $61,249 $66,245 $24,129 39%$(4,996) -8% Table of Contents Our total revenues in 2012 increased by $24.1 million as compared to 2011, primarily as the result of a $6.2 million increase in U.S. net productsales and a $18.2 million increase in our license fee and other collaboration revenues associated with our collaboration agreement with Takeda, asdescribed in further detail below. The $5.0 million decrease in our total revenues in 2011 as compared to 2010 was primarily attributable to a $7.2 million decrease in U.S. netproduct sales, partially offset by a $2.2 million increase in our license fee and other collaboration revenues associated with our collaboration agreementwith Takeda, as described in further detail below. The following table sets forth customers who represented 10% or more of our total revenues for the years ended December 31, 2012, 2011 and2010.U.S. Product Sales, Net Net U.S. product sales for the years ended December 31, 2012, 2011 and 2010 consisted of the following (in thousands): Our total net U.S. product sales increased by $6.2 million, or 12%, during 2012 as compared to 2011 primarily as the result of an increase inFeraheme provider demand in 2012 and to a lesser extent, the impact of our 2012 Feraheme price increases, and changes in our estimated reserves,described below. The $6.2 million increase in our net U.S. product sales was the result of a $15.5 million increase in our gross U.S. product sales in2012 as compared to 2011, partially offset by higher allowances related to customer discounts and chargebacks in 2012. During 2012, we recordedallowances of $33.2 million as compared to $23.6 million in 2011. These allowances do not include the aggregate of changes in estimated Medicaid andproduct return reserves of $2.8 million and $2.5 million, as described below, that we recorded during the years ended December 31, 2012 and 2011,respectively. During 2012 and 2011, we revised our estimated Medicaid reserve rate based on actual rebate claims received since the 2009 launch of Feraheme,our expectations of state level activity, and estimated rebate claims not yet submitted, which resulted in a reduction of our estimated Medicaid rebatereserve related to prior Feraheme sales of $0.6 million and $2.5 million, respectively. Further, during 2012, we reduced our reserve for product returnsby approximately $2.2 million primarily as a result of a lower than expected rate of product returns as well as the lapse of the product return period oncertain manufactured Feraheme lots that carried a two year expiration. There was no significant adjustment of our reserve for product returns in 2011.These changes in estimates were reflected as an increase in our net product sales for the years ended December 31, 2012 and 2011 and resulted inreductions to our gross to net percentage in these respective periods. We regularly assess our Medicaid and product return reserve balances and accrualrates. If we determine in future periods that our actual73 Years EndedDecember 31, 2012 2011 2010 AmerisourceBergen Drug Corporation 34% 41% 36%Takeda Pharmaceuticals Company Limited 31% 13% <10%McKesson Corporation 17% 21% <10%Cardinal Health, Inc. 12% 13% <10%Metro Medical Supply, Inc. <10% <10% 21% Years Ended December 31, 2012 to 2011 change 2011 to 2010 change 2012 2011 2010 $ Change %Change $ Change %Change Feraheme $58,287 $52,097 $59,339 $6,190 12%$(7,242) -12% Total $58,287 $52,097 $59,339 $6,190 12%$(7,242) -12% Table of Contentsrebate or returns experience is not indicative of expected claims or returns, if our actual claims or returns experience changes, or if other factors affectestimated claims or returns rates, we may be required to change our Medicaid reserve or product return reserve estimates and/or the current rates atwhich we estimate Medicaid reserves or returns, which would affect our earnings in the period of the change and could be significant. Our total net U.S. product sales decreased by $7.2 million, or 12%, in 2011 as compared to 2010. The $7.2 million decrease was primarily due todecreased sales of Feraheme to dialysis providers during 2011 as compared to 2010, including a decrease of $6.8 million in net sales related to a launchincentive program which we initiated in 2009 and under which we recognized revenues of $7.0 million during 2010 as compared to $0.2 million during2011. Our Feraheme net product sales to dialysis customers in 2011 were de minimis relative to our dialysis sales during 2010 principally as a result ofthe January 2011 implementation of the Medicare prospective payment system, which made it unlikely that dialysis providers would choose to useFeraheme. The decreased Feraheme net product sales in the dialysis market was only partially offset by increased Feraheme net product sales in thenon-dialysis market in 2011 as compared to 2010. In addition, during 2011, we revised our estimated Medicaid utilization rate based on actual rebateclaims received since the 2009 launch of Feraheme, our expectations of state level activity, and estimated rebate claims not yet submitted, which resultedin a $2.5 million reduction of our 2011 estimated Medicaid rebate reserve related to prior year Feraheme sales as compared to a $0.6 million reductionin our 2010 estimated Medicaid rebate reserve. We also offered higher average customer discounts, chargebacks and rebates to our end-users during2011 as compared to 2010. During 2011, we reduced our gross product sales by recording allowances of $23.6 million, excluding the $2.5 millionMedicaid rebate reserve reduction, as compared to allowances of $22.8 million recorded during 2010, excluding the $0.6 million Medicaid rebatereserve reduction. Our U.S. net product sales may fluctuate from period to period due to the enactment of or changes in legislation that impact third-partyreimbursement coverage and pricing. For example, in January 2011, the implementation of the Medicare prospective payment system had the effect ofsignificantly diminishing the utilization of Feraheme in the dialysis market and as a result, beginning in 2010, Feraheme sales in the dialysis settingbegan to significantly decline and were de minimis in 2012 and 2011. We expect that dialysis sales will continue to be insignificant in 2013 and beyond. An analysis of our product sales allowances and accruals for the years ended December 31, 2012, 2011 and 2010 is as follows (in thousands): Total discounts and chargebacks for 2012 were $26.5 million, or 30% of total gross product sales, as compared to $13.9 million, or 19% of totalgross product sales, in 2011. The 11% increase in total discounts and chargebacks as a percentage of total gross product sales in 2012 as compared to2011 was primarily due to higher discounts offered to customers off the gross sales price as well as a change in pricing strategy from offering rebatesfor purchases of Feraheme above a certain minimum volume74 Years Ended December 31, 2012 2011 2010 Provision for U.S. product sales allowances and accruals Discounts and chargebacks $26,517 $13,851 $5,113 Government and other rebates 6,058 8,544 16,374 Medicaid rebate reserve adjustment (621) (2,532) (599)Returns (1,516) 1,259 1,334 Total provision for U.S. product sales allowances and accruals $30,438 $21,122 $22,222 Total gross U.S. product sales $88,725 $73,219 $81,561 Total provision for U.S. product sales allowances and accruals as a percent of totalgross U.S. product sales 34% 29% 27%Table of Contentsthreshold to entering into commercial contracts which provide increased upfront discounts on the purchase price of Feraheme. Total government andother rebates (excluding any changes in estimates related to Medicaid rebate reserves) were $6.1 million, or 7% of total gross product sales, in 2012 ascompared to $8.5 million, or 12% of gross product sales, in 2011. The decrease in total government and other rebates as a percentage of gross productsales was related primarily to lower volume rebates offered in 2012 as compared to 2011. Total discounts and chargebacks for 2011 were $13.9 million, or 19% of total gross product sales, as compared to $5.1 million, or 6% of totalgross sales in 2010. Total government and other rebates (excluding any changes in estimates related to Medicaid rebate reserves) were $8.5 million, or12% of gross product sales, in 2011 as compared to $16.4 million, or 20% of gross product sales, in 2010. The increase in total discounts andchargebacks as a percentage of total gross product sales and the corresponding decrease in government and other rebates as a percentage of total grossproduct sales were primarily due to a change in our customer mix and pricing strategy. Beginning in January 2011, with the implementation of theMedicare prospective payment system, the utilization of Feraheme in the dialysis market significantly decreased. As a result, our U.S. commercialstrategy shifted to focus on growing the utilization of Feraheme in non-dialysis CKD patients with IDA, specifically in hematology, oncology,nephrology, and hospital sites of care, many of which are members of GPOs, which leverage the purchasing power of a group of customers to obtainlower prices based on the collective bargaining power of the group. These lower prices are typically obtained through contractually arranged discountingprograms. Additionally, as end user experience with Feraheme became more established, particularly in these non-dialysis sites of care, during 2011,we entered into commercial contracts which provided discounts on the purchase price of Feraheme and gradually decreased our volume rebateprograms. These changes resulted in a decrease to our net selling price per unit of Feraheme in 2011 as compared to 2010. We are subject to reimbursement arrangements with state Medicaid programs for which we estimate and record rebate reserves. We determine ourestimates for Medicaid rebates based on actual Feraheme sales data, forecasted customer buying patterns and market research data related to utilizationrates by various end-users blended with historical experience of products similar to Feraheme sold by others. During 2012, 2011 and 2010, we revisedour estimated Medicaid reserve rate based on actual rebate claims received since the launch of Feraheme in July 2009, our expectations of state levelactivity, and estimated rebate claims not yet submitted, which resulted in a reduction of our estimated Medicaid rebate reserve related to prior periodFeraheme sales of $0.6 million, $2.5 million and $0.6 million, respectively. These changes in estimates were reflected as an increase in our net productsales for the years ended December 31, 2012, 2011 and 2010 and resulted in reductions to our gross to net percentage in these respective periods.Actual claims to date have been limited. In future periods, we may be required to adjust our estimates based on additional experience or other changes inexpectations, and such adjustments may be significant. Any such adjustments would be reflected as a change to our sales allowances and, accordingly,an increase or decrease to net product sales in that period. If actual future results vary from any of our estimates, we may need to adjust our previousestimates, which would also affect our earnings in the period of the adjustment. We generally offer our wholesalers, specialty distributors and other customers a limited right to return product purchased directly from us,principally based on the product's expiration date which, once packaged, is currently four or five years in the U.S. Reserves for product returns for U.S.sales are recorded in the period the related revenue is recognized, resulting in a reduction to product sales. Currently, sales to our licensees arerecognized as revenue when product is sold to our licensees' customers and therefore no return reserve is required at the time of sale to our licensees.We evaluate our estimated product returns rate each period based on the historical return patterns and known or expected changes in the marketplace.During 2012, we reduced our reserve for product returns by approximately $2.2 million, primarily as a result of a lower than expected rate of productreturns as75Table of Contentswell as the lapse of the product return period on certain manufactured Feraheme lots that carried a two year expiration. As a result, the product returnsprovision applied to gross product sales for 2012 was a credit of $1.5 million, resulting in an increase to product sales, as compared to a $1.3 millioncharge in both 2011 and 2010, resulting in decreases to product sales. Actual returns to date have been limited. In future periods, we may be required toadjust our estimates based on additional experience or other changes in expectations, which would result in a corresponding change to our net productsales in the period in which the change is made and could be significant. If actual future results vary from any of our estimates, we may need to adjustour previous estimates, which would also affect our earnings in the period of the adjustment. An analysis of the amount of, and change in, reserves for the years ended December 31, 2012, 2011 and 2010 is as follows (in thousands): During 2012, 2011 and 2010, we decreased our product sales allowances and accruals by approximately $2.8 million, $2.8 million and$0.7 million, respectively, for changes in estimates relating to sales in prior years. The $2.8 million adjustments made during 2012 were primarily due toa net reduction of our reserve for product returns of $2.2 million as a result of a lower than expected rate of product returns as well as the lapse of thereturn period on certain manufactured Feraheme lots that carried a two year expiration and a $0.6 million change to our estimated Medicaid rebatereserve. The adjustments made during 2011 and 2010 were primarily due to changes in our estimated Medicaid utilization rate based on actual rebateclaims received since the 2009 launch of Feraheme, our expectations of state level activity, and estimated rebate claims not yet submitted. This resultedin $2.5 million and $0.6 million reductions of our estimated Medicaid rebate reserve for 2011 and 2010, respectively. Overall, we expect that our reserves as a percentage of gross sales will increase slightly during 2013 as compared to 2012 due primarily to ourefforts to continue to increase adoption and utilization of Feraheme, our efforts to address continuing reimbursement and competitive pricing pressures,the expected customer mix and utilization rates, and the fact that our reserves as percentage of gross76 Discounts andChargebacks Governmentand OtherRebates Returns Total Balance at January 1, 2010 $499 $5,194 $463 $6,156 Current provisions relating to sales in current year 5,113 16,374 1,405 22,892 Other provisions relating to deferred revenue — (1,085) — (1,085)Adjustments relating to sales in prior year — (599) (71) (670)Payments/returns relating to sales in current year (3,965) (8,540) — (12,505)Payments/returns relating to sales in prior year (499) (3,126) — (3,625) Balance at December 31, 2010 $1,148 $8,218 $1,797 $11,163 Current provisions relating to sales in current year 14,074 8,605 1,259 23,938 Other provisions relating to deferred revenue — (18) — (18)Adjustments relating to sales in prior years (223) (2,593) — (2,816)Payments/returns relating to sales in current year (12,251) (6,195) (55) (18,501)Payments/returns relating to sales in prior years (926) (4,916) (159) (6,001) Balance at December 31, 2011 $1,822 $3,101 $2,842 $7,765 Current provisions relating to sales in current year 26,517 6,152 577 33,246 Adjustments relating to sales in prior years — (715) (2,093) (2,808)Payments/returns relating to sales in current year (24,739) (4,511) — (29,250)Payments/returns relating to sales in prior years (1,859) (1,597) (308) (3,764) Balance at December 31, 2012 $1,741 $2,430 $1,018 $5,189 Table of Contentsproduct sales were positively impacted by changes in our estimated Medicaid rebate and product return reserves during 2012. During 2012, weimplemented gross price increases for Feraheme, some of which was discounted back to customers under performance-based contracts. We anticipatethat the effect of these price increases will offset the impact of the widening gross to net adjustment and that the average net revenue per gram ofFeraheme will increase in future periods. There are a number of factors that make it difficult to predict the magnitude of future U.S. Feraheme sales, including but not limited to, thefollowing:•The magnitude and timing of adoption of Feraheme by physicians, hospitals and other healthcare payors and providers; •Any expansion or contraction of the overall size of the IV iron market, which could result from a number of factors including but notlimited to, changes in treatment guidelines or practices related to IDA; •The introduction of new competitive products in the iron replacement therapeutic market, such as Injectafer®, if approved or genericversions of new or currently available drug therapies; •The effect of federal and other legislation such as the Patient Protection and Affordable Care Act, as amended by the Health Care andEducation Affordability Reconciliation Act, or the Health Care Reform Act, and the Budget Control Act of 2011; •The inventory levels maintained by Feraheme wholesalers, distributors and other customers; •The frequency of re-orders by existing customers; •The impact of any actual or perceived safety or efficacy issues with Feraheme; and •The impact of and any actions taken by us or our competitors to address pricing and reimbursement considerations related to Ferahemeor products that compete with Feraheme. As a result of these and other factors, future Feraheme sales could vary significantly from quarter to quarter and, accordingly, our Feraheme netproduct revenues in current or previous quarters may not be indicative of future Feraheme net product revenues.Recent Healthcare Reform Legislation The Health Care Reform Act was enacted in the U.S. in March 2010 and includes certain cost containment measures including an increase to theminimum rebates for products covered by Medicaid programs and the extension of such rebates to drugs dispensed to Medicaid beneficiaries enrolled inMedicaid managed care organizations as well as the expansion of the 340B Drug Discount Program under the Public Health Service Act. Thislegislation contains provisions that can affect the operational results of companies in the pharmaceutical industry, including us, and other healthcarerelated industries by imposing on them additional costs. In the first quarter of 2010, an increase from 15.1% to 23.1% in the minimum statutoryMedicaid rebate to states participating in the Medicaid program became effective. Given the relatively small portion of our sales that are subject toMedicaid claims, this increase in the minimum Medicaid rebate did not materially reduce our product revenues in 2012, 2011 and 2010. The Health Care Reform Act also requires pharmaceutical manufacturers to pay a prorated share of the overall Branded Drug Fee, based on thedollar value of its branded prescription drug sales to certain federal programs identified in the legislation. The amount of our annual share of theBranded Drug Fee for 2012 was $0.1 million and was non-deductible for income tax purposes. We have included this amount in selling, general andadministrative expense in our consolidated statement of operations. We were not assessed and therefore did not record any Branded Drug Fee in anyperiod during 2011 or 2010. The amount of this annual payment could increase in future years due to both higher eligible77Table of ContentsFeraheme sales and the increasing amount of the overall fee assessed across manufacturers, but any such increases are not expected to be material to ourresults of operations or financial condition. In addition, the number of entities covered by the 340B Drug Discount Program under the Public Health Service Act, which provides drugs atreduced rates, was expanded by the Health Care Reform Act to include additional hospitals. The expansion of 340B eligible entities did not materiallyimpact our discounts and chargebacks as a percentage of gross product sales in 2012 as compared to 2011 or in 2011 as compared to 2010. However,the amount of Feraheme business in 340B eligible entities is growing faster than other customers to which we sell. Because of the federal pricingdiscounts granted to these 340B institutions, the revenue realized per unit of Feraheme sold to 340B institutions is lower than from other customers andthis change in the mix of our business contributed to our increase in discounts in 2012 as compared to 2011. We were not materially impacted by recent healthcare reform legislation during 2012, 2011 or 2010. Presently, we have not identified anyprovisions that could materially impact our business but we will continue to monitor future developments related to this legislation. The potential long-term impact on our business is inherently difficult to predict as many details regarding the implementation of this legislation have not yet beendetermined.International Product Sales and Royalties We record all international product sales and royalties for Feraheme/Rienso sold to Takeda in deferred revenues in our consolidated balance sheet.We recognize these deferred revenues, and the associated cost of product sales, in our consolidated statement of operations at the time Takeda reports tous that sales have been made its customers. During 2012, we recognized $0.1 million in product sales and royalty revenue related to the AmendedTakeda Agreement and we have included this revenue in international product sales and royalties in our consolidated statement of income. Takedalaunched Feraheme/Rienso in Canada, Switzerland and the EU in the fourth quarter of 2012. As of December 31, 2012, we have $1.0 million indeferred revenue related to product shipped to Takeda, but not yet sold through to Takeda's customers.License Fee and Other Collaboration Revenues License fee and other collaboration revenues for the years ended December 31, 2012, 2011 and 2010 consisted of the following (in thousands):78 Years Ended December 31, 2012 to 2011 change 2011 to 2010 change 2012 2011 2010 $ Change %Change $ Change %Change Milestonerevenuesrecognizedfrom Takeda $19,950 $— $— $19,950 N/A $— — Deferred licensefee revenuesrecognizedfrom Takeda 6,096 6,096 4,572 — — 1,524 33%Reimbursementrevenuesprimarily fromTakeda 429 2,225 1,560 (1,796) -81% 665 43% Total $26,475 $8,321 $6,132 $18,154 >100%$2,189 36% Table of Contents Our license fee and other collaboration revenues in 2012 increased by $18.2 million as compared to 2011 and increased by $2.2 million in 2011 ascompared to 2010. During 2012, we received a $15.0 million milestone payment from Takeda associated with the regulatory approval of Rienso in theEU, which we deemed a substantive milestone and recorded in its entirety in revenues in our license fee and other collaboration revenues in ourconsolidated statement of operations. In addition, during 2012, we received an aggregate of $18.0 million of milestone payments related to thecommercial launches of Feraheme/Rienso in Canada and the EU, which we deemed non-substantive milestones and are amortizing into revenue on acumulative catch up basis using the proportional performance method extended over the original life of the Takeda Agreement. As a result, we haveincluded $5.0 million of the $18.0 million in our license fee and other collaboration revenues in 2012. We did not receive any milestone payments in2011 or 2010. In addition, during 2012, 2011 and 2010 we recorded $6.1 million, $6.1 million, and $4.6 million, respectively, of revenues associated with theamortization of $61.0 million of deferred revenues recorded in connection with the original Takeda Agreement. The $1.5 million increase in 2011 ascompared to 2010 was the result of recognizing a full year of the upfront payment from Takeda during 2011 as compared to nine months during 2010.The $61.0 million of deferred revenues was comprised of a $60.0 million upfront payment which we received from Takeda in April 2010, as well asapproximately $1.0 million reimbursed to us during 2010 for certain expenses incurred prior to entering the agreement, which we considered anadditional upfront payment. As of December 31, 2012, we had approximately $44.2 million remaining in deferred revenues related to the $61.0 millionupfront payments received from Takeda. Under the terms of the Amended Takeda Agreement, Takeda is responsible for reimbursing us for certain out-of-pocket regulatory and clinical trialsupply costs we incur in the conduct of certain regulatory and clinical research activities we manage under the agreement. Because we are acting as theprincipal in carrying out these activities, any reimbursement payments received from Takeda are recorded in license fee and other collaboration revenuesin our consolidated statement of operations and offset the costs that we incur during the period in which we perform those services. During 2012, 2011and 2010, we recorded $0.4 million, $2.0 million, and $1.6 million, respectively, of revenues associated with the reimbursement of out-of pocketregulatory and clinical supply costs in connection with the Amended Takeda Agreement. We anticipate that our license fee and other collaboration revenues will decrease in 2013 as compared to 2012 given the non-recurring$15.0 million substantive milestone payment and the $5.0 million cumulative catch up associated with the $18.0 million non-substantive milestonepayments we received from Takeda in 2012 and recognized in our 2012 revenues, as discussed above. We do not expect any new milestones to beachieved under the Amended Takeda Agreement in 2013.Other Product Sales and Royalties Our other product sales and royalties include product sales of GastroMARK to our licensees as well as royalties received from our licensees' salesof GastroMARK. The $0.3 million decrease in our other product sales and royalties in 2012 as compared to 2011 was due to decreased sales as a resultof our 2012 terminations of our agreements with our GastroMARK licensees.79Table of ContentsCosts and ExpensesCost of Product Sales Cost of product sales for the years ended December 31, 2012, 2011 and 2010 consisted of the following (in thousands): Our cost of product sales are primarily comprised of manufacturing costs, costs of managing our contract manufacturers, and costs for qualityassurance and quality control associated with our sales of Feraheme in the U.S., international sales of Feraheme/Rienso, and GastroMARK sales to ourlicensees. During 2012, our cost of product sales increased by $3.7 million, or 35%, as compared to 2011. Included in our cost of product sales for2012 was $2.3 million in accelerated depreciation and impairment costs associated with our ongoing divestiture of our Cambridge, Massachusettsmanufacturing facility. During the third quarter of 2012, we determined that our manufacturing facility and related assets were considered held for sale,based on an analysis of current accounting guidance. This $2.3 million charge during 2012 reflects an adjustment to reduce the carrying value of theseassets to fair value less the cost to sell based on what we believe is the best estimate of the net realizable value of the assets upon divestiture. In addition,the increase in our cost of product sales during 2012 as compared to 2011 was due to $0.9 million of additional Feraheme vials sold and a $0.6 millionwrite-off of commercial inventory deemed no longer saleable. Our cost of product sales increased by $2.9 million, or 38%, during 2011 as compared to 2010 primarily due to higher idle capacity costs at ourCambridge, Massachusetts manufacturing facility. The high idle capacity costs resulted from reduced production activity due to our alignment ofproduction volumes and inventory with our then current and expected Feraheme sales. Idle capacity costs are included in cost of product sales in theperiod incurred. We expect our cost of product sales as a percentage of net product sales and royalties to decrease during 2013 as compared to 2012 because we donot expect to record any significant costs related to our manufacturing facility during 2013.Research and Development Expenses Research and development expenses include external expenses, such as costs of clinical trials, contract research and development expenses, certainmanufacturing research and development costs, regulatory filing fees, consulting and professional fees and expenses, and internal expenses, such ascompensation of employees engaged in research and development activities, the manufacture of product needed to support research and developmentefforts, related costs of facilities, and other general costs related to research and development. Where possible, we track our external costs by majorproject. To the extent that external costs are not attributable to a specific project or activity, they are included in other external costs. Prior to the initialregulatory approval of our products or development of new manufacturing processes, costs associated with manufacturing process development and themanufacture of drug product are recorded as research and development expenses. Subsequent to initial regulatory approval, costs associated with themanufacture of our products for commercial sale are capitalized in inventory and recorded as cost of product sales when sold.80 Years Ended December 31, 2012 to 2011change 2011 to 2010change 2012 2011 2010 $Change %Change $Change %Change Cost ofProductSales $14,220 $10,531 $7,606 $3,689 35%$2,925 38%Percentageof NetProductSales andRoyalties 24% 20% 13% Table of Contents Research and development expenses for the years ended December 31, 2012, 2011 and 2010 consisted of the following (in thousands): Total research and development expenses incurred in 2012 decreased by $24.8 million, or 43%, as compared to 2011. The decrease was primarilydue to reduced external research and development costs of $21.7 million in 2012. In addition, 2012 internal research and development costs decreasedby $3.2 million as compared to 2011. The $21.7 million, or 53%, decrease in our external research and development expenses in 2012 as compared to 2011, was due primarily to a$15.0 million decrease in costs incurred in connection with our Phase III clinical development program for Feraheme to treat IDA regardless of theunderlying cause, which was completed in 2012. In addition, costs associated with our global clinical program to support the MAA in the EU for thetreatment of IDA in CKD patients, which was completed in 2012, our post-approval clinical study evaluating Feraheme treatment as compared totreatment with another IV iron, which was completed in 2011, and the current pace of enrollment in our on-going pediatric studies of Feraheme,decreased by $6.2 million. Years Ended December 31, 2012 to 2011change 2011 to 2010change 2012 2011 2010 $ Change %Change $ Change %Change External Researchand DevelopmentExpenses Feraheme to treatIDAregardless ofthe underlyingcause $12,357 $27,405 $17,132 $(15,048) -55%$10,273 60%Feraheme to treatIDA in CKDpatients 3,226 9,385 11,003 (6,159) -66% (1,618) -15%Feraheme as atherapeuticagent, general 1,033 917 799 116 13% 118 15%Ferahememanufacturingprocessdevelopmentand materials 2,297 2,752 3,059 (455) -17% (307) -10%Feraheme as animaging agent — — 2,483 — — (2,483) -100%Other externalcosts 152 263 763 (111) -42% (500) -66% Total $19,065 $40,722 $35,239 $(21,657) -53%$5,483 16% Internal Researchand DevelopmentExpenses Compensation,payroll taxes,benefits andother expenses 12,237 15,544 15,715 (3,307) -21% (171) -1%Equity-basedcompensationexpense 1,994 1,874 3,508 120 6% (1,634) -47% Total $14,231 $17,418 $19,223 $(3,187) -18%$(1,805) -9% Total Research andDevelopmentExpenses $33,296 $58,140 $54,462 $(24,844) -43%$3,678 7%  The $3.2 million, or 18%, decrease in our internal research and development expenses in 2012 as compared to 2011 was primarily attributable tothe decrease in compensation and related benefits following our 2012 and 2011 corporate restructurings, which resulted in lower headcount in ourresearch and development departments. Total research and development expenses incurred in 2011 increased by $3.7 million, or 7%, from 2010 due to increased external research anddevelopment expenses of $5.5 million in 2011, partially offset by a $1.8 million decrease in our internal research and development costs in 2011 ascompared to 2010.81Table of Contents The $5.5 million, or 16%, increase in our external research and development expenses in 2011 as compared to 2010, was due primarily to anincrease of $10.3 million in costs incurred in connection with our Phase III clinical development program for Feraheme to treat IDA regardless of theunderlying cause, which was initiated in June 2010, and costs incurred related to certain of our pediatric studies of Feraheme. This increase waspartially offset by a $1.6 million reduction in costs associated with our global clinical program to support the MAA in the EU for the treatment of IDAin CKD patients, which was completed in 2012, as well as $2.5 million in certain costs incurred in 2010 in connection with a clinical trial for Ferahemeas an imaging agent, which was discontinued in 2010. The $1.8 million, or 9%, decrease in our internal research and development expenses in 2011 as compared to 2010, was primarily attributable to a$1.6 million reduction of equity-based compensation expense and the net decrease in compensation and related benefits principally due to restructuringsthat took place in 2011 and 2010, which resulted in lower headcount in our research and development departments during 2011.Research and Development Activities We expect research and development expenses to decrease in 2013 as compared to 2012 primarily due to the completion of our clinicaldevelopment program of Feraheme for the treatment of IDA regardless of the underlying cause and the reduction of costs related to the preparation andthe related December 2012 submission of our U.S. Feraheme sNDA to treat IDA regardless of the underlying cause, partially offset by costs associatedwith certain Feraheme clinical studies we have committed to conduct as a condition of approval of the Rienso MAA by the EMA, such as our post-approval commitment discussed above, as well as other miscellaneous research and development related activities in support of our Feraheme/Riensodevelopment programs. We do not track our internal costs by project since our research and development personnel work on a number of projects concurrently and muchof our fixed costs benefit multiple projects or our operations in general. We track our external costs on a major project basis, in most cases through thelater of the completion of the last trial in the project or the last submission of a regulatory filing to the FDA or applicable foreign regulatory body. Thefollowing two major research and development projects are currently ongoing:•Feraheme to treat IDA regardless of the underlying cause. This project currently includes: (1) a completed Phase III clinical studyevaluating Feraheme treatment as compared to treatment with placebo; (2) a completed Phase III clinical study evaluating Ferahemetreatment as compared to treatment with another IV iron; and (3) a completed extension study. •Feraheme to treat IDA in CKD patients. This project currently includes: (1) a completed clinical study evaluating Feraheme treatment ascompared to treatment to another IV iron to support the MAA submission; (2) two ongoing pediatric studies that are being conducted aspart of our post-approval Pediatric Research Equity Act requirement to support pediatric CKD labeling of Feraheme; (3) two additionalpediatric studies to be completed in accordance with our approved pediatric investigation plan to support the MAA submission; and (4) amulti-center clinical trial to be conducted to determine the safety and efficacy of repeat doses of Feraheme for the treatment of IDA inpatients with hemodialysis dependent CKD, including a treatment arm with iron sucrose as well as a MRI study to evaluate the potentialfor iron to accumulate in the body following repeated IV iron administration for the treatment of IDA in patients with CKD over a twoyear period. Through December 31, 2012, we have incurred aggregate external research and development expenses of approximately $57.7 million related toour current program for the development of Feraheme to treat IDA regardless of the underlying cause. We currently estimate that the total82Table of Contentsremaining external costs associated with the efforts needed to complete this development project will be less than $3.0 million, which will be incurred in2013. Through December 31, 2012, we have incurred aggregate external research and development expenses of approximately $23.9 million related toour current program for the development of Feraheme to treat IDA in CKD patients. We currently estimate that the total remaining external costsassociated with this development project will be in the range of approximately $23.0 to $33.0 million over the next several years. Conducting clinical trials involves a number of uncertainties, many of which are out of our control. Our estimates of external costs associated withour research and development projects could therefore vary from our current estimates for a variety of reasons including but not limited to the following:•Delays in our clinical trials due to slow enrollment; •Unexpected results from our clinical sites that affect our ability to complete the studies in a timely manner; •Unanticipated adverse reactions to Feraheme either in commercial use or in a clinical trial setting; •Inadequate performance or errors by third-party service providers; •Any deficiencies in the design or oversight of these studies by us; •The need to conduct additional clinical trials; or •Any adverse regulatory action or delay in the submission of any applicable regulatory filing. As a result, we are unable to reasonably estimate the specific timing of any expected net cash inflows resulting from these projects, providedhowever, as the result of recent regulatory decisions on our marketing applications in the EU and the respective commercial launches forFeraheme/Rienso in the CKD indication in the EU and Canada, we have received $33.0 million in milestone payments and we have begun receivingproduct sales revenues and royalty payments in accordance with the Amended Takeda Agreement.Selling, General and Administrative Expenses Our selling, general and administrative expenses include costs related to our commercial personnel, including our specialty sales force, medicaleducation professionals, pharmacovigilance and safety monitoring and other commercial support personnel, costs related to our administrativepersonnel, including our legal, finance, business development and executive personnel, external and facilities costs required to support the marketingand sale of Feraheme and other costs associated with our corporate activities. Selling, general and administrative expenses for the years ended December 31, 2012, 2011 and 2010 consisted of the following (in thousands): Years Ended December 31, 2012 to 2011change 2011 to 2010change 2012 2011 2010 $ Change %Change $ Change %Change Compensation,payroll taxesand benefits $23,273 $29,553 $35,274 $(6,280) -21%$(5,721) -16%Sales andmarketingconsulting,professionalfees, and otherexpenses 12,133 16,859 27,593 (4,726) -28% (10,734) -39%General andadministrativeconsulting,professionalfees and other83expenses 12,860 14,903 11,498 (2,043) -14% 3,405 30%Equity-basedcompensationexpense 4,805 7,548 10,574 (2,743) -36% (3,026) -29% Total $53,071 $68,863 $84,939 $(15,792) -23%$(16,076) -19% Table of Contents Total selling, general and administrative expenses incurred in 2012 decreased by $15.8 million, or 23%, as compared to 2011 for the followingreasons:•A $6.3 million decrease in compensation, payroll taxes and benefits during 2012 as compared to 2011 due primarily to reducedheadcount resulting from our 2012 and 2011 corporate restructurings; •A $4.7 million decrease in sales and marketing consulting, professional fees, and other expenses during 2012 as compared to 2011primarily due to reduced costs related to advertising and marketing materials, and certain other general marketing costs; •A $2.0 million decrease in general and administrative consulting, professional fees and other expenses during 2012 as compared to 2011primarily due to a decrease in our professional fees, specifically $4.5 million of costs incurred in 2011 in connection with our thenproposed merger with Allos Therapeutics, Inc., or Allos, including a $2.0 million expense reimbursement fee paid to Allos in connectionwith the termination of the merger agreement. These increased costs were partially offset by $1.6 million in termination fee paymentsmade in 2012 to our GastroMARK licensees in connection with the termination of our commercial license agreements with them, costsincurred in 2012 in connection with our intention to expand our product portfolio and the 2012 closure of our Cambridge, Massachusettsmanufacturing facility; and •A $2.7 million decrease in equity-based compensation expenses for 2012 due primarily to a $3.3 million reduction of equity-basedcompensation expense associated with the 2011 departures of certain of our executive officers, including our former chief financialofficer, our chief executive officer and our chief commercial officer, and the impact of our 2012 and 2011 corporate workforcereductions, partially offset by the expense associated with equity awards to new employees in 2012, including our current chief executiveofficer, and additional equity awards to existing employees. Total selling, general and administrative expenses incurred in 2011 decreased by $16.1 million, or 19%, as compared to 2010 for the followingreasons:•A $5.7 million decrease in compensation, payroll taxes and benefits during 2011 as compared to 2010 primarily as a result of reducedheadcount resulting from our 2010 restructuring; •A $10.7 million decrease in sales and marketing consulting, professional fees, and other expenses during 2011 as compared to 2010 dueto reduced costs related to the reduction or elimination of field-based contract nurses, advertising and marketing materials, and certainother general marketing costs; •A $3.4 million increase in our general and administrative consulting, professional fees and other expenses during 2011 as compared to2010 primarily due to $4.5 million of costs incurred in connection with our then proposed merger with Allos; and •A $3.0 million decrease in equity-based compensation expense during 2011 as compared to 2010 due primarily to a $1.6 millionreduction of equity-based compensation expense associated with the 2011 departures of certain of our executive officers, and theexpected impact on our equity compensation forfeitures resulting from our 2011 corporate workforce reduction, partially offset by theexpense associated with equity awards to new employees and additional equity awards to existing employees. This $1.6 million includesa reduction of expense of approximately $0.7 million previously recorded for certain of our former chief executive officer's outstandingequity awards as the result of the modification of the terms of such awards pursuant to his November 2011 separation agreement. We expect total selling, general and administrative expenses will remain relatively stable during 2013 as compared to 2012.84Table of ContentsRestructuring Expense During 2012, we initiated a corporate restructuring, including a workforce reduction plan. The majority of the workforce reduction plan wasassociated with our manufacturing and development infrastructure, including our decision to divest our Cambridge, Massachusetts manufacturingfacility. As a result of the restructuring, we recorded charges of approximately $2.2 million in 2012. Of the $2.2 million in restructuring expense,approximately $1.5 million was related to employee severance and benefits, and approximately $0.7 million was related to the write-down of primarilyraw material inventory that was no longer usable due to the closure of the facility. The workforce reduction was substantially completed by the end of2012, and the majority of the related expenses were paid by the end of 2012. During 2011, we initiated a corporate restructuring, including a workforce reduction plan for which we recorded $3.5 million of restructuringrelated costs, primarily related to employee severance and benefits. The workforce reduction was substantially completed by the end of 2011 and themajority of the related expenses were paid by the end of 2012. During 2010, we also initiated a corporate restructuring, including a workforce reduction plan, for which we recorded $2.2 million of restructuringrelated costs, primarily related to employee severance and benefits. These expenses were substantially paid by the end of 2011. The majority of theworkforce reduction was completed during 2010 and the remaining positions were eliminated by the end of 2011.Other Income (Expense) Other income (expense) for the years ended December 31, 2012, 2011 and 2010 consisted of the following (in thousands): Other income (expense) for 2012 decreased by $1.7 million as compared to 2011 primarily due to the $1.5 million loss we realized on the June2012 sale of our then remaining ARS portfolio. In addition, there was a $0.5 million decrease in our interest and dividend income as the result of loweraverage cash balances in 2012 as compared to 2011. Other income (expense) in 2011 remained relatively constant as compared to 2010 and we expect interest and dividend income to remain relativelyconstant in 2013 as compared to 2012.Income Tax Benefit We recognized an income tax benefit of $0.9 million, $1.2 million and $0.5 million during the years ended December 31, 2012, 2011 and 2010,respectively, as the result of our recognition of a corresponding income tax expense associated with the increase in value of certain securities as a resultof their redemption at prices higher than the fair market value at which they were recorded. This income tax expense was recorded in othercomprehensive income.Net Loss For the reasons stated above, we incurred a net loss of $16.8 million, $77.1 million and $81.2 million, or $0.78, $3.64 and $3.90 per basic anddiluted share, for the years ended December 31, 2012, 2011 and 2010, respectively.85 Years Ended December 31, 2012 to 2011 change 2011 to 2010 change 2012 2011 2010 $ Change %Change $ Change %Change Interest anddividendincome, net $1,286 $1,747 $1,741 $(461) -26%$6 — (Losses) gainsoninvestments,net (1,466) (193) 408 (1,273) >100% (601) <(100%)Fair valueadjustmentofsettlementrights — — (788) — — 788 -100% Total $(180)$1,554 $1,361 $(1,734) <(100%)$193 14% Table of ContentsLiquidity and Capital ResourcesGeneral We finance our operations primarily from the sale of Feraheme/Rienso, including payments from our licensees and cash generated from ourinvesting activities and the sale of our common stock. We expect to continue to incur significant expenses as we continue to manufacture, market andsell Feraheme/Rienso as an IV iron replacement therapeutic for use in adult CKD patients in the U.S., Canada, Switzerland and the EU, and as wefurther develop and seek regulatory approval for Feraheme/Rienso for the treatment of IDA in a broad range of patients in and outside of the U.S. Our long-term capital requirements will depend on many factors, including, but not limited to, the following:•Our ability to successfully commercialize Feraheme in the U.S. and Takeda's ability to successfully commercialize Feraheme/Rienso inits licensed territories outside of the U.S.; •The magnitude of U.S. Feraheme sales; •Our ability to obtain U.S. and EU regulatory approval for ferumoxytol to treat IDA regardless of the underlying cause; •Our ability to achieve the various milestones and receive the associated payments under the Amended Takeda Agreement; •The magnitude of Feraheme/Rienso product sales and royalties we may receive from Takeda outside of the U.S.; •Costs associated with the U.S. commercialization of Feraheme, including costs associated with maintaining our commercialinfrastructure, executing our promotional and marketing strategy for Feraheme and conducting our required pediatric clinical trials andour post-marketing clinical studies; •Costs associated with qualifying additional manufacturing capacities and alternative suppliers; •The outcome of and costs associated with any material litigation or patent challenges to which we are or may become a party; •The success, costs and structure of any business or corporate development initiatives to bring additional products into our portfolio; •Our ability to maintain successful collaborations with our licensees and/or to enter into additional strategic relationships or acquisitions,if necessary; and •Our ability to raise additional capital on terms and within a timeframe acceptable to us, if necessary. As of December 31, 2012, our investments consisted of corporate debt securities, U.S. treasury and government agency securities and commercialpaper. We place our cash, cash equivalents and investments in instruments that meet high credit quality and diversification standards, as specified in ourinvestment policy. Our investment policy also limits the amount of our credit exposure to any one issue or issuer, excluding U.S. government entities,and seeks to manage these assets to achieve our goals of preserving principal, maintaining adequate liquidity at all times, and maximizing returns.86Table of Contents Cash, cash equivalents and investments as of December 31, 2012 and 2011 consisted of the following (in thousands): The $2.7 million decrease in cash, cash equivalents and investments as of December 31, 2012 as compared to December 31, 2011 was primarilydue to cash expended to fund our operations and working capital, partially offset by cash received from Feraheme sales, milestone payments, andproduct sales and royalty payments from Takeda and interest income. We expect that our cash, cash equivalents and investments balances, in the aggregate, will decrease in 2013. Our expectation assumes ourcontinued investment in the development and commercialization of Feraheme, and the continued realignment of our cost structure following our 2012and 2011 corporate restructurings. We believe that our cash, cash equivalents and investments as of December 31, 2012 and the cash we currentlyexpect to receive from sales of Feraheme, earnings on our investments, and potential product sales and royalty payments from Takeda will be sufficientto satisfy our cash flow needs for at least the next twelve months, including projected operating expenses related to our ongoing development andcommercialization programs for Feraheme. During 2012, we initiated a corporate restructuring, including a workforce reduction plan. The majority of the workforce reduction plan wasassociated with our manufacturing and development infrastructure, including our decision to divest our Cambridge, Massachusetts manufacturingfacility. As a result of the restructuring, we recorded charges of approximately $2.2 million in 2012. Of the $2.2 million in restructuring expense,approximately $1.5 million was related to employee severance and benefits, and approximately $0.7 million was related to the write-down of primarilyraw material inventory that was no longer usable due to the closure of the facility. The workforce reduction was substantially completed by the end of2012, and the majority of the related expenses were paid by the end of 2012. During 2011, we initiated a corporate restructuring, including a workforce reduction plan for which we recorded $3.5 million of restructuringrelated costs, primarily related to employee severance and benefits. The workforce reduction was substantially completed by the end of 2011 and therelated expenses were substantially paid by the end of 2012. In June 2012, we sold our remaining ARS portfolio, with a par value of $19.8 million, for proceeds of $18.3 million and recognized a loss ofapproximately $1.5 million in other income (expense) in our 2012 consolidated statement of income. All of the ARS we held consisted of municipalbonds with an auction reset feature and were classified as available-for-sale. The ongoing uncertainty in the global financial markets has had an adverse impact on financial market activities world-wide, resulting in, amongother things, volatility in security prices, periodic diminished liquidity and credit availability, ratings downgrades of certain investments and decliningvaluations of others. Although we invest our excess cash in investment grade securities, there can be no assurance that changing circumstances will notaffect our future financial position, results of operations or liquidity.87 December 31, 2012 2011 $ Change % Change Cash and cash equivalents $46,293 $63,474 $(17,181) -27%Short-term investments 180,750 148,703 32,047 22%Long-term investments — 17,527 (17,527) -100% Total $227,043 $229,704 $(2,661) -1% Table of ContentsYear Ended December 31, 2012Cash flows from operating activities During 2012, our use of $1.2 million in cash in operations was attributable principally to our net loss of approximately $16.8 million, adjusted forthe following:•Non-cash operating items of $14.6 million including equity-based compensation expense, depreciation, amortization ofpremium/discount on purchased securities, net losses (gains) on investments, and other non-cash items; •An increase in deferred revenues and other long-term liabilities of $7.5 million, primarily from the deferral of a portion of the milestonesreceived from Takeda in 2012; •A combined decrease of $5.6 million in accounts receivable, prepaid assets and inventories; and •A decrease of $12.1 million in accounts payable and accrued expenses. Our net loss of $16.8 million was primarily the result of compensation and other expenses, commercialization expenses, including marketing andpromotion costs, research and development costs, including costs associated with our clinical trials and general and administrative costs, partially offsetby net product and collaboration revenues, including the recognition of approximately $20.0 million in milestone payments from Takeda.Cash flows from investing activities Cash used in investing activities in 2012 was $16.4 million and was primarily attributable to the purchases of investments, partially offset byproceeds from the sales and maturities of our investments, including the June 2012 sale of our remaining ARS portfolio.Year Ended December 31, 2011Cash flows from operating activities During 2011, our use of $63.8 million of cash in operations was attributable principally to our net loss of approximately $77.1 million, adjusted forthe following:•Non-cash operating items of $15.2 million including equity-based compensation expense, depreciation, income tax benefit, and othernon-cash items; •A decrease in deferred revenues and other long-term liabilities of $6.7 million, which reflects timing differences between the receipt andpayment of cash associated with certain transactions and the recognition of such amounts in our results of operations; •A combined decrease of $3.1 million in accounts receivable, prepaid assets and inventories; and •An increase of $1.7 million in accounts payable and accrued expenses. Our net loss of $77.1 million in 2011 was primarily the result of commercialization expenses, including marketing and promotion costs,compensation and other expenses, research and development costs, including costs associated with our clinical trials, and general and administrativecosts, partially offset by net product and collaboration revenues.Cash flows from investing activities Cash provided by investing activities in 2011 was $14.0 million during 2011 and was primarily attributable to proceeds from the sales andmaturities of our investments partially offset by purchases of investments.88Table of ContentsContractual Obligations We currently have no long-term debt obligations or capital lease obligations. Our contractual obligations primarily consist of our obligations undernon-cancellable operating leases and other purchase obligations. Future lease obligations and purchase commitments, as of December 31, 2012, are asfollows (in thousands):Operating and Facility Lease Obligations We have entered into certain operating leases, including leases of certain automobiles and certain office equipment which expire through 2014. Welease approximately 76 automobiles for our field-based employees. These leases require an initial minimum lease commitment of 12 months perautomobile, after which we are responsible for certain disposal costs in the event of termination of the lease. As of December 31, 2012, all of our leasedautomobiles have been held beyond the initial 12 month commitment period. In May 2008, we entered into a lease agreement for certain real property located at 100 Hayden Avenue, Lexington, Massachusetts for use as ourprincipal executive offices. The term of the lease began on May 22, 2008 and will continue until August 31, 2016 with two successive five yearextension terms at our option. The aggregate size of rentable floor area for the offices is 55,924 square feet, and the rent for the initial term commencedin February 2009. The lease requires us to pay rent as follows (in thousands): During any extension term, the base rent will be an amount agreed upon by us and the landlord. In addition to base rent, we are also required topay a proportionate share of the landlord's annual operating costs.Purchase Commitments During 2012, we entered into various agreements with third parties for which we had remaining purchase commitments of approximately$3.7 million as of December 31, 2012. These agreements principally related to certain purchase orders for the production of Feraheme/Rienso,outsourced commercial activities, manufacturing commitments, our information technology infrastructure and other operational activities.89 Payment due by period Total Less than 1 year 1-3 years 3-5 years More than 5 years Facility lease obligations $7,945 $2,080 $4,309 $1,556 $— Purchase commitments 3,710 3,550 100 60 — Operating leaseobligations, excludingfacility lease 161 101 60 — — Total $11,816 $5,731 $4,469 $1,616 $— Period Minimum LeasePayments Year Ended December 31, 2013 $2,071 Year Ended December 31, 2014 2,127 Year Ended December 31, 2015 2,183 Year Ended December 31, 2016 1,556 Total $7,937 Table of ContentsOther Funding Commitments As of December 31, 2012, we had several ongoing clinical studies in various clinical trial stages. Our most significant clinical trial expenditureswere to clinical research organizations, or CROs. The contracts with CROs are generally cancellable, with notice, at our option. We have recordedaccrued expenses in our consolidated balance sheet of approximately $0.7 million representing expenses incurred with these organizations as ofDecember 31, 2012, net of any amounts prepaid to these CROs. As a result of our cancellation rights, we have not included these CRO contracts in thecontractual obligations table above.Severance Arrangements We have entered into employment agreements or other arrangements with most of our executive officers and certain other employees, whichprovide for salary continuation payments and, in certain instances, the acceleration of the vesting of certain equity awards to such individuals in theevent that the individual is terminated other than for cause, as defined in the applicable employment agreements or arrangements.Indemnification Agreements In the course of operating our business, we have entered into a number of indemnification arrangements under which we may be required to makepayments to or on behalf of certain third parties including our directors, officers, and certain employees as well as certain other third parties with whomwe enter into agreements. For further discussion of how this may affect our business, refer to Note M of the Notes to Financial Statements included inPart II, Item 8 "Financial Statements and Supplementary Data" of this Annual Report on Form 10-K.Legal Proceedings We accrue a liability for legal contingencies when we believe that it is both probable that a liability has been incurred and that we can reasonablyestimate the amount of the loss. We review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counseland other relevant information. To the extent new information is obtained and our views on the probable outcomes of claims, suits, assessments,investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. Forthe matters referenced below, the liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. Inaddition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of material loss is at least reasonably possible,we will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, we will provide disclosure to thateffect. A purported class action complaint was originally filed on March 18, 2010 in the United States District Court for the District of Massachusetts,entitled Silverstrand Investments et. al. v. AMAG Pharm., Inc., et. al., Civil Action No. 1:10-CV-10470-NMG, and was amended on September 15,2010 and on December 17, 2010. The second amended complaint, or SAC, filed on December 17, 2010 alleged that we and our former President andChief Executive Officer, former Executive Vice President and Chief Financial Officer, the then members of our Board of Directors, and certainunderwriters in our January 2010 offering of common stock violated certain federal securities laws, specifically Sections 11 and 12(a)(2) of theSecurities Act of 1933, as amended, and that our former President and Chief Executive Officer and former Executive Vice President and Chief FinancialOfficer violated Section 15 of such Act, respectively, by making certain alleged false and misleading statements and omissions in a registrationstatement filed in January 2010. The plaintiff sought unspecified damages on behalf of a purported class of purchasers of our common stock pursuant toour common stock offering90Table of Contentson or about January 21, 2010. On August 11, 2011, the District Court issued an Opinion and Order dismissing the SAC in its entirety for failure tostate a claim upon which relief could be granted. A separate Order of Dismissal was filed on August 15, 2011. On September 14, 2011, the plaintiffsfiled a Notice of Appeal to the United States Court of Appeals for the First Circuit, or the Court of Appeals. After briefing was completed by all parties,the Court of Appeals heard oral argument on May 11, 2012, and took the matter under advisement. On February 4, 2013, the Court of Appeals affirmedin part and reversed in part the District Court's Opinion and Order, and remanded the case to the District Court. On February 18, 2013, we filed aPetition for Panel Hearing or Rehearing En Banc, asking the Court of Appeals to reconsider its decision. In July 2010, Sandoz GmbH, or Sandoz, filed with the European Patent Office, or the EPO, an opposition to our previously issued patent whichcovers ferumoxytol in the EU. In October 2012, at an oral hearing, the Opposition Division of the EPO revoked our European ferumoxytol patent. InDecember 2012, our notice of appeal was recorded with the EPO, which suspends the revocation of our patent. We will continue to defend the validityof this patent throughout the appeals process, which we expect to take two to three years. However, in the event that we do not experience a successfuloutcome from the appeals process, under EU regulations ferumoxytol would still be entitled to eight years of data protection and ten years of marketexclusivity from the date of approval, which we believe would create barriers to entry for any generic version of ferumoxytol into the EU market untilsometime between 2020 and 2022. This decision had no impact on our revenues for the year ended December 31, 2012. However, any futureunfavorable outcome in this matter could negatively affect the magnitude and timing of future revenues, including royalties and milestone payments wemay receive from Takeda pursuant to our collaboration agreement with Takeda. We continue to believe the patent is valid and intend to vigorouslyappeal the decision. For additional information on our Legal Proceedings, please see the discussion under Part I, Item 3—Legal Proceedings.Off-Balance Sheet Arrangements As of December 31, 2012, we did not have any off-balance sheet arrangements as defined in Regulation S-K, Item 303(a)(4)(ii).ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK: As of December 31, 2012 and 2011, our investments equaled $180.8 million and $166.2 million, respectively, and were invested in corporate debtsecurities, U.S. treasury and government agency securities, commercial paper and, as of December 31, 2011, the amount also included auction ratesecurities, or ARS. Our investments meet high credit quality and diversification standards, as specified in our investment policy. Our investment policyalso limits the amount of our credit exposure to any one issue or issuer, excluding U.S. government entities, and seeks to manage these assets to achieveour goals of preserving principal, maintaining adequate liquidity at all times, and maximizing returns. These investments are subject to interest rate risk.The modeling technique used measures the change in fair values arising from an immediate hypothetical shift in market interest rates and assumes thatending fair values include principal plus accrued interest. If market interest rates for comparable investments were to increase immediately and uniformlyby 50 basis points, or one-half of a percentage point, from levels as of December 31, 2012 and 2011, this would have resulted in a hypothetical declinein fair value of our investments, excluding our ARS, of approximately $1.0 million and $0.6 million, respectively, and if market interest rates forcomparable investments were to decrease immediately and uniformly by 50 basis points, or one-half of a percentage point, from levels as ofDecember 31, 2012 and 2011, this would have resulted in a hypothetical increase in fair value of our investments, excluding our ARS, of approximately$0.9 million and $0.5 million, respectively. These amounts are determined by considering the impact of the hypothetical interest rate movements on ouravailable-for-sale91Table of Contentsinvestment portfolios. This analysis does not consider the effect of credit risk as a result of the changes in overall economic activity that could exist insuch an environment. As of December 31, 2011, we held a total of $17.5 million in fair market value of ARS, reflecting an impairment of approximately $2.4 million ascompared to the par value of these securities of $19.9 million. These securities were sold in 2012 for $18.3 million and we recognized a loss of$1.5 million on the sale.92Table of ContentsITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA: Index To Consolidated Financial Statements93Management's Annual Report on Internal Control over Financial Reporting 94 Report of Independent Registered Public Accounting Firm 95 Consolidated Balance Sheets—as of December 31, 2012 and 2011 96 Consolidated Statements of Operations—for the years ended December 31, 2012, 2011 and 2010 97 Consolidated Statements of Comprehensive Loss—for the years ended December 31, 2012, 2011 and 2010 98 Consolidated Statements of Stockholders' Equity—as of December 31, 2012, 2011 and 2010 99 Consolidated Statements of Cash Flows—for the years ended December 31, 2012, 2011 and 2010 100 Notes to Consolidated Financial Statements 101 Table of ContentsMANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Management is responsible for establishing and maintaining adequate internal controls over financial reporting, as such term is defined inRule 13a-15(f) under the Securities and Exchange Act of 1934, as amended. Our internal control over financial reporting is a process designed underthe supervision of our principal executive officer and principal financial officer to provide reasonable assurance regarding the reliability of financialreporting and the preparation of our financial statements for external reporting purposes in accordance with U.S. generally accepted accountingprinciples. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, weassessed the effectiveness of our internal control over financial reporting as of December 31, 2012 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, managementconcluded that our internal control over financial reporting was effective as of December 31, 2012. The effectiveness of our internal control over financial reporting as of December 31, 2012 has been audited by PricewaterhouseCoopers LLP, anindependent registered public accounting firm, as stated in their report which is included herein.94Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of AMAG Pharmaceuticals, Inc. In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive loss,stockholders' equity, and cash flows present fairly, in all material respects, the financial position of AMAG Pharmaceuticals, Inc. and its subsidiaries atDecember 31, 2012 and 2011, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2012in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in allmaterial respects, effective internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's managementis responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectivenessof internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting.Our responsibility is to express opinions on these financial statements and on the Company's internal control over financial reporting based on ourintegrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Thosestandards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of materialmisstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statementsincluded examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principlesused and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control overfinancial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists,and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performingsuch other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company'sinternal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts andexpenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) providereasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have amaterial effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of anyevaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that thedegree of compliance with the policies or procedures may deteriorate.Boston, MassachusettsMarch 1, 201395Table of ContentsAMAG Pharmaceuticals, Inc. Consolidated Balance Sheets (in thousands, except share and per share data) The accompanying notes are an integral part of these consolidated financial statements.96 As of December 31, 2012 2011 ASSETS Current assets: Cash and cash equivalents $46,293 $63,474 Short-term investments 180,750 148,703 Accounts receivable, net 6,410 5,932 Inventories 12,451 15,206 Receivable from collaboration 263 428 Assets held for sale 2,000 — Prepaid and other current assets 6,213 6,288 Total current assets 254,380 240,031 Property, plant and equipment, net 3,297 9,206 Long-term investments — 17,527 Restricted cash 460 460 Total assets $258,137 $267,224 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $3,515 $3,732 Accrued expenses 20,338 28,916 Deferred revenues 9,104 6,346 Total current liabilities 32,957 38,994 Long-term liabilities: Deferred revenues 50,350 45,196 Other long-term liabilities 2,033 2,438 Total liabilities 85,340 86,628 Commitments and contingencies (Notes M & N) Stockholders' equity: Preferred stock, par value $0.01 per share, 2,000,000 shares authorized; none issued — — Common stock, par value $0.01 per share, 58,750,000 shares authorized; 21,506,754and 21,306,413 shares issued and outstanding at December 31, 2012 and 2011,respectively 215 213 Additional paid-in capital 632,487 625,133 Accumulated other comprehensive loss (3,247) (4,842)Accumulated deficit (456,658) (439,908) Total stockholders' equity 172,797 180,596 Total liabilities and stockholders' equity $258,137 $267,224 Table of ContentsAMAG Pharmaceuticals, Inc. Consolidated Statements of Operations (in thousands, except per share data) The accompanying notes are an integral part of these consolidated financial statements.97 Years Ended December 31, 2012 2011 2010 Revenues: U.S. product sales, net $58,287 $52,097 $59,339 International product sales and royalties 120 — — License fee and other collaboration revenues 26,475 8,321 6,132 Other product sales and royalties 496 831 774 Total revenues 85,378 61,249 66,245 Costs and expenses: Cost of product sales 14,220 10,531 7,606 Research and development expenses 33,296 58,140 54,462 Selling, general and administrative expenses 53,071 68,863 84,939 Restructuring expenses 2,215 3,508 2,224 Total costs and expenses 102,802 141,042 149,231 Other income (expense): Interest and dividend income, net 1,286 1,747 1,741 (Losses) gains on investments, net (1,466) (193) 408 Fair value adjustment of settlement rights — — (788) Total other income (expense) (180) 1,554 1,361 Net loss before income taxes (17,604) (78,239) (81,625)Income tax benefit 854 1,170 472 Net loss $(16,750)$(77,069)$(81,153) Net loss per share: Basic and diluted $(0.78)$(3.64)$(3.90)Weighted average shares outstanding used to compute net loss per share: Basic and diluted 21,392 21,189 20,806 Table of ContentsAMAG Pharmaceuticals, Inc. Consolidated Statements of Comprehensive Loss (in thousands) The accompanying notes are an integral part of these consolidated financial statements.98 Years Ended December 31, 2012 2011 2010 Net loss $(16,750)$(77,069)$(81,153) Other comprehensive income (loss): Unrealized gains (losses) on securities: Holding gains (losses) arising during period, net of tax 129 1,980 497 Reclassification adjustment for (gains) losses included in net loss 1,466 206 400 Net unrealized gains (losses) on securities 1,595 2,186 897 Total comprehensive loss $(15,155)$(74,883)$(80,256) Table of ContentsAMAG Pharmaceuticals, Inc. Consolidated Statements of Stockholders' Equity (in thousands) Common Stock AccumulatedOtherComprehensiveIncome (Loss) AdditionalPaid-inCapital AccumulatedDeficit TotalStockholders'Equity Shares Amount Balance atDecember 31,2009 17,363 $174 $432,414 $(281,686)$(7,925)$142,977 Net sharesissued inconnectionwith theexercise ofstock optionsand restrictedstock units 132 1 1,336 — — 1,337 Shares issuedin connectionwithemployeestockpurchase plan 42 — 892 — — 892 Non-cashequity-basedcompensation — — 14,777 — — 14,777 Unrealizedgains onsecurities, netof tax of$0.5 million — — — — 897 897 Shares issuedin connectionwithfinancing, netof financingcosts of$8.1 million 3,600 36 165,523 — — 165,559 Net loss — — — (81,153) — (81,153) Balance atDecember 31,2010 21,137 211 614,942 (362,839) (7,028) 245,286 Net sharesissued inconnectionwith theexercise ofstock optionsand restrictedThe accompanying notes are an integral part of these consolidated financial statements.99stock units 132 1 120 — — 121 Shares issuedin connectionwithemployeestockpurchase plan 37 1 507 — — 508 Non-cashequity-basedcompensation — — 9,564 — — 9,564 Unrealizedgains onsecurities, netof tax of$1.2 million — — — — 2,186 2,186 Net loss — — — (77,069) — (77,069) Balance atDecember 31,2011 21,306 213 625,133 (439,908) (4,842) 180,596 Net sharesissued inconnectionwith theexercise ofstock optionsand restrictedstock units 178 2 98 — — 100 Shares issuedin connectionwithemployeestockpurchase plan 23 — 270 — — 270 Non-cashequity-basedcompensation — — 6,986 — — 6,986 Unrealizedgains onsecurities, netof tax of$0.9 million — — — — 1,595 1,595 Net loss — — — (16,750) — (16,750) Balance atDecember 31,2012 21,507 $215 $632,487 $(456,658)$(3,247)$172,797 Table of ContentsAMAG Pharmaceuticals, Inc. Consolidated Statements of Cash Flows (in thousands) The accompanying notes are an integral part of these consolidated financial statements.100 Years Ended December 31, 2012 2011 2010 Cash flows from operating activities: Net loss $(16,750)$(77,069)$(81,153)Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 3,084 2,536 2,405 Impairment loss on assets held for sale 1,100 — — Non-cash equity-based compensation expense 7,024 10,038 14,523 Non-cash income tax benefit (854) (1,170) (481)Amortization of premium/discount on purchased securities 2,808 3,639 1,679 Fair value adjustment of settlement rights — — 788 Losses (gains) on investments, net 1,466 193 (408)Changes in operating assets and liabilities: Accounts receivable, net (478) (147) 21,565 Inventories 5,891 1,506 (6,675)Receivable from collaboration 165 13 (441)Prepaid and other current assets 75 1,661 (2,477)Accounts payable and accrued expenses (12,195) 1,698 2,745 Deferred revenues 7,912 (6,353) 46,697 Other long-term liabilities (405) (349) (294) Total adjustments 15,593 13,265 79,626 Net cash used in operating activities (1,157) (63,804) (1,527) Cash flows from investing activities: Proceeds from sales or maturities of investments 133,061 141,095 160,079 Purchase of investments (149,406) (126,585) (262,597)Capital expenditures (47) (507) (1,223) Net cash (used in) provided by investing activities (16,392) 14,003 (103,741) Cash flows from financing activities: Proceeds from the exercise of stock options 98 121 1,337 Proceeds from the issuance of common stock, net of underwritingdiscounts and other expenses — — 165,559 Proceeds from the issuance of common stock under ESPP 270 508 892 Net cash provided by financing activities 368 629 167,788 Net (decrease) increase in cash and cash equivalents (17,181) (49,172) 62,520 Cash and cash equivalents at beginning of the year 63,474 112,646 50,126 Cash and cash equivalents at end of the year $46,293 $63,474 $112,646 Supplemental data: Non-cash investing activities: Accrued construction in progress $228 $— $— Table of ContentsNotes to Consolidated Financial Statements A. Description of Business AMAG Pharmaceuticals, Inc., a Delaware corporation, was founded in 1981. We are a specialty pharmaceutical company focused on thedevelopment and commercialization of Feraheme® (ferumoxytol) Injection for Intravenous, or IV, use to treat iron deficiency anemia, or IDA.Currently, our principal source of revenue is from the sale of Feraheme, which was approved for marketing in the U.S. in June 2009 by the U.S. Foodand Drug Administration, or the FDA, for use as an IV iron replacement therapy for the treatment of IDA in adult patients with chronic kidney disease,or CKD. We began commercial sale of Feraheme in the U.S. in July 2009 through our own commercial organization, including a specialty sales force.We sell Feraheme to authorized wholesalers and specialty distributors, who in turn, sell Feraheme to healthcare providers who administer Ferahemeprimarily within hospitals, hematology and oncology centers, and nephrology clinics. Outside of the U.S., ferumoxytol has been granted marketing approval in Canada, Switzerland and the European Union, or EU, for use as an IViron replacement therapy for the treatment of IDA in adult patients with CKD. The European marketing authorization is valid in the current EU memberstates as well as in Iceland and Norway. Under our amended agreement with Takeda Pharmaceutical Company Limited, or Takeda, Takeda has anexclusive license to market and sell ferumoxytol in Canada, the EU and Switzerland, as well as certain other geographic territories. In Canada, Takedapromotes ferumoxytol under the trade name Feraheme and in the EU and Switzerland, Takeda promotes ferumoxytol under the trade name Rienso®30mg/ml solution for Injection. In 2012, we received a total of $33.0 million in milestone payments from Takeda associated with the EU approval andthe commercial launches of Feraheme/Rienso in Canada and the EU. In addition, in connection with the commercial launches of Feraheme/Rienso byTakeda, we recorded revenue from product sales to Takeda and royalties on sales by Takeda of $0.1 million in 2012. GastroMARK®, which is marketed and sold under the trade name Lumirem® outside of the U.S, is our oral contrast agent used for delineating thebowel during magnetic resonance imaging and is approved and marketed in the U.S., Europe and other countries through our licensees. In the secondquarter of 2012, we terminated our commercial license agreements for GastroMARK. Following the completion of our obligations under theseagreements in the first quarter of 2013, we intend to cease commercially manufacturing or selling GastroMARK. Pursuant to the terms of the respectivetermination agreements, in June 2012, we paid our licensees aggregate termination fees of $1.6 million, which we recorded in selling, general andadministrative expenses in our consolidated statement of operations. We are subject to risks common to companies in the pharmaceutical industry including, but not limited to, our sole dependence on the success ofFeraheme/Rienso, uncertainties related to the protection of our proprietary technology, our dependence on third parties to manufactureFeraheme/Rienso, the potential development of significant safety or drug interaction problems with respect to Feraheme/Rienso, uncertainty of theregulatory approval process for the broader Feraheme/Rienso indication or for potential alternative manufacturing facilities and processes, uncertaintiesrelated to potential collaborations, in-licensing arrangements or acquisition agreements, competition in our industry, uncertainties regarding marketacceptance of Feraheme/Rienso, our reliance on a limited number of customers, uncertainties related to patient insurance coverage and third-partyreimbursement rates and terms for Feraheme/Rienso, our reliance on Takeda to commercialize Feraheme/Rienso in certain territories outside of the U.S.,the potential inability of our third-party manufacturers to operate their facilities in compliance with current good manufacturing practices andmanufacture sufficient quantities of Feraheme/Rienso, our or our third-party manufacturers' potential inability to obtain raw or other materials, ourpotential inability to become profitable in the future, our limited experience commercializing and distributing a pharmaceutical product, our dependenceon key personnel, the potential fluctuation of our operating results, uncertainties related to the impact of101Table of Contentscurrent and future healthcare initiatives and legislation, potential differences between actual future results and the estimates or assumptions used by us inpreparation of our consolidated financial statements, the volatility of our stock price, our potential inadvertent failure to comply with reporting andpayment obligations under government pricing programs, our potential inadvertent failure to comply with the regulations of the FDA or other federal,state or foreign government agencies, uncertainties related to the actions of activist stockholders, potential product liability, potential legislative andregulatory changes, and potential costs and liabilities associated with pending or future litigation or patent challenges. Throughout this Annual Report on Form 10-K, AMAG Pharmaceuticals, Inc. and our consolidated subsidiaries are collectively referred to as "theCompany," "we," "us," or "our."B. Summary of Significant Accounting PoliciesUse of Estimates and Assumptions The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of Americarequires management to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and therelated disclosure of contingent assets and liabilities. The most significant estimates and assumptions are used in, but are not limited to, revenuerecognition related to product sales and collaboration agreements, product sales allowances and accruals, assessing investments for potential other-than-temporary impairment and determining values of investments, estimates used to measure the fair value of our held for sale assets, accrued expenses,income taxes and equity-based compensation expense. Actual results could differ materially from those estimates.Principles of Consolidation The accompanying consolidated financial statements include our accounts and the accounts of our wholly-owned subsidiaries, AMAG EuropeLimited, and AMAG Securities Corporation. AMAG Europe Limited was incorporated in October 2009 in London, England. AMAG SecuritiesCorporation is a Massachusetts corporation which was incorporated in August 2007. All intercompany account balances and transactions between thecompanies have been eliminated.Cash and Cash Equivalents Cash and cash equivalents consists principally of cash held in commercial bank accounts, money market funds and U.S. Treasury securities havingan original maturity of less than three months. At December 31, 2012, substantially all of our cash and cash equivalents were held in either commercialbank accounts or money market funds.Investments We account for and classify our investments as either "available-for-sale," "trading," or "held-to-maturity," in accordance with current guidancerelated to the accounting and classification of certain investments in debt and equity securities. The determination of the appropriate classification by usis based on a variety of factors, including management's intent at the time of purchase. As of December 31, 2012 and 2011, all of our investments wereclassified as available-for-sale securities. Available-for-sale securities are those securities which we view as available for use in current operations, if needed. We generally classify ouravailable-for-sale securities as short-term investments, even though the stated maturity date may be one year or more beyond the current balance sheetdate. Available-for-sale investments are stated at fair value with their unrealized gains and losses included as a separate component of stockholders'equity entitled "Accumulated other comprehensive loss," until such gains and losses are realized or until an unrealized loss is considered other-than-temporary.102Table of Contents We recognize and report other-than-temporary impairments of our debt securities in accordance with current accounting guidance, which requiresthat for debt securities with a decline in fair value below amortized cost basis, an other-than-temporary impairment exists if (i) we have the intent to sellthe security or (ii) it is more likely than not that we will be required to sell the security prior to recovery of its amortized cost basis. If either of theseconditions is met, we recognize the difference between the amortized cost of the security and its fair value at the impairment measurement date in ourconsolidated statement of operations. If neither of these conditions is met, we must perform additional analyses to evaluate whether the unrealized loss isassociated with the creditworthiness of the security rather than other factors, such as interest rates or market factors. These factors include evaluation ofthe security, issuer and other factors such as the duration of the period that, and extent to which, the fair value was less than cost basis, the financialhealth of and business outlook for the issuer, including industry and sector performance, operational and financing cash flow factors, overall marketconditions and trends, underlying collateral, whether we have a favorable history in redeeming similar securities at prices at or above fair value, andcredit ratings with respect to our investments provided by investments ratings agencies. If we determine from this analysis that we do not expect toreceive cash flows sufficient to recover the entire amortized cost of the security, a credit loss exists. In this situation, the impairment is considered other-than-temporary and is recognized in our consolidated statement of operations.Fair Value of Financial Instruments Under current accounting standards, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (anexit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on themeasurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservableinputs. Current accounting guidance establishes a hierarchy used to categorize how fair value is measured and which is based on three levels of inputs, ofwhich the first two are considered observable and the third unobservable, as follows:Level 1—Quoted prices in active markets for identical assets or liabilities.Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quotedprices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the fullterm of the assets or liabilities.Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.Assets Measured at Fair Value on a Recurring Basis We hold certain assets that are required to be measured at fair value on a recurring basis, including our cash equivalents and short- and long-terminvestments. The following tables represent the103Table of Contentsfair value hierarchy as of December 31, 2012 and 2011 for those assets that we measure at fair value on a recurring basis (in thousands): With the exception of our money market funds, and previously, our auction rate securities, or ARS, which we sold in June 2012, and which werevalued using Level 3 inputs, the fair value of our investments is primarily determined from independent pricing services which use Level 2 inputs todetermine fair value. Independent pricing services normally derive security prices from recently reported trades for identical or similar securities, makingadjustments based upon other significant observable market transactions. At the end of each reporting period, we perform quantitative and qualitativeanalyses of prices received from third parties to determine whether prices are reasonable estimates of fair value. After completing our analyses, we didnot adjust or override any fair value measurements provided by our pricing services as of either December 31, 2012 or 2011. In addition, there were notransfers or reclassifications of any securities between Level 1 and Level 2 during either of the years ended December 31, 2012 or 2011. We also analyze when the volume and level of activity for an asset or liability have significantly decreased and when circumstances indicate that atransaction may not be considered orderly. In order to determine whether the volume and level of activity for an asset or liability have significantlydecreased, we assess current activity as compared to normal market activity for the asset or liability. We rely on many factors such as trading volume,trading frequency, the levels at which market participants indicate their willingness to buy and sell our securities, as reported by market participants, andcurrent market conditions. Using professional judgment and experience, we evaluate and weigh the relevance and significance of all applicable factors todetermine if there has been a significant decrease in the volume and level of activity for an asset, group of similar assets or liabilities. Similarly, in orderto identify transactions that are not orderly, we take into consideration the activity in the market which can influence the determination and occurrence ofan orderly transaction. Also, we inquire as to whether there may have been restrictions on the marketing of the security to a single or limited104 Fair Value Measurements at December 31, 2012 Using: Total Quoted Prices inActive Markets forIdentical Assets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs(Level 3) Money market funds $24,058 $24,058 $— $— Corporate debt securities 111,690 — 111,690 — U.S. treasury and government agencysecurities 59,569 — 59,569 — Commercial paper 9,491 — 9,491 — $204,808 $24,058 $180,750 $— Fair Value Measurements at December 31, 2011 Using: Total Quoted Prices inActiveMarkets forIdentical Assets(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs(Level 3) Money market funds $55,995 $55,995 $— $— Corporate debt securities 94,626 — 94,626 — U.S. treasury and government agencysecurities 48,086 — 48,086 — Commercial paper 5,991 — 5,991 — Auction rate securities 17,527 — — 17,527 $222,225 $55,995 $148,703 $17,527 Table of Contentsnumber of participants. Where possible, we assess the financial condition of the seller to determine whether observed transactions may have beenforced. If there is a significant disparity between the trading price for a security held by us as compared to the trading prices of similar recenttransactions, we consider whether this disparity is an indicator of a disorderly trade. Using professional judgment and experience, we evaluate andweigh the relevance and significance of all applicable factors to determine if the evidence suggests that a transaction or group of similar transactions isnot orderly. Based upon these procedures, we determined that market activity for our non-ARS assets appeared normal and that transactions did notappear disorderly as of December 31, 2012 and 2011. In June 2012, we sold our remaining ARS portfolio, with a par value of $19.8 million, for proceeds of $18.3 million. The following table provides a rollforward of Level 3 assets for the years ended December 31, 2012 and 2011 (in thousands):Assets Held for Sale During 2012, we determined that certain assets related to our Cambridge, Massachusetts manufacturing facility, including the related land, buildingand certain equipment, met the criteria established by current accounting guidance for classifying assets as held for sale. As a result, in 2012, wereclassified these assets from property, plant and equipment to assets held for sale in our consolidated balance sheet. In anticipation of a future sale, wehave valued these assets at the lower of their carrying amount or fair value less cost to sell to arrive at the estimated fair value of $2.0 million as ofDecember 31, 2012. Prior to our determination that our Cambridge, Massachusetts manufacturing facility and related assets met the requirements to beclassified as assets held for sale, we accelerated the depreciation on such assets to reflect our then estimated fair value. In doing so, we recorded$1.4 million of accelerated depreciation in our consolidated statement of operations for the year ended December 31, 2012. Upon determination thatthese assets met the criteria for held for sale, we recognized an impairment loss to decrease the carrying value of the assets to our best estimate of fairvalue and continue to evaluate the estimate of fair value on an ongoing basis. As a result, we have recognized an aggregate impairment loss of$1.1 million to decrease the carrying value of the assets to our best estimate of fair value as of December 31, 2012. Of these $2.5 million of non-cashcharges, we recorded $2.3 million in cost of product sales and $0.2 million in research and development expenses in our 2012 consolidated statement ofoperations. The fair values of the land, building, and equipment were estimated using offers received from potential purchasers, real estate appraisalsand other estimates from third-parties and accordingly, these assets have been classified as Level 3 assets.105 December 31, 2012 December 31, 2011 Balance at beginning of period $17,527 $33,597 Transfers to Level 3 — — Total gains (losses) (realized or unrealized): Included in earnings (1,471) (210)Included in other comprehensive income (loss) 2,373 3,790 Purchases, issuances, sales and settlements: Purchases — — Issuances — — Sales (18,329) — Settlements (100) (19,650) Balance at end of period $— $17,527 The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at end of period $— $— Table of ContentsInventories Inventories are stated at the lower of cost or market (net realizable value), with approximate cost being determined on a first-in, first-out basis. Prior to initial approval from the FDA or other regulatory agencies, we expense costs relating to the production of inventory in the period incurred.After such time as the product receives initial regulatory approval, we begin to capitalize the inventory costs related to the product. Prior to the June2009 FDA approval of Feraheme for commercial sale in the U.S., all production costs related to Feraheme were expensed to research and development.Subsequent to receiving FDA approval, costs related to the production of Feraheme are capitalized to inventory, including the costs of convertingpreviously existing raw or other materials to inventory and vialing, labeling, and packaging inventory manufactured prior to approval whose costs hadalready been recorded as research and development expense. We continue to expense costs associated with clinical trial material as research anddevelopment expense.Property, Plant and Equipment Property, plant and equipment are recorded at cost and depreciated when placed into service using the straight-line method, based on the followingestimated useful lives: buildings—40 years; building improvements—over the shorter of the remaining useful life of the building or the life of theimprovement; laboratory and production equipment—5 years; and furniture and fixtures—5 years. The furniture, fixtures, and leasehold improvementsassociated with our facility lease are being depreciated over the shorter of their useful lives or the remaining life of the original lease (excluding optionallease renewal terms). Costs for capital assets not yet placed in service are capitalized on our balance sheets, and the cost of maintenance and repairs is expensed asincurred. Upon sale or other disposition of property and equipment, the cost and related depreciation are removed from the accounts and any resultinggain or loss is charged to our consolidated statement of operations. Currently, our long-lived assets consist entirely of property and equipment. Long-lived assets to be held and used are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of the assetmay not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset(asset group) and its eventual disposition. In the event such cash flows are not expected to be sufficient to recover the carrying amount of the assets, theassets are written down to their estimated fair values. Assets classified as held for sale are no longer subject to depreciation and are recorded at the lowerof carrying value or estimated net realizable value.Patents We expense all patent-related costs as incurred.Research and Development Expenses Research and development expenses include external expenses, such as costs of clinical trials, contract research and development expenses, certainmanufacturing research and development costs, regulatory filing fees, consulting and professional fees and expenses, and internal expenses, such ascompensation of employees engaged in research and development activities, the manufacture of product needed to support research and developmentefforts, related costs of facilities, and other general costs related to research and development. Manufacturing costs are expensed as incurred until aproduct has received the necessary initial regulatory approval.106Table of ContentsAdvertising Costs Advertising costs are expensed as incurred and are included in selling, general and administrative expenses in our consolidated statement ofoperations. Advertising costs, including promotional expenses and costs related to trade shows were $1.8 million, $3.1 million and $7.4 million for theyears 2012, 2011 and 2010, respectively.Revenue Recognition and Related Sales Allowances and Accruals We recognize revenue from the sale of Feraheme/Rienso as well as license fee and other collaboration revenues, including milestone payments,other product sale revenues, and royalties we receive from our licensees. We recognize revenue in accordance with current accounting guidance relatedto the recognition, presentation and disclosure of revenue in financial statements, which outlines the basic criteria that must be met to recognize revenueand provides guidance for disclosure of revenue in financial statements. We recognize revenue when:•Persuasive evidence of an arrangement exists; •Delivery of product has occurred or services have been rendered; •The sales price charged is fixed or determinable; and •Collection is reasonably assured.U.S. Product Sales, Net We record product sales allowances and accruals related to prompt payment discounts, chargebacks, government and other rebates, distributor,wholesaler and group purchasing organization, or GPO, fees, and product returns as a reduction of revenue in our consolidated statement of operationsat the time product sales are recorded. Calculating these gross-to-net sales adjustments involves estimates and judgments based primarily on actualFeraheme sales data, forecasted customer buying patterns, and market research data related to utilization rates by various end-users. In addition, we alsomonitor our distribution channel to determine whether additional allowances or accruals are required based on inventory in our sales channel. Ananalysis of our product sales allowances and accruals for the years ended December 31, 2012, 2011 and 2010 is as follows (in thousands):Classification of U.S. Product Sales Allowances and Accruals Product sales allowances and accruals are primarily comprised of both direct and indirect fees, discounts and rebates and provisions for estimatedproduct returns. Direct fees, discounts and rebates are contractual fees and price adjustments payable to wholesalers, specialty distributors and othercustomers that purchase products directly from us. Indirect fees, discounts and rebates are contractual107 Years Ended December 31, 2012 2011 2010 Provision for U.S. product sales allowances and accruals Discounts and chargebacks $26,517 $13,851 $5,113 Government and other rebates 6,058 8,544 16,374 Medicaid rebate reserve adjustment (621) (2,532) (599)Returns (1,516) 1,259 1,334 Total provision for U.S. product sales allowances and accruals $30,438 $21,122 $22,222 Total gross U.S. product sales $88,725 $73,219 $81,561 Total provision for U.S. product sales allowances and accruals as a percent of totalgross U.S. product sales 34% 29% 27%Table of Contentsprice adjustments payable to healthcare providers and organizations, such as certain physicians, clinics, hospitals, GPOs, and dialysis organizations thattypically do not purchase products directly from us but rather from wholesalers and specialty distributors. In accordance with guidance related toaccounting for fees and consideration given by a vendor to a customer, including a reseller of a vendor's products, these fees, discounts and rebates arepresumed to be a reduction of the selling price of Feraheme. Product sales allowances and accruals are based on definitive contractual agreements orlegal requirements (such as Medicaid laws and regulations) related to the purchase and/or utilization of the product by these entities and are recorded inthe same period that the related revenue is recognized. We estimate product sales allowances and accruals using either historical, actual and/or other data,including estimated patient usage, applicable contractual rebate rates, contract performance by the benefit providers, other current contractual andstatutory requirements, historical market data based upon experience of Feraheme and other products similar to Feraheme, specific known marketevents and trends such as competitive pricing and new product introductions, current and forecasted customer buying patterns and inventory levels, andthe shelf life of Feraheme. As part of this evaluation, we also review changes to federal and other legislation, changes to rebate contracts, changes in thelevel of discounts, and changes in product sales trends. Although allowances and accruals are recorded at the time of product sale, certain rebates aretypically paid out, on average, up to six months or longer after the sale. Allowances against receivable balances primarily relate to prompt payment discounts, provider chargebacks and certain government agency rebatesand are recorded at the time of sale, resulting in a reduction in product sales revenue and the reporting of product sales receivables net of allowances.Accruals related to Medicaid and provider volume rebates, wholesaler and distributor fees, GPO fees, other discounts to healthcare providers andproduct returns are recorded at the time of sale, resulting in a reduction in product sales revenue and the recording of an increase in accrued expenses.Discounts We typically offer a 2% prompt payment discount to our customers as an incentive to remit payment in accordance with the stated terms of theinvoice, generally thirty days. Because we anticipate that those customers who are offered this discount will take advantage of the discount, we accrue100% of the prompt payment discount, at the time of sale, based on the gross amount of each invoice. We adjust the accrual quarterly to reflect actualexperience.Chargebacks Chargeback reserves represent our estimated obligations resulting from the difference between the prices at which we sell Feraheme to wholesalersand the sales price ultimately paid to wholesalers under fixed price contracts by third-party payors, including governmental agencies. We determine ourchargeback estimates based on actual Feraheme sales data and forecasted customer buying patterns. Actual chargeback amounts are determined at thetime of resale to the qualified healthcare provider, and we generally issue credits for such amounts within several weeks of receiving notification fromthe wholesaler. Estimated chargeback amounts are recorded at the time of sale, and we adjust the allowance quarterly to reflect actual experience.Government and Other Rebates Government and other rebate reserves relate to our reimbursement arrangements with state Medicaid programs or performance rebate agreementswith certain classes of trade. We determine our estimates for Medicaid rebates based on actual Feraheme sales data, forecasted customer buying patternsand market research data related to utilization rates by various end-users blended with historical experience of products similar to Feraheme sold byothers. We currently have limited actual claims payment data, and therefore are not able to solely rely on our actual Feraheme claims108Table of Contentsexperience. In estimating these reserves, we provide for a Medicaid rebate associated with both those expected instances where Medicaid will act as theprimary insurer as well as in those instances where we expect Medicaid will act as the secondary insurer. For rebates associated with reaching definedperformance goals, we determine our estimates using actual Feraheme sales data and forecasted customer buying patterns. Rebate amounts generally areinvoiced quarterly and are paid in arrears, and we expect to pay such amounts within several weeks of notification by the Medicaid or provider entity.Estimated government and other rebates are recorded at the time of sale and, with the exception of Medicaid as discussed below, we adjust the accrualquarterly to reflect actual experience. During the years ended December 31, 2012, 2011 and 2010, we revised our estimated Medicaid utilization rate based on actual rebate claimsreceived since the 2009 launch of Feraheme, our expectations of state level activity, and estimated rebate claims not yet submitted, which resulted in areduction of our estimated Medicaid rebate reserve related to prior period Feraheme sales of $0.6 million, $2.5 million and $0.6 million, respectively.These changes in estimates were reflected as an increase in our net product sales for the years ended December 31, 2012, 2011 and 2010. As a result,our gross to net percentages for 2012, 2011 and 2010 were lower than they otherwise would have been had we not reduced our Medicaid rebatereserve. The reduction of our estimated Medicaid rebate reserve had an impact of $0.03, $0.12 and $0.03 per basic and diluted share for the years endedDecember 31, 2012, 2011 and 2010, respectively. We regularly assess our Medicaid reserve balance and the rate at which we accrue for claims againstproduct sales. If we determine in future periods that our actual rebate experience is not indicative of expected claims, or if other factors affect estimatedclaims rates, we may be required to change our estimated Medicaid reserve and/or the current rate at which we estimate our Medicaid claims, whichwould affect our earnings in the period of the change in estimate and such change could be significant.Distributor/Wholesaler and Group Purchasing Organization Fees Fees under our arrangements with distributors and wholesalers are usually based upon units of Feraheme purchased during the prior month orquarter and are usually paid by us within several weeks of our receipt of an invoice from the wholesaler or distributor, as the case may be. Fees underour arrangements with GPOs are usually based upon member purchases during the prior quarter and are generally billed by the GPO within 30 daysafter period end. Current accounting standards related to consideration given by a vendor to a customer, including a reseller of a vendor's products,specify that cash consideration given by a vendor to a customer is presumed to be a reduction of the selling price of the vendor's products or servicesand therefore should be characterized as a reduction of revenue. Consideration should be characterized as a cost incurred if we receive, or will receive,an identifiable benefit (goods or services) in exchange for the consideration and we can reasonably estimate the fair value of the benefit received.Because the fees we pay to wholesalers do not meet the foregoing conditions to be characterized as a cost, we have characterized these fees as areduction of revenue and have included them in government and other rebates in the table above. We generally pay such amounts within several weeksof our receipt of an invoice from the distributor, wholesaler, or GPO. Accordingly, we accrue the estimated fee due at the time of sale, based on thecontracted price invoiced to the customer. We adjust the accrual quarterly to reflect actual experience.Product Returns Consistent with industry practice, we generally offer our distributors and wholesaler customers a limited right to return product purchased directlyfrom us principally based upon the product's expiration date which, once packaged, is currently four or five years in the U.S. We estimate productreturns based upon historical experience since the 2009 launch of Feraheme and trends of products similar to Feraheme sold by others. We currentlyhave limited actual returns data, and therefore are not able to solely rely on our actual returns experience. We track actual returns by individualproduction109Table of Contentslots. Returns on lots eligible for credits under our returned goods policy are monitored and compared with historical return trends and rates. We consider several additional factors in our product return estimation process, including our internal sales forecasts and inventory levels in thedistribution channel. We expect that wholesalers and healthcare providers will not stock significant inventory due to Feraheme's cost and expense tostore. Based on the level of inventory in the wholesale distribution channel, we determine whether an adjustment to the sales return reserve isappropriate. We record an estimate of returns at the time of sale. If necessary, our estimated rate of returns may be adjusted for actual return experience as itbecomes available and for known or expected changes in the marketplace. During 2012, we reduced our reserve for product returns by approximately$2.2 million primarily as a result of a lower than expected rate of product returns as well as the lapse of the product return period on certainmanufactured Feraheme lots that carried a two year expiration. As a result, the product returns provision applied to gross product sales for the yearended December 31, 2012 was a credit of $1.5 million, resulting in an increase to net product sales for the year. The reduction of our estimated productreturns reserve had a positive impact of $0.10 per basic and diluted share for year ended December 31, 2012. We did not significantly adjust our reservefor product returns during 2011 or 2010. Feraheme is still early in its product lifecycle and returns experience may change over time. A future revisionto our product returns estimate would result in a corresponding change to our net product sales in the period in which the change is made and could besignificant.International Product Sales and Royalties We record all international product sales for Feraheme/Rienso sold to Takeda in deferred revenues in our consolidated balance sheet. We recognizethese deferred revenues, and the associated cost of product sales, in our consolidated statement of operations at the time Takeda reports to us that saleshave been made to its customers.License Fee and Other Collaboration Revenues The terms of product development and commercialization agreements entered into between us and our collaborative licensees may include non-refundable license fees, payments based on the achievement of certain milestones and performance goals, reimbursement of certain out-of-pocket costs,payment for manufacturing services, and royalties on product sales. We recognize license fee and research and development revenue under collaborativearrangements over the term of the applicable agreements using a proportional performance model, if practical. Otherwise, we recognize such revenue ona straight-line basis. Under this model, revenue is generally recognized in an amount equal to the lesser of the amount due under the agreements or anamount based on the proportional performance to date. In cases where project costs or other performance metrics are not estimable but there is anestablished contract period, revenues are recognized on a straight-line basis over the term of the relevant agreement. In cases where we are reimbursedfor certain research and development costs associated with our collaboration agreements and where we are acting as the principal in carrying out theseservices, any reimbursement payments are recorded in license fee and other collaboration revenues in our consolidated statement of operations to matchthe costs that we incur during the period in which we perform those services. Nonrefundable payments and fees are recorded as deferred revenue uponreceipt and may require deferral of revenue recognition to future periods.Multiple Element Arrangements and Milestone Payments We evaluate revenue from arrangements that have multiple elements to determine whether the components of the arrangement represent separateunits of accounting as defined in the accounting110Table of Contentsguidance related to revenue arrangements with multiple deliverables. Under current accounting guidance, which governs any agreements that containmultiple elements that are either entered into or materially modified subsequent to January 1, 2011, companies are required to establish the fair value ofundelivered products and services based on a separate revenue recognition process using management's best estimate of the selling price for anundelivered item when there is no other means to determine the fair value of that undelivered item. Agreements entered into prior to January 1, 2011,that have not been materially modified, including our agreements with Takeda and 3SBio, Inc., or 3SBio, are accounted for under previous accountingguidance, which provides that an element of a contract can be accounted for separately if the delivered elements have standalone value and the fair valueof all undelivered elements is determinable. If an element is considered to have standalone value but the fair value of any of the undelivered items cannotbe determined, all elements of the arrangement are recognized as revenue as a single unit of accounting over the period of performance for suchundelivered items or services. Significant management judgment is required in determining what elements constitute deliverables and what deliverablesor combination of deliverables should be considered units of accounting. When multiple deliverables are combined and accounted for as a single unit of accounting, we base our revenue recognition pattern on the last to bedelivered element. Revenue is recognized using either a proportional performance or straight-line method, depending on whether we can reasonablyestimate the level of effort required to complete our performance obligations under an arrangement and whether such performance obligations areprovided on a best-efforts basis. To the extent we cannot reasonably estimate our performance obligations, we recognize revenue on a straight-line basisover the period we expect to complete our performance obligations. Significant management judgment is required in determining the level of effortrequired under an arrangement and the period over which we are expected to complete our performance obligations under an arrangement. We may haveto revise our estimates based on changes in the expected level of effort or the period we expect to complete our performance obligations. Our collaboration agreements may entitle us to additional payments upon the achievement of performance-based milestones. If a milestone involvessubstantive effort on our part and its achievement is not considered probable at the inception of the collaboration, we recognize the milestoneconsideration as revenue in the period in which the milestone is achieved only if it meets the following additional criteria:•The milestone consideration received is commensurate with either the level of effort required to achieve the milestone or the enhancementof the value of the item delivered as a result of a specific outcome resulting from our performance to achieve the milestone; •The milestone is related solely to past performance; and •The milestone consideration is reasonable relative to all deliverables and payment terms in the arrangement. There is significant judgment involved in determining whether a milestone meets all of these criteria. For milestones that do not meet the abovecriteria and are therefore not considered substantive milestones, we recognize that portion of the milestone payment equal to the percentage of theperformance period completed at the time the milestone is achieved and the above conditions are met. The remaining portion of the milestone will berecognized over the remaining performance period using a proportional performance or straight-line method. Amounts received prior to satisfying the above revenue recognition criteria are recorded as deferred revenue in our consolidated balance sheets.Amounts not expected to be recognized within the next 12 months are classified as long-term deferred revenue.111Table of ContentsShipping and Handling Costs We utilize a third-party logistics provider, which is a subsidiary of one of our distribution customers, to provide us with various shipping andhandling services related to sales of Feraheme. Current accounting standards related to consideration given by a vendor to a customer, including areseller of a vendor's products, specify that cash consideration given by a vendor to a customer is presumed to be a reduction of the selling price of thevendor's products or services and therefore should be characterized as a reduction of revenue. However, that presumption is overcome and theconsideration should be characterized as a cost incurred if both of the following conditions are met:•We receive, or will receive, an identifiable benefit (goods or services) in exchange for the consideration; and •We can reasonably estimate the fair value of the benefit received. Since both of the above conditions were met with respect to the costs we incurred for shipping and handling services incurred with our third-partylogistics provider, we have recorded $0.2 million, $0.1 million and $0.2 million as a selling, general and administrative expense during the years endedDecember 31, 2012, 2011 and 2010, respectively.Equity-Based Compensation Under the fair value recognition guidance of equity-based compensation accounting rules, equity-based compensation cost is generally required tobe measured at the grant date (based upon an estimate of the fair value of the compensation granted) and recorded to expense over the requisite serviceperiod, which generally is the vesting period. Because equity-based compensation expense is based on awards ultimately expected to vest, we mustmake certain judgments about whether employees and directors will complete the requisite service period. Accordingly, we have reduced thecompensation expense being recognized for estimated forfeitures. Under current accounting guidance, forfeitures are estimated at the time of grant andrevised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Forfeitures are estimated based upon historical experience,adjusted for unusual events such as the corporate restructurings in 2012, 2011 and 2010, which resulted in higher than expected turnover and forfeituresin those years. If factors change and we employ different assumptions in future periods, the compensation expense that we record in the future maydiffer significantly from what we have recorded in the current period. We estimate the fair value of equity-based compensation involving stock options based on the Black-Scholes option pricing model. We estimate thefair value of our restricted stock units whose vesting is contingent upon market conditions using the Monte-Carlo simulation model. These modelsrequire the input of several factors such as the expected option term, the expected risk-free interest rate over the expected option term, the expectedvolatility of our stock price over the expected option term, and the expected dividend yield over the expected option term and are subject to variousassumptions. The fair value of awards whose fair values are calculated using the Black-Scholes option pricing model is generally being amortized on astraight-line basis over the requisite service period and is recognized based on the proportionate amount of the requisite service period that has beenrendered during each reporting period. The fair value of awards with market conditions is being amortized based upon the estimated derived serviceperiod. We believe our valuation methodologies are appropriate for estimating the fair value of the equity awards we grant to our employees anddirectors. Our equity award valuations are estimates and thus may not be reflective of actual future results or amounts ultimately realized by recipients ofthese grants. These amounts, and the amounts applicable to future quarters, are also subject to future quarterly adjustments based upon a variety offactors, which include, but are not limited to, changes in estimated forfeiture rates and the issuance of new equity-based awards. The fair value ofrestricted stock units granted to our employees and directors is determined based upon the quoted closing market price per share on the date of grant,adjusted for estimated112Table of Contentsforfeitures. As with any accounting policy that applies judgments and estimates, actual results could significantly differ from those estimates whichcould result in a material adverse impact to our financial results.Income Taxes Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax basis of assetsand liabilities using future enacted rates. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of ourdeferred tax assets will not be realized.Concentrations and Significant Customer Information Financial instruments which potentially subject us to concentrations of credit risk consist principally of cash, investments, and accounts receivable.As of December 31, 2012, our cash, cash equivalents and investments amounted to approximately $227.0 million. We currently invest our excess cashprimarily in U.S. government and agency money market funds, and investments in corporate debt securities, U.S. treasury and government agencysecurities and commercial paper. As of December 31, 2012 we had approximately $24.1 million of our total $46.3 million cash and cash equivalentsbalance invested in institutional money market funds, of which $16.3 million was invested in a single fund, which is collateralized solely by U.S.treasury and government agency securities. Our operations are located solely within the U.S. We are focused principally on developing, manufacturing, and commercializingFeraheme/Rienso. We perform ongoing credit evaluations of our customers and generally do not require collateral. The following table sets forthcustomers who represented 10% or more of our total revenues for the years ended December 31, 2012, 2011 and 2010. In addition, approximately 32% of our end-user demand in 2012 was generated by members of a single GPO with which we have contracted.Revenues from customers outside of the U.S. amounted to approximately 32%, 14% and 10% of our total revenues for the years ended December 31,2012, 2011 and 2010, respectively, and were principally related to collaboration revenue recognized in connection with our collaboration agreement withTakeda, which is based in Japan.Comprehensive Income (Loss) The current accounting guidance related to comprehensive income (loss) requires us to display comprehensive loss and its components as part ofour consolidated financial statements. Our comprehensive loss consists of net loss and other comprehensive income (loss). Other comprehensiveincome (loss) includes changes in equity that are excluded from net loss, which for all periods presented related to unrealized holding gains and losseson available-for-sale investments, net of tax.113 Years Ended December 31, 2012 2011 2010 AmerisourceBergen Drug Corporation 34% 41% 36%Takeda Pharmaceuticals Company Limited 31% 13% <10%McKesson Corporation 17% 21% <10%Cardinal Health, Inc. 12% 13% <10%Metro Medical Supply, Inc. <10% <10% 21%Table of ContentsNet Loss per Share We compute basic net loss per share by dividing net loss by the weighted average number of common shares outstanding during the relevantperiod. The components of basic and diluted net loss per share were as follows (in thousands, except per share data): The following table sets forth the potential common shares issuable upon the exercise of outstanding options and the vesting of restricted stockunits (prior to consideration of the treasury stock method), the total of which was excluded from our computation of diluted net loss per share becausesuch options and restricted stock units were anti-dilutive due to a net loss in the relevant periods (in thousands):Reclassifications Certain amounts in prior periods have been reclassified in order to conform to the current period presentation.C. Investments As of December 31, 2012 and 2011, our investments equaled $180.8 million and $166.2 million, respectively, and consisted of securities classifiedas available-for-sale in accordance with accounting standards which provide guidance related to accounting and classification of certain investments indebt and equity securities.114 Years Ended December 31, 2012 2011 2010 Net loss $(16,750)$(77,069)$(81,153)Weighted average common shares outstanding 21,392 21,189 20,806 Net loss per share: Basic and diluted $(0.78)$(3.64)$(3.90) Years Ended December 31, 2012 2011 2010 Options to purchase shares of common stock 2,190 1,817 2,411 Shares of common stock issuable upon the vesting of restricted stock units 374 669 385 Total 2,564 2,486 2,796 Table of Contents The following is a summary of our investments as of December 31, 2012 and 2011 (in thousands):Auction Rate Securities In June 2012, we sold our remaining ARS portfolio, with a par value of $19.8 million, for proceeds of $18.3 million and recognized a loss ofapproximately $1.5 million in other income (expense) in our consolidated statement of operations for the year ended December 31, 2012.Impairments and Unrealized Gains and Losses on Investments The following is a summary of the fair value of our investments with unrealized losses that are deemed to be temporarily impaired and theirrespective gross unrealized losses aggregated by115 December 31, 2012 AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFairValue Corporate debt securities Due in one year or less $52,332 $88 $(6)$52,414 Due in one to three years 59,176 137 (37) 59,276 U.S. treasury and government agency securities Due in one year or less 24,795 86 — 24,881 Due in one to three years 34,606 84 (2) 34,688 Commercial paper Due in one year or less 9,494 1 (4) 9,491 Total investments $180,403 $396 $(49)$180,750 December 31, 2011 AmortizedCost GrossUnrealizedGains GrossUnrealizedLosses EstimatedFairValue Short-term investments: Corporate debt securities Due in one year or less $74,687 $81 $(115)$74,653 Due in one to three years 19,950 73 (50) 19,973 U.S. treasury and government agency securities Due in one year or less 26,770 67 (7) 26,830 Due in one to three years 21,028 228 — 21,256 Commercial paper Due in one year or less 5,997 — (6) 5,991 Total short-term investments $148,432 $449 $(178)$148,703 Long-term investments: Auction rate securities Due after five years 19,900 — (2,373) 17,527 Total long-term investments $19,900 $— $(2,373)$17,527 Total investments $168,332 $449 $(2,551)$166,230 Table of Contentsinvestment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2012 and 2011(in thousands): We did not recognize any unrealized other-than-temporary impairment losses in our consolidated statements of operations related to our securitiesduring either of the years ended December 31, 2012 or 2011. Future events may occur, or additional information may become available, which maycause us to identify credit losses where we do not expect to receive cash flows sufficient to recover the entire amortized cost basis of a security andwhich may necessitate the recording of future realized losses on securities in our portfolio. Significant losses in the estimated fair values of ourinvestments could have a material adverse effect on our earnings in future periods.Realized Gains and Losses on Investments Gains and losses are determined on the specific identification method. During 2012, we recorded realized losses of $1.5 million to our consolidatedstatement of operations related to the sale of our then remaining ARS portfolio, as discussed above.D. Accounts Receivable, Net Our net accounts receivable were $6.4 million and $5.9 million as of December 31, 2012 and 2011, respectively, and primarily representedamounts due from wholesalers and distributors to whom we sell Feraheme directly. Accounts receivable are recorded net of reserves for estimatedchargeback obligations, prompt payment discounts and any allowance for doubtful accounts. Reserves for other sales-related allowances such asrebates, distribution and other fees, and product returns are included in accrued expenses in our consolidated balance sheets. As part of our credit management policy, we perform ongoing credit evaluations of our customers, and we have not required collateral from anycustomer. To date, we have not experienced significant bad debts. Accordingly, we have not established an allowance for doubtful accounts at eitherDecember 31, 2012 or 2011. If the financial condition of any of our significant customers was to116 December 31, 2012 Less than 12 Months 12 Months orGreater Total FairValue UnrealizedLosses FairValue UnrealizedLosses FairValue UnrealizedLosses Corporate debt securities $37,036 $(43)$— $— $37,036 $(43)U.S. treasury andgovernment agencysecurities 6,271 (2) — — 6,271 (2)Commercial paper 3,992 (4) — — 3,992 (4) $47,299 $(49)$— $— $47,299 $(49) December 31, 2011 Less than 12 Months 12 Months or Greater Total FairValue UnrealizedLosses FairValue UnrealizedLosses FairValue UnrealizedLosses Corporate debtsecurities $34,097 $(161)$4,124 $(4)$38,221 $(165)U.S. treasury andgovernmentagencysecurities 8,841 (7) — — 8,841 (7)Commercialpaper 5,991 (6) — — 5,991 (6)Auction ratesecurities — — 19,900 (2,373) 19,900 (2,373) $48,929 $(174)$24,024 $(2,377)$72,953 $(2,551) Table of Contentsdeteriorate and result in an impairment of its ability to make payments owed to us, an allowance for doubtful accounts may be required which couldhave a material effect on earnings in the period of any such adjustment. Customers which represented greater than 10% of our accounts receivable balances as of December 31, 2012 and 2011 were as follows:E. Inventories Our major classes of inventories were as follows as of December 31, 2012 and 2011 (in thousands): During 2012, we wrote-off $0.6 million of inventory which was initially produced to validate the manufacturing process at third-party suppliersand which we no longer believed was suitable for sale. We have recorded the $0.6 million write-off in research and development expenses. In addition,during 2012, we wrote-off $0.6 million of commercial inventory deemed no longer saleable, which we recorded in cost of goods sold. We reserved$0.7 million of additional inventory related to our ongoing divestiture of our Cambridge, Massachusetts manufacturing facility and have recorded thereserve in restructuring costs. On a quarterly basis, we analyze our inventory levels to determine whether we have any obsolete, expired, or excess inventory. If any inventory isexpected to expire prior to being sold, has a cost basis in excess of its net realizable value, is in excess of expected sales requirements as determined byinternal sales forecasts, or fails to meet commercial sale specifications, the inventory is written-down through a charge to cost of goods sold. Thedetermination of whether inventory costs will be realizable requires estimates by management. A critical input in this determination is future expectedinventory requirements, based on internal sales forecasts and forecasts received from Takeda. Once packaged, Feraheme/Rienso currently has a shelf-life of four or five years in the U.S. and between two and three years outside of the U.S., and as a result of comparison to internal sales forecasts, weexpect to fully realize the carrying value of our current Feraheme/Rienso finished goods inventory. If actual market conditions are less favorable thanthose projected by management, additional inventory write-downs may be required. Charges for inventory write-downs are not reversed if it is laterdetermined that the product is saleable.117 December 31, 2012 2011 AmerisourceBergen Drug Corporation 48% 44%McKesson Corporation 28% 33%Cardinal Health, Inc. 18% 15% December 31, 2012 2011 Raw materials $2,652 $1,892 Work in process 2,524 3,696 Finished goods 7,275 9,618 Total inventories $12,451 $15,206 Table of ContentsF. Property, Plant and Equipment, Net Property, plant and equipment consisted of the following as of December 31, 2012 and 2011, respectively (in thousands): During the third quarter of 2012, we determined that certain assets related to our Cambridge, Massachusetts manufacturing facility, including therelated land, building and certain equipment, met the criteria established by current accounting guidance for classifying assets as held for sale. As aresult, we reclassified these assets from property, plant and equipment to assets held for sale in our consolidated balance sheet during 2012. We haveclassified these assets as current as we expect to complete the sale within one year. Current accounting guidance requires us to record assets held forsale at the lower of the carrying amount or fair value less cost to sell and discontinue the recognition of depreciation. Based on such guidance, werecorded the value of these assets at $2.0 million, their estimated fair market value as of December 31, 2012. Prior to our determination that ourCambridge manufacturing facility and related assets met the requirements to be classified as assets held for sale, we accelerated the depreciation on suchassets to reflect our then estimated fair value. In doing so, we recorded $1.4 million of accelerated depreciation in our consolidated statements ofoperations in 2012. Upon determination that these assets met the criteria for held for sale, we recognized an impairment loss to decrease the carryingvalue of the assets to our best estimate of fair value, and continue to evaluate the estimate of fair value on an ongoing basis. As a result, we haverecognized an aggregate impairment loss of $1.1 million to decrease the carrying value of the assets to our best estimate of fair value as of December 31,2012. The fair values of the land, building and equipment were estimated using offers received from potential purchasers, real estate appraisals and otherestimates from third parties.G. Current and Long-Term LiabilitiesAccrued Expenses Accrued expenses consisted of the following as of December 31, 2012 and 2011 (in thousands):118 December 31, 2012 2011 Land $— $360 Buildings and improvements 5,373 11,308 Laboratory and production equipment 115 7,662 Furniture and fixtures 5,326 5,382 Construction in process 228 86 11,042 24,798 Less—accumulated depreciation (7,745) (15,592) Property, plant and equipment, net $3,297 $9,206 December 31, 2012 2011 Clinical, manufacturing and regulatory consulting fees and expenses $7,737 $11,468 Salaries, bonuses, and other compensation 5,236 5,924 Commercial rebates, fees and returns 3,448 5,943 Professional, license, and other fees and expenses 1,719 1,966 Restructuring expense 1,383 2,366 Commercial consulting fees and expenses 815 1,249 Total accrued expenses $20,338 $28,916 Table of ContentsDeferred Revenues Deferred revenues consisted of the following as of December 31, 2012 and 2011 (in thousands): During 2010, under the terms of our License, Development and Commercialization Agreement, or the Takeda Agreement, we received certainpayments, including a $60.0 million upfront fee and $1.0 million reimbursed to us for certain expenses incurred prior to entering the agreement. Wehave recorded such payments as deferred revenue which we are recognizing on a straight-line basis over a period of 10 years, which represents thecurrent patent life of Feraheme/Rienso and our best estimate of the period over which we will substantially perform our obligations. In addition, during2012, we received an aggregate of $18.0 million in milestone payments from Takeda associated with the commercial launches of Feraheme/Rienso inCanada and the EU. These milestone payments were considered non-substantive milestone payments and accounted for in accordance with our revenueattribution method, as described in more detail below in Note N. Therefore, we are amortizing the $18.0 million using the proportional performancemethod over the original life of the Takeda Agreement. During 2012, we recorded $5.0 million of the $18.0 million to license fee and other collaborationrevenues in our consolidated statement of operations and have included the remaining $13.0 million in our deferred revenues in our consolidated balancesheet. In consideration of the grant of the license to 3SBio in 2008, we received an upfront payment of $1.0 million, the recognition of which has beendeferred and will be recognized under the proportional performance methodology over the remaining portion of the thirteen year initial term of theagreement once we begin to supply Feraheme to 3SBio.Other Long-Term Liabilities Other long-term liabilities at both December 31, 2012 and 2011 consisted solely of deferred rent related to the lease of our principal executiveoffices in Lexington, Massachusetts.H. Income Taxes For the years ended December 31, 2012, 2011 and 2010, we recognized $0.9 million, $1.2 million and $0.5 million in current federal income taxbenefits, respectively. These federal income tax benefits were the result of the recognition of corresponding income tax expense associated with thedecrease in the unrealized loss on our investments, primarily related to our ARS, which we carried at fair market value during these respective periods.The corresponding income tax expense was recorded in other comprehensive income (loss). Due to the uncertainty surrounding the realization offavorable tax attributes in future tax returns, we have recorded a full valuation allowance against our otherwise recognizable net deferred tax assets.119 December 31, 2012 2011 Short-term deferred revenues: Takeda $8,854 $6,096 Other short-term deferred revenues 250 250 Total $9,104 $6,346 Long-term deferred revenues: Takeda $49,350 $44,196 3SBio 1,000 1,000 Total $50,350 $45,196 Table of Contents The reconciliation of the statutory U.S. federal income tax rate to our effective income tax rate is as follows: Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax basis of assetsand liabilities using future enacted rates. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of thedeferred tax assets will not be realized. The components of our deferred tax assets and liabilities are as follows (in thousands): Due to the uncertainty surrounding the realization of favorable tax attributes in future tax returns, we have recorded a full valuation allowanceagainst our otherwise recognizable net deferred tax assets. The valuation allowance decreased by approximately $2.8 million for the year endedDecember 31, 2012, primarily due to an increase in our net operating loss, or NOL, carryforwards, capitalized research and development expense, andoffset by a decrease in our equity-based compensation expense. The valuation allowance increased by approximately $26.8 million and $27.9 million forthe years ended December 31, 2011 and 2010, respectively, primarily due to an increase in our NOL carryforwards, capitalized research anddevelopment expense, and equity based compensation expense. At December 31, 2012, we had federal NOL carryforwards of approximately $203.5 million and state NOL carryforwards of up to $132.7 million.We also had federal capital loss carryforwards of $3.3 million to offset future capital gains and an additional $24.4 million and $5.6 million of federaland state NOLs, respectively, not reflected above which were attributable to deductions from the exercise of equity awards. The benefit from thesedeductions will be recorded as a credit to additional paid-in capital if and when realized through a reduction of taxes paid in cash. Our federal NOLs andour most significant state NOLs expire at various dates through 2032. Our capital loss carryforwards will expire120 Years Ended December 31, 2012 2011 2010 Statutory U.S. federal tax rate (34.0)% (34.0)% (34.0)%State taxes, net of federal benefit 4.2% (3.4)% (5.8)%Equity-based compensation expense 42.4% 2.4% 1.7%Permanent items, net 1.2% 0.4% 0.5%Tax credits 0.8% (1.6)% (2.2)%Valuation allowance (19.5)% 34.7% 39.2% Total tax (benefit) expense (4.9)% (1.5)% (0.6)% December 31, 2012 2011 Assets Net operating loss carryforwards $75,740 $75,738 Tax credit carryforwards 12,403 12,560 Deferred revenue 22,315 19,321 Equity-based compensation expense 3,681 10,331 Capitalized research & development 45,137 43,463 Other 4,239 6,406 Property, Plant, and Equipment Depreciation 1,393 — Liabilities Property, Plant, and Equipment Depreciation — (130) 164,908 167,689 Valuation allowance (164,908) (167,689) Net deferred taxes $— $— Table of Contentsthrough 2017. In addition, we have federal and state tax credits of approximately $9.2 million and $4.9 million, respectively, to offset future taxliabilities. Our tax credits will expire periodically through 2032 if not utilized. Utilization of our NOLs and research and development, or R&D, credit carryforwards may be subject to a substantial annual limitation due toownership change limitations that have occurred previously or that could occur in the future in accordance with Section 382 of the Internal RevenueCode of 1986, or Section 382, as well as similar state provisions. These ownership changes may limit the amount of NOL and R&D creditcarryforwards that can be utilized annually to offset future taxable income and taxes, respectively. In general, an ownership change as defined bySection 382 results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than50 percentage points over a three-year period. Since our formation, we have raised capital through the issuance of capital stock on several occasions.These financings, combined with the purchasing shareholders' subsequent disposition of those shares, may have resulted in a change of control asdefined by Section 382 or could result in a change of control in the future upon subsequent disposition. In May 2011, we conducted an analysis underSection 382 to determine if historical changes in ownership through December 31, 2010 would limit or otherwise restrict our ability to utilize theseNOL and R&D credit carryforwards. As a result of this analysis, we do not believe there are any significant limitations on our ability to utilize thesecarryforwards. However, changes in ownership after December 31, 2010 could affect the limitation in future years. Any limitation may result inexpiration of a portion of the NOL or R&D credit carryforwards before utilization. At December 31, 2012 and 2011, we had no unrecognized tax benefits. We have not, as yet, conducted a study of our R&D credit carryforwards.Such a study could result in an adjustment to our R&D credit carryforwards; however, until a study is completed and any adjustment is known, noamounts are being presented as an uncertain tax position. A full valuation allowance has been provided against our R&D credits and, if an adjustment isrequired, this adjustment would be offset by an adjustment to the valuation allowance. Thus, there would be no impact to the consolidated balance sheetor statement of operations if an adjustment were required. We would recognize both accrued interest and penalties related to unrecognized benefits in income tax expense. We have not recorded any interestor penalties on any unrecognized benefits since inception. The statute of limitations for assessment by the Internal Revenue Service, or the IRS, and state tax authorities is closed for tax years prior toDecember 31, 2009, although carryforward attributes that were generated prior to tax year 2009 may still be adjusted upon examination by the IRS orstate tax authorities if they either have been or will be used in a future period. We file income tax returns in the U.S. federal and various statejurisdictions. There are currently no federal or state audits in progress. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which reinstated, retroactive to January 1, 2012,certain tax benefits that had previously expired. In accordance with the financial accounting standards for income taxes, we are required to account forthe effects of changes in tax law and rates on deferred tax balances in the period the legislation is enacted. As this legislation was enacted in January2013, our 2012 financial statements were not affected by this legislation.I. Equity-Based Compensation We currently maintain several equity compensation plans, including our Second Amended and Restated 2007 Equity Incentive Plan, or the 2007Plan, our Amended and Restated 2000 Stock Plan, or the 2000 Plan, and our 2010 Employee Stock Purchase Plan, or the 2010 ESPP. During 2012, wealso granted equity to our chief executive officer through an inducement grant that was outside of these plans.121Table of ContentsSecond Amended and Restated 2007 Equity Incentive Plan Our 2007 Plan was originally approved by our stockholders in November 2007. In each of May 2009 and May 2010, our stockholders approvedproposals to amend and restate our 2007 Plan to, among other things, increase the number of shares authorized for issuance thereunder by 600,000 and800,000 shares, respectively. In addition, the amendment approved by our stockholders in May 2009 replaced a limitation on the number of shares inthe aggregate which could be issued under the 2007 Plan with respect to restricted stock units, restricted stock, stock and similar equity interests in ourcompany with a fungible share reserve whereby the number of shares available for issuance under the 2007 Plan is reduced by one share of ourcommon stock issued pursuant to an option or stock appreciation right and by 1.5 shares for each share of our common stock issued pursuant to arestricted stock unit award or other similar equity-based award. The 2007 Plan provides for the grant of stock options, restricted stock units, restricted stock, stock, and other equity interests in our company toemployees, officers, directors, consultants, and advisors of our company and our subsidiaries. We generally issue common stock from previouslyauthorized but unissued shares to satisfy option exercises and restricted stock awards. The terms and conditions of each such grant, including, but notlimited to, the number of shares, the exercise price, term of the option/award and vesting requirements, are determined by our Board of Directors, orBoard, or the Compensation Committee of our Board. Our Board may award stock options in the form of nonqualified stock options or incentive stockoptions, or ISOs. ISOs may be granted at an exercise price no less than fair market value of a share of our common stock on the date of grant, asdetermined by our Board or the Compensation Committee of our Board, subject to certain limitations. Our Board establishes the vesting schedule for stock options and the method of payment for the exercise price. In general, our equity-based awardsare subject to three or four year vesting. Our standard stock option agreement allows for payment of the exercise price for vested stock options eitherthrough cash remittance of the exercise price to us in exchange for newly issued shares, or through a non-cash exchange of previously issued sharesheld by the recipient equal in value to the exercise price in exchange for newly issued shares. The latter method results in no cash being received by us,but also results in a lower number of total shares subsequently being outstanding (as compared to a cash exercise), as a direct result of previously issuedshares being exchanged in return for the issuance of new shares. Shares returned to us in this manner are retired. In addition, under the 2007 Plan,participants may satisfy their tax obligations related to restricted stock unit vesting in whole or in part by transferring shares of common stock to us.Shares returned to us in this manner are retired. As of December 31, 2012, we have granted options and restricted stock units covering 5,283,775 shares of common stock under our 2007 Plan, ofwhich 2,273,686 stock options and 615,430 restricted stock units have expired or terminated, and of which 38,338 options have been exercised and347,725 shares of common stock have been issued pursuant to restricted stock units that became fully vested. The number of options and restrictedstock units outstanding under this plan as of December 31, 2012 was 1,734,920 and 273,676, respectively. The remaining number of shares availablefor future grants as of December 31, 2012 was 1,513,918, not including shares subject to outstanding awards under the 2000 Plan, which will be addedto the total number of shares available for issuance under the 2007 Plan to the extent that such awards expire or terminate for any reason prior toexercise. All outstanding stock options granted under our 2007 Plan have an exercise price equal to the closing price of a share of our common stock onthe grant date and have either a seven or ten-year term.Amended and Restated 2000 Stock Plan Our 2000 Plan provided for the grant of options and other equity-based awards to our directors, officers, employees and consultants. The termsand conditions of each such grant, including, but not limited to, the number of shares, the exercise price, term of the option/award and vestingrequirements,122Table of Contentswere determined by our Board or the Compensation Committee of our Board. As of December 31, 2012, we have granted stock options and restrictedstock units covering 2,182,700 shares of common stock under the 2000 Plan, of which 946,977 stock options and 1,500 restricted stock units haveexpired or terminated, and of which 1,036,570 stock options have been exercised and 42,500 shares of common stock have been issued pursuant torestricted stock units that became fully vested. The remaining number of shares underlying outstanding stock options which were issued pursuant to our2000 Plan as of December 31, 2012 was 155,153. There were no remaining restricted stock units which were issued pursuant to our 2000 Plan as ofDecember 31, 2012. All outstanding stock options granted under the 2000 Plan have an exercise price equal to the closing price of our common stockon the grant date and have a ten year term. In November 2007, the 2000 Plan was succeeded by our 2007 Plan and, accordingly, no further grants maybe made under this plan. Any shares that remained available for issuance under the 2000 Plan as of the date of adoption of the 2007 Plan are included inthe number of shares that may be issued under the 2007 Plan. Any shares subject to outstanding awards granted under the 2000 Plan that expire orterminate for any reason prior to exercise will be added to the total number of shares available for issuance under the 2007 Plan.Other Equity Compensation Grants In May 2012, in connection with his entry into an employment agreement as our President and Chief Executive Officer, our Board granted WilliamHeiden an option to purchase 300,000 shares of our common stock at an exercise price equal to the fair market value of a share of our common stock onthe date of grant. The option will be exercisable in four equal annual installments beginning on the first anniversary of the grant date. Mr. Heiden wasalso granted 100,000 restricted stock units, which will vest in four equal annual installments beginning on the first anniversary of the grant date. Theforegoing grants were made pursuant to an inducement grant outside of our 2007 Plan as permitted under the NASDAQ Global Market rules. Weassessed the terms of these awards to Mr. Heiden and determined there was no possibility that we would have to settle these awards in cash andtherefore, equity accounting was applied. In July 2012, we filed a Form S-8 registration statement with the Securities and Exchange Commission withrespect to these equity compensation grants.Equity-based compensation expense Equity-based compensation expense, excluding amounts that have been capitalized into inventory, for the years ended December 31, 2012, 2011and 2010 consisted of the following (in thousands): We reduce the compensation expense being recognized to account for estimated forfeitures, which we estimate based primarily on historicalexperience, adjusted for unusual events such as the corporate restructurings in 2012, 2011 and 2010, which resulted in higher than expected turnoverand forfeitures in those years. Under current accounting guidance, forfeitures are estimated at the time of grant and revised, if necessary, in subsequentperiods if actual forfeitures differ from those estimates. In addition, during 2011, we reduced our equity-based compensation expense by approximately $0.7 million to reflect the modification of the termsof certain of our former chief executive officer's outstanding equity awards pursuant to his November 2011 separation agreement.123 Years Ended December 31, 2012 2011 2010 Cost of product sales $225 $616 $441 Research and development 1,994 1,874 3,508 Selling, general and administrative 4,805 7,548 10,574 Total equity-based compensation expense $7,024 $10,038 $14,523 Table of Contents Due to the uncertainty surrounding the realization of the favorable tax attributes in future tax returns associated with operating losses we incurredin the past, we have not recognized any excess tax benefits from the exercise of options. Accordingly, there was no impact recorded in cash flows fromfinancing activities or cash flows from operating activities as reported in the accompanying consolidated statements of cash flows. The following table summarizes the weighted average assumptions we utilized for purposes of valuing grants of options to our employees andnon-employee directors: Risk free interest rates utilized are based upon published U.S. Treasury yields at the date of the grant for the expected option term. We estimate ourexpected stock price volatility by basing it on a blend of the historical volatility of our own common stock price and the historical volatility of othersimilar companies over the prior period equivalent to our expected option term to better reflect expected future volatility. To compute the expected optionterm, we estimate the calculated historical term of stock options. The following table summarizes details regarding our stock option plans and any grants outside of the plans under an inducement grant for the yearended December 31, 2012 (excluding restricted stock units, which are presented separately below): The weighted average grant date fair value of stock options granted during the years ended December 31, 2012, 2011 and 2010 was $6.90, $7.40,and $18.57, respectively. A total of 336,443 stock options vested during the year ended December 31, 2012. The total grant date fair value of optionsthat vested during the years ended December 31, 2012, 2011 and 2010 was $5.5 million, $9.8 million, and $12.0 million, respectively. The aggregateintrinsic value of options exercised during the years ended December 31, 2012, 2011 and 2010, excluding purchases made pursuant to our employeestock purchase plans, measured as of the exercise date, was approximately $0.1 million, $0.1 million, and $1.1 million, respectively. The intrinsic valueof a stock option is the amount by which the fair market value124 Years Ended December 31, 2012 2011 2010 Employees Non-EmployeeDirectors Employees Non-EmployeeDirectors Employees Non-EmployeeDirectors Risk freeinterestrate (%) 0.66 0.68 1.67 1.36 2.47 1.61 Expectedvolatility(%) 57 56 51 51 58 53 Expectedoptionterm(years) 4.66 4.00 5.50 4.00 5.50 4.00 Dividendyield none none none none none none December 31, 2012 Options Weighted AverageExercise Price WeightedAverageRemainingContractualTerm Aggregate IntrinsicValue ($ inmillions) Outstanding at beginning of year 1,817,027 $35.16 Granted 1,500,800 14.72 Exercised (9,188) 10.65 Expired and/or forfeited (1,118,566) 31.60 Outstanding at end of year 2,190,073 $23.07 6.7 $0.6 Outstanding at end of year—vested andunvested expected to vest 1,981,028 $23.82 6.7 $0.6 Exercisable at end of year 729,294 $36.59 6.0 $0.1 Table of Contentsof the underlying stock exceeds the exercise price of the common stock option on the last trading day of each year. In the year ended December 31, 2012, we issued an aggregate of 247,050 restricted stock units to our employees and directors. In general, thesegrants vest on an annual basis over a three or four year period. The estimated fair value of restricted stock units granted was determined at the grant datebased upon the quoted market price per share on the date of the grant. The estimated fair value of restricted stock unit awards issued during 2012 wasapproximately $3.9 million. The following table summarizes details regarding restricted stock units granted under our equity incentive plans for the year ended December 31,2012 and our May 2012 grant to our chief executive officer: At December 31, 2012, the amount of unrecorded equity-based compensation expense, net of forfeitures, attributable to future periods wasapproximately $11.9 million. Of this amount, $8.2 million was associated with stock options and is expected to be amortized on a straight-line basis toexpense over a weighted average period of approximately 3.1 years, and $3.7 million was associated with restricted stock units and is expected to beamortized to on a straight-line basis to expense over a weighted average period of approximately 2.9 years. Such amounts will be amortized primarily toresearch and development or selling, general and administrative expense. These future estimates are subject to change based upon a variety of futureevents, which include, but are not limited to, changes in estimated forfeiture rates, employee turnover, and the issuance of new stock options and otherequity-based awards.2010 Employee Stock Purchase Plan In May 2010, our stockholders approved our 2010 ESPP as the successor to and continuation of the 2006 Employee Stock Purchase Plan, or 2006ESPP. The 2010 ESPP authorizes the issuance of up to 100,000 shares of our common stock to eligible employees. Currently, eligible employees maypurchase shares (subject to certain plan and/or income tax limitations) in semi-annual offerings through payroll deductions of up to an annual maximumof 10% of the employee's total compensation, as defined by our Board. The purchase price per share is the lesser of 85% of the fair market value of ourcommon stock on the first or last day of the plan period. During 2012, we issued 23,025 shares under our 2010 ESPP.125 December 31, 2012 UnvestedRestrictedStock Units Weighted AverageGrant DateFair Value Outstanding at beginning of year 669,009 $21.16 Granted 247,050 15.64 Vested (171,182) 20.59 Forfeited (371,201) 21.91 Outstanding at end of year 373,676 $17.02 Outstanding at end of year and expected to vest 295,916 $16.54 Table of Contents The assumptions used for awards granted under our employee stock purchase plans were as follows: The weighted average fair value for purchase rights granted under our 2010 ESPP and our 2006 ESPP, during the years ended December 31,2012, 2011 and 2010 was $4.48, $5.01, and $13.66, respectively, and was estimated using the Black-Scholes option-pricing model.J. Employee Savings Plan We provide a 401(k) Plan to our employees by which they may defer compensation for income tax purposes under Section 401(k) of the InternalRevenue Code. Each employee may elect to defer a percentage of his or her salary up to a specified maximum. Our 401(k) Plan provides, among otherthings, for a company contribution of 3% of each employee's combined salary and certain other compensation for the plan year. Salary deferred byemployees and contributions by us to the 401(k) Plan are not taxable to employees until withdrawn from the 401(k) Plan and contributions aredeductible by us when made. The amount of our company contribution for the 401(k) Plan was $0.8 million, $1.0 million, and $1.3 million for the yearsended December 31, 2012, 2011 and 2010, respectively.K. Stockholders' EquityPreferred Stock Our certificate of incorporation authorizes our Board to issue preferred stock from time to time in one or more series. The rights, preferences,restrictions, qualifications and limitations of such stock are determined by our Board. In September 2009, our Board adopted a shareholder rights plan,or Rights Plan. The terms of the Rights Plan provide for a dividend distribution of one preferred share purchase right, or Right, for each outstandingshare of our common stock, par value $0.01 per share, to shareholders of record as of September 17, 2009, and for one such Right to attach to eachnewly issued share of common stock thereafter. Each Right entitles shareholders to purchase one one-thousandth of a share of Series A JuniorParticipating Preferred Stock for each outstanding share of our common stock. The Rights issued pursuant to our Rights Plan become exercisablegenerally upon the earlier of 10 days after a person or group, or an Acquiring Person, acquires 20% or more of our outstanding common stock or 10business days after the announcement by a person or group of an intention to acquire 20% of our outstanding common stock via tender offer or similartransaction. In that event, each holder of a Right, other than the Acquiring Person, would for a period of 60 days be entitled to purchase, at the exerciseprice of the Right, such number of shares of our common stock having a current value of twice the exercise price of the Right. Once a person becomesan Acquiring Person, until such Acquiring Person acquires 50% or more of our common stock, our Board can exchange the Rights, in part or in whole,for our common stock at an exchange ratio of one share of common stock per Right. If we are acquired in a merger or other business combinationtransaction, each holder of a Right, other than the Acquiring Person, would then be entitled to purchase, at the exercise price of the Right, such numberof shares of the acquiring company's common stock having a current value of twice the exercise price of the Right. The Board may redeem the Rights orterminate the Rights Plan at any time before a person or group becomes an Acquiring Person. The Rights will expire on September 17, 2019 unless theRights are earlier redeemed or exchanged by us. In May 2012, we amended the126 Years Ended December 31, 2012 2011 2010 Risk free interest rate (%) 0.12 0.09 0.22 Expected volatility (%) 43 37 42 Expected option term (years) 0.5 0.5 0.5 Dividend yield none none none Table of Contentsdefinition of an Acquiring Person in the Rights Plan to provide that Adage Capital Management, L.P., or Adage, would not be deemed an "AcquiringPerson" unless Adage, together with its affiliates and associates, have acquired beneficial ownership of 25% or more of our outstanding common stock(other than solely from repurchases of stock by us which increases Adage's percentage ownership above 25%). Pursuant to the terms of theamendment, this provision terminated in the third quarter of 2012 and Adage returned to being subject to the 20% limit applied to our otherstockholders.Common Stock Transactions In January 2010, we sold 3,600,000 shares of our common stock, $0.01 par value per share, in an underwritten public offering at a price to thepublic of $48.25 per common share, resulting in gross proceeds of approximately $173.7 million. Net proceeds to us after deducting fees, commissionsand other expenses related to the offering were approximately $165.6 million. The shares were issued pursuant to a shelf registration statement onForm S-3 which became effective upon filing.L. Business Segments We have determined that we conduct our operations in one business segment: the manufacture, development and commercialization of productsderived from our proprietary technology for use in treating human diseases. Long-lived assets consist entirely of property and equipment and are locatedin the U.S. for all periods presented.M. Commitments and ContingenciesCommitmentsOperating and Facility Lease Obligations We have entered into certain operating leases, including leases of certain automobiles, and certain office equipment which expire through 2014.Expense associated with these operating leases amounted to approximately $0.9 million, $0.8 million, and $1.0 million for the years endedDecember 31, 2012, 2011 and 2010, respectively. Future minimum lease payments associated with all noncancellable automobile, equipment, serviceand lease agreements, excluding facility-related leases are approximately $0.1 million for 2013. We lease 76 automobiles for our field-based employees.These leases require an initial minimum lease commitment of 12 months per automobile, after which we are responsible for certain disposal costs in theevent of termination of the lease. As of December 31, 2012, all of our leased automobiles have been held beyond the initial 12 month commitmentperiod. In May 2008, we entered into a lease agreement for certain real property located at 100 Hayden Avenue, Lexington, Massachusetts for use as ourprincipal executive offices. The term of the lease began on May 22, 2008 and will continue until August 31, 2016 with two successive five yearextension terms at our option. In accordance with accounting guidance related to accounting for operating leases with scheduled rent increases, werecognize rent expense on this facility on a straight-line basis over the initial term of the lease. In addition, as provided for under the lease, we receivedapproximately $2.2 million of tenant improvement reimbursements from the landlord. These reimbursements are being recorded as a deferred rentliability in our consolidated balance sheets and are amortized on a straight-line basis as a reduction to rent expense over the term of the lease. We haverecorded all tenant improvements as leasehold improvements and are amortizing these improvements over the shorter of the estimated useful life of theimprovement or the remaining life of the initial lease term. Amortization of leasehold improvements is included in depreciation expense.127Table of Contents The lease requires us to pay rent as follows (in thousands): During any extension term, the base rent will be an amount agreed upon by us and the landlord. In addition to base rent, we are also required topay a proportionate share of the landlord's annual operating costs. Facility-related rent expense was $1.7 million for each of the years ended December 31, 2012, 2011, and 2010. In addition, in connection with our facility lease, in May 2008 we delivered to the landlord a security deposit of approximately $0.5 million in theform of an irrevocable letter of credit. The cash securing this letter of credit is classified on our balance sheets as a long-term asset and is restricted in itsuse.Purchase Commitments During 2012, we entered into various agreements with third parties for which we had remaining purchase commitments of approximately$3.7 million as of December 31, 2012. These agreements principally related to certain purchase orders for the production of Feraheme/Rienso, certainoutsourced commercial activities, manufacturing commitments, our information technology infrastructure, and other operational activities.Severance Arrangements We have entered into employment agreements or other arrangements with most of our executive officers and certain other employees, whichprovide for salary continuation payments and, in certain instances, the acceleration of the vesting of certain equity awards to such individuals in theevent that the individual is terminated other than for cause, as defined in the applicable employment agreements or arrangements.Indemnification Obligations As permitted under Delaware law, pursuant to our certificate of incorporation, by-laws and agreements with all of our current directors, executiveofficers, and certain of our employees, we are obligated to indemnify such individuals for certain events or occurrences while the officer, director oremployee is, or was, serving at our request in such capacity. The maximum potential amount of future payments we could be required to make underthese indemnification obligations is not capped. Our director and officer insurance policy limits our initial exposure to $1.0 million and our policyprovides significant coverage. As a result, we believe the estimated fair value of these indemnification obligations is likely to be immaterial.128Period Minimum LeasePayments Year Ended December 31, 2013 $2,071 Year Ended December 31, 2014 2,127 Year Ended December 31, 2015 2,183 Year Ended December 31, 2016 1,556 Total $7,937 Table of Contents We are also a party to a number of other agreements entered into in the ordinary course of business, which contain typical provisions and whichobligate us to indemnify the other parties to such agreements upon the occurrence of certain events. Such indemnification obligations are usually ineffect from the date of execution of the applicable agreement for a period equal to the applicable statute of limitations. Our aggregate maximum potentialfuture liability under such indemnification provisions is uncertain. Except for expenses we incurred related to the ongoing class action lawsuit filedagainst us in March 2010, we have not incurred any expenses as a result of such indemnification provisions. Accordingly, we have determined that theestimated aggregate fair value of our potential liabilities under such indemnification provisions is not significant, and we have not recorded any liabilityrelated to such indemnification.ContingenciesLegal Proceedings We accrue a liability for legal contingencies when we believe that it is both probable that a liability has been incurred and that we can reasonablyestimate the amount of the loss. We review these accruals and adjust them to reflect ongoing negotiations, settlements, rulings, advice of legal counseland other relevant information. To the extent new information is obtained and our views on the probable outcomes of claims, suits, assessments,investigations or legal proceedings change, changes in our accrued liabilities would be recorded in the period in which such determination is made. Forthe matters referenced below, the liability is not probable or the amount cannot be reasonably estimated and, therefore, accruals have not been made. Inaddition, in accordance with the relevant authoritative guidance, for any matters in which the likelihood of material loss is at least reasonably possible,we will provide disclosure of the possible loss or range of loss. If a reasonable estimate cannot be made, however, we will provide disclosure to thateffect. A purported class action complaint was originally filed on March 18, 2010 in the United States District Court for the District of Massachusetts,entitled Silverstrand Investments et. al. v. AMAG Pharm., Inc., et. al., Civil Action No. 1:10-CV-10470-NMG, and was amended on September 15,2010 and on December 17, 2010. The second amended complaint, or SAC, filed on December 17, 2010 alleged that we and our former President andChief Executive Officer, former Executive Vice President and Chief Financial Officer, the then members of our Board, and certain underwriters in ourJanuary 2010 offering of common stock violated certain federal securities laws, specifically Sections 11 and 12(a)(2) of the Securities Act of 1933, asamended, and that our former President and Chief Executive Officer and former Executive Vice President and Chief Financial Officer violatedSection 15 of such Act, respectively, by making certain alleged false and misleading statements and omissions in a registration statement filed in January2010. The plaintiff sought unspecified damages on behalf of a purported class of purchasers of our common stock pursuant to our common stockoffering on or about January 21, 2010. On August 11, 2011, the District Court issued an Opinion and Order dismissing the SAC in its entirety forfailure to state a claim upon which relief could be granted. A separate Order of Dismissal was filed on August 15, 2011. On September 14, 2011, theplaintiffs filed a Notice of Appeal to the United States Court of Appeals for the First Circuit, or the Court of Appeals. After briefing was completed byall parties, the Court of Appeals heard oral argument on May 11, 2012, and took the matter under advisement. On February 4, 2013, the Court ofAppeals affirmed in part and reversed in part the District Court's Opinion and Order, and remanded the case to the District Court. On February 18,2013, we filed a Petition for Panel Hearing or Rehearing En Banc, asking the Court of Appeals to reconsider its decision. We are currently unable topredict the outcome or reasonably estimate the range of potential loss associated with this matter, if any, and have therefore not recorded any potentialestimated liability as we do not believe that such a liability is probable nor do we believe that a range of loss is currently estimable.129Table of Contents In July 2010, Sandoz GmbH, or Sandoz, filed with the European Patent Office, or the EPO, an opposition to our previously issued patent whichcovers ferumoxytol in the EU. In October 2012, at an oral hearing, the Opposition Division of the EPO revoked our European ferumoxytol patent. InDecember 2012, our notice of appeal was recorded with the EPO, which suspends the revocation of our patent. We will continue to defend the validityof this patent throughout the appeals process, which we expect to take two to three years. However, in the event that we do not experience a successfuloutcome from the appeals process, under EU regulations ferumoxytol would still be entitled to eight years of data protection and ten years of marketexclusivity from the date of approval, which we believe would create barriers to entry for any generic version of ferumoxytol into the EU market untilsometime between 2020 and 2022. This decision had no impact on our revenues for the year ended December 31, 2012. However, any futureunfavorable outcome in this matter could negatively affect the magnitude and timing of future revenues, including royalties and milestone payments wemay receive from Takeda pursuant to our collaboration agreement with Takeda. We do not expect to incur any related liability regardless of the outcomeof the appeal and therefore have not recorded any liability as of December 31, 2012. We continue to believe the patent is valid and intend to vigorouslyappeal the decision. We may periodically become subject to other legal proceedings and claims arising in connection with ongoing business activities, including claimsor disputes related to patents that have been issued or that are pending in the field of research on which we are focused. Other than the above actions, weare not aware of any material claims against us at December 31, 2012. We expense legal costs as they are incurred.N. Collaborative Agreements Our commercial strategy includes the formation of collaborations with other pharmaceutical companies to facilitate the sale and distribution ofFeraheme/Rienso, primarily outside of the U.S. As of December 31, 2012, we were a party to the following collaborations:Takeda In March 2010, we entered into the Takeda Agreement with Takeda under which we granted exclusive rights to Takeda to develop andcommercialize Feraheme/Rienso as a therapeutic agent in Europe, certain Asia-Pacific countries (excluding Japan, China and Taiwan), theCommonwealth of Independent States, Canada, India and Turkey. In June 2012, we entered into an amendment to the Takeda Agreement, or theAmended Takeda Agreement, which removed the Commonwealth of Independent States from the territories under which Takeda has the exclusiverights to develop and commercialize Feraheme/Rienso. In addition, the Amended Takeda Agreement modified the timing and pricing arrangements for asupply agreement to be entered into between us and Takeda in the future, the terms related to primary and secondary manufacturing for drug substanceand drug product, certain patent related provisions, and the re-allocation of certain of the agreed-upon milestone payments. We analyzed the AmendedTakeda Agreement and determined that the amended terms did not result in a material modification of the original Takeda Agreement (and thus did notrequire us to change our accounting model) based on the fact that there were no changes to the deliverables under the original Takeda Agreement as aresult of the amendment, and the change in arrangement consideration as a result of the amendment was not quantitatively material in relation to the totalarrangement consideration. Under the Amended Takeda Agreement, except under limited circumstances, we have retained the right to manufacture Feraheme/Rienso and,accordingly, are responsible for supply of Feraheme/Rienso to Takeda at a fixed price per unit, which is capped for a certain period of time. We are alsoresponsible for conducting, and bearing the costs related to, certain pre-defined clinical studies with the costs of future modifications or additionalstudies to be allocated between the parties according to an130Table of Contentsagreed-upon cost-sharing mechanism. We have determined that our obligations under the Amended Takeda Agreement have not changed from thoseunder the original Takeda Agreement and include the following four deliverables: the license, access to future know-how and improvements to theFeraheme/Rienso technology, regulatory and clinical research activities, and the manufacturing and supply of product. Pursuant to the accountingguidance in effect in March 2010, when we signed the original Takeda Agreement and which governed revenue recognition on multiple elementarrangements, we evaluated the four deliverables under the original Takeda Agreement and determined that our obligation to provide manufacturingsupply of product meets the criteria for separation and is therefore treated as a single unit of accounting, which we refer to as the supply unit ofaccounting. Further, we concluded that the license is not separable from the undelivered future know-how and technological improvements or theundelivered regulatory and clinical research activities. Accordingly, these deliverables are being combined and also treated as a single unit of accounting,which we refer to as the combined unit of accounting. With respect to the combined unit of accounting, our obligation to provide access to our futureknow-how and technological improvements is the final deliverable and is an obligation which exists throughout the term of the Amended TakedaAgreement. In connection with the execution of the original Takeda Agreement, we received a $60.0 million upfront payment from Takeda in April 2010,which we recorded as deferred revenue, as well as approximately $1.0 million reimbursed to us during 2010 for certain expenses incurred prior toentering the agreement, which we considered an additional upfront payment. Because we cannot reasonably estimate the total level of effort required tocomplete the obligations under the combined deliverable, we are recognizing the entire $60.0 million upfront payment, the $1.0 million reimbursed to usin 2010, as well as any non-substantive milestone payments that are achieved into revenues on a straight-line basis over a period of ten years fromMarch 31, 2010, the date on which we originally entered the Takeda Agreement, which represented the then current patent life of Feraheme/Rienso andour best estimate of the period over which we will substantively perform our obligations. We continue to believe that the then current patent life ofFeraheme/Rienso is our best estimate of the period over which we will substantively perform our obligations under this agreement. Revenues related tothe combined unit of accounting and any reimbursement revenues are recorded in license fee and other collaboration revenues in our consolidatedstatement of operations. During the years ended December 31, 2012, 2011 and 2010, we recorded $6.1 million, $6.1 million and $4.6 million inrevenues associated with the upfront payments. Any potential non-substantive milestone payments that may be received in the future will be recognizedas revenue on a cumulative catch up basis when they become due and payable. We have received and may also receive additional regulatory approval and performance-based milestone payments, reimbursement of certain out-of-pocket regulatory and clinical supply costs, defined payments for supply of Feraheme/Rienso, and tiered double-digit royalties on net product salesin the agreed-upon territories under the Amended Takeda Agreement. During 2012, we received $33.0 million in milestone payments from Takedaassociated with the EU approval and the commercial launches of Feraheme/Rienso in Canada and the EU. The remaining milestone payments we maybe entitled to receive under the agreement could over time equal approximately $186.0 million. We have determined that any milestone payments which may become due upon approval by certain regulatory agencies will be deemed substantivemilestones and, therefore, will be accounted for as revenue in the period in which they are achieved. In June 2012, we earned a $15.0 million milestonepayment from Takeda based on the European Commission marketing authorization for ferumoxytol. We deemed this milestone payment to be asubstantive milestone based on our analysis that the milestone consideration received was commensurate with our performance to achieve the milestone,was solely related to past performance, and was reasonable relative to all of the deliverables and payment terms, including other milestones, within thearrangement. Therefore, we recognized the $15.0 million milestone payment as revenue in the second quarter of 2012 in our consolidated statement ofoperations.131Table of Contents Additionally, we have determined that any non-substantive milestone payments will be accounted for in accordance with our revenue attributionmethod for the upfront payment, as described above. In the fourth quarter of 2012, we received an aggregate of $18.0 million in milestone paymentsfrom Takeda associated with the commercial launches of Feraheme/Rienso in Canada and the EU. We deemed these milestone payments to be non-substantive milestone payments and accordingly, we recognized approximately $5.0 million of the $18.0 million on a cumulative catch up basis in thefourth quarter of 2012 in our consolidated statement of operations. Under the terms of the Amended Takeda Agreement, Takeda is responsible for reimbursing us for certain out-of-pocket regulatory and clinical trialsupply costs associated with carrying out our regulatory and clinical research activities under the collaboration agreement. Because we are acting as theprincipal in carrying out these services, any reimbursement payments received from Takeda will be recorded in license fee and other collaborationrevenues in our consolidated statement of operations to match the costs that we incur during the period in which we perform those services. Werecorded $0.4 million, $2.0 million and $1.6 million for the years ended December 31, 2012, 2011 and 2010, respectively, associated with otherreimbursement revenues received from Takeda. In accordance with current accounting guidance related to the recognition, presentation, and disclosure of revenue in the financial statements, werecord all revenue for Feraheme/Rienso sold to our licensees in deferred revenues in our consolidated balance sheets. We will recognize revenues fromproduct sales to our licensees, the related cost of goods sold, as well as any royalty revenues due from our licensees, in our consolidated statement ofoperations at the time our licensees report to us that sales have been made to its customers.3SBio In 2008, we entered into a Collaboration and Exclusive License Agreement, or the 3SBio License Agreement, and a Supply Agreement, or the3SBio Supply Agreement, with 3SBio for the development and commercialization of Feraheme as an IV iron replacement therapeutic agent in China.The 3SBio License Agreement grants 3SBio an exclusive license for an initial term of thirteen years to develop and commercialize Feraheme as atherapeutic agent in China for an initial indication for the treatment of IDA in patients with CKD, and an option to expand into additional therapeuticindications. In consideration of the grant of the license, we received an upfront payment of $1.0 million, the recognition of which has been deferred andwill be recognized under the proportional performance methodology over the remaining portion of the thirteen year initial term of the agreement once webegin to supply Feraheme to 3SBio. We are eligible to receive certain other specified milestone payments upon regulatory approval of Feraheme inChina for CKD and other indications. We are also entitled to receive tiered royalties of up to 25% based on net sales of Feraheme by 3SBio in China.We retained all manufacturing rights for Feraheme under these agreements. In addition, pursuant to the 3SBio Supply Agreement, 3SBio has agreed topurchase from us, and we have agreed to supply to 3SBio, Feraheme at a predetermined supply price for use in connection with 3SBio's developmentand commercialization obligations described above for so long as the 3SBio License Agreement is in effect. To date, we have not provided 3SBio withany commercial product under this agreement.O. Restructuring During 2012, we initiated a corporate restructuring, including a workforce reduction plan. The majority of the workforce reduction plan wasassociated with our manufacturing and development infrastructure, including our decision to divest our Cambridge, Massachusetts manufacturingfacility. As a result of the restructuring, we recorded charges of approximately $2.2 million in 2012. Of the $2.2 million in restructuring expense,approximately $1.5 million was related to employee severance and benefits, and approximately $0.7 million was related to the write-down of primarilyraw material inventory that was no longer usable due to the closure of the facility. The workforce reduction was132Table of Contentssubstantially completed by the end of 2012, and the majority of the related expenses were paid by the end of 2012. During 2011, we initiated a corporate restructuring, including a workforce reduction plan for which we recorded $3.5 million of restructuringrelated costs, primarily related to employee severance and benefits. The workforce reduction was substantially completed by the end of 2011 and themajority of the related expenses were paid by the end of 2012. The following table outlines the components of our restructuring expenses which were recorded in operating expenses and current liabilities for theyears ended December 31, 2012 and 2011 (in thousands):P. Consolidated Quarterly Financial Data—Unaudited The following tables provide unaudited consolidated quarterly financial data for the years ended December 31, 2012 and 2011 (in thousands,except per share data):133 December 31, 2012 2011 Accrued restructuring, beginning of period $2,366 $1,324 Employee severance, benefits and related costs 1,624 3,697 Payments (2,674) (2,523)Inventory and other adjustments 67 (132) Accrued restructuring, end of period $1,383 $2,366 March 31, 2012 June 30, 2012 September 30, 2012 December 31, 2012 U.S. product sales,net(a) $13,626 $14,094 $16,186 $14,381 International productsales and royalties — 168 (168) 120 License fee and othercollaborationrevenues(b) 1,753 16,592 1,566 6,564 Other product salesand royalties 101 158 158 79 Total revenues 15,480 31,012 17,742 21,144 Cost of product sales 2,646 3,224 4,323 4,027 Operating expenses 25,643 22,772 17,420 20,532 Restructuringexpenses(c) — 1,058 562 595 Interest and dividendincome, net 393 338 295 260 (Losses) gains oninvestments, net(d) — (1,471) 2 3 Income tax benefit — 494 299 61 Net income (loss) $(12,416)$3,319 $(3,967)$(3,686) Net income (loss) pershare—basic $(0.58)$0.16 $(0.19)$(0.17)Net income (loss) pershare—diluted $(0.58)$0.15 $(0.19)$(0.17)Table of ContentsQ. Valuation and Qualifying Accounts (in thousands) March 31, 2011 June 30, 2011 September 30, 2011 December 31, 2011 U.S. product sales,net(a) $10,861 $12,846 $15,560 $12,830 License fee and othercollaborationrevenues 2,327 2,288 1,707 1,999 Other product salesand royalties 197 268 288 78 Total revenues 13,385 15,402 17,555 14,907 Cost of product sales 3,041 2,082 2,669 2,739 Operating expenses 33,200 33,521 32,124 28,158 Restructuringexpenses(c) — — — 3,508 Interest and dividendincome, net 560 452 378 357 Gains (losses) oninvestments, net 1 (209) 14 1 Income tax benefit — 396 215 559 Net loss $(22,295)$(19,562)$(16,631)$(18,581) Net loss per share—basicand diluted $(1.05)$(0.92)$(0.78)$(0.87) Quarterly loss per share totals differ from annual loss per share totals due to rounding. (a) In the quarters ended September 30, 2012 and 2011, we revised our estimated Medicaid utilization rate, which resulted in areduction of our estimated Medicaid rebate reserve related to prior year Feraheme sales of $0.6 million and $2.5 million, respectively. Inaddition, in the first three quarters of 2012 we reduced our reserve for product returns by $2.2 million. (b) During the quarters ended June 30, 2012 and December 31, 2012, we recognized $15.0 million and $5.0 million related tocertain milestone payments we received from Takeda upon the EU marketing authorization of Rienso and the commercial launches ofFeraheme/Rienso in Canada and the EU, respectively. (c) In 2012 and 2011 we carried out corporate restructurings pursuant to which we reduced our workforce and incurred chargesrelated to employee severance and other related costs. (d) In June 2012, we sold our then remaining ARS portfolio and recognized a loss of approximately $1.5 million. Balance atBeginningof Period Additions(a) DeductionsCharged toReserves Balance atEnd ofPeriod Year ended December 31, 2012: Accounts receivable allowances(b) $1,822 $26,517 $(26,598)$1,741 Rebates, fees and returns reserves $5,943 $6,729 $(9,224)$3,448 Year ended December 31, 2011: Accounts receivable allowances(b) $1,148 $14,074 $(13,400)$1,822 Rebates, fees and returns reserves $10,015 $9,864 $(13,936)$5,943 Year ended December 31, 2010: Accounts receivable allowances(b) $499 $5,113 $(4,464)$1,148 Rebates, fees and returns reserves $5,657 $17,779 $(13,421)$10,015 (a)134(a)Additions to sales discounts, rebates, fees and returns reserves are recorded as a reduction of revenues. (b)We have not recorded an allowance for doubtful accounts in any of the years presented above. These accounts receivableallowances represent discounts and other chargebacks related to the provision for U.S. product sales.Table of ContentsR. Recently Issued and Proposed Accounting Pronouncements In June 2011, the Financial Accounting Standards Board, or FASB, issued amended guidance on the presentation of comprehensive income infinancial statements. This amendment provides companies the option to present the components of net income and other comprehensive income either asone continuous statement of comprehensive income or as two separate but consecutive statements. This guidance eliminates the option to presentcomponents of other comprehensive income as part of the statement of changes in stockholders' equity. The provisions of this guidance becameeffective in 2012. We have adopted all provisions of this pronouncement by including other comprehensive income as part of our consolidatedstatements of comprehensive loss and such adoption did not have a significant impact on our consolidated financial statements. In May 2011, the FASB issued an amendment to the accounting guidance for fair value measurements and related disclosures. This amendmentclarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimatedusing significant unobservable inputs, or Level 3 measurements. This guidance became effective for interim and annual periods beginning afterDecember 15, 2011. We have adopted all provisions of this pronouncement and such adoption did not have a significant impact on our consolidatedfinancial statements.135Table of ContentsITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE: None.ITEM 9A. CONTROLS AND PROCEDURES: Managements' Evaluation of our Disclosure Controls and Procedures Our principal executive officer and principal financial officer, after evaluating the effectiveness of our "disclosure controls and procedures" (asdefined in the Exchange Act Rule 13a-15(e), or Rule 15d-15(e)), with the participation of our management, have each concluded that, as ofDecember 31, 2012, the end of the period covered by this Annual Report on Form 10-K, our disclosure controls and procedures were designed andwere effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the SecuritiesExchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and ExchangeCommission's rules and forms and that such information is accumulated and communicated to management, including our principal executive officerand principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. It should be noted that any system of controls isdesigned to provide reasonable, but not absolute, assurances that the system will achieve its stated goals under all reasonably foreseeable circumstances.Management's Annual Report on Internal Control Over Financial Reporting Management's Report on Internal Control over Financial Reporting is contained in Part II, Item 8 "Financial Statements and Supplementary Data"of this Annual Report on Form 10-K for the year ended December 31, 2012 and is incorporated herein by reference.Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting that occurred during the fourth quarter of the year ended December 31, 2012that materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.ITEM 9B. OTHER INFORMATION: None.136Table of ContentsPART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE: The information required under this item is incorporated herein by reference to our definitive proxy statement pursuant to Regulation 14A, to befiled with the Securities and Exchange Commission, or the SEC, not later than 120 days after the close of our year ended December 31, 2012.ITEM 11. EXECUTIVE COMPENSATION: The information required under this item is incorporated herein by reference to our definitive proxy statement pursuant to Regulation 14A, to befiled with the SEC not later than 120 days after the close of our year ended December 31, 2012.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERS: The information required under this item is incorporated herein by reference to our definitive proxy statement pursuant to Regulation 14A, to befiled with the SEC not later than 120 days after the close of our year ended December 31, 2012.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE: The information required under this item is incorporated herein by reference to our definitive proxy statement pursuant to Regulation 14A, to befiled with the SEC not later than 120 days after the close of our year ended December 31, 2012.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES: The information required under this item is incorporated herein by reference to our definitive proxy statement pursuant to Regulation 14A, to befiled with the SEC not later than 120 days after the close of our year ended December 31, 2012.137Table of ContentsPART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES: (a)The following documents are filed as part of this Annual Report on Form 10-K: 1.Financial Statements.Management's Annual Report on Internal Control over Financial ReportingReport of Independent Registered Public Accounting FirmConsolidated Balance Sheets—as of December 31, 2012 and 2011Consolidated Statements of Operations—for the years ended December 31, 2012, 2011 and 2010Consolidated Statements of Comprehensive Loss—for the years ended December 31, 2012, 2011 and 2010Consolidated Statements of Stockholders' Equity—as of December 31, 2012, 2011 and 2010Consolidated Statements of Cash Flows—for the years ended December 31, 2012, 2011 and 2010Notes to Consolidated Financial Statements2.Financial Statement Schedules. No financial statement schedules have been submitted because they are not required, not applicable, orbecause the information required is included in the financial statements or the notes thereto. 3.Exhibit Index.138ExhibitNumber Description3.1, 4.1 Certificate of Incorporation of the Company, as restated (incorporated herein by reference to Exhibit 3.1 tothe Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, File No. 001-10865).3.2, 4.2 By-Laws of the Company, as amended (incorporated herein by reference to Exhibit 3.1 to the Company'sCurrent Report on Form 8-K filed November 28, 2008, File No. 0-14732).3.3, 4.3 Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated herein by referenceto Exhibit 3.1 and 4.1 to the Company's Current Report on Form 8-K filed September 4, 2009, File No. 0-14732).4.4 Specimen certificate representing the Company's Common Stock (incorporated herein by reference toExhibit 4.3 to the Current Report on Form 8-K filed September 4, 2009, File No. 0-14732).4.5 Rights Agreement dated as of September 4, 2009 by and among AMAG Pharmaceuticals, Inc. and AmericanStock Transfer & Trust Company, LLC (incorporated herein by reference to Exhibit 4.2 to the Company'sCurrent Report on Form 8-K filed September 4, 2009, File No. 0-14732).4.6 Amendment to Rights Agreement, dated May 10, 2012, by and between the Company and American StockTransfer & Trust Company LLC (incorporated herein by reference to Exhibit 4.1 to the Company's CurrentReport on Form 8-K filed May 10, 2012).4.7 Form of Rights Certificate (incorporated herein by reference to Exhibit 4.3 to the Company's Current Reporton Form 8-K filed September 4, 2009, File No. 0-14732).Table of Contents139ExhibitNumber Description10.1* Representative Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.2 to theCompany's Annual Report on Form 10-K for the year ended December 31, 2009, File No. 001-10865).10.2* Summary of the Company's Change of Control Policy applicable to executive officers (incorporated hereinby reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed February 13, 2006, FileNo. 0-14732).10.3* AMAG Pharmaceuticals, Inc. 2010 Employee Stock Purchase Plan (incorporated herein by reference toAppendix B to the Company's Definitive Proxy Statement on Schedule 14A, filed April 19, 2010, FileNo. 001-10865).10.4* AMAG Pharmaceuticals, Inc.'s Non-Employee Director Compensation Policy (incorporated herein byreference to Exhibit 10.4 to the Company's Annual Report on Form 10-K filed March 8, 2012, File No. 001-10865).10.5* Employment Agreement, dated as of May 6, 2012, by and between the Company and William K. Heiden(incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filedMay 10, 2012).10.6* Employment Agreement dated as of August 1, 2011 between the Company and Frank E. Thomas.(incorporated herein by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K filedMarch 8, 2012, File No. 001-10865).10.7* Second Amendment to Employment Agreement dated as of November 30, 2011 between the Company andFrank E. Thomas (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report onForm 8-K filed December 2, 2011, File No. 001-10865).10.8* Letter Agreement, dated as of May 9, 2012, by and between the Company and Frank E. Thomas(incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filedMay 10, 2012).10.9* Retention Agreement between the Company and Scott A. Holmes dated as of December 2, 2011(incorporated herein by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K filedMarch 8, 2012, File No. 001-10865).10.10*+ Second Amended and Restated Employment Agreement dated as of December 15, 2009, as amendedFebruary 1, 2011 and November 3, 2011 between the Company and Lee F. Allen, M.D., Ph.D.10.11* Retention Agreement dated as of August 27, 2012 between the Company and Lee F. Allen, M.D., Ph.D.(incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filedAugust 31, 2012, File No. 001-10865).10.12*+ Second Amended and Restated Employment Agreement dated as of December 15, 2009, as amendedFebruary 1, 2011 and November 3, 2011 between the Company and Christopher White.10.13*+ Employment Agreement dated as of August 15, 2012 between the Company and Scott B. Townsend.10.14*+ Employment Agreement dated as of January 1, 2013 between the Company and Greg Madison.10.15* Stockholder Agreement, May 9, 2012, by and between the Company and Adage Capital Management, L.P.(incorporated herein by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filedMay 10, 2012).10.16* Advanced Magnetics, Inc. Amended and Restated 2000 Stock Plan (incorporated herein by reference toAppendix A to the Company's definitive proxy statement for the year ended September 30, 2005, File No. 0-14732).10.17* Form of Stock Option Grant under the Company's 2000 Stock Plan (employees) (incorporated herein byreference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,2005, File No. 0-14732).Table of Contents140ExhibitNumber Description10.18* Form of Stock Option Grant under the Company's 2000 Stock Plan (non-employees) (incorporated herein byreference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,2005, File No. 0-14732).10.19* AMAG Pharmaceuticals, Inc. Second Amended and Restated 2007 Equity Incentive Plan (incorporatedherein by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A, filedApril 19, 2010, File No. 001-10865).10.20* Form of Option Agreement (ISO) under the Company's 2007 Equity Incentive Plan (incorporated herein byreference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed November 30, 2007, FileNo. 0-14732).10.21* Form of Option Agreement (Nonqualified Option) under the Company's 2007 Equity Incentive Plan(incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filedNovember 30, 2007, File No. 0-14732).10.22* Form of Restricted Stock Unit Agreement under the Company's 2007 Equity Incentive Plan (incorporatedherein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed November 30, 2007,File No. 0-14732).10.23* Form of Option Agreement (Nonqualified Option) for Annual Director Grants under the Company's SecondAmended and Restated 2007 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.4 to theCompany's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 001-10865).10.24* Form of Restricted Stock Unit Agreement for Annual Director Grants under the Company's SecondAmended and Restated 2007 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.5 to theCompany's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 001-10865).10.25* Form of November 2011 Restricted Stock Unit Agreement under the Company's Second Amended andRestated 2007 Equity Incentive Plan between the Company and the Company's executive officers(incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K filedMarch 8, 2012, File No. 001-10865).10.26* Form of November 2011 Restricted Stock Unit Agreement under the Company's Second Amended andRestated 2007 Equity Incentive Plan between the Company and each non-executive employee of theCompany (incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-Kfiled March 8, 2012, File No. 001-10865).10.27* Form of Non-Plan Restricted Stock Unit Agreement, by and between the Company and William K. Heiden(incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filedMay 10, 2012).10.28* Form of Non-Plan Stock Option Agreement, by and between the Company and William K. Heiden(incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filedMay 10, 2012).10.29* Option Agreement under the Company's Second Amended and Restated 2007 Equity Incentive Plan betweenthe Company and Lee F. Allen, dated as of June 25, 2012 (incorporated herein by reference to Exhibit 10.2to the Company's Current Report on Form 8-K filed June 29, 2012).10.30* Option Agreement under the Company's Second Amended and Restated 2007 Equity Incentive Plan betweenthe Company and Christopher G. White, dated as of June 25, 2012 (incorporated herein by reference toExhibit 10.3 to the Company's Current Report on Form 8-K filed June 29, 2012).Table of Contents141ExhibitNumber Description10.31 Lease Agreement, dated as of May 27, 2008, by and between AMAG Pharmaceuticals, Inc. and Mortimer B.Zuckerman and Edward H. Linde, trustees of 92 Hayden Avenue Trust under Declaration of Trust datedAugust 18, 1983 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report onForm 8-K filed May 29, 2008, File No. 0-14732).10.32 Collaboration and Exclusive License Agreement between the Company and 3SBio Inc., dated as of May 25,2008 (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q forthe quarter ended June 30, 2008, File No. 0-14732) (confidential treatment previously granted).10.33 Supply Agreement between the Company and 3SBio Inc., dated as of May 25, 2008 (incorporated herein byreference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,2008, File No. 0-14732) (confidential treatment previously granted).10.34 Commercial Outsourcing Services Agreement, dated October 2008, by and between the Company andIntegrated Commercialization Services, Inc. (incorporated herein by reference to Exhibit 10.1 to theCompany's Current Report on Form 8-K filed July 1, 2009, File No. 0-14732) (confidential treatmentpreviously granted).10.35 First Amendment to Commercial Outsourcing Services Agreement, dated April 14, 2011, by and betweenthe Company and Integrated Commercialization Services, Inc. (incorporated herein by reference toExhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, FileNo. 001-10865).10.36 Second Amendment to Commercial Outsourcing Services Agreement, dated effective as of December 1,2011, by and between the Company and Integrated Commercialization Services, Inc. (incorporated herein byreference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed December 22, 2011, FileNo. 001-10865) (confidential treatment previously granted).10.37 Third Amendment to Commercial Outsourcing Services Agreement, dated effective as of August 1, 2012, byand between the Company and Integrated Commercialization Services, Inc. (incorporated herein by referenceto Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed November 7, 2012, File No. 001-10865) (confidential treatment previously granted).10.38 Commercial Packaging Services Agreement, dated May 29, 2009, by and between the Company andPackaging Coordinators, LLC (formerly Catalent Pharma Solutions LLC) (incorporated herein by referenceto Exhibit 10.2 to the Company's Current Report on Form 8-K filed July 1, 2009, File No. 0-14732)(confidential treatment previously granted).10.39+ Amendment No. 1 to Commercial Packaging Services Agreement, dated January 29, 2013, by and betweenthe Company and Packaging Coordinators, LLC (formerly Catalent Pharma Solutions LLC) (Certainconfidential information contained in this exhibit was omitted by means of redacting a portion of the text andreplacing it with [***]. This exhibit has been filed separately with the SEC without the redaction pursuant toa Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934, as amended).10.40 License, Development and Commercialization Agreement by and between the Company and TakedaPharmaceutical Company Limited, dated March 31, 2010 (incorporated herein by reference to Exhibit 10.1 tothe Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, File No. 001-10865)(confidential treatment previously granted).Table of Contents142ExhibitNumber Description10.41 Amendment to the License, Development and Commercialization Agreement, dated June 25, 2012, by andbetween the Company and Takeda Pharmaceutical Company Limited (incorporated herein by reference toExhibit 10.1 to the Company's Current Report on Form 8-K filed June 29, 2012, File No. 001-10865)(confidential treatment previously granted).10.42 Commercial Supply Agreement, dated effective as of August 29, 2012, by and between the Company andSigma-Aldrich, Inc. (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report onForm 10-Q filed November 7, 2012, File No. 001-10865) (confidential treatment previously granted).10.43 Pharmaceutical Manufacturing and Supply Agreement, dated effective as of January 8, 2010, by and betweenthe Company and DSM Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.4 to theCompany's Quarterly Report on Form 10-Q filed November 7, 2012, File No. 001-10865) (confidentialtreatment previously granted).21.1+ Subsidiaries of the Company.23.1+ Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm.24.1 Power of Attorney (included on the signature page(s) hereto)31.1+ Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302of the Sarbanes-Oxley Act of 2002.31.2+ Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act, as Adopted Pursuant to Section 302of the Sarbanes-Oxley Act of 2002.32.1++ Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2++ Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.101++ The following materials from AMAG Pharmaceuticals, Inc.'s Annual Report on Form 10-K for the yearended December 31, 2012, formatted in Extensible Business Reporting Language (XBRL): (i) ConsolidatedBalance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of ComprehensiveLoss, (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash, and(vi) Notes to Consolidated Financial Statements.+Exhibits marked with a plus sign ("+") are filed herewith. ++Exhibits marked with a double plus sign ("++") are furnished herewith. *Exhibits marked with a single asterisk reference management contracts, compensatory plans or arrangements, filed in response toItem 15(a)(3) of the instructions to Form 10-K.The other exhibits listed have previously been filed with the SEC and are incorporated herein by reference, as indicated.(b)Exhibits. We hereby file or furnish as exhibits, as the case may be, to this Form 10-K those exhibits listed in Part IV,Item 15(a)(3) above. (c)Financial Statement Schedules. No financial statement schedules have been submitted because they are not required, notapplicable, or because the information required is included in the financial statements or the notes thereto.Table of ContentsSIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized. We, the undersigned officers and directors of AMAG Pharmaceuticals, Inc., hereby severally constitute and appoint William K. Heiden and ScottA. Holmes, and each of them singly, our true and lawful attorneys, with full power to them and each of them singly, to sign for us in our names in thecapacities indicated below, all amendments to this report, and generally to do all things in our names and on our behalf in such capacities to enableAMAG Pharmaceuticals, Inc. to comply with the provisions of the Securities Exchange Act of 1934, as amended, and all requirements of the Securitiesand Exchange Commission. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. AMAG PHARMACEUTICALS, INC. By: /s/ WILLIAM K. HEIDENWilliam K. HeidenPresident and Chief Executive Officer Date: March 1, 2013Name Title Date/s/ WILLIAM K. HEIDENWilliam K. Heiden President and Chief Executive Officer (Principal Executive Officer) March 1, 2013/s/ SCOTT A. HOLMESScott A. Holmes Chief Accounting Officer, Vice President of Finance and Controller (PrincipalFinancial and Accounting Officer) March 1, 2013/s/ JOSEPH V. BONVENTRE, MD, PHDJoseph V. Bonventre, MD, PhD Director March 1, 2013/s/ RAJIV DE SILVARajiv De Silva Director March 1, 2013/s/ MICHAEL NARACHIMichael Narachi Director March 1, 2013/s/ ROBERT J. PEREZRobert J. Perez Director March 1, 2013/s/ LESLEY RUSSELL, MB. CH.B., MRCPLesley Russell, MB. Ch.B., MRCP Director March 1, 2013/s/ GINO SANTINIGino Santini Director March 1, 2013/s/ DAVEY S. SCOON143Davey S. Scoon Director March 1, 2013Table of Contents144ExhibitNumber Description 3.1, 4.1 Certificate of Incorporation of the Company, as restated (incorporated herein by reference to Exhibit 3.1 tothe Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, File No. 001-10865). 3.2, 4.2 By-Laws of the Company, as amended (incorporated herein by reference to Exhibit 3.1 to the Company'sCurrent Report on Form 8-K filed November 28, 2008, File No. 0-14732). 3.3, 4.3 Certificate of Designation of Series A Junior Participating Preferred Stock (incorporated herein by referenceto Exhibit 3.1 and 4.1 to the Company's Current Report on Form 8-K filed September 4, 2009, File No. 0-14732). 4.4 Specimen certificate representing the Company's Common Stock (incorporated herein by reference toExhibit 4.3 to the Current Report on Form 8-K filed September 4, 2009, File No. 0-14732). 4.5 Rights Agreement dated as of September 4, 2009 by and among AMAG Pharmaceuticals, Inc. andAmerican Stock Transfer & Trust Company, LLC (incorporated herein by reference to Exhibit 4.2 to theCompany's Current Report on Form 8-K filed September 4, 2009, File No. 0-14732). 4.6 Amendment to Rights Agreement, dated May 10, 2012, by and between the Company and American StockTransfer & Trust Company LLC (incorporated herein by reference to Exhibit 4.1 to the Company's CurrentReport on Form 8-K filed May 10, 2012). 4.7 Form of Rights Certificate (incorporated herein by reference to Exhibit 4.3 to the Company's Current Reporton Form 8-K filed September 4, 2009, File No. 0-14732). 10.1* Representative Form of Indemnification Agreement (incorporated herein by reference to Exhibit 10.2 to theCompany's Annual Report on Form 10-K for the year ended December 31, 2009, File No. 001-10865). 10.2* Summary of the Company's Change of Control Policy applicable to executive officers (incorporated hereinby reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed February 13, 2006, FileNo. 0-14732). 10.3* AMAG Pharmaceuticals, Inc. 2010 Employee Stock Purchase Plan (incorporated herein by reference toAppendix B to the Company's Definitive Proxy Statement on Schedule 14A, filed April 19, 2010, FileNo. 001-10865). 10.4* AMAG Pharmaceuticals, Inc.'s Non-Employee Director Compensation Policy (incorporated herein byreference to Exhibit 10.4 to the Company's Annual Report on Form 10-K filed March 8, 2012, FileNo. 001-10865). 10.5* Employment Agreement, dated as of May 6, 2012, by and between the Company and William K. Heiden(incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filedMay 10, 2012). 10.6* Employment Agreement dated as of August 1, 2011 between the Company and Frank E. Thomas.(incorporated herein by reference to Exhibit 10.8 to the Company's Annual Report on Form 10-K filedMarch 8, 2012, File No. 001-10865). 10.7* Second Amendment to Employment Agreement dated as of November 30, 2011 between the Company andFrank E. Thomas (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report onForm 8-K filed December 2, 2011, File No. 001-10865). 10.8* Letter Agreement, dated as of May 9, 2012, by and between the Company and Frank E. Thomas(incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filedMay 10, 2012). 10.9* Retention Agreement between the Company and Scott A. Holmes dated as of December 2, 2011(incorporated herein by reference to Exhibit 10.11 to the Company's Annual Report on Form 10-K filedMarch 8, 2012, File No. 001-10865). 10.10*+ Second Amended and Restated Employment Agreement dated as of December 15, 2009, as amendedFebruary 1, 2011 and November 3, 2011 between the Company and Lee F. Allen, M.D., Ph.D.Table of Contents145ExhibitNumber Description 10.11* Retention Agreement dated as of August 27, 2012 between the Company and Lee F. Allen, M.D., Ph.D.(incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filedAugust 31, 2012, File No. 001-10865). 10.12*+ Second Amended and Restated Employment Agreement dated as of December 15, 2009, as amendedFebruary 1, 2011 and November 3, 2011 between the Company and Christopher White. 10.13*+ Employment Agreement dated as of August 15, 2012 between the Company and Scott B. Townsend. 10.14*+ Employment Agreement dated as of January 1, 2013 between the Company and Greg Madison. 10.15* Stockholder Agreement, May 9, 2012, by and between the Company and Adage Capital Management, L.P.(incorporated herein by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filedMay 10, 2012). 10.16* Advanced Magnetics, Inc. Amended and Restated 2000 Stock Plan (incorporated herein by reference toAppendix A to the Company's definitive proxy statement for the year ended September 30, 2005, FileNo. 0-14732). 10.17* Form of Stock Option Grant under the Company's 2000 Stock Plan (employees) (incorporated herein byreference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,2005, File No. 0-14732). 10.18* Form of Stock Option Grant under the Company's 2000 Stock Plan (non-employees) (incorporated hereinby reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter endedMarch 31, 2005, File No. 0-14732). 10.19* AMAG Pharmaceuticals, Inc. Second Amended and Restated 2007 Equity Incentive Plan (incorporatedherein by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A, filedApril 19, 2010, File No. 001-10865). 10.20* Form of Option Agreement (ISO) under the Company's 2007 Equity Incentive Plan (incorporated herein byreference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed November 30, 2007, FileNo. 0-14732). 10.21* Form of Option Agreement (Nonqualified Option) under the Company's 2007 Equity Incentive Plan(incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filedNovember 30, 2007, File No. 0-14732). 10.22* Form of Restricted Stock Unit Agreement under the Company's 2007 Equity Incentive Plan (incorporatedherein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed November 30,2007, File No. 0-14732). 10.23* Form of Option Agreement (Nonqualified Option) for Annual Director Grants under the Company'sSecond Amended and Restated 2007 Equity Incentive Plan (incorporated herein by reference toExhibit 10.4 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, FileNo. 001-10865). 10.24* Form of Restricted Stock Unit Agreement for Annual Director Grants under the Company's SecondAmended and Restated 2007 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.5 to theCompany's Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File No. 001-10865). 10.25* Form of November 2011 Restricted Stock Unit Agreement under the Company's Second Amended andRestated 2007 Equity Incentive Plan between the Company and the Company's executive officers(incorporated herein by reference to Exhibit 10.21 to the Company's Annual Report on Form 10-K filedMarch 8, 2012, File No. 001-10865). 10.26* Form of November 2011 Restricted Stock Unit Agreement under the Company's Second Amended andRestated 2007 Equity Incentive Plan between the Company and each non-executive employee of theCompany (incorporated herein by reference to Exhibit 10.22 to the Company's Annual Report on Form 10-K filed March 8, 2012, File No. 001-10865).Table of Contents146ExhibitNumber Description 10.27* Form of Non-Plan Restricted Stock Unit Agreement, by and between the Company and William K. Heiden(incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filedMay 10, 2012). 10.28* Form of Non-Plan Stock Option Agreement, by and between the Company and William K. Heiden(incorporated herein by reference to Exhibit 10.3 to the Company's Current Report on Form 8-K filedMay 10, 2012). 10.29* Option Agreement under the Company's Second Amended and Restated 2007 Equity Incentive Planbetween the Company and Lee F. Allen, dated as of June 25, 2012 (incorporated herein by reference toExhibit 10.2 to the Company's Current Report on Form 8-K filed June 29, 2012). 10.30* Option Agreement under the Company's Second Amended and Restated 2007 Equity Incentive Planbetween the Company and Christopher G. White, dated as of June 25, 2012 (incorporated herein byreference to Exhibit 10.3 to the Company's Current Report on Form 8-K filed June 29, 2012). 10.31 Lease Agreement, dated as of May 27, 2008, by and between AMAG Pharmaceuticals, Inc. and MortimerB. Zuckerman and Edward H. Linde, trustees of 92 Hayden Avenue Trust under Declaration of Trust datedAugust 18, 1983 (incorporated herein by reference to Exhibit 10.1 to the Company's Current Report onForm 8-K filed May 29, 2008, File No. 0-14732). 10.32 Collaboration and Exclusive License Agreement between the Company and 3SBio Inc., dated as of May 25,2008 (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Qfor the quarter ended June 30, 2008, File No. 0-14732) (confidential treatment previously granted). 10.33 Supply Agreement between the Company and 3SBio Inc., dated as of May 25, 2008 (incorporated hereinby reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q for the quarter endedJune 30, 2008, File No. 0-14732) (confidential treatment previously granted). 10.34 Commercial Outsourcing Services Agreement, dated October 2008, by and between the Company andIntegrated Commercialization Services, Inc. (incorporated herein by reference to Exhibit 10.1 to theCompany's Current Report on Form 8-K filed July 1, 2009, File No. 0-14732) (confidential treatmentpreviously granted). 10.35 First Amendment to Commercial Outsourcing Services Agreement, dated April 14, 2011, by and betweenthe Company and Integrated Commercialization Services, Inc. (incorporated herein by reference toExhibit 10.1 to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011, FileNo. 001-10865). 10.36 Second Amendment to Commercial Outsourcing Services Agreement, dated effective as of December 1,2011, by and between the Company and Integrated Commercialization Services, Inc. (incorporated hereinby reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed December 22, 2011, FileNo. 001-10865) (confidential treatment previously granted). 10.37 Third Amendment to Commercial Outsourcing Services Agreement, dated effective as of August 1, 2012,by and between the Company and Integrated Commercialization Services, Inc. (incorporated herein byreference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q filed November 7, 2012, FileNo. 001-10865) (confidential treatment previously granted). 10.38 Commercial Packaging Services Agreement, dated May 29, 2009, by and between the Company andPackaging Coordinators, LLC (formerly Catalent Pharma Solutions LLC) (incorporated herein by referenceto Exhibit 10.2 to the Company's Current Report on Form 8-K filed July 1, 2009, File No. 0-14732)(confidential treatment previously granted).Table of Contents147ExhibitNumber Description 10.39+ Amendment No. 1 to Commercial Packaging Services Agreement, dated January 29, 2013, by and betweenthe Company and Packaging Coordinators, LLC (formerly Catalent Pharma Solutions LLC) (Certainconfidential information contained in this exhibit was omitted by means of redacting a portion of the textand replacing it with [***]. This exhibit has been filed separately with the SEC without the redactionpursuant to a Confidential Treatment Request under Rule 24b-2 of the Securities Exchange Act of 1934, asamended). 10.40 License, Development and Commercialization Agreement by and between the Company and TakedaPharmaceutical Company Limited, dated March 31, 2010 (incorporated herein by reference to Exhibit 10.1to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2010, File No. 001-10865) (confidential treatment previously granted). 10.41 Amendment to the License, Development and Commercialization Agreement, dated June 25, 2012, by andbetween the Company and Takeda Pharmaceutical Company Limited (incorporated herein by reference toExhibit 10.1 to the Company's Current Report on Form 8-K filed June 29, 2012, File No. 001-10865)(confidential treatment previously granted). 10.42 Commercial Supply Agreement, dated effective as of August 29, 2012, by and between the Company andSigma-Aldrich, Inc. (incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report onForm 10-Q filed November 7, 2012, File No. 001-10865) (confidential treatment previously granted). 10.43 Pharmaceutical Manufacturing and Supply Agreement, dated effective as of January 8, 2010, by andbetween the Company and DSM Pharmaceuticals, Inc. (incorporated herein by reference to Exhibit 10.4 tothe Company's Quarterly Report on Form 10-Q filed November 7, 2012, File No. 001-10865) (confidentialtreatment previously granted). 21.1+ Subsidiaries of the Company. 23.1+ Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm. 24.1 Power of Attorney (included on the signature page(s) hereto) 31.1+ Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act, as Adopted Pursuant toSection 302 of the Sarbanes-Oxley Act of 2002. 31.2+ Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act, as Adopted Pursuant toSection 302 of the Sarbanes-Oxley Act of 2002. 32.1++ Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2++ Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101++ The following materials from AMAG Pharmaceuticals, Inc.'s Annual Report on Form 10-K for the yearended December 31, 2012, formatted in Extensible Business Reporting Language (XBRL): (i) ConsolidatedBalance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements ofComprehensive Loss, (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements ofCash, and (vi) Notes to Consolidated Financial Statements.+Exhibits marked with a plus sign ("+") are filed herewith. ++Exhibits marked with a double plus sign ("++") are furnished herewith. *Exhibits marked with a single asterisk reference management contracts, compensatory plans or arrangements, filed in response toItem 15(a)(3) of the instructions to Form 10-K. The other exhibits listed have previously been filed with the SEC and are incorporated herein by reference, as indicated.Exhibit 10.10 AMENDED AND RESTATED EMPLOYMENT AGREEMENT This Amended and Restated Employment Agreement (the “Agreement”) is entered into as of December 15, 2009 (the “Effective Date”) by andbetween AMAG Pharmaceuticals, Inc., a Delaware corporation with offices at 100 Hayden Avenue, Lexington, MA 02421 (the “Company”), and Lee F. Allen,M.D., Ph.D., [Address] (“you”). Whereas, the Company and you wish to amend and restate the Employment Agreement dated as of August 6, 2007 by and between you and theCompany (the “Original Agreement”). Now therefore, in consideration of the premises and mutual agreements hereinafter set forth, and intending to be legally bound hereby, the partieshereto agree to amend and restate the Original Agreement as follows: 1. Position; Duties. a) Position. You shall serve as Chief Medical Officer and Executive Vice President of Clinical Development of the Company, reporting to theChief Executive Officer of the Company. b) Duties. You shall perform for the Company the duties customarily associated with the office of Chief Medical Officer andExecutive Vice President of Clinical Development and such other duties as may be assigned to you from time to time by the Company’s Chief ExecutiveOfficer or the Company’s Board of Directors (the “Board”) that are consistent with the duties normally performed by those performing the role of the mostsenior executives of similar entities. You shall devote substantially your full business time and best efforts to the performance of your duties hereunder and thebusiness and affairs of the Company and will not undertake or engage in any other employment, occupation or business enterprise; provided, however, thatyou may participate as a member of the board of directors or advisory board of other entities and in professional organizations and civic and charitableorganizations; provided further, that any such positions are disclosed to the Chief Executive Officer and/or the Board or the Audit Committee thereof and donot materially interfere with your duties and responsibilities to the Company. You shall be based in the Company’s principal offices, which currently are inLexington, Massachusetts. 2. Term. The term of this Agreement shall be for a three (3) year period commencing on the Effective Date unless terminated earlier pursuantto Section 4 below (the “Initial Term”). The term of this Agreement shall automatically renew for additional three-year terms (each, a “Renewal Term”)following the Initial Term and any Renewal Term unless either party provides written notice to the other party at least sixty (60) days before the end of theInitial Term or any Renewal Term, as applicable, that it does not desire to renew this Agreement, in which case this Agreement shall expire at the end of theInitial Term or any Renewal Term, as applicable. The Initial Term and any Renewal Term are referred to herein collectively as the “Term.” 3. Compensation and Benefits. The Company shall pay you the following compensation and benefits for all services rendered by you underthis Agreement: a) Base Salary. The Company will pay you a base salary at the annualized rate of at least $330,000 beginning with the yearcommencing January 1, 2010 (“Base Salary”), minus withholdings as required by law and other deductions authorized by you, which amount shall be paidin equal installments at the Company’s regular payroll intervals, but not less often than monthly. Your base salary may be increased annually by the Boardor the Compensation Committee in their sole discretion. b) Bonus. You will be eligible to receive an annual performance bonus (the “Annual Bonus”) of up to 40% of Base Salary for eachfiscal year during the Term of this Agreement beginning with the fiscal year ending December 31, 2009 based on the extent to which, in the discretion of theBoard or the Compensation Committee in consultation with the Chief Executive Officer you achieve or exceed specific and measurable individual andCompany performance objectives established by the Board or the Compensation Committee in consultation with the Chief Executive Officer andcommunicated to you in advance. The exact amount of the bonus for any year during the Term shall be determined by the Board or the CompensationCommittee in its sole discretion and may be more than the target bonus in the event you achieve all of your personal and Company performance objectives orless than the target bonus if you do not achieve all of your personal and Company performance objectives. The Company shall pay the Annual Bonus no laterthan two and a half months after the end of the fiscal year to which the applicable bonus relates. Unless otherwise provided herein, no bonus shall be deemedto have been earned by you for any year in which you are not actively employed by the Company on the last day of the fiscal year to which the bonus relates. c) Equity Compensation. You shall be eligible to receive stock options or other equity compensation under the Company’s equityincentive plans as determined by the Board or the Compensation Committee from time to time. d) Vacation. You will receive four (4) weeks of paid vacation per calendar year which shall accrue ratably on a monthly basis. e) Benefits. You will be eligible to participate in all group health, dental, 401(k), and other insurance and/or benefit plans that theCompany may offer to similarly situated executives of the Company from time to time on the same terms as offered to such other executives. f) Business Expenses. The Company will reimburse you for all reasonable and usual business expenses incurred by you in theperformance of your duties hereunder in accordance with the Company’s expense reimbursement policy. 4. Termination. Your employment with the Company may be terminated prior to the expiration of the Term as follows: a) Death. This Agreement shall terminate automatically upon your death. 2 b) Disability. The Company may terminate your employment in accordance with applicable laws in the event that you shall beprevented, by illness, accident, disability or any other physical or mental condition (to be determined by means of a written opinion of a competent medicaldoctor chosen by mutual agreement of the Company and you or your personal representative(s)) from substantially performing your duties and responsibilitieshereunder for one or more periods totaling one hundred and twenty (120) days in any twelve (12) month period. c) By the Company for Cause. The Company may terminate your employment for “Cause” upon written notice to you. Forpurposes of this Agreement, “Cause” shall mean any of: (i) fraud, embezzlement or theft against the Company or any of its affiliates; (ii) you are convicted of,or plead guilty or no contest to, a felony; (iii) willful nonperformance by you (other than by reason of illness) of your material duties hereunder and failure toremedy such nonperformance within ten (10) business days following written notice from the Chief Executive Officer, the Board and/or your supervisoridentifying the nonperformance and the actions required to cure it; or (iv) you commit an act of gross negligence, engage in willful misconduct or otherwise actwith willful disregard for the Company’s best interests, and you fail to remedy such conduct within ten (10) business days following written notice from theChief Executive Officer, the Board and/or your supervisor identifying the gross negligence, willful misconduct or willful disregard and the actions required tocure it (if such conduct can be cured). d) By the Company Other Than For Death, Disability or Cause. The Company may terminate your employment other than forCause, disability or death upon thirty (30) days prior written notice to you. e) By You For Good Reason or Any Reason. You may terminate your employment at any time with or without Good Reason uponthirty (30) days prior written notice to the Company. For purposes of this Agreement, “Good Reason” shall mean that any of the following occurs without yourprior written consent: (i) a material adverse change in your title, position, duties or responsibilities; (ii) a material reduction by the Company in your BaseSalary or your target Annual Bonus opportunity in the total annual amount that you are then eligible to receive, unless such reduction is in connection with aproportionate reduction of compensation applicable to all other executive officers; (iii) any relocation of your principal place of business to a location more than50 miles from the Company’s current executive offices in Lexington, MA; or (iv) a material breach by the Company of any of the terms or provisions of thisAgreement and failure to remedy such breach within thirty (30) days following written notice from you identifying the breach. 5. Payment Upon Termination. In the event that your employment with the Company terminates, you will be paid the following: a) Termination for Any Reason. In the event that your employment terminates for any reason, the Company shall pay you for thefollowing items that were earned and accrued but unpaid as of the date of your termination: (i) your Base Salary; (ii) a cash payment for all accrued, unusedvacation calculated at your then Base Salary rate; (iii) 3 reimbursement for any unpaid business expenses; and (iv) such other benefits and payments to which you may be entitled by law or pursuant to the benefitplans of the Company then in effect. In addition, if your employment terminates due to your death, the Board or the Compensation Committee, inconsultation with the Chief Executive Officer and/or your supervisor, shall determine the extent to which any of the individual performance objectivesestablished pursuant to Section 3(b) above were met as of the time of your death. If, based on that determination, the Board or the Compensation Committeedetermines that a bonus is due, the Company shall pay your estate an amount equal to such bonus, pro-rated for the portion of the fiscal year elapsed as of thetime of your death. b) Termination Without Cause or for Good Reason. In addition to the payments provided for in Section 5(a), in the event that (i) theCompany terminates your employment other than for death, disability or Cause pursuant to Section 4(d) or you terminate your employment for Good Reasonpursuant to Section 4(e); (ii) you comply fully with all of your obligations under all agreements between the Company and you; and (iii) you execute, deliver tothe Company, within 60 days of the termination of your employment, and do not revoke a general release (in a form acceptable to the Company) releasing andwaiving any and all claims that you have or may have against the Company, its directors, officers, employees, agents, successors and assigns with respect toyour employment (other than any obligation of the Company set forth herein which specifically survives the termination of your employment), then theCompany will provide you with twelve (12) months of severance pay based on your then current Base Salary. The foregoing severance shall be paid in equalinstallments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred to abovemay no longer be revoked. This Section 5(b) shall not apply during the one year period following a Change of Control (as defined below), in which caseSection 5(c) shall apply. c) Change of Control. Upon a Change of Control, fifty percent (50%) of the unvested portion of any options to purchase commonstock, restricted stock units and other equity incentives then held by you shall become immediately vested and the remaining unvested amount shall continueto vest after the closing of the Change of Control on the same vesting schedule but at 50% of the number of shares that were to vest on each vesting date prior tothe Change of Control. Further, in the event that (i) within one year from the date a Change of Control (as defined below) of the Company occurs, theCompany (for purposes of this section, such term to include its successor) terminates your employment other than for Cause pursuant to Section 4(c), deathor disability or you terminate your employment with Good Reason; (ii) you comply fully with all of your obligations under all agreements between theCompany and you; and (iii) within 60 days of termination of your employment you execute and deliver to the Company and do not revoke a general release (ina form acceptable to the Company) releasing and waiving any and all claims that you have or may have against the Company and its directors, officers,employees, agents, successors and assigns with respect to your employment (other than any obligation of the Company set forth herein which specificallysurvives the termination of your employment), then: · the Company will pay you twelve (12) months of severance pay based on your then current Base Salary, with such severance to be paid in equalinstallments over the severance period 4 in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred to above may no longer be revoked;· the Company will pay you, promptly after the revocation period of the release set forth above expires, in a lump sum, one times the average annual bonuspaid to you over the preceding three years, provided that in no event will a year prior to the year ended December 31, 2007 be used in this calculation;· the Company will pay or reimburse you for the premiums for continued coverage for you and your eligible dependents in the same amounts and for thesame coverage in effect immediately prior to your termination from employment, under the Company’s group health and dental plans until the earlier of:(i) twenty four (24) months from the date of termination of your employment; or (ii) the date you are provided with health and dental coverage by anotheremployer’s health and dental plan (and, for purposes of clarity, if the Company is unable to extend coverage to you under its group health and dentalplans due to your termination from active employment status, then, to receive this benefit, you must elect continuation coverage under COBRA and/orpurchase an individual insurance policy, and the Company shall have no obligation to pay or reimburse insurance premiums or otherwise providecoverage if you fail to elect COBRA or obtain an individual policy); and· all unvested outstanding stock options, restricted stock units and other equity incentives that were granted to you before the Change of Control occurredshall immediately without further action become vested in full. For purposes of this Agreement, “Change of Control” shall mean the first to occur of any of the following: (a) any “person” or “group” (as defined in theSecurities Exchange Act of 1934, as amended) becomes the beneficial owner of a majority of the combined voting power of the then outstanding votingsecurities with respect to the election of the Board of Directors of the Company; (b) any merger, consolidation or similar transaction involving the Company,other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the same proportion asimmediately prior to the transaction not less than 50% of the combined voting power of the then voting securities with respect to the election of the Board ofDirectors of the resulting entity; (c) any sale of all or substantially all of the assets of the Company; or (d) any other acquisition by a third party of all orsubstantially all of the business or assets of the Company, as determined by the Board of Directors, in its sole discretion. The payments, benefits andacceleration of vesting of stock options, restricted stock units and other equity incentives provided in this Section 5(c) shall override and replace with respectto you any Company wide policy with respect to payments, benefits and/or acceleration of vesting upon a Change of Control. After the one year periodfollowing a Change of Control, this Section 5(c) shall no longer apply, and Section 5(b) shall continue to apply. In the event that upon a Change of Control,the Company or the successor to or acquiror of the Company’s business (whether by sale of outstanding stock, merger, sale of substantially all the assets orotherwise) elects not to assume all the then unvested outstanding stock options, restricted stock units and other equity incentives that were granted to youbefore the Change of Control occurred, such securities shall immediately without further action become vested in full effective no later than the effective date ofthe Change of Control and you shall receive the value of such stock options, restricted stock units and other equity incentives as provided in the applicableacquisition agreement (or if no such provision is made, in the applicable equity incentive plan). 5 d) Death/Disability. In addition to the payments provided for in Section 5(a), in the event of your death or the termination of youremployment due to your disability in accordance with Section 4(b) above, all unvested outstanding stock options, restricted stock units and other equityincentives that were held by you at the time of your death or termination of employment due to disability shall immediately become fully vested and exercisableby you or your personal representatives, heirs or legatees, as the case may be, at any time prior to the expiration of one (1) year from the date of your death ordisability, but in no event after the expiration of the term of the applicable equity award agreement. 6. Nonsolicitation Covenant. In exchange for the consideration provided by this Agreement, you shall not, for a period of one year followingthe termination of your employment with the Company for any reason, directly or indirectly, whether through your own efforts, or in any way assisting oremploying the assistance of any other person or entity (including, without limitation, any consultant or any person employed by or associated with any entitywith which you are employed or associated), recruit, solicit or induce (or in any way assist another in recruiting, soliciting or inducing) any employee orconsultant of the Company to terminate his or her employment or other relationship with the Company. 7. Assignment. This Agreement and the rights and obligations of the parties hereto shall bind and inure to the benefit of any successor of theCompany by reorganization, merger or consolidation and any assignee of all or substantially all of its business and properties. Neither this Agreement nor anyrights or benefits hereunder may be assigned by you, except that, upon your death, your earned and unpaid economic benefits will be paid to your heirs orbeneficiaries. 8. Interpretation and Severability. It is the express intent of the parties that (a) in case any one or more of the provisions contained in thisAgreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provision shall be construed bylimiting and reducing it as determined by a court of competent jurisdiction, so as to be enforceable to the fullest extent compatible with applicable law; and(b) in case any one or more of the provisions contained in this Agreement cannot be so limited and reduced and for any reason is held to be invalid, illegal orunenforceable, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as ifsuch invalid, illegal or unenforceable provision had never been contained herein. 9. Notices. Any notice that you or the Company are required to give the other under this Agreement shall be given by personal delivery,recognized overnight courier service, or registered or certified mail, return receipt requested, addressed in your case to you at your last address of record withthe Company, or at such other place as you may from time to time designate in writing, and, in the case of the Company, to the Company at its principaloffice, or at such other office as the Company may from time to time designate in writing. The date of actual delivery of any notice under this Section 9 shallbe deemed to be the date of receipt thereof. 10. Waiver. No consent to or waiver of any breach or default in the performance of any obligation hereunder shall be deemed or construed to bea consent to or waiver of any other 6 breach or default in the performance of any of the same or any other obligations hereunder. No waiver hereunder shall be effective unless it is in writing andsigned by the waiving party. 11. Complete Agreement; Modification. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof,and supersedes any previous oral or written communications, negotiations, representations, understandings, or agreements between them. Any modification ofthis Agreement shall be effective only if set forth in a written document signed by you and a duly authorized officer of the Company. 12. Headings. The headings of the Sections hereof are inserted for convenience only and shall not be deemed to constitute a part, or affect themeaning, of this Agreement. 13. Counterparts. This Agreement may be signed in two (2) counterparts, each of which shall be deemed an original and both of which shalltogether constitute one agreement. 14. Choice of Law; Jurisdiction. This Agreement shall be deemed to have been made in the Commonwealth of Massachusetts, and thevalidity, interpretation and performance of this Agreement shall be governed by, and construed in accordance with, the laws of Massachusetts, without regardto conflict of law principles. You hereby consent and submit without limitation to the jurisdiction of courts in Massachusetts in connection with any actionarising out of this Agreement, and waive any right to object to any such forum as inconvenient or to object to venue in Massachusetts. You agree that, in anyaction arising out of this Agreement, you will accept service of process by registered mail or the equivalent directed to your last known address or by suchother means permitted by such court. 15. Advice of Counsel; No Representations. You acknowledge that you have been advised to review this Agreement with your own legalcounsel, that prior to entering into this Agreement, you have had the opportunity to review this Agreement with your attorney, and that the Company has notmade any representations, warranties, promises or inducements to you concerning the terms, enforceability or implications of this Agreement other than as arecontained in this Agreement. 16. I.R.C. § 409A. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement thatconstitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulationsand other guidance thereunder and any state law of similar effect (collectively, the “Section 409A”) shall not commence in connection with your termination ofemployment unless and until you have also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (the“Separation From Service”), unless the Company reasonably determines that such amounts may be provided to you without causing you to incur theadditional 20% tax under Section 409A. It is intended that each installment of severance pay provided for in this Agreement is a separate “payment” for purposes of Treasury RegulationSection 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that severance payments set forth in this Agreement satisfy, to the greatest extent possible,the exceptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-1(b)(9). 7 If the Company (or, if applicable, the successor entity thereto) determines that any payments or benefits constitute “deferred compensation” underSection 409A and you are, on the termination of service, a “specified employee” of the Company or any successor entity thereto, as such term is defined inSection 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A,the timing of the payments and benefits shall be delayed until the earlier to occur of: (a) the date that is six months and one day after your Separation FromService, or (b) the date of your death (such applicable date, the “Specified Employee Initial Payment Date”). On the Specified Employee Initial Payment Date,the Company (or the successor entity thereto, as applicable) shall (i) pay to you a lump sum amount equal to the sum of the payments and benefits that youwould otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of such amounts had not been sodelayed pursuant to this Section and (ii) commence paying the balance of the payments and benefits in accordance with the applicable payment schedules setforth in this Agreement. 17. Survival. Provisions of this Agreement which by their terms must survive the termination of this Agreement in order to effectuate the intentof the parties will survive any such termination, whether by expiration of the Term, termination of your employment, or otherwise, for such period as may beappropriate under the circumstances. Such provisions include, without limitation, Sections 5 and 6 of this Agreement. 18. Excise Tax-Related Provisions. In the event you become entitled to any amounts or benefits payable in connection with a Change ofControl, including the value of accelerated vesting of equity (and whether or not such amounts are payable pursuant to this Agreement) (the “Change of ControlPayments”), if any of such Change of Control Payments are subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any similarfederal, state or local tax that may hereafter be imposed), the Company shall pay you at the time specified in clause (c) below an additional amount (the“Gross-Up Payment”) such that the net amount retained by you, after deduction of any Excise Tax on the Change of Control Payments and any federal, stateand local income tax and Excise Tax upon the Gross Up Payment provided for by this Section 18, shall be equal to the Change of Control Payments;provided, however that in the event the aggregate value of the Change of Control Payments exceeds three times your “base amount,” as defined inSection 280G(b)(3) of the Code (the “Parachute Threshold”), by an amount equal to less than fifteen percent (15%) of the Parachute Threshold, the Changeof Control Payments shall be reduced to an aggregate amount that is two hundred ninety-nine percent (299%) of your “base amount” and the Company shallhave no obligation to make a Gross-Up Payment. The Company shall reduce or eliminate the Change of Control Payments by first reducing or eliminatingcash payments, and then by reducing or eliminating the portion of such Change of Control Payments which are not payable in cash, in each case in reverseorder beginning with payments or benefits which are to be paid the farthest in time from the Change of Control. This provision shall take precedence over theprovisions of any other plan, arrangement or agreement governing your rights and entitlements to any benefits or compensation. For the avoidance of doubt,(a) in no event shall the Company be required to pay to you any amount under this Section 18 with respect to any taxes or interest that may arise as a result ofSection 409A of the Code and (b) no part of the Gross Up Payment is intended to provide a gross up for your regular income or employment taxes with respectto the Change of Control Payments that are unrelated to the Excise Tax. 8 In addition, the following operational rules and limits shall apply to this Section 18. a) All determinations under this Section 18 shall be made at the expense of the Company by a nationally recognized tax counsel, publicaccounting firm or compensation consultant selected by the Company and subject to your approval, which approval shall not be unreasonably withheld. Such determinations shall be binding upon you and the Company. b) For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income taxes at the highest marginalrate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at your marginal rate oftaxation in the state and locality of your residence on the date of termination, net of the maximum reduction in federal income taxes which could be obtainedfrom deduction of such state and local taxes. c) The payments provided for in this Section 18 shall be made to you at least 30 days prior to such time as you are required to remit the taxesdescribed above to the applicable taxing authorities; provided, however, that if the amount of such payments cannot be finally determined on or before the datedue, the Company shall pay you on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shallpay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can bedetermined but in no event later than the sixtieth day after the date of your termination of employment. In the event that the amount of the estimated paymentsexceeds the amount subsequently determined to have been due, you shall repay such excess to the Company within fifteen (15) days after demand by theCompany (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). d) In no event will the Gross Up Payment paid under this Section 18 exceed $1 million even if the effect of such limit is that the net amountretained by you, after deduction of any Excise Tax on the Change of Control Payments and any federal, state and local income tax and Excise Tax upon theGross Up Payment provided for by this Section 18, shall be less than the Change of Control Payments. e) This Section 18 shall be of no further force or effect as of the earlier of (1) the expiration or termination of this Agreement and (2) the thirdanniversary of this Agreement. 9 IN WITNESS WHEREOF, the Company and you have executed this Agreement as of the day and year first set forth above. AMAG Pharmaceuticals, Inc. By:/s/ Brian J.G. PereiraName:Brian J.G. PereiraTitle:President and CEO /s/ Lee F. Allen, M.D., Ph.D.Lee F. Allen, M.D., Ph.D. AMENDMENT TOEMPLOYMENT AGREEMENT THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is entered into as of February 1, 2011 by and between AMAGPHARMACEUTICALS, INC., a Delaware corporation with offices at 100 Hayden Avenue, Lexington, MA 02421 (the “Company”), and LEE F. ALLEN,M.D., PH.D. of [Address] (the “Employee”). WHEREAS, the Employer and the Employee are parties to that certain Amended and Restated Employment Agreement, dated as of December 15, 2009 (the“Employment Agreement”); and WHEREAS, the parties hereto desire to amend the Employment Agreement as set forth herein. NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. Amendments. Pursuant to Section 11 of the Employment Agreement, Section 18 of the Employment Agreement is hereby deleted in its entirety andreplaced with the following: “18. Excise Tax-Related Provisions. If any payment or benefit you would receive pursuant to this Agreement or any other agreement (“Payment”)would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (b) but for this sentence, be subject to the excise taximposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be adjusted so that it would equal the Reduced Amount. The“Reduced Amount” shall be either (i) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Taxor (ii) the total Payment, whichever amount of (i) or (ii), after taking into account all applicable federal, state and local employment taxes, incometaxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in your receipt, on an after-tax basis, of the greater amount ofthe Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefitsconstituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, any such reduction will occur in a mannernecessary to provide you with the greatest post-reduction economic benefit. If more than one manner of reduction of Payments necessary to arrive atthe Reduced Amount yields the greatest economic benefit to you, the Payments will be reduced pro rata.” Pursuant to Section 11 of the Employment Agreement, Section 5(c) of the Employment Agreement is hereby deleted in its entirety andreplaced with the following: “c) Change of Control. Upon a Change of Control, subject to the terms of any other agreements that exist between you and the Company, fiftypercent (50%) of the unvested portion of any options to purchase common stock, restricted stock units and other equity incentives then held by you shallbecome immediately vested and the remaining unvested 2 amount shall continue to vest after the closing of the Change of Control on the same vesting schedule but at 50% of the number of shares that were to veston each vesting date prior to the Change of Control. Further, in the event that (i) within one year from the date a Change of Control (as defined below) ofthe Company occurs, the Company (for purposes of this section, such term to include its successor) terminates your employment other than for Causepursuant to Section 4(c), death or disability or you terminate your employment with Good Reason; (ii) you comply fully with all of your obligations underall agreements between the Company and you; and (iii) within 60 days of termination of your employment you execute and deliver to the Company and donot revoke a general release (in a form acceptable to the Company) releasing and waiving any and all claims that you have or may have against theCompany and its directors, officers, employees, agents, successors and assigns with respect to your employment (other than any obligation of theCompany set forth herein which specifically survives the termination of your employment), then: · the Company will pay you twelve (12) months of severance pay based on your then current Base Salary, with such severance to be paid in equalinstallments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred toabove may no longer be revoked;· the Company will pay you, promptly after the revocation period of the release set forth above expires, in a lump sum, one times your target annualbonus amount for the year in which the Change of Control occurs;· the Company will pay or reimburse you for the premiums for continued coverage for you and your eligible dependents in the same amounts and forthe same coverage in effect immediately prior to your termination from employment, under the Company’s group health and dental plans until theearlier of: (i) twenty four (24) months from the date of termination of your employment; or (ii) the date you are provided with health and dentalcoverage by another employer’s health and dental plan (and, for purposes of clarity, if the Company is unable to extend coverage to you under itsgroup health and dental plans due to your termination from active employment status, then, to receive this benefit, you must elect continuationcoverage under COBRA and/or purchase an individual insurance policy, and the Company shall have no obligation to pay or reimburse insurancepremiums or otherwise provide coverage if you fail to elect COBRA or obtain an individual policy); and· all unvested outstanding stock options, restricted stock units and other equity incentives that were granted to you before the Change of Controloccurred shall immediately without further action become vested in full. For purposes of this Agreement, “Change of Control” shall mean the first to occur of any of the following: (a) any “person” or “group” (as defined in theSecurities Exchange Act of 1934, as amended) becomes the beneficial owner of a majority of the combined voting power of the then outstanding votingsecurities with respect to the election of the Board of Directors of the Company; (b) any merger, consolidation or similar transaction involving theCompany, other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the sameCompany, other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the sameproportion as immediately prior to the transaction not less than 50% of the combined voting power of the then voting securities with respect to the electionof the Board of Directors of the resulting entity; (c) any sale of all or 3 substantially all of the assets of the Company; or (d) any other acquisition by a third party of all or substantially all of the business or assets of theCompany, as determined by the Board of Directors, in its sole discretion. The payments, benefits and acceleration of vesting of stock options, restrictedstock units and other equity incentives provided in this Section 5(c) shall override and replace with respect to you any Company wide policy with respectto payments, benefits and/or acceleration of vesting upon a Change of Control. After the one year period following a Change of Control, thisSection 5(c) shall no longer apply, and Section 5(b) shall continue to apply. In the event that upon a Change of Control, the Company or the successor toor acquiror of the Company’s business (whether by sale of outstanding stock, merger, sale of substantially all the assets or otherwise) elects not toassume all the then unvested outstanding stock options, restricted stock units and other equity incentives that were granted to you before the Change ofControl occurred, such securities shall immediately without further action become vested in full effective no later than the effective date of the Change ofControl and you shall receive the value of such stock options, restricted stock units and other equity incentives as provided in the applicable acquisitionagreement (or if no such provision is made, in the applicable equity incentive plan).” 2. Continuation of Employment Agreement. Except as specifically amended hereby, the Employment Agreement shall remain of fullforce and effect and is hereby ratified and affirmed in all respects. 3. Choice of Law; Jurisdiction. This Amendment shall be deemed to be a contract made under the laws of the Commonwealth ofMassachusetts, and the validity, interpretation and performance of this Amendment shall be governed by, and construed in accordance with, the laws ofMassachusetts, without regard to conflict of law principles. 4. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all ofwhich together shall constitute one and the same instrument. [Signature Page Follows] 4 IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Employment Agreement as of the day and year first set forth above. COMPANY:AMAG PHARMACEUTICALS, INC. By:/s/ Brian J.G. Pereira, M.D.Name:Brian J.G. Pereira, M.D.Title:President and Chief Executive Officer EMPLOYEE: By:/s/ Lee F. Allen, M.D., Ph.D.Name:Lee F. Allen, M.D., Ph.D. SECOND AMENDMENT TOEMPLOYMENT AGREEMENT THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this “Second Amendment”) is entered into as of November 3, 2011by and between AMAG PHARMACEUTICALS, INC., a Delaware corporation with offices at 100 Hayden Avenue, Lexington, MA 02421 (the“Company”), and LEE F. ALLEN, M.D., Ph.D., of [Address] (“Employee” or “you”). WHEREAS, the Company and the Employee are parties to that certain Amended and Restated Employment Agreement, dated as of December 15,2009, which was amended by the Amendment to Employment Agreement dated February 1, 2011 (as amended, the “Employment Agreement”); WHEREAS, the Company and the Employee wish to further amend the Employment Agreement to comply with Section 409A of the InternalRevenue Code of 1986, as amended, concerning the timing of the execution of a release and payments made in connection with a separation of service; NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. Amendment to Section 5(b). Section 5(b) of the Employment Agreement is hereby amended and the following sentence is added after thelast sentence of Section 5(b): “Notwithstanding anything to the contrary herein, if any of the payments and benefits provided for in this Section 5(b) constitute non-qualified deferred compensation subject to Section 409A and the sixty (60) day period in which you must execute the release begins in onecalendar year and ends in another, the payments and benefits provided for in this Section 5(b) shall commence, be made or become effectivein the later calendar year.” 2. Amendment to Section 5(c). Section 5(c) of the Employment Agreement is hereby amended and the following sentence is added after thelast sentence of Section 5(c): “Notwithstanding anything to the contrary herein, if any of the payments and benefits provided for in this Section 5(c) constitute non-qualified deferred compensation subject to Section 409A and the sixty (60) day period in which you must execute the release begins in onecalendar year and ends in another, the payments and benefits provided for in this Section 5(b) shall commence, be made or become effectivein the later calendar year.” 3. Continuation of Employment Agreement. Except as specifically amended by this Second Amendment, the Employment Agreementshall remain in full force and effect and is hereby ratified and affirmed in all respects. 2 4. Choice of Law; Jurisdiction. This Second Amendment shall be deemed to be a contract made under the laws of the Commonwealth ofMassachusetts, and the validity, interpretation and performance of this Second Amendment shall be governed by, and construed in accordance with, the lawsof Massachusetts, without regard to conflict of law principles. 5. Counterparts. This Second Amendment may be executed in two or more counterparts, each of which shall be deemed an original, butall of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Employment Agreement as of the day and year first setforth above. COMPANY: AMAG PHARMACEUTICALS, INC. By:/s/ Joseph L. FarmerName:Joseph L. FarmerTitle:General Counsel & SVP Legal EMPLOYEE: By:/s/ Lee F. Allen, M.D., Ph.D.Name:Lee F. Allen, M.D., Ph.D. 3Exhibit 10.12 AMENDED AND RESTATED EMPLOYMENT AGREEMENT This Amended and Restated Employment Agreement (the “Agreement”) is entered into as of December 15, 2009 (the “Effective Date”) by andbetween AMAG Pharmaceuticals, Inc., a Delaware corporation with offices at 100 Hayden Avenue, Lexington, MA 02421 (the “Company”), and ChristopherWhite of [Address] (“you”). Whereas, the Company and you wish to amend and restate the Employment Agreement dated as of May 6, 2008 by and between you and theCompany (the “Original Agreement”). Now therefore, in consideration of the premises and mutual agreements hereinafter set forth, and intending to be legally bound hereby, the partieshereto agree to amend and restate the Original Agreement as follows: 1. Position; Duties. a) Position. You shall serve as Senior Vice President of Business Development and Corporate Planning, reporting to the Executive VicePresident, Chief Business Officer and Chief Financial Officer of the Company. b) Duties. You shall perform for the Company the duties customarily associated with the office of Senior Vice President ofBusiness Development and Corporate Planning and such other duties as may be assigned to you from time to time by the Company’s Executive VicePresident, Chief Business Officer and Chief Financial Officer or the Company’s Board of Directors (the “Board”) that are consistent with the duties normallyperformed by those performing the role of the most senior executives of similar entities. You shall devote substantially your full business time and best effortsto the performance of your duties hereunder and the business and affairs of the Company and will not undertake or engage in any other employment,occupation or business enterprise; provided, however, that you may participate as a member of the board of directors or advisory board of other entities and inprofessional organizations and civic and charitable organizations; provided further, that any such positions are disclosed to the Chief Executive Officer and/orthe Board or the Audit Committee thereof and do not materially interfere with your duties and responsibilities to the Company. You shall be based in theCompany’s principal offices, which currently are in Lexington, Massachusetts. 2. Term. The term of this Agreement shall be for a three (3) year period commencing on the Effective Date unless terminated earlier pursuantto Section 4 below (the “Initial Term”). The term of this Agreement shall automatically renew for additional three-year terms (each, a “Renewal Term”)following the Initial Term and any Renewal Term unless either party provides written notice to the other party at least sixty (60) days before the end of theInitial Term or any Renewal Term, as applicable, that it does not desire to renew this Agreement, in which case this Agreement shall expire at the end of theInitial Term or any Renewal Term, as applicable. The Initial Term and any Renewal Term are referred to herein collectively as the “Term.” 3. Compensation and Benefits. The Company shall pay you the following compensation and benefits for all services rendered by you underthis Agreement: a) Base Salary. The Company will pay you a base salary at the annualized rate of at least $260,000 beginning with the yearcommencing January 1, 2010 (“Base Salary”), minus withholdings as required by law and other deductions authorized by you, which amount shall be paidin equal installments at the Company’s regular payroll intervals, but not less often than monthly. Your base salary may be increased annually by the Boardor the Compensation Committee in their sole discretion. b) Bonus. You will be eligible to receive an annual performance bonus (the “Annual Bonus”) of up to 40% of Base Salary for eachfiscal year during the Term of this Agreement beginning with the fiscal year ending December 31, 2009 based on the extent to which, in the discretion of theBoard or the Compensation Committee in consultation with the Chief Executive Officer and/or your supervisor you achieve or exceed specific and measurableindividual and Company performance objectives established by the Board or the Compensation Committee in consultation with the Chief Executive Officerand/or your supervisor and communicated to you in advance. The exact amount of the bonus for any year during the Term shall be determined by the Boardor the Compensation Committee in its sole discretion and may be more than the target bonus in the event you achieve all of your personal and Companyperformance objectives or less than the target bonus if you do not achieve all of your personal and Company performance objectives. The Company shall paythe Annual Bonus no later than two and a half months after the end of the fiscal year to which the applicable bonus relates. Unless otherwise provided herein,no bonus shall be deemed to have been earned by you for any year in which you are not actively employed by the Company on the last day of the fiscal year towhich the bonus relates. c) Equity Compensation. You shall be eligible to receive stock options or other equity compensation under the Company’s equityincentive plans as determined by the Board or the Compensation Committee from time to time. d) Vacation. You will receive four (4) weeks of paid vacation per calendar year which shall accrue ratably on a monthly basis. e) Benefits. You will be eligible to participate in all group health, dental, 401(k), and other insurance and/or benefit plans that theCompany may offer to similarly situated executives of the Company from time to time on the same terms as offered to such other executives. f) Business Expenses. The Company will reimburse you for all reasonable and usual business expenses incurred by you in theperformance of your duties hereunder in accordance with the Company’s expense reimbursement policy. 4. Termination. Your employment with the Company may be terminated prior to the expiration of the Term as follows: 2 a) Death. This Agreement shall terminate automatically upon your death. b) Disability. The Company may terminate your employment in accordance with applicable laws in the event that you shall beprevented, by illness, accident, disability or any other physical or mental condition (to be determined by means of a written opinion of a competent medicaldoctor chosen by mutual agreement of the Company and you or your personal representative(s)) from substantially performing your duties and responsibilitieshereunder for one or more periods totaling one hundred and twenty (120) days in any twelve (12) month period. c) By the Company for Cause. The Company may terminate your employment for “Cause” upon written notice to you. Forpurposes of this Agreement, “Cause” shall mean any of: (i) fraud, embezzlement or theft against the Company or any of its affiliates; (ii) you are convicted of,or plead guilty or no contest to, a felony; (iii) willful nonperformance by you (other than by reason of illness) of your material duties hereunder and failure toremedy such nonperformance within ten (10) business days following written notice from the Chief Executive Officer, the Board and/or your supervisoridentifying the nonperformance and the actions required to cure it; or (iv) you commit an act of gross negligence, engage in willful misconduct or otherwise actwith willful disregard for the Company’s best interests, and you fail to remedy such conduct within ten (10) business days following written notice from theChief Executive Officer, the Board and/or your supervisor identifying the gross negligence, willful misconduct or willful disregard and the actions required tocure it (if such conduct can be cured). d) By the Company Other Than For Death, Disability or Cause. The Company may terminate your employment other than forCause, disability or death upon thirty (30) days prior written notice to you. e) By You For Good Reason or Any Reason. You may terminate your employment at any time with or without Good Reason uponthirty (30) days prior written notice to the Company. For purposes of this Agreement, “Good Reason” shall mean that any of the following occurs without yourprior written consent: (i) a material adverse change in your title, position, duties or responsibilities; (ii) a material reduction by the Company in your BaseSalary or your target Annual Bonus opportunity in the total annual amount that you are then eligible to receive, unless such reduction is in connection with aproportionate reduction of compensation applicable to all other executive officers; (iii) any relocation of your principal place of business to a location more than50 miles from the Company’s current executive offices in Lexington, MA; or (iv) a material breach by the Company of any of the terms or provisions of thisAgreement and failure to remedy such breach within thirty (30) days following written notice from you identifying the breach. 5. Payment Upon Termination. In the event that your employment with the Company terminates, you will be paid the following: a) Termination for Any Reason. In the event that your employment terminates for any reason, the Company shall pay you for thefollowing items that were earned and accrued but unpaid as of the date of your termination: (i) your Base Salary; (ii) a cash 3 payment for all accrued, unused vacation calculated at your then Base Salary rate; (iii) reimbursement for any unpaid business expenses; and (iv) such otherbenefits and payments to which you may be entitled by law or pursuant to the benefit plans of the Company then in effect. In addition, if your employmentterminates due to your death, the Board or the Compensation Committee, in consultation with the Chief Executive Officer and/or your supervisor, shalldetermine the extent to which any of the individual performance objectives established pursuant to Section 3(b) above were met as of the time of your death. If,based on that determination, the Board or the Compensation Committee determines that a bonus is due, the Company shall pay your estate an amount equal tosuch bonus, pro-rated for the portion of the fiscal year elapsed as of the time of your death. b) Termination Without Cause or for Good Reason. In addition to the payments provided for in Section 5(a), in the event that (i) theCompany terminates your employment other than for death, disability or Cause pursuant to Section 4(d) or you terminate your employment for Good Reasonpursuant to Section 4(e); (ii) you comply fully with all of your obligations under all agreements between the Company and you; and (iii) you execute, deliver tothe Company, within 60 days of the termination of your employment, and do not revoke a general release (in a form acceptable to the Company) releasing andwaiving any and all claims that you have or may have against the Company, its directors, officers, employees, agents, successors and assigns with respect toyour employment (other than any obligation of the Company set forth herein which specifically survives the termination of your employment), then theCompany will provide you with twelve (12) months of severance pay based on your then current Base Salary. The foregoing severance shall be paid in equalinstallments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred to abovemay no longer be revoked. This Section 5(b) shall not apply during the one year period following a Change of Control (as defined below), in which caseSection 5(c) shall apply. c) Change of Control. Upon a Change of Control, fifty percent (50%) of the unvested portion of any options to purchase commonstock, restricted stock units and other equity incentives then held by you shall become immediately vested and the remaining unvested amount shall continueto vest after the closing of the Change of Control on the same vesting schedule but at 50% of the number of shares that were to vest on each vesting date prior tothe Change of Control. Further, in the event that (i) within one year from the date a Change of Control (as defined below) of the Company occurs, theCompany (for purposes of this section, such term to include its successor) terminates your employment other than for Cause pursuant to Section 4(c), deathor disability or you terminate your employment with Good Reason; (ii) you comply fully with all of your obligations under all agreements between theCompany and you; and (iii) within 60 days of termination of your employment you execute and deliver to the Company and do not revoke a general release (ina form acceptable to the Company) releasing and waiving any and all claims that you have or may have against the Company and its directors, officers,employees, agents, successors and assigns with respect to your employment (other than any obligation of the Company set forth herein which specificallysurvives the termination of your employment), then: 4 · the Company will pay you twelve (12) months of severance pay based on your then current Base Salary, with such severance to be paid in equalinstallments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred to abovemay no longer be revoked;· the Company will pay you, promptly after the revocation period of the release set forth above expires, in a lump sum, one times the average annual bonuspaid to you over the preceding three years, provided that in no event will a year prior to the year ended December 31, 2007 be used in this calculation;· the Company will pay or reimburse you for the premiums for continued coverage for you and your eligible dependents in the same amounts and for thesame coverage in effect immediately prior to your termination from employment, under the Company’s group health and dental plans until the earlier of:(i) twenty four (24) months from the date of termination of your employment; or (ii) the date you are provided with health and dental coverage by anotheremployer’s health and dental plan (and, for purposes of clarity, if the Company is unable to extend coverage to you under its group health and dentalplans due to your termination from active employment status, then, to receive this benefit, you must elect continuation coverage under COBRA and/orpurchase an individual insurance policy, and the Company shall have no obligation to pay or reimburse insurance premiums or otherwise providecoverage if you fail to elect COBRA or obtain an individual policy); and· all unvested outstanding stock options, restricted stock units and other equity incentives that were granted to you before the Change of Control occurredshall immediately without further action become vested in full. For purposes of this Agreement, “Change of Control” shall mean the first to occur of any of the following: (a) any “person” or “group” (as defined in theSecurities Exchange Act of 1934, as amended) becomes the beneficial owner of a majority of the combined voting power of the then outstanding votingsecurities with respect to the election of the Board of Directors of the Company; (b) any merger, consolidation or similar transaction involving the Company,other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the same proportion asimmediately prior to the transaction not less than 50% of the combined voting power of the then voting securities with respect to the election of the Board ofDirectors of the resulting entity; (c) any sale of all or substantially all of the assets of the Company; or (d) any other acquisition by a third party of all orsubstantially all of the business or assets of the Company, as determined by the Board of Directors, in its sole discretion. The payments, benefits andacceleration of vesting of stock options, restricted stock units and other equity incentives provided in this Section 5(c) shall override and replace with respectto you any Company wide policy with respect to payments, benefits and/or acceleration of vesting upon a Change of Control. After the one year periodfollowing a Change of Control, this Section 5(c) shall no longer apply, and Section 5(b) shall continue to apply. In the event that upon a Change of Control,the Company or the successor to or acquiror of the Company’s business (whether by sale of outstanding stock, merger, sale of substantially all the assets orotherwise) elects not to assume all the then unvested outstanding stock options, restricted stock units and other equity incentives that were granted to youbefore the Change of Control occurred, such securities shall immediately without further action become vested in full effective no later than the effective date ofthe Change of Control and you shall receive the value of such stock 5 options, restricted stock units and other equity incentives as provided in the applicable acquisition agreement (or if no such provision is made, in theapplicable equity incentive plan). d) Death/Disability. In addition to the payments provided for in Section 5(a), in the event of your death or the termination of youremployment due to your disability in accordance with Section 4(b) above, all unvested outstanding stock options, restricted stock units and other equityincentives that were held by you at the time of your death or termination of employment due to disability shall immediately become fully vested and exercisableby you or your personal representatives, heirs or legatees, as the case may be, at any time prior to the expiration of one (1) year from the date of your death ordisability, but in no event after the expiration of the term of the applicable equity award agreement. 6. Nonsolicitation Covenant. In exchange for the consideration provided by this Agreement, you shall not, for a period of one year followingthe termination of your employment with the Company for any reason, directly or indirectly, whether through your own efforts, or in any way assisting oremploying the assistance of any other person or entity (including, without limitation, any consultant or any person employed by or associated with any entitywith which you are employed or associated), recruit, solicit or induce (or in any way assist another in recruiting, soliciting or inducing) any employee orconsultant of the Company to terminate his or her employment or other relationship with the Company. 7. Assignment. This Agreement and the rights and obligations of the parties hereto shall bind and inure to the benefit of any successor of theCompany by reorganization, merger or consolidation and any assignee of all or substantially all of its business and properties. Neither this Agreement nor anyrights or benefits hereunder may be assigned by you, except that, upon your death, your earned and unpaid economic benefits will be paid to your heirs orbeneficiaries. 8. Interpretation and Severability. It is the express intent of the parties that (a) in case any one or more of the provisions contained in thisAgreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provision shall be construed bylimiting and reducing it as determined by a court of competent jurisdiction, so as to be enforceable to the fullest extent compatible with applicable law; and(b) in case any one or more of the provisions contained in this Agreement cannot be so limited and reduced and for any reason is held to be invalid, illegal orunenforceable, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as ifsuch invalid, illegal or unenforceable provision had never been contained herein. 9. Notices. Any notice that you or the Company are required to give the other under this Agreement shall be given by personal delivery,recognized overnight courier service, or registered or certified mail, return receipt requested, addressed in your case to you at your last address of record withthe Company, or at such other place as you may from time to time designate in writing, and, in the case of the Company, to the Company at its principaloffice, or at such other office as the Company may from time to time designate in writing. The date of actual delivery of any notice under this Section 9 shallbe deemed to be the date of receipt thereof. 6 10. Waiver. No consent to or waiver of any breach or default in the performance of any obligation hereunder shall be deemed or construed to bea consent to or waiver of any other breach or default in the performance of any of the same or any other obligations hereunder. No waiver hereunder shall beeffective unless it is in writing and signed by the waiving party. 11. Complete Agreement; Modification. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof,and supersedes any previous oral or written communications, negotiations, representations, understandings, or agreements between them. Any modification ofthis Agreement shall be effective only if set forth in a written document signed by you and a duly authorized officer of the Company. 12. Headings. The headings of the Sections hereof are inserted for convenience only and shall not be deemed to constitute a part, or affect themeaning, of this Agreement. 13. Counterparts. This Agreement may be signed in two (2) counterparts, each of which shall be deemed an original and both of which shalltogether constitute one agreement. 14. Choice of Law; Jurisdiction. This Agreement shall be deemed to have been made in the Commonwealth of Massachusetts, and thevalidity, interpretation and performance of this Agreement shall be governed by, and construed in accordance with, the laws of Massachusetts, without regardto conflict of law principles. You hereby consent and submit without limitation to the jurisdiction of courts in Massachusetts in connection with any actionarising out of this Agreement, and waive any right to object to any such forum as inconvenient or to object to venue in Massachusetts. You agree that, in anyaction arising out of this Agreement, you will accept service of process by registered mail or the equivalent directed to your last known address or by suchother means permitted by such court. 15. Advice of Counsel; No Representations. You acknowledge that you have been advised to review this Agreement with your own legalcounsel, that prior to entering into this Agreement, you have had the opportunity to review this Agreement with your attorney, and that the Company has notmade any representations, warranties, promises or inducements to you concerning the terms, enforceability or implications of this Agreement other than as arecontained in this Agreement. 16. I.R.C. § 409A. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement thatconstitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulationsand other guidance thereunder and any state law of similar effect (collectively, the “Section 409A”) shall not commence in connection with your termination ofemployment unless and until you have also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (the“Separation From Service”), unless the Company reasonably determines that such amounts may be provided to you without causing you to incur theadditional 20% tax under Section 409A. It is intended that each installment of severance pay provided for in this Agreement is a separate “payment” for purposes of Treasury RegulationSection 1.409A-2(b)(2)(i). For the 7 avoidance of doubt, it is intended that severance payments set forth in this Agreement satisfy, to the greatest extent possible, the exceptions from the applicationof Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-1(b)(9). If the Company (or, if applicable, the successor entity thereto) determines that any payments or benefits constitute “deferred compensation” underSection 409A and you are, on the termination of service, a “specified employee” of the Company or any successor entity thereto, as such term is defined inSection 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A,the timing of the payments and benefits shall be delayed until the earlier to occur of: (a) the date that is six months and one day after your Separation FromService, or (b) the date of your death (such applicable date, the “Specified Employee Initial Payment Date”). On the Specified Employee Initial Payment Date,the Company (or the successor entity thereto, as applicable) shall (i) pay to you a lump sum amount equal to the sum of the payments and benefits that youwould otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of such amounts had not been sodelayed pursuant to this Section and (ii) commence paying the balance of the payments and benefits in accordance with the applicable payment schedules setforth in this Agreement. 17. Survival. Provisions of this Agreement which by their terms must survive the termination of this Agreement in order to effectuate the intentof the parties will survive any such termination, whether by expiration of the Term, termination of your employment, or otherwise, for such period as may beappropriate under the circumstances. Such provisions include, without limitation, Sections 5 and 6 of this Agreement. 18. Excise Tax-Related Provisions. In the event you become entitled to any amounts or benefits payable in connection with a Change ofControl, including the value of accelerated vesting of equity (and whether or not such amounts are payable pursuant to this Agreement) (the “Change of ControlPayments”), if any of such Change of Control Payments are subject to the tax (the “Excise Tax”) imposed by Section 4999 of the Code (or any similarfederal, state or local tax that may hereafter be imposed), the Company shall pay you at the time specified in clause (c) below an additional amount (the“Gross-Up Payment”) such that the net amount retained by you, after deduction of any Excise Tax on the Change of Control Payments and any federal, stateand local income tax and Excise Tax upon the Gross Up Payment provided for by this Section 18, shall be equal to the Change of Control Payments;provided, however that in the event the aggregate value of the Change of Control Payments exceeds three times your “base amount,” as defined inSection 280G(b)(3) of the Code (the “Parachute Threshold”), by an amount equal to less than fifteen percent (15%) of the Parachute Threshold, the Changeof Control Payments shall be reduced to an aggregate amount that is two hundred ninety-nine percent (299%) of your “base amount” and the Company shallhave no obligation to make a Gross-Up Payment. The Company shall reduce or eliminate the Change of Control Payments by first reducing or eliminatingcash payments, and then by reducing or eliminating the portion of such Change of Control Payments which are not payable in cash, in each case in reverseorder beginning with payments or benefits which are to be paid the farthest in time from the Change of Control. This provision shall take precedence over theprovisions of any other plan, arrangement or agreement governing your rights and entitlements to any benefits or compensation. For the avoidance of doubt,(a) in no event shall the Company be required to pay to you any amount 8 under this Section 18 with respect to any taxes or interest that may arise as a result of Section 409A of the Code and (b) no part of the Gross Up Payment isintended to provide a gross up for your regular income or employment taxes with respect to the Change of Control Payments that are unrelated to the ExciseTax. In addition, the following operational rules and limits shall apply to this Section 18. a) All determinations under this Section 18 shall be made at the expense of the Company by a nationally recognized tax counsel, publicaccounting firm or compensation consultant selected by the Company and subject to your approval, which approval shall not be unreasonably withheld. Such determinations shall be binding upon you and the Company. b) For purposes of determining the amount of the Gross-Up Payment, you shall be deemed to pay federal income taxes at the highest marginalrate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at your marginal rate oftaxation in the state and locality of your residence on the date of termination, net of the maximum reduction in federal income taxes which could be obtainedfrom deduction of such state and local taxes. c) The payments provided for in this Section 18 shall be made to you at least 30 days prior to such time as you are required to remit the taxesdescribed above to the applicable taxing authorities; provided, however, that if the amount of such payments cannot be finally determined on or before the datedue, the Company shall pay you on such day an estimate, as determined in good faith by the Company, of the minimum amount of such payments and shallpay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount thereof can bedetermined but in no event later than the sixtieth day after the date of your termination of employment. In the event that the amount of the estimated paymentsexceeds the amount subsequently determined to have been due, you shall repay such excess to the Company within fifteen (15) days after demand by theCompany (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code). d) In no event will the Gross Up Payment paid under this Section 18 exceed $1 million even if the effect of such limit is that the net amountretained by you, after deduction of any Excise Tax on the Change of Control Payments and any federal, state and local income tax and Excise Tax upon theGross Up Payment provided for by this Section 18, shall be less than the Change of Control Payments. e) This Section 18 shall be of no further force or effect as of the earlier of (1) the expiration or termination of this Agreement and (2) the thirdanniversary of this Agreement. 9 IN WITNESS WHEREOF, the Company and you have executed this Agreement as of the day and year first set forth above. AMAG Pharmaceuticals, Inc. By:/s/ Brian J.G. PereiraName:Brian J.G. PereiraTitle:President and CEO /s/ Christopher WhiteChristopher White  AMENDMENT TOEMPLOYMENT AGREEMENT THIS AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”) is entered into as of February 1, 2011 by and between AMAGPHARMACEUTICALS, INC., a Delaware corporation with offices at 100 Hayden Avenue, Lexington, MA 02421 (the “Company”), and CHRISTOPHERWHITE of [Address] (the “Employee”). WHEREAS, the Employer and the Employee are parties to that certain Amended and Restated Employment Agreement, dated as of December 15, 2009 (the“Employment Agreement”); and WHEREAS, the parties hereto desire to amend the Employment Agreement as set forth herein. NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. Amendments. Pursuant to Section 11 of the Employment Agreement, Section 18 of the Employment Agreement is hereby deleted in its entirety andreplaced with the following: “18. Excise Tax-Related Provisions. If any payment or benefit you would receive pursuant to this Agreement or any other agreement (“Payment”)would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (b) but for this sentence, be subject to the excise taximposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be adjusted so that it would equal the Reduced Amount. The“Reduced Amount” shall be either (i) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Taxor (ii) the total Payment, whichever amount of (i) or (ii), after taking into account all applicable federal, state and local employment taxes, incometaxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in your receipt, on an after-tax basis, of the greater amount ofthe Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefitsconstituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, any such reduction will occur in a mannernecessary to provide you with the greatest post-reduction economic benefit. If more than one manner of reduction of Payments necessary to arrive atthe Reduced Amount yields the greatest economic benefit to you, the Payments will be reduced pro rata.” Pursuant to Section 11 of the Employment Agreement, Section 5(c) of the Employment Agreement is hereby deleted in its entirety andreplaced with the following: “c) Change of Control. Upon a Change of Control, subject to the terms of any other agreements that exist between you and the Company, fiftypercent (50%) of the unvested portion of any options to purchase common stock, restricted stock units and other equity incentives then held by you shallbecome immediately vested and the remaining unvested 2 amount shall continue to vest after the closing of the Change of Control on the same vesting schedule but at 50% of the number of shares that were to veston each vesting date prior to the Change of Control. Further, in the event that (i) within one year from the date a Change of Control (as defined below) ofthe Company occurs, the Company (for purposes of this section, such term to include its successor) terminates your employment other than for Causepursuant to Section 4(c), death or disability or you terminate your employment with Good Reason; (ii) you comply fully with all of your obligations underall agreements between the Company and you; and (iii) within 60 days of termination of your employment you execute and deliver to the Company and donot revoke a general release (in a form acceptable to the Company) releasing and waiving any and all claims that you have or may have against theCompany and its directors, officers, employees, agents, successors and assigns with respect to your employment (other than any obligation of theCompany set forth herein which specifically survives the termination of your employment), then: · the Company will pay you twelve (12) months of severance pay based on your then current Base Salary, with such severance to be paid in equalinstallments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred toabove may no longer be revoked;· the Company will pay you, promptly after the revocation period of the release set forth above expires, in a lump sum, one times your target annualbonus amount for the year in which the Change of Control occurs;· the Company will pay or reimburse you for the premiums for continued coverage for you and your eligible dependents in the same amounts and forthe same coverage in effect immediately prior to your termination from employment, under the Company’s group health and dental plans until theearlier of: (i) twenty four (24) months from the date of termination of your employment; or (ii) the date you are provided with health and dentalcoverage by another employer’s health and dental plan (and, for purposes of clarity, if the Company is unable to extend coverage to you under itsgroup health and dental plans due to your termination from active employment status, then, to receive this benefit, you must elect continuationcoverage under COBRA and/or purchase an individual insurance policy, and the Company shall have no obligation to pay or reimburse insurancepremiums or otherwise provide coverage if you fail to elect COBRA or obtain an individual policy); and· all unvested outstanding stock options, restricted stock units and other equity incentives that were granted to you before the Change of Controloccurred shall immediately without further action become vested in full. For purposes of this Agreement, “Change of Control” shall mean the first to occur of any of the following: (a) any “person” or “group” (as defined in theSecurities Exchange Act of 1934, as amended) becomes the beneficial owner of a majority of the combined voting power of the then outstanding votingsecurities with respect to the election of the Board of Directors of the Company; (b) any merger, consolidation or similar transaction involving theCompany, other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the sameproportion as immediately prior to the transaction not less than 50% of the combined voting power of the then voting securities with respect to the electionof the Board of Directors of the resulting entity; (c) any sale of all or 3 substantially all of the assets of the Company; or (d) any other acquisition by a third party of all or substantially all of the business or assets of theCompany, as determined by the Board of Directors, in its sole discretion. The payments, benefits and acceleration of vesting of stock options, restrictedstock units and other equity incentives provided in this Section 5(c) shall override and replace with respect to you any Company wide policy with respectto payments, benefits and/or acceleration of vesting upon a Change of Control. After the one year period following a Change of Control, thisSection 5(c) shall no longer apply, and Section 5(b) shall continue to apply. In the event that upon a Change of Control, the Company or the successor toor acquiror of the Company’s business (whether by sale of outstanding stock, merger, sale of substantially all the assets or otherwise) elects not toassume all the then unvested outstanding stock options, restricted stock units and other equity incentives that were granted to you before the Change ofControl occurred, such securities shall immediately without further action become vested in full effective no later than the effective date of the Change ofControl and you shall receive the value of such stock options, restricted stock units and other equity incentives as provided in the applicable acquisitionagreement (or if no such provision is made, in the applicable equity incentive plan).” 2. Continuation of Employment Agreement. Except as specifically amended hereby, the Employment Agreement shall remain of fullforce and effect and is hereby ratified and affirmed in all respects. 3. Choice of Law; Jurisdiction. This Amendment shall be deemed to be a contract made under the laws of the Commonwealth ofMassachusetts, and the validity, interpretation and performance of this Amendment shall be governed by, and construed in accordance with, the laws ofMassachusetts, without regard to conflict of law principles. 4. Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all ofwhich together shall constitute one and the same instrument. [Signature Page Follows] 4 IN WITNESS WHEREOF, the parties hereto have executed this Amendment to Employment Agreement as of the day and year first set forth above. COMPANY:AMAG PHARMACEUTICALS, INC. By:/s/ Brian J.G. Pereira, M.D.Name:Brian J.G. Pereira, M.D.Title:President and Chief Executive Officer EMPLOYEE: By:/s/ Christopher WhiteName:Christopher White SECOND AMENDMENT TOEMPLOYMENT AGREEMENT THIS SECOND AMENDMENT TO EMPLOYMENT AGREEMENT (this “Second Amendment”) is entered into as of November 3, 2011by and between AMAG PHARMACEUTICALS, INC., a Delaware corporation with offices at 100 Hayden Avenue, Lexington, MA 02421 (the“Company”), and CHRISTOPHER WHITE, of [Address] (“Employee” or “you”). WHEREAS, the Company and the Employee are parties to that certain Amended and Restated Employment Agreement, dated as of December 15,2009, which was amended by the Amendment to Employment Agreement dated February 1, 2011 (as amended, the “Employment Agreement”); WHEREAS, the Company and the Employee wish to further amend the Employment Agreement to comply with Section 409A of the InternalRevenue Code of 1986, as amended, concerning the timing of the execution of a release and payments made in connection with a separation of service; NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows: 1. Amendment to Section 5(b). Section 5(b) of the Employment Agreement is hereby amended and the following sentence is added after thelast sentence of Section 5(b): “Notwithstanding anything to the contrary herein, if any of the payments and benefits provided for in this Section 5(b) constitute non-qualified deferred compensation subject to Section 409A and the sixty (60) day period in which you must execute the release begins in onecalendar year and ends in another, the payments and benefits provided for in this Section 5(b) shall commence, be made or become effectivein the later calendar year.” 2. Amendment to Section 5(c). Section 5(c) of the Employment Agreement is hereby amended and the following sentence is added after thelast sentence of Section 5(c): “Notwithstanding anything to the contrary herein, if any of the payments and benefits provided for in this Section 5(c) constitute non-qualified deferred compensation subject to Section 409A and the sixty (60) day period in which you must execute the release begins in onecalendar year and ends in another, the payments and benefits provided for in this Section 5(b) shall commence, be made or become effectivein the later calendar year.” 3. Continuation of Employment Agreement. Except as specifically amended by this Second Amendment, the Employment Agreementshall remain in full force and effect and is hereby ratified and affirmed in all respects. 2 4. Choice of Law; Jurisdiction. This Second Amendment shall be deemed to be a contract made under the laws of the Commonwealth ofMassachusetts, and the validity, interpretation and performance of this Second Amendment shall be governed by, and construed in accordance with, the lawsof Massachusetts, without regard to conflict of law principles. 5. Counterparts. This Second Amendment may be executed in two or more counterparts, each of which shall be deemed an original, butall of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to Employment Agreement as of the day and year first setforth above. COMPANY: AMAG PHARMACEUTICALS, INC. By:/s/ Joseph L. FarmerName:Joseph L. FarmerTitle:General Counsel & SVP Legal EMPLOYEE: By:/s/ Christopher WhiteName:Christopher White 3Exhibit 10.13 EMPLOYMENT AGREEMENT This Employment Agreement (the “Agreement”) is entered into as of August 15, 2012 (the “Effective Date”) by and between AMAGPharmaceuticals, Inc., a Delaware corporation with offices at 100 Hayden Avenue, Lexington, MA 02421 (the “Company”), and Scott B. Townsend of[address] (“you”). Now therefore, in consideration of the premises and mutual agreements hereinafter set forth, and intending to be legally bound hereby, the partieshereto agree as follows: 1. Position; Duties. a) Position. You shall serve as Senior Vice President Legal Affairs & General Counsel of the Company. b) Duties. You shall perform for the Company the duties customarily associated with the office of Senior Vice President LegalAffairs & General Counsel and such other duties as may be assigned to you from time to time by the Company’s Executive Vice President and ChiefOperating Officer, the Company’s Chief Executive Officer or the Company’s Board of Directors (the “Board”) that are consistent with the duties normallyperformed by those performing the role of the most senior executives of similar entities. You shall devote substantially your full business time and best effortsto the performance of your duties hereunder and the business and affairs of the Company and will not undertake or engage in any other employment,occupation or business enterprise; provided, however, that you may participate as a member of the board of directors or advisory board of other entities and inprofessional organizations and civic and charitable organizations; provided further, that any such positions are disclosed to the Chief Executive Officer and/orthe Board or the Audit Committee thereof and do not materially interfere with your duties and responsibilities to the Company. You shall be based in theCompany’s principal offices, which currently are in Lexington, Massachusetts. 2. Term. The term of this Agreement shall be for a three (3) year period commencing on the Effective Date unless terminated earlier pursuantto Section 4 below (the “Initial Term”). The term of this Agreement shall automatically renew for additional three-year terms (each, a “Renewal Term”)following the Initial Term and any Renewal Term unless either party provides written notice to the other party at least sixty (60) days before the end of theInitial Term or any Renewal Term, as applicable, that it does not desire to renew this Agreement, in which case this Agreement shall expire at the end of theInitial Term or any Renewal Term, as applicable. The Initial Term and any Renewal Term are referred to herein collectively as the “Term.” 3. Compensation and Benefits. The Company shall pay you the following compensation and benefits for all services rendered by you underthis Agreement (subject to any tax withholdings required by law): a) Base Salary. The Company will pay you a base salary at the annualized rate of $315,000 (“Base Salary”), minus withholdingsas required by law and other deductions authorized by you, which amount shall be paid in equal installments at the Company’s regular payroll intervals, butnot less often than monthly. Your base salary may be increased annually by the Board or the Compensation Committee in their sole discretion. b) Bonus. You will be eligible to receive an annual performance bonus (the “Annual Bonus”) of up to 40% of Base Salary for eachfiscal year during the Term of this Agreement beginning with the fiscal year ending December 31, 2012 based on the extent to which, in the discretion of theBoard or the Compensation Committee in consultation with the Chief Executive Officer and/or your supervisor you achieve or exceed specific and measurableindividual and Company performance objectives established by the Board or the Compensation Committee in consultation with the Chief Executive Officerand/or your supervisor and communicated to you in advance. Notwithstanding the foregoing, your bonus opportunity with respect to the 2012 fiscal yearshall be pro rated based on the length of your employment during such fiscal year. The exact amount of the bonus for any year during the Term shall bedetermined by the Board or the Compensation Committee in its sole discretion and may be more than the target bonus in the event you achieve all of yourpersonal and Company performance objectives or less than the target bonus if you do not achieve all of your personal and Company performance objectives. The Company shall pay the Annual Bonus no later than two and a half months after the end of the fiscal year to which the applicable bonus relates. Unlessotherwise provided herein, no bonus shall be deemed to have been earned by you for any year in which you are not actively employed by the Company on thelast day of the fiscal year to which the bonus relates. In addition to the foregoing, effective on the first payroll date after the Effective Date, the Company shallpay you a sign-on bonus of $45,000, minus withholdings as required by law (the “Sign-On Bonus”). If you terminate your employment with the Companyprior to the one (1) year anniversary of the Effective Date, you shall reimburse the Company for one hundred percent (100%) of the Sign-On Bonus. c) Equity Compensation. Promptly after the first day of your employment with the Company, you shall be granted an option withrespect to 52,500 shares of Common Stock of the Company with an exercise price equal to the then fair market value of the Common Stock, and you shall begranted restricted stock units with respect to 17,500 shares of Common Stock. The equity incentives shall be granted under, and shall be subject to, theterms of the Company’s current equity incentive plan and applicable equity incentive agreements. These equity incentive grants shall vest in equal annualinstallments over a four year period commencing on the Effective Date. You shall be eligible to receive additional stock options or other equity compensation inthe future under the Company’s equity incentive plans as determined by the Board or the Compensation Committee from time to time. d) Vacation. You will receive four (4) weeks of paid vacation per calendar year which shall accrue ratably on a monthly basis. e) Benefits. You will be eligible to participate in all group health, dental, 401(k), and other insurance and/or benefit plans that theCompany may offer to similarly situated 2 executives of the Company from time to time on the same terms as offered to such other executives. f) Business Expenses. The Company will reimburse you for all reasonable and usual business expenses incurred by you in theperformance of your duties hereunder in accordance with the Company’s expense reimbursement policy, including but not limited to the following: (1) bardues and fees for State Bars for Massachusetts (active status) and Virginia (inactive status); (2) bar association fees for (i) the American Bar Association,(ii) the Massachusetts Bar Association, and (iii) the Association of Corporate Counsel; (3) employed lawyers liability insurance premiums up to $30,000 peryear; and (4) costs incurred in attending the Annual Meeting of Association of Corporate Counsel once per calendar year. 4. Termination. Your employment with the Company may be terminated prior to the expiration of the Term as follows: a) Death. This Agreement shall terminate automatically upon your death. b) Disability. The Company may terminate your employment in accordance with applicable laws in the event that you shall beprevented, by illness, accident, disability or any other physical or mental condition (to be determined by means of a written opinion of a competent medicaldoctor chosen by mutual agreement of the Company and you or your personal representative(s)) from substantially performing your duties and responsibilitieshereunder for one or more periods totaling one hundred and twenty (120) days in any twelve (12) month period. c) By the Company for Cause. The Company may terminate your employment for “Cause” upon written notice to you. Forpurposes of this Agreement, “Cause” shall mean any of: (i) fraud, embezzlement or theft against the Company or any of its affiliates; (ii) you are convicted of,or plead guilty or no contest to, a felony; (iii) willful nonperformance by you (other than by reason of illness) of your material duties hereunder and failure toremedy such nonperformance within ten (10) business days following written notice from the Chief Executive Officer, the Board and/or your supervisoridentifying the nonperformance and the actions required to cure it; or (iv) you commit an act of gross negligence, engage in willful misconduct or otherwise actwith willful disregard for the Company’s best interests, and you fail to remedy such conduct within ten (10) business days following written notice from theChief Executive Officer, the Board and/or your supervisor identifying the gross negligence, willful misconduct or willful disregard and the actions required tocure it (if such conduct can be cured). d) By the Company Other Than For Death, Disability or Cause. The Company may terminate your employment other than forCause, disability or death upon thirty (30) days prior written notice to you. e) By You For Good Reason or Any Reason. You may terminate your employment at any time with or without Good Reason uponthirty (30) days prior written notice to the Company. For purposes of this Agreement, “Good Reason” shall mean that any of the 3 following occurs without your prior written consent: (i) a material adverse change in your title, position, duties or responsibilities; (ii) a material reduction bythe Company in your Base Salary or your target Annual Bonus opportunity in the total annual amount that you are then eligible to receive, unless suchreduction is in connection with a proportionate reduction of compensation applicable to all other executive officers; (iii) any relocation of your principal place ofbusiness to a location more than 50 miles from the Company’s current executive offices in Lexington, MA; or (iv) a material breach by the Company of any ofthe terms or provisions of this Agreement and failure to remedy such breach within thirty (30) days following written notice from you identifying the breach. 5. Payment Upon Termination. In the event that your employment with the Company terminates, you will be paid the following (subject toany tax withholdings required by law): a) Termination for Any Reason. In the event that your employment terminates for any reason, the Company shall pay you for thefollowing items that were earned and accrued but unpaid as of the date of your termination: (i) your Base Salary; (ii) a cash payment for all accrued, unusedvacation calculated at your then Base Salary rate; (iii) reimbursement for any unpaid business expenses; and (iv) such other benefits and payments to whichyou may be entitled by law or pursuant to the benefit plans of the Company then in effect. In addition, if your employment terminates due to your death, theBoard or the Compensation Committee, in consultation with the Chief Executive Officer and/or your supervisor, shall determine the extent to which any of theindividual performance objectives established pursuant to Section 3(b) above were met as of the time of your death. If, based on that determination, the Boardor the Compensation Committee determines that a bonus is due, the Company shall pay your estate an amount equal to such bonus, pro-rated for the portionof the fiscal year elapsed as of the time of your death. b) Termination Without Cause or for Good Reason. In addition to the payments provided for in Section 5(a), in the event that (i) theCompany terminates your employment other than for death, disability or Cause pursuant to Section 4(d) or you terminate your employment for Good Reasonpursuant to Section 4(e); (ii) you comply fully with all of your obligations under all agreements between the Company and you; and (iii) you execute, deliver tothe Company, within 60 days of the termination of your employment, and do not revoke a general release (in a form acceptable to the Company) releasing andwaiving any and all claims that you have or may have against the Company, its directors, officers, employees, agents, successors and assigns with respect toyour employment (other than any obligation of the Company set forth herein which specifically survives the termination of your employment), then theCompany will provide you with twelve (12) months of severance pay based on your then current Base Salary. The foregoing severance shall be paid in equalinstallments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred to abovemay no longer be revoked. This Section 5(b) shall not apply during the one year period following a Change of Control (as defined below), in which caseSection 5(c) shall apply. Notwithstanding anything to the contrary herein, if any of the payments and benefits provided for in this Section 5(b) constitutenon-qualified deferred 4 compensation subject to Section 409A and the sixty (60) day period in which you must execute the release begins in one calendar year and ends in another, thepayments and benefits provided for in this Section 5(b) shall commence, be made or become effective in the later calendar year. c) Change of Control. Upon a Change of Control, subject to the terms of any other agreements that exist between you and theCompany, fifty percent (50%) of the unvested portion of any options to purchase common stock, restricted stock units and other equity incentives then heldby you shall become immediately vested and the remaining unvested amount shall continue to vest after the closing of the Change of Control on the samevesting schedule but at 50% of the number of shares that were to vest on each vesting date prior to the Change of Control. Further, in the event that (i) withinone year from the date a Change of Control (as defined below) of the Company occurs, the Company (for purposes of this Section, such term to include itssuccessor) terminates your employment other than for Cause pursuant to Section 4(c), death or disability or you terminate your employment with GoodReason; (ii) you comply fully with all of your obligations under all agreements between the Company and you; and (iii) within 60 days of termination of youremployment you execute and deliver to the Company and do not revoke a general release (in a form acceptable to the Company) releasing and waiving any andall claims that you have or may have against the Company and its directors, officers, employees, agents, successors and assigns with respect to youremployment (other than any obligation of the Company set forth herein which specifically survives the termination of your employment), then: · the Company will pay you twelve (12) months of severance pay based on your then current Base Salary, with such severance to be paid in equalinstallments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred toabove may no longer be revoked;· the Company will pay you, promptly after the revocation period of the release set forth above expires, in a lump sum, one times your target annualbonus amount for the year in which the Change of Control occurs;· the Company will pay or reimburse you for the premiums for continued coverage for you and your eligible dependents in the same amounts and forthe same coverage in effect immediately prior to your termination from employment, under the Company’s group health and dental plans until theearlier of: (i) twenty four (24) months from the date of termination of your employment; or (ii) the date you are provided with health and dentalcoverage by another employer’s health and dental plan (and, for purposes of clarity, if the Company is unable to extend coverage to you under itsgroup health and dental plans due to your termination from active employment status, then, to receive this benefit, you must elect continuationcoverage under COBRA and/or purchase an individual insurance policy, and the Company shall have no obligation to pay or reimburse insurancepremiums or otherwise provide coverage if you fail to elect COBRA or obtain an individual policy); and· all unvested outstanding stock options, restricted stock units and other equity incentives that were granted to you before the Change of Controloccurred shall immediately without further action become vested in full. 5 For purposes of this Agreement, “Change of Control” shall mean the first to occur of any of the following: (a) any “person” or “group” (as defined in theSecurities Exchange Act of 1934, as amended) becomes the beneficial owner of a majority of the combined voting power of the then outstanding votingsecurities with respect to the election of the Board of Directors of the Company; (b) any merger, consolidation or similar transaction involving the Company,other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the same proportion asimmediately prior to the transaction not less than 50% of the combined voting power of the then voting securities with respect to the election of the Board ofDirectors of the resulting entity; (c) any sale of all or substantially all of the assets of the Company; or (d) any other acquisition by a third party of all orsubstantially all of the business or assets of the Company, as determined by the Board of Directors, in its sole discretion. The payments, benefits andacceleration of vesting of stock options, restricted stock units and other equity incentives provided in this Section 5(c) shall override and replace with respectto you any Company wide policy with respect to payments, benefits and/or acceleration of vesting upon a Change of Control. After the one year periodfollowing a Change of Control, this Section 5(c) shall no longer apply, and Section 5(b) shall continue to apply. In the event that upon a Change of Control,the Company or the successor to or acquiror of the Company’s business (whether by sale of outstanding stock, merger, sale of substantially all the assets orotherwise) elects not to assume all the then unvested outstanding stock options, restricted stock units and other equity incentives that were granted to youbefore the Change of Control occurred, such securities shall immediately without further action become vested in full effective no later than the effective date ofthe Change of Control and you shall receive the value of such stock options, restricted stock units and other equity incentives as provided in the applicableacquisition agreement (or if no such provision is made, in the applicable equity incentive plan). Notwithstanding anything to the contrary herein, if any of the payments and benefits provided for in this Section 5(c) constitute non-qualified deferredcompensation subject to Section 409A and the sixty (60) day period in which you must execute the release begins in one calendar year and ends in another, thepayments and benefits provided for in this Section 5(c) shall commence, be made or become effective in the later calendar year. d) Death/Disability. In addition to the payments provided for in Section 5(a), in the event of your death or the termination of youremployment due to your disability in accordance with Section 4(b) above, all unvested outstanding stock options, restricted stock units and other equityincentives that were held by you at the time of your death or termination of employment due to disability shall immediately become fully vested, andexercisable by you or your personal representatives, heirs or legatees, as the case may be, at any time prior to the expiration of one (1) year from the date ofyour death or disability, but in no event after the expiration of the term of the applicable equity award agreement. 6. Nonsolicitation Covenant. In exchange for the consideration provided by this Agreement, you shall not, for a period of one year followingthe termination of your employment with the Company for any reason, directly or indirectly, whether through your own efforts, or in any way assisting oremploying the assistance of any other person or entity (including, without 6 limitation, any consultant or any person employed by or associated with any entity with which you are employed or associated), recruit, solicit or induce (orin any way assist another in recruiting, soliciting or inducing) any employee or consultant of the Company to terminate his or her employment or otherrelationship with the Company. 7. Assignment. This Agreement and the rights and obligations of the parties hereto shall bind and inure to the benefit of any successor of theCompany by reorganization, merger or consolidation and any assignee of all or substantially all of its business and properties. Neither this Agreement nor anyrights or benefits hereunder may be assigned by you, except that, upon your death, your earned and unpaid economic benefits will be paid to your heirs orbeneficiaries. 8. Interpretation and Severability. It is the express intent of the parties that (a) in case any one or more of the provisions contained in thisAgreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provision shall be construed bylimiting and reducing it as determined by a court of competent jurisdiction, so as to be enforceable to the fullest extent compatible with applicable law; and(b) in case any one or more of the provisions contained in this Agreement cannot be so limited and reduced and for any reason is held to be invalid, illegal orunenforceable, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as ifsuch invalid, illegal or unenforceable provision had never been contained herein. 9. Notices. Any notice that you or the Company are required to give the other under this Agreement shall be given by personal delivery,recognized overnight courier service, or registered or certified mail, return receipt requested, addressed in your case to you at your last address of record withthe Company, or at such other place as you may from time to time designate in writing, and, in the case of the Company, to the Company at its principaloffice, or at such other office as the Company may from time to time designate in writing. The date of actual delivery of any notice under this Section 9 shallbe deemed to be the date of receipt thereof. 10. Waiver. No consent to or waiver of any breach or default in the performance of any obligation hereunder shall be deemed or construed to bea consent to or waiver of any other breach or default in the performance of any of the same or any other obligations hereunder. No waiver hereunder shall beeffective unless it is in writing and signed by the waiving party. 11. Complete Agreement; Modification. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof,and supersedes any previous oral or written communications, negotiations, representations, understandings, or agreements between them. Any modification ofthis Agreement shall be effective only if set forth in a written document signed by you and a duly authorized officer of the Company. 12. Headings. The headings of the Sections hereof are inserted for convenience only and shall not be deemed to constitute a part, or affect themeaning, of this Agreement. 7 13. Counterparts. This Agreement may be signed in two (2) counterparts, each of which shall be deemed an original and both of which shalltogether constitute one agreement. 14. Choice of Law; Jurisdiction. This Agreement shall be deemed to have been made in the Commonwealth of Massachusetts, and thevalidity, interpretation and performance of this Agreement shall be governed by, and construed in accordance with, the laws of Massachusetts, without regardto conflict of law principles. You hereby consent and submit without limitation to the jurisdiction of courts in Massachusetts in connection with any actionarising out of this Agreement, and waive any right to object to any such forum as inconvenient or to object to venue in Massachusetts. You agree that, in anyaction arising out of this Agreement, you will accept service of process by registered mail or the equivalent directed to your last known address or by suchother means permitted by such court. 15. Advice of Counsel; No Representations. You acknowledge that you have been advised to review this Agreement with your own legalcounsel, that prior to entering into this Agreement, you have had the opportunity to review this Agreement with your attorney, and that the Company has notmade any representations, warranties, promises or inducements to you concerning the terms, enforceability or implications of this Agreement other than as arecontained in this Agreement. 16. I.R.C. § 409A. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement thatconstitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulationsand other guidance thereunder and any state law of similar effect (collectively, the “Section 409A”) shall not commence in connection with your termination ofemployment unless and until you have also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (the“Separation From Service”), unless the Company reasonably determines that such amounts may be provided to you without causing you to incur theadditional 20% tax under Section 409A. It is intended that each installment of severance pay provided for in this Agreement is a separate “payment” for purposes of Treasury RegulationSection 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that severance payments set forth in this Agreement satisfy, to the greatest extent possible,the exceptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-1(b)(9). If the Company (or, if applicable, the successor entity thereto) determines that any payments or benefits constitute “deferred compensation” underSection 409A and you are, on the termination of service, a “specified employee” of the Company or any successor entity thereto, as such term is defined inSection 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A,the timing of the payments and benefits shall be delayed until the earlier to occur of: (a) the date that is six months and one day after your Separation FromService, or (b) the date of your death (such applicable date, the “Specified Employee Initial Payment Date”). On the Specified Employee Initial Payment Date,the Company (or the successor entity thereto, as applicable) 8 shall (i) pay to you a lump sum amount equal to the sum of the payments and benefits that you would otherwise have received through the Specified EmployeeInitial Payment Date if the commencement of the payment of such amounts had not been so delayed pursuant to this Section and (ii) commence paying thebalance of the payments and benefits in accordance with the applicable payment schedules set forth in this Agreement. 17. Survival. Provisions of this Agreement which by their terms must survive the termination of this Agreement in order to effectuate the intentof the parties will survive any such termination, whether by expiration of the Term, termination of your employment, or otherwise, for such period as may beappropriate under the circumstances. Such provisions include, without limitation, Sections 5 (to the extent severance payments are due under such Section)and 6 of this Agreement. 18. Excise Tax-Related Provisions. If any payment or benefit you would receive pursuant to this Agreement or any other agreement(“Payment”) would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (b) but for this sentence, be subject to the excisetax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment shall be adjusted so that it would equal the Reduced Amount. The “ReducedAmount” shall be either (i) the largest portion of the Payment that would result in no portion of the Payment being subject to the Excise Tax or (ii) the totalPayment, whichever amount of (i) or (ii), after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax(all computed at the highest applicable marginal rate), results in your receipt, on an after-tax basis, of the greater amount of the Payment notwithstanding thatall or some portion of the Payment may be subject to the Excise Tax. If a reduction in payments or benefits constituting “parachute payments” is necessary sothat the Payment equals the Reduced Amount, any such reduction will occur in a manner necessary to provide you with the greatest post-reduction economicbenefit. If more than one manner of reduction of Payments necessary to arrive at the Reduced Amount yields the greatest economic benefit to you, the Paymentswill be reduced pro rata. 9 IN WITNESS WHEREOF, the Company and you have executed this Agreement as of the day and year first set forth above. AMAG Pharmaceuticals, Inc. By:/s/ William K. HeidenName: William K. HeidenTitle: President and CEO /s/ Scott Be. TownsendScott B. Townsend Exhibit 10.14 EMPLOYMENT AGREEMENT This Employment Agreement (the “Agreement”) is entered into as of January 1, 2013 (the “Execution Date”) by and between (i) AMAGPharmaceuticals, Inc., a Delaware corporation with offices at 100 Hayden Avenue, Lexington, MA 02421 (together with its subsidiaries and affiliates, the“Company”), and (ii) Greg Madison of [address] (“you”). Now therefore, in consideration of the premises and mutual agreements hereinafter set forth, and intending to be legally bound hereby, the partieshereto agree as follows: 1. Start Date; Position; Duties. a) Start Date. Your first day of employment with the Company shall be January 2, 2013 unless another date is agreed to by theCompany. For purposes of this Agreement, the actual first day of your employment shall be the “Start Date”. Your employment is contingent on (i) yoursubmission of satisfactory proof of your identity and your legal authorization to work in the United States of America, (ii) satisfactory background andreference checks on you conducted after you provide authorization for such checks, (iii) your execution of the Company’s then current form of nondisclosureand developments agreement, (iv) your completion of federal and state tax withholding forms, (v) your certification that you have read and understood theCompany’s Employee Handbook and certain of the Company’s corporate policies, and (vi) your certification that you have not been debarred or otherwisebanned by any federal or state governmental agency, including, but not limited to, the Office of Inspector General of the U.S. Health and Human Services. Allpayments and benefits pursuant to this Agreement are contingent on you commencing employment with the Company. b) Position. You shall serve as Executive Vice President and Chief Commercial Officer of the Company. c) Duties. You shall perform for the Company the duties customarily associated with the office of Executive Vice President ofCommercial Operations and such other duties as may be assigned to you from time to time by the Company’s Chief Executive Officer or the Company’sBoard of Directors (the “Board”) that are consistent with the duties normally performed by those performing the role of the most senior executives of similarentities. You shall devote substantially your full business time and best efforts to the performance of your duties hereunder and the business and affairs of theCompany and will not undertake or engage in any other employment, occupation or business enterprise; provided, however, that you may participate as amember of the board of directors or advisory board of other entities and in professional organizations and civic and charitable organizations; provided further,that any such positions are disclosed to the Chief Executive Officer and/or the Board or the Audit Committee thereof and do not materially interfere with yourduties and responsibilities to the Company. You shall be based in the Company’s principal offices, which currently are in Lexington, Massachusetts. 2. Term. The term of this Agreement shall be for a three (3) year period commencing on the Start Date unless terminated earlier pursuant toSection 4 below (the “Initial Term”). The term of this Agreement shall automatically renew for additional three-year terms (each, a “Renewal Term”) following the Initial Term and anyRenewal Term unless either party provides written notice to the other party at least sixty (60) days before the end of the Initial Term or any Renewal Term, asapplicable, that it does not desire to renew this Agreement, in which case this Agreement shall expire at the end of the Initial Term or any Renewal Term, asapplicable. The Initial Term and any Renewal Term are referred to herein collectively as the “Term.” 3. Compensation and Benefits. The Company shall pay you the following compensation and benefits for all services rendered by you underthis Agreement: a) Base Salary. The Company will pay you a base salary at the annualized rate of $350,000 (“Base Salary”), minus withholdingsas required by law and other deductions authorized by you, which amount shall be paid in equal installments at the Company’s regular payroll intervals, butnot less often than monthly. Your base salary may be increased annually by the Board or the Compensation Committee in their sole discretion. b) Annual Performance Bonus. You will be eligible to receive an annual performance bonus (the “Annual Bonus”) of up to 40% ofBase Salary for each fiscal year during the Term of this Agreement beginning with the fiscal year ending December 31, 2013 based on the extent to which, inthe discretion of the Board or the Compensation Committee in consultation with the Chief Executive Officer and/or your supervisor you achieve or exceedspecific and measurable individual and Company performance objectives established by the Board or the Compensation Committee in consultation with theChief Executive Officer and/or your supervisor and communicated to you in advance. Notwithstanding the foregoing, your bonus opportunity with respect tothe 2013 fiscal year shall be pro-rated based on the Start Date and length of your employment during such fiscal year. The exact amount of the bonus for anyyear during the Term shall be determined by the Board or the Compensation Committee in its sole discretion and may be more than the target bonus in theevent you achieve all of your personal and Company performance objectives or less than the target bonus if you do not achieve all of your personal andCompany performance objectives. The Company shall pay the Annual Bonus no later than two and a half months after the end of the fiscal year to which theapplicable bonus relates. Unless otherwise provided herein, no bonus shall be deemed to have been earned by you for any year in which you are not activelyemployed by the Company on the last day of the fiscal year to which the bonus relates. c) Equity Compensation. Promptly after the first day of your employment with the Company, you shall be granted an option withrespect to 75,000 shares of Common Stock of the Company with an exercise price equal to the then fair market value of the Common Stock, and you shall begranted restricted stock units with respect to 35,000 shares of Common Stock. The equity incentives shall be granted under, and shall be subject to, the termsof the Company’s current equity incentive plan and applicable equity incentive agreements. These equity incentive grants shall vest in equal annualinstallments over a four year period commencing on the Start Date. You shall be eligible to receive additional stock options or other equity compensation in thefuture under the Company’s equity incentive plans as determined by the Board or the Compensation Committee from time to time. 2 d) Vacation. You will receive four (4) weeks of paid vacation per calendar year which shall accrue ratably on a monthly basis. e) Benefits. You will be eligible to participate in all group health, dental, 401(k), and other insurance and/or benefit plans that theCompany may offer to similarly situated executives of the Company from time to time on the same terms as offered to such other executives. f) Business Expenses. The Company will reimburse you for all reasonable and usual business expenses incurred by you in theperformance of your duties hereunder in accordance with the Company’s expense reimbursement policy. g) Sign-on Bonus. On the Company’s first regular payroll date after your Start Date, the Company shall pay you a one-time, lumpsum sign-on bonus of $70,000 (the “Sign-On Bonus”), minus withholdings as required by law. If (i) you terminate your employment with the Company priorto the one (1) year anniversary of the Start Date or (ii) the Company terminates you for Cause prior to the one (1) year anniversary of the Start Date, you shallreimburse the Company for one hundred percent (100%) of the Sign-On Bonus within thirty (30) days of the date of termination. h) Six Month Special Bonus. If you are an employee of the Company in good standing on the date that is six (6) calendar monthsafter your Start Date (such date, the “Six Month Date”), you will be eligible to receive a one-time, lump sum special bonus (the “Six Month Special Bonus”),minus withholdings as required by law, based on your performance during such period. The amount of the Six Month Special Bonus shall be at least$70,000, but may be more than such amount in the sole discretion of the Board or the Compensation Committee in consultation with the Chief ExecutiveOfficer. The Company shall pay the Six Month Special Bonus on the Company’s regular payroll date that is within thirty (30) days after the Six MonthDate. If (i) you terminate your employment with the Company on or before one (1) year after the Six Month Date or (ii) the Company terminates you for Causeon or before one (1) year after the Six Month Date, you shall reimburse the Company for one hundred percent (100%) of the Six Month Special Bonus withinthirty days (30) of the date of termination. 4. Termination. Your employment with the Company may be terminated prior to the expiration of the Term as follows: a) Death. This Agreement shall terminate automatically upon your death. b) Disability. The Company may terminate your employment in accordance with applicable laws in the event that you shall beprevented, by illness, accident, disability or any other physical or mental condition (to be determined by means of a written opinion of a competent medicaldoctor chosen by mutual agreement of the Company and you or your personal representative(s)) from substantially performing your duties and responsibilitieshereunder for one or more periods totaling one hundred and twenty (120) days in any twelve (12) month period. 3 c) By the Company for Cause. The Company may terminate your employment for “Cause” upon written notice to you. Forpurposes of this Agreement, “Cause” shall mean any of: (i) fraud, embezzlement or theft against the Company or any of its affiliates; (ii) you are convicted of,or plead guilty or no contest to, a felony; (iii) willful nonperformance by you (other than by reason of illness) of your material duties hereunder and failure toremedy such nonperformance within ten (10) business days following written notice from the Chief Executive Officer, the Board and/or your supervisoridentifying the nonperformance and the actions required to cure it; or (iv) you commit an act of gross negligence, engage in willful misconduct or otherwise actwith willful disregard for the Company’s best interests, and you fail to remedy such conduct within ten (10) business days following written notice from theChief Executive Officer, the Board and/or your supervisor identifying the gross negligence, willful misconduct or willful disregard and the actions required tocure it (if such conduct can be cured). d) By the Company Other Than For Death, Disability or Cause. The Company may terminate your employment other than forCause, disability or death upon thirty (30) days prior written notice to you. e) By You For Good Reason or Any Reason. You may terminate your employment at any time with or without Good Reason uponthirty (30) days prior written notice to the Company. For purposes of this Agreement, “Good Reason” shall mean that any of the following occurs without yourprior written consent: (i) a material adverse change in your title, position, duties or responsibilities; (ii) a material reduction by the Company in your BaseSalary or your target Annual Bonus opportunity in the total annual amount that you are then eligible to receive, unless such reduction is in connection with aproportionate reduction of compensation applicable to all other executive officers; (iii) any relocation of your principal place of business to a location more than50 miles from the Company’s current executive offices in Lexington, MA; or (iv) a material breach by the Company of any of the terms or provisions of thisAgreement and failure to remedy such breach within thirty (30) days following written notice from you identifying the breach. 5. Payment Upon Termination. In the event that your employment with the Company terminates, you will be paid the following: a) Termination for Any Reason. In the event that your employment terminates for any reason, the Company shall pay you for thefollowing items that were earned and accrued but unpaid as of the date of your termination: (i) your Base Salary; (ii) a cash payment for all accrued, unusedvacation calculated at your then Base Salary rate; (iii) reimbursement for any unpaid business expenses; and (iv) such other benefits and payments to whichyou may be entitled by law or pursuant to the benefit plans of the Company then in effect. In addition, if your employment terminates due to your death, theBoard or the Compensation Committee, in consultation with the Chief Executive Officer and/or your supervisor, shall determine the extent to which any of theindividual performance objectives established pursuant to Section 3(b) above were met as of the time of your death. If, based on that determination, the Boardor the Compensation Committee determines that a bonus is due, the Company shall pay 4 your estate an amount equal to such bonus, pro-rated for the portion of the fiscal year elapsed as of the time of your death. b) Termination Without Cause or for Good Reason. In addition to the payments provided for in Section 5(a), in the event that (i) theCompany terminates your employment other than for death, disability or Cause pursuant to Section 4(d) or you terminate your employment for Good Reasonpursuant to Section 4(e); (ii) you comply fully with all of your obligations under all agreements between the Company and you; and (iii) you execute, deliver tothe Company, within 60 days of the termination of your employment, and do not revoke a general release (in a form acceptable to the Company) releasing andwaiving any and all claims that you have or may have against the Company, its directors, officers, employees, agents, successors and assigns with respect toyour employment (other than any obligation of the Company set forth herein which specifically survives the termination of your employment), then theCompany will provide you with twelve (12) months of severance pay based on your then current Base Salary. The foregoing severance shall be paid in equalinstallments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred to abovemay no longer be revoked. This Section 5(b) shall not apply during the one year period following a Change of Control (as defined below), in which caseSection 5(c) shall apply. Notwithstanding anything to the contrary herein, if any of the payments and benefits provided for in this Section 5(b) constitutenon-qualified deferred compensation subject to Section 409A and the sixty (60) day period in which you must execute the release begins in one calendar yearand ends in another, the payments and benefits provided for in this Section 5(b) shall commence, be made or become effective in the later calendar year. c) Change of Control. Upon a Change of Control, subject to the terms of any other agreements that exist between you and theCompany, fifty percent (50%) of the unvested portion of any options to purchase common stock, restricted stock units and other equity incentives then heldby you shall become immediately vested and the remaining unvested amount shall continue to vest after the closing of the Change of Control on the samevesting schedule but at 50% of the number of shares that were to vest on each vesting date prior to the Change of Control. Further, in the event that (i) withinone year from the date a Change of Control (as defined below) of the Company occurs, the Company (for purposes of this Section, such term to include itssuccessor) terminates your employment other than for Cause pursuant to Section 4(c), death or disability or you terminate your employment with GoodReason; (ii) you comply fully with all of your obligations under all agreements between the Company and you; and (iii) within 60 days of termination of youremployment you execute and deliver to the Company and do not revoke a general release (in a form acceptable to the Company) releasing and waiving any andall claims that you have or may have against the Company and its directors, officers, employees, agents, successors and assigns with respect to youremployment (other than any obligation of the Company set forth herein which specifically survives the termination of your employment), then: · the Company will pay you twelve (12) months of severance pay based on your then current Base Salary, with such severance to be paid in equalinstallments over the severance period in accordance with the Company’s usual payroll schedule, commencing on the date that the release referred toabove may no longer be revoked; 5 · the Company will pay you, promptly after the revocation period of the release set forth above expires, in a lump sum, one times your target annualbonus amount for the year in which the Change of Control occurs;· the Company will pay or reimburse you for the premiums for continued coverage for you and your eligible dependents in the same amounts and forthe same coverage in effect immediately prior to your termination from employment, under the Company’s group health and dental plans until theearlier of: (i) twenty four (24) months from the date of termination of your employment; or (ii) the date you are provided with health and dentalcoverage by another employer’s health and dental plan (and, for purposes of clarity, if the Company is unable to extend coverage to you under itsgroup health and dental plans due to your termination from active employment status, then, to receive this benefit, you must elect continuationcoverage under COBRA and/or purchase an individual insurance policy, and the Company shall have no obligation to pay or reimburse insurancepremiums or otherwise provide coverage if you fail to elect COBRA or obtain an individual policy); and· all unvested outstanding stock options, restricted stock units and other equity incentives that were granted to you before the Change of Controloccurred shall immediately without further action become vested in full. For purposes of this Agreement, “Change of Control” shall mean the first to occur of any of the following: (a) any “person” or “group” (as defined in theSecurities Exchange Act of 1934, as amended) becomes the beneficial owner of a majority of the combined voting power of the then outstanding votingsecurities with respect to the election of the Board of Directors of the Company; (b) any merger, consolidation or similar transaction involving the Company,other than a transaction in which the stockholders of the Company immediately prior to the transaction hold immediately thereafter in the same proportion asimmediately prior to the transaction not less than 50% of the combined voting power of the then voting securities with respect to the election of the Board ofDirectors of the resulting entity; (c) any sale of all or substantially all of the assets of the Company; or (d) any other acquisition by a third party of all orsubstantially all of the business or assets of the Company, as determined by the Board of Directors, in its sole discretion. The payments, benefits andacceleration of vesting of stock options, restricted stock units and other equity incentives provided in this Section 5(c) shall override and replace with respectto you any Company wide policy with respect to payments, benefits and/or acceleration of vesting upon a Change of Control. After the one year periodfollowing a Change of Control, this Section 5(c) shall no longer apply, and Section 5(b) shall continue to apply. In the event that upon a Change of Control,the Company or the successor to or acquiror of the Company’s business (whether by sale of outstanding stock, merger, sale of substantially all the assets orotherwise) elects not to assume all the then unvested outstanding stock options, restricted stock units and other equity incentives that were granted to youbefore the Change of Control occurred, such securities shall immediately without further action become vested in full effective no later than the effective date ofthe Change of Control and you shall receive the value of such stock options, restricted stock units and other equity incentives as provided in the applicableacquisition agreement (or if no such provision is made, in the applicable equity incentive plan). Notwithstanding anything to the contrary herein, if any of the payments and benefits provided for in this Section 5(c) constitute non-qualified deferredcompensation subject to Section 409A 6 and the sixty (60) day period in which you must execute the release begins in one calendar year and ends in another, the payments and benefits provided for inthis Section 5(c) shall commence, be made or become effective in the later calendar year. d) Death/Disability. In addition to the payments provided for in Section 5(a), in the event of your death or the termination of youremployment due to your disability in accordance with Section 4(b) above, all unvested outstanding stock options, restricted stock units and other equityincentives that were held by you at the time of your death or termination of employment due to disability shall immediately become fully vested and exercisableby you or your personal representatives, heirs or legatees, as the case may be, at any time prior to the expiration of one (1) year from the date of your death ordisability, but in no event after the expiration of the term of the applicable equity award agreement. 6. Nonsolicitation Covenant. In exchange for the consideration provided by this Agreement, you shall not, for a period of one year followingthe termination of your employment with the Company for any reason, directly or indirectly, whether through your own efforts, or in any way assisting oremploying the assistance of any other person or entity (including, without limitation, any consultant or any person employed by or associated with any entitywith which you are employed or associated), recruit, solicit or induce (or in any way assist another in recruiting, soliciting or inducing) any employee orconsultant of the Company to terminate his or her employment or other relationship with the Company. Any breach of this Agreement is likely to cause theCompany substantial and irrevocable damage and therefore, in the event of such breach, the Company, in addition to such other remedies which may beavailable, will be entitled to specific performance and other injunctive relief, without the posting of a bond. 7. No Conflicting Agreements. You hereby represent that, except as you have fully disclosed previously in writing to the Company, you arenot bound by the terms of any agreement with any previous employer or other party to refrain from (i) using or disclosing any trade secret or confidential orproprietary information in the course of your employment with the Company, (ii) competing, directly or indirectly, with the business of such previousemployer or any other party or (iii) soliciting or recruiting any employees or former employees of any previous employer or any other party. You furtherrepresent that your performance of all the terms of this Agreement as an employee of the Company does not and will not breach any agreement to keep inconfidence proprietary information, knowledge or data acquired by you in confidence or in trust prior to your employment with the Company. You furtherrepresent that you will not violate any enforceable non-solicitation obligations you have to any previous employer or other party. You will not disclose to theCompany or induce the Company to use any confidential or proprietary information or material belonging to any previous employer or other party. ThisSection 7 is a material term of this Agreement and any breach by you shall provide the Company with Cause to terminate your employment. 8. Assignment. This Agreement and the rights and obligations of the parties hereto shall bind and inure to the benefit of any successor of theCompany by reorganization, merger or consolidation and any assignee of all or substantially all of its business and properties. Neither this Agreement nor anyrights or benefits hereunder may be assigned by you, except that, upon your death, your earned and unpaid economic benefits will be paid to your heirs orbeneficiaries. 7 9. Interpretation and Severability. It is the express intent of the parties that (a) in case any one or more of the provisions contained in thisAgreement shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, such provision shall be construed bylimiting and reducing it as determined by a court of competent jurisdiction, so as to be enforceable to the fullest extent compatible with applicable law; and(b) in case any one or more of the provisions contained in this Agreement cannot be so limited and reduced and for any reason is held to be invalid, illegal orunenforceable, such invalidity, illegality or unenforceability shall not affect the other provisions of this Agreement, and this Agreement shall be construed as ifsuch invalid, illegal or unenforceable provision had never been contained herein. 10. Notices. Any notice that you or the Company are required to give the other under this Agreement shall be given by personal delivery,recognized overnight courier service, or registered or certified mail, return receipt requested, addressed in your case to you at your last address of record withthe Company, or at such other place as you may from time to time designate in writing, and, in the case of the Company, to the Company at its principaloffice, or at such other office as the Company may from time to time designate in writing. The date of actual delivery of any notice under this Section 10 shallbe deemed to be the date of receipt thereof. 11. Waiver. No consent to or waiver of any breach or default in the performance of any obligation hereunder shall be deemed or construed tobe a consent to or waiver of any other breach or default in the performance of any of the same or any other obligations hereunder. No waiver hereunder shall beeffective unless it is in writing and signed by the waiving party. 12. Complete Agreement; Modification. This Agreement sets forth the entire agreement of the parties with respect to the subject matter hereof,and supersedes any previous oral or written communications, negotiations, representations, understandings, or agreements between them. Any modification ofthis Agreement shall be effective only if set forth in a written document signed by you and a duly authorized officer of the Company. 13. Headings. The headings of the Sections hereof are inserted for convenience only and shall not be deemed to constitute a part, or affect themeaning, of this Agreement. 14. Counterparts. This Agreement may be signed in two (2) counterparts, each of which shall be deemed an original and both of which shalltogether constitute one agreement. 15. Choice of Law; Jurisdiction. This Agreement shall be deemed to have been made in the Commonwealth of Massachusetts, and thevalidity, interpretation and performance of this Agreement shall be governed by, and construed in accordance with, the laws of Massachusetts, without regardto conflict of law principles. You hereby consent and submit without limitation to the jurisdiction of courts in Massachusetts in connection with any actionarising out of this Agreement, and waive any right to object to any such forum as inconvenient or to object to venue in Massachusetts. You agree that, in anyaction arising out of this Agreement, you will accept service of process by registered mail or the equivalent directed to your last known address or by suchother means permitted by such court. 8 16. Advice of Counsel; No Representations. You acknowledge that you have been advised to review this Agreement with your own legalcounsel, that prior to entering into this Agreement, you have had the opportunity to review this Agreement with your attorney, and that the Company has notmade any representations, warranties, promises or inducements to you concerning the terms, enforceability or implications of this Agreement other than as arecontained in this Agreement. 17. I.R.C. § 409A. Notwithstanding anything to the contrary set forth herein, any payments and benefits provided under this Agreement thatconstitute “deferred compensation” within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulationsand other guidance thereunder and any state law of similar effect (collectively, the “Section 409A”) shall not commence in connection with your termination ofemployment unless and until you have also incurred a “separation from service” (as such term is defined in Treasury Regulation Section 1.409A-1(h) (the“Separation From Service”), unless the Company reasonably determines that such amounts may be provided to you without causing you to incur theadditional 20% tax under Section 409A. It is intended that each installment of severance pay provided for in this Agreement is a separate “payment” for purposes of Treasury RegulationSection 1.409A-2(b)(2)(i). For the avoidance of doubt, it is intended that severance payments set forth in this Agreement satisfy, to the greatest extent possible,the exceptions from the application of Section 409A provided under Treasury Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5), and 1.409A-1(b)(9). If the Company (or, if applicable, the successor entity thereto) determines that any payments or benefits constitute “deferred compensation” underSection 409A and you are, on the termination of service, a “specified employee” of the Company or any successor entity thereto, as such term is defined inSection 409A(a)(2)(B)(i) of the Code, then, solely to the extent necessary to avoid the incurrence of the adverse personal tax consequences under Section 409A,the timing of the payments and benefits shall be delayed until the earlier to occur of: (a) the date that is six months and one day after your Separation FromService, or (b) the date of your death (such applicable date, the “Specified Employee Initial Payment Date”). On the Specified Employee Initial Payment Date,the Company (or the successor entity thereto, as applicable) shall (i) pay to you a lump sum amount equal to the sum of the payments and benefits that youwould otherwise have received through the Specified Employee Initial Payment Date if the commencement of the payment of such amounts had not been sodelayed pursuant to this Section and (ii) commence paying the balance of the payments and benefits in accordance with the applicable payment schedules setforth in this Agreement. 18. Survival. Provisions of this Agreement which by their terms must survive the termination of this Agreement in order to effectuate the intentof the parties will survive any such termination, whether by expiration of the Term, termination of your employment, or otherwise, for such period as may beappropriate under the circumstances. Such provisions include, without limitation, Sections 5 and 6 of this Agreement. 19. Excise Tax-Related Provisions. If any payment or benefit you would receive pursuant to this Agreement or any other agreement(“Payment”) would (a) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (b) but for this sentence, be subject to the excisetax imposed by Section 4999 of the Code (the “Excise Tax”), 9 then such Payment shall be adjusted so that it would equal the Reduced Amount. The “Reduced Amount” shall be either (i) the largest portion of the Paymentthat would result in no portion of the Payment being subject to the Excise Tax or (ii) the total Payment, whichever amount of (i) or (ii), after taking into accountall applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate), results in yourreceipt, on an after-tax basis, of the greater amount of the Payment notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. Ifa reduction in payments or benefits constituting “parachute payments” is necessary so that the Payment equals the Reduced Amount, any such reduction willoccur in a manner necessary to provide you with the greatest post-reduction economic benefit. If more than one manner of reduction of Payments necessary toarrive at the Reduced Amount yields the greatest economic benefit to you, the Payments will be reduced pro rata. [Remainder of this page is intentionally left blank] 10 SIGNATURE PAGE TO EMPLOYMENT AGREEMENT IN WITNESS WHEREOF, the Company and you have executed this Agreement as of the day and year first set forth above. AMAG Pharmaceuticals, Inc. By: /s/ William K. HeidenName: William K. HeidenTitle: President and CEO /s/ Greg MadisonGreg Madison Exhibit 10.39 *** Text Omitted and Filed Separately with the Secretary of the CommissionConfidential Treatment Requested AMENDMENT No. 1 TOCOMMERCIAL PACKAGING SERVICES AGREEMENT THIS AMENDMENT NO. 1 (“Amendment”) by and between AMAG Pharmaceuticals, Inc. (“AMAG”), and Packaging Coordinators, LLC (“PCI”) is dated as of the 29 day of January, 2013 (“Effective Date”). WHEREAS, AMAG and PCI (as successor by assignment to Catalent Pharma Solutions, LLC) are parties to a Commercial Packaging ServicesAgreement dated May 29, 2009 (the “Agreement”); and WHEREAS, pursuant to Section 16.1 of the Agreement, the Agreement maybe amended by written amendment signed by the parties; and WHEREAS, the parties desire to further amend the Agreement as set forth herein; NOW, THEREFORE, the parties hereto, in consideration of the foregoing premises and the agreements herein contained and intending to be legallybound hereby, agree as follows: 1. Definitions. The capitalized terms in this Amendment which are not otherwise defined herein shall have their respectivemeanings set forth in the Agreement. 2. Amendment to Agreement. The Agreement is hereby amended as follows: (a) Section 1.3 shall be deleted in its entirety and replaced with the following: “Applicable Laws” means all laws, ordinances, rules and regulations within the Territory applicable to the Packagingand Storage of the Product or any aspect thereof and the obligations of PCI or AMAG, as the context requires under this Agreement,including without limitation: (A) all applicable federal, state and local laws and regulations of each Territory, (B) the U.S. Federal Food,Drug and Cosmetic Act, and (C) the Good Manufacturing Practices (“GMPs”) promulgated by the Regulatory Authorities, as amendedfrom time to time, as applicable to the Packaging and Storage.” (b) Section 1.14 shall be deleted in its entirety and replaced with the following: “Regulatory Authority” means any governmental regulatory authority within a Territory involved in regulating anyaspect of the development, manufacture, market approval, sale, distribution, packaging, storage or use of the Product.” (c) A new section 1.17 shall be added as follows: “Stored Product” means the Product once stored until used inconnection with Packaging. “Storage” means the storage of the Stored Product pursuant to the terms herein.” (d) Section 2.1 shall be amended by adding the following: “PCI agrees to store any Product prior to Packaging at the Facility or at PCI’s facility at 2200 West Lakeshore Drive, Woodstock, IL 60098. PCIshall store such Stored Product at a controlled temperature of between 20-25C. PCI shall have three (3) days to inspect or otherwise evaluate each shipment ofProduct for external container or package damage or loss in transit and shall promptly notify AMAG of any damage observed.” (e) Section 3.6 shall be amended by adding a new paragraph as follows: “For any Stored Product, AMAG agrees that: (A) title and risk of loss for such Stored Product will remain with AMAGduring the storage period, and, upon use by PCI for Packaging, title and risk of loss will be governed as provided in this Agreement and(B) AMAG will be responsible for any decrease in value of such Stored Product other than as a result of PCI’s gross negligence or willfulmisconduct. AMAG may request for return of the Stored Product, at its expense, at any time. Notwithstanding anything herein to thecontrary, PCI shall be responsible for any decrease in value to the Stored Product due its gross negligence or willful misconduct.” (f) Section 3.5, Article 6 (except Section 6.5), Section 8.1 and Section 8.2 shall be revised by adding “and Storage”wherever “Packaging” is mentioned and “and Stored Product” wherever “Packaged Product” is mentioned. (g) Section 6.5 shall be amended to add a new paragraph as follows: “PCI shall be responsible for any Replacement Costs (as defined in Exhibit D) of Stored Product to the extent of anydamage, loss, theft or destruction while on PCI premises due to the gross negligence or willful misconduct of PCI and not later than thirty(30) days following the end of each Contract Year, PCI shall provide AMAG with a detailed accounting of any damages, loss, theft orthdestruction of the Stored Product together with a payment representing the Replacement Cost for the losses of such Stored Product.” (h) There will be a new section 8.1 (D) as follows: “The Product shall be stored and supplied in conformity with the Specifications, as applicable, and any writteninstructions by AMAG agreed to by PCI, which approval will not be unreasonably withheld or delayed.” (i) Section 11.1 shall be amended by adding “and Storage” after “Packaging” in Section 11.1(C). Section 11.2 shall beamended by adding “Stored Product,” 2 after “use of or exposure to the Product,” in Section 11.2(B) and “and Storage” after “Packaging” in Section 11.2(C). (j) The parties acknowledge and agree that there will be a new separate and distinct Section 12.1(a) and 12.1(b) which willapply solely to PCI’s liability with respect to the Storage of the Product. The original Section 12.1(a) and 12.1(b) continue to remain in full force and effectwith respect to the Packaging. (k) Pricing for the Storage of Product shall be listed in Exhibit A, attached hereto and incorporated herein, and shall besubject to the payment provisions in Section 3.3. (l) All references in the Agreement to “Catalent” shall be amended to “PCI”. PCI hereby acknowledges that it has assumedall of the rights, responsibilities and obligations formerly of Catalent under the Agreement. (m) Any notices to PCI under Article 15 shall be provided to: Packaging Coordinators, LLC, 3001 Red Lion Road,Philadelphia, PA 19114, Attn: CEO, Facsimile: (215) 613-3127. 3. Counterparts. This Amendment No. 1 may be executed in counterparts, each of which shall be deemed an original, but whichtaken together shall constitute one and the same agreement. The parties agree that a facsimile signature on the Amendment shall be binding evidence of aparty’s signature (such facsimile which may also be forwarded by email). 4. Effect of Agreement. Except as amended hereby, all provisions of the Agreement are hereby ratified and shall continue in fullforce and effect and are incorporated herein by reference. All references in the Agreement to “this Agreement” shall be deemed to refer to the Agreement, asamended by this Amendment. This Amendment No. 1 shall be governed by and construed consistently with the terms of the Agreement. [SIGNATURE PAGE FOLLOWS] 3 IN WITNESS WHEREOF, the undersigned have executed this Amendment as of the month and year first above written. AMAG:PCI: AMAG Pharmaceuticals, Inc.Packaging Coordinators, LLC /s/ Scott T. McMillan/s/ William A. BoldingSignatureSignature Scott T. McMillanWilliam A. BoldingPrint NamePrint Name Senior Vice President — Quality &Technical OperationsC.O.O.TitleTitle  Solution forFeraheme™ bulk storageVERSION: PS-KR10152012.02 Prepared for Mr. Jim Lucie61 Mooney StreetCambridge, MA 02138T (617) 576-4164jlucie@amagpharma.com Provided by Packaging Coordinators Inc.Ken RichardsonAccount Director3001 Red Lion Rd. Philadelphia, PA 19114T (215) 397-5881ken.richardson@pciservices.com *** Text Omitted and Filed Separately with the Secretary of the CommissionConfidential Treatment Requested November 19, 2012 Mr. Jim Lucie61 Mooney StreetCambridge, MA 02138T (617) 576-4164 Dear Jim, On behalf of Catalent Pharma Solutions, I am pleased to present the following quotation for bulk storage services for your product Feraheme. The pricing in this quotation is based on the assumption that the product being stored at our facility will not require special handling. For bulk product,finished product, API or excipients please supply the MSDS (Material Safety Data Sheet) for review and acceptance by our Product Review Committee. Warehouse Storage FeesProject Initiation$[***]Additional Receipts$[***]/lot/receiptMonthly Management Fee$[***]/month Storage· Controlled Room Temperature$[***]/month/pallet Importation Management Fee (Initial)$[***] if we are importer of recordImportation Management Fee (repeat-same drug)$[***]Custom Broker Fee$[***]Freight/Airport Storage (if applicable)Cost + [***]%Duty FeesCost For services not included in above for example, additional audit assistance, material handling, etc.: Hourly Employee Rate$[***]per hourSalaried Employee Rate$[***]per hour 2 *** Text Omitted and Filed Separately with the Secretary of the CommissionConfidential Treatment Requested Shipping and Handling (Ambient)Shipping · Domestic$[***]/first pallet/location/shipment + $[***]each additional pallets/same location/same shipment · Domestic — Bulk$[***]/shipment · International$[***]/first pallet/location/shipment + $[***]each additional pallet/same location/same shipment · International — Bulk$[***]/shipment Shipping and Handling (2-8°°C)Shipping · Domestic$[***]/first pallet/location/shipment + $[***]each additional pallet/same location/same shipment · Domestic — Bulk$[***]/shipment · International$[***]/first pallet/location/shipment + $[***]each additional pallet/same location/same shipment · International — Bulk$[***]/shipment Freight and Shipping Supplies Additional — Cost + [***]% · 48 Hour TurnaroundShipping Fee: Quoted Rate· Next Day TurnaroundShipping Fee: Quoted Rate + [***]% Premium· Same Day TurnaroundShipping Fee: Quoted Rate + [***]% Premium PCI will require all dispatched shipments to be detailed in a Shipping Protocol. PCI reserves the right to revisit pricing on an annual basis. Standard Terms and Conditions At the time of this quotation there is a Packaging Agreement dated 29 May 2009 as amended executed between Catalent Pharma Solutions, LLC and AMAGPharmaceuticals, Inc and the terms and conditions of such Packaging Agreement will supersede this Quotation (including its Terms and Conditions) if suchpackaging agreement is still in force. 3 Cancellation:Customer is responsible for all materials and tooling purchased on their behalf. Payment Terms:NET 30If you have any questions concerning this quotation, please do not hesitate to contact me at [TELEPHONE]. Kind Regards, Ken RichardsonAccount Director, U.S. Commercial PackagingPackaging Coordinators Inc. 4 Project Approval and Authorization By signing below, AMAG agrees to the project details as set forth in this Quotation. AMAGPackaging Coordinators Inc. /s/ Jim Lucie/s/ Ken RichardsonSignatureSignature Jim LucieKen RichardsonPrinted NamePrinted Name Sr. Mgr Material ControlAccount DirectorTitleTitle 28 Nov 2012November 19, 2012DateDate 58354PO Number Please sign and return a copy of the Quotation Approval Page via e-mail to Ken Richardson at [EMAIL] 5Exhibit 21.1 Subsidiaries of AMAG Pharmaceuticals, Inc. Name of SubsidiaryJurisdiction of Formation AMAG Securities CorporationMassachusetts AMAG Europe LimitedUnited Kingdom QuickLinks -- Click here to rapidly navigate through this documentExhibit 23.1 Consent of Independent Registered Public Accounting Firm We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (File No. 333-164400) and in the RegistrationStatements on Form S-8 (File Nos. 333-82292, 333-131656, 333-148682, 333-159938, 333-168786 and 333-182821) of AMAGPharmaceuticals, Inc. of our report dated March 1, 2013 relating to the financial statements and the effectiveness of internal control over financialreporting, which appears in this Form 10-K./s/ PRICEWATERHOUSECOOPERS LLPBoston, MassachusettsMarch 1, 2013 QuickLinksExhibit 23.1QuickLinks -- Click here to rapidly navigate through this documentExhibit 31.1 CERTIFICATIONS I, William K. Heiden, certify that: 1. I have reviewed this Annual Report on Form 10-K of AMAG Pharmaceuticals, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Date: March 1, 2013 /s/ WILLIAM K. HEIDENWilliam K. HeidenPresident and Chief Executive Officer(principal executive officer)QuickLinksExhibit 31.1CERTIFICATIONSQuickLinks -- Click here to rapidly navigate through this documentExhibit 31.2 CERTIFICATIONS I, Scott A. Holmes, certify that: 1. I have reviewed this Annual Report on Form 10-K of AMAG Pharmaceuticals, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to makethe statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respectsthe financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and15d-15(f)) for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, particularly during the period in which this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles; c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's mostrecent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonablylikely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financialreporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.Date: March 1, 2013 /s/ SCOTT A. HOLMESScott A. HolmesChief Accounting Officer, Vice President of Finance andController (principal financial officer)QuickLinksExhibit 31.2CERTIFICATIONSQuickLinks -- Click here to rapidly navigate through this documentExhibit 32.1 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of AMAG Pharmaceuticals, Inc. (the "Company") on Form 10-K for the period ended December 31, 2012as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William K. Heiden, President and Chief Executive Officer ofthe Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of myknowledge:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ WILLIAM K. HEIDENWilliam K. HeidenPresident and Chief Executive Officer(principal executive officer) Dated: March 1, 2013QuickLinksExhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002QuickLinks -- Click here to rapidly navigate through this documentExhibit 32.2 CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of AMAG Pharmaceuticals, Inc. (the "Company") on Form 10-K for the period ended December 31, 2012as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Scott A. Holmes, Chief Accounting Officer, Vice Presidentof Finance and Controller of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002,that, to the best of my knowledge:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany. /s/ SCOTT A. HOLMESScott A. HolmesChief Accounting Officer, Vice President ofFinance and Controller (principal financial officer) Dated: March 1, 2013QuickLinksExhibit 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEYACT OF 2002

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