MedImmune's zig-zag rise Rebound: Gaithersburg-based MedImmune Inc., a growing presence in biotechnology, has come a long way from the dark days of 1993, when a vaccine was rejected.

July 12, 1998|By Mark Guidera | Mark Guidera,SUN STAFF

Just before Christmas in 1993, MedImmune Inc.'s founder and chief executive officer, Wayne T. Hockmeyer, received the blow of his career.

The U.S. Food and Drug Administration had rejected RespiGam, the Gaithersburg company's vaccine for preventing a serious respiratory illness in premature infants, saying clinical data were flawed.

It was a humiliating setback. Hockmeyer and other MedImmune executives were anticipating approval of the vaccine and banking on its sales to help build a drug sales force, fund development of other drugs and pave the way for acquiring another biotechnology company.

"It was the defining moment of this company," said Hockmeyer. "A failure like that can be a life-threatening experience for a young company."

Retrenching, Hockmeyer set his staff to mastering every step of the clinical studies and review process, in which volumes of information are gathered in an effort to show its safety and effectiveness.

"We could not repeat the same mistake twice," said Hockmeyer, a former chairman of the Department of Immunology at Walter Reed Army Institute of Research.

The lessons learned from the 1993 crisis served Hockmeyer and his MedImmune team well.

After new human clinical trials, the company landed approval for RespiGam in 1996, and in June it got the FDA's blessing for Synagis, a more potent and easier-to-use vaccine for the same infection RespiGam prevents, respiratory syncytial virus, known as RSV. The infection strikes about 90,000 children annually in the United States and kills 4,500 a year.

The Synagis approval came six months after MedImmune submitted its final clinical data to the FDA. It marked one of the few times a biotechnology produced drug has cleared the FDA without a review by an advisory panel, which is often arduous and time-consuming.

That and the speed with which the drug was approved, which usually is reserved for drugs given "priority review" status for expedited consideration by the agency, testified to the strength of MedImmune's application for marketing approval and the vaccine's strong safety profile, said analysts.

"What you have now with MedImmune is a company which is emerging into the top tier of biotechnology companies," said Dr. Laurence Blumberg, a biotechnology analyst with Alliance Capital Corp., a New York-based mutual fund manager and MedImmune's largest institutional investor.

Alliance, which owns 25 percent of MedImmune, began investing in the company in 1996.

One of the key reasons Alliance's analysts were drawn to the company, said Blumberg, was its exacting attention to understanding in detail how Synagis and RespiGam work as part of its preparation for clinical trials. The drugs, made from genetically engineered, naturally occurring antibodies, spur the body to make antibodies to the virus.

Recently, Wall Street has made clear that it is bullish on the company, which was founded with financing from Edison, N.J.-based Healthcare Ventures, a venture capital firm that has helped launch a number of Maryland biotechnology start-ups.

Since Dec. 1, when the 10-year-old company announced a co-marketing agreement for Synagis with pharmaceutical giant Abbott Laboratories, MedImmune shares have rocketed more than 54 percent to as high as $65.87. They closed Friday at $63.75.

That's a long way from the dark days in 1993 after the RespiGam rejection, when investors dumped the stock, sending its value down by 50 percent in two days and prompting MedImmune to cancel its planned acquisition of another biotechnology company.

Prudential Securities biotechnology analyst Caroline Copithorne expects Synagis sales to catapult MedImmune into a small group of biotechnology companies reporting profits from product sales, rather than from research or licensing agreements with big pharmaceutical houses.

But a cherry on the sundae for this year's financial report is the $30 million licensing payment due from Abbott that was triggered by the FDA approval.

With the Synagis approval, MedImmune has three drugs on the market. Synagis is expected to displace its predecessor, RespiGam. That drug, which generated $45 million in sales last year, must be administered by intravenous drip in a hospital; Synagis can be administered by injection in a physician's office.

MedImmune's other approved drug is CytoGam, which generated $20.3 million in sales last year. It prevents a viral infection common after kidney transplantation.

Some analysts think Synagis could emerge as a "blockbuster" drug, one with global sales of $500 million or more, even though its target market is small by drug market standards. Regulatory approvals in Canada, Europe and other overseas markets should ensure that status, analysts say.

The first $350 million in U.S. sales would go directly to MedImmune, said Copithorne.

Abbott would pay MedImmune an estimated royalty of 30 percent to 35 percent on U.S. sales exceeding $350 million, said analysts. Abbott gets to keep all revenue from sales outside the United States.

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