EU's OK of breakthrough drug sends MedImmune stock up 8%

Md. company, Abbott win right to sell medicine in Europe

Treats infants' infections

Pharmaceuticals

September 02, 1999|By Mark Guidera | Mark Guidera,SUN STAFF

MedImmune Inc. of Gaithersburg and Abbott Laboratories won European approval yesterday to market MedImmune's breakthrough anti-viral treatment for a serious lung infection in babies.

The approval sent MedImmune shares up $8.8125, or 8 percent, to close at $112 on the Nasdaq stock market. MedImmune shares have risen 125 percent this year.

Shares in Abbott, which has a marketing agreement with MedImmune, closed at $44, up 62.50 cents on the New York Stock Exchange.

The drug, Synagis, has been available for treating prematurely born babies in the United States since June 1998.

The European Commission, the trade and regulatory body for the 15-nation European Union, said Synagis could be used in premature infants at high risk for respiratory syncytial virus (RSV), which usually strikes from October to April.

The commission also approved the drug for use in infants and children with chronic bronchopulmonary dysplasia, a chronic lung disease, MedImmune said.

Analysts estimate the European market for the drug to be about the same size as that in the United States, where the disease annually infects about 90,000 children, 70 percent of whom must be hospitalized. About 4,500 die of the viral infection annually in the United States.

Those are not considered large figures in the pharmaceutical industry, but the drug is a success because it is easy to administer and prevents costly hospitalizations, said analysts.

Abbott, of Abbott Park, Ill., has the exclusive right to market and distribute Synagis outside the United States.

Under the 1997 agreement, Abbott will pay MedImmune a production fee for European supplies of Synagis, but no royalties or share of sales.

The drug will be manufactured in Germany under a separate agreement MedImmune has with Boehringer IngelheimPharma.

MedImmune and Abbott co-promote the drug in the United States. Under the U.S. agreement MedImmune gets to keep the first $350 million in sales. After that milestone is reached, Abbott will pay MedImmune an estimated 30 percent to 35 percent royalty on sales, said analysts.

From October to April, its first RSV "season" on the U.S. market, Synagis generated $117 million in sales.

The drug, administered through an injection, usually is given once a month at a doctor's office. A full course of treatment costs about $4,500.

Melvin D. Booth, president and chief operating officer at MedImmune, said the company and Abbott hope to expand the market for Synagis beyond the United States and Europe.

"RSV is a worldwide problem, and we, with our colleagues at Abbott, want to make Synagis globally available," said Booth.

Alex To, Credit Suisse First Boston biotechnology analyst, said yesterday that he expects sales of Synagis to be 80 percent higher this year than last year. He predicts strong demand in the next October-to-April RSV season.

Industry analysts expect Synagis to become a blockbuster product with eventual worldwide sales of $500 million annually.

MedImmune plans to manufacture Synagis at its new production plant in Frederick, which has not been cleared for use by the Food and Drug Administration.

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