MedImmune deal passes antitrust step

Aviron stockholders are clear to vote on takeover by Md. firm

$1.56 billion stock swap

30-day waiting period brings no objection from U.S. regulators

January 05, 2002|By Julie Bell | Julie Bell,SUN STAFF

MedImmune Inc.'s $1.56 billion acquisition of vaccine developer Aviron has passed a key antitrust hurdle, clearing the way for its approval should a majority of Aviron stockholders tender their shares in favor of the deal by midnight Wednesday.

The Gaithersburg pharmaceutical company said yesterday that a 30-day waiting period had expired without the Justice Department or Federal Trade Commission objecting to the deal on antitrust grounds, clearing the way for the acquisition.

The deadline for Aviron shareholders to tender their shares could be extended.

MedImmune announced early last month that it had agreed to acquire Aviron, giving it ownership of the company's nasally inhaled influenza vaccine. MedImmune has said the experimental product could generate as much as $1 billion in annual sales within five years.

If approved by the Food and Drug Administration, the vaccine would be the first nasal-mist flu vaccine available in the United States.

MedImmune anticipates that the FDA will approve the FluMist vaccine this year, despite the fact that an FDA advisory panel said in July that there wasn't enough safety data to support its approval.

The panel of experts said the vaccine appeared to be effective. And Aviron, based in Mountain View, Calif., has said it is optimistic the vaccine will be approved without additional human testing.

"I'm pretty optimistic it will be approved in time for the 2002 flu season," said Dennis Harp, an analyst at Deutsche Banc Alex. Brown. He said Aviron was expected to submit additional safety data, particularly for young and elderly patients, by the end of last year or early this year.

Neither Aviron nor MedImmune officials returned calls yesterday.

Harp said he thinks the acquisition will be good for both companies, which he described as having compatible research programs.

MedImmune's flagship product is Synagis, a drug designed to prevent serious seasonal respiratory infections in premature babies and those with lung diseases.

The company's research programs are focused on cancer, infectious diseases and immune regulation.

Aviron's products in development include vaccines for the prevention of fatigue-causing Epstein-Barr virus and cytomegalovirus, which is associated with a range of symptoms in AIDS patients, including retinal lesions.

Aviron also is doing early-stage research on a vaccine for respiratory syncytial virus, the bug at which Synagis is aimed.

MedImmune has five drugs on the market and has had tremendous success with Synagis - which generated $267 million of the company's $304 million in product sales through the first nine months of 2001.

But the company has been criticized because none of its experimental drugs is scheduled to get to market before 2004. FluMist, if successful, would change that.

MedImmune has said it expects FluMist to generate $500 million in annual sales within three years on the market and $1 billion in five years.

The company would book only half of that amount, however, because of a co-promotion agreement covering sales in the United States.

Under the agreement, Wyeth-Lederle Vaccines will book all sales to end users, while Aviron will book manufacturing revenue, milestone payments and sales royalties.

MedImmune, therefore, estimates that its FluMist-related revenue and operating income, respectively, would amount to about half the worldwide sales and overall profitability of the product.

The terms of the deal call for Aviron shareholders to get 1.075 MedImmune shares for each Aviron share.

Shares of MedImmune fell 48 cents closed at $46.69 in trading yesterday on the Nasdaq stock market.

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