MedImmune predicts bigger loss this quarter

Acquisition of new virus is costing $10 million

August 16, 2002|By Julie Bell | Julie Bell,SUN STAFF

MedImmune Inc. said yesterday that its third-quarter loss will be greater than anticipated because it bought the rights to a recently discovered virus linked to respiratory infections in children.

The Gaithersburg-based company's best-selling drug is Synagis, which is used to fight a respiratory virus in infants. MedImmune said it has acquired the rights to a different virus from the private Dutch biotechnology company ViroNovative for $10 million immediately and in future payments.

Acquiring the rights to human metapneumovirus will allow MedImmune to develop antibody drugs and vaccines designed to fight infections it causes. In addition to the $10 million, MedImmune will pay for research and development, make payments as certain pre-determined milestones in drug or vaccine development are achieved and pay royalties on the sales of any products that result.

The company said the deal will increase its third-quarter net loss by 3 cents per share, putting it in the range of 16 cents to 17 cents per share.

"We are thrilled to have the opportunity to work with ... Dr. Osterhaus and other researchers in this field to develop products to prevent serious respiratory infections caused by hMPV in young children," David M. Mott, MedImmune's chief executive officer, said in a statement.

Mott was referring to Dr. Albert Osterhaus, whose team at Erasmus Medical Center recently discovered human metapneumovirus and reported the discovery in Nature Medicine. ViroNovative, the company from which MedImmune licensed the virus, is affiliated with Erasmus University in Rotterdam.

MedImmune said yesterday that the virus is believed to be a common cause of serious lower respiratory tract infections in young children.

Synagis, which accounted for $326 million of MedImmune's $393 million in the first six months of this year, fights respiratory syncytial virus. RSV, as it's known, causes serious lower respiratory infections in babies and generally strikes in the winter months. Consequently, MedImmune's revenues are seasonal, leading to losses in the second and third quarters. Additionally, MedImmune is taking charges this year related to its acquisition of Aviron, a California vaccine developer.

The ViroNovative deal was announced after the close of the stock market yesterday. MedImmune shares, which had dropped 61 cents to $29.18 on the Nasdaq stock market, fell to $28.20 in after-hours trading.

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