FluMist's maker warns of shortfall

Poor vaccine sales lower MedImmune profit outlook

Wyeth partnership in doubt

March 02, 2004|By William Patalon III | William Patalon III,SUN STAFF

MedImmune Inc. said yesterday that it will stick with its FluMist flu vaccine despite the nasal spray's dismal first season's sales but warned that its profit for the next several years would fall short until an improved version and other new drugs come onto the market in 2007.

The Gaithersburg drug maker cut its outlook for 2004, projecting earnings of 50 cents to 60 cents a share for the full year, well below analysts' consensus estimate of 95 cents per share, according to Zacks Investment Research.

For the current quarter, MedImmune said it expected net income of 40 cents to 43 cents per share - well below the 53 cents per share expected.

The company's shares fell $1.59, or 6.1 percent, to close at $24.10. The stock is down nearly 43 percent from its 52-week high of $42.09, on June 6.

In a morning conference call with investors and analysts, MedImmune outlined revenue and profit objectives it hoped to achieve over the next several years but caused some consternation when it became clear the projections were made even though some key questions remain unanswered.

"MedImmune was definitely trying to put its best foot forward," said Jennifer M. Chao, a managing director and biotechnology analyst for RBC Capital Markets in New York.

The answers to two of those questions will have a crucial bearing on MedImmune's near-term fortunes.

First, the company said it's not certain whether Wyeth, its partner in the FluMist program, will stay or walk, given the vaccine's disappointing debut. The Madison, N.J., drug company would say only that it was "still evaluating" its plans.

Second, MedImmune said it has yet to decide whether to slash the vaccine's $46 wholesale price in view of the fact that a conventional flu shot is far less expensive.

MedImmune launched FluMist with a $25 million advertising campaign and with Wyeth produced 4 million doses. But sales were less than a million, and the company even began giving the vaccine away as supplies of conventional injected flu vaccine ran short amid a worse-than-anticipated flu season.

MedImmune said yesterday that it expects to achieve $2 billion in total revenue by 2009, and then detailed a five-year plan to reach that goal. The company said per-share profits would reach $1 to $1.10 by 2007, and said those results would advance at a compounded annual rate of 25 percent to 30 percent.

Research and development will play a major role in this sales growth, with outlays equaling about 20 percent of product sales, the company said. MedImmune intends to add at least two new products between 2007 and 2009. That involves placing several new products into clinical trials each year through 2006, the firm said.

FluMist will be key, according to MedImmune, but only over the long haul. The company intends to continue development and commercialization of FluMist, projecting peak annual sales of more than $500 million in the United States and $800 million globally. For 2004, the vaccine's sales are expected to be $45 million to $55 million, a marked disappointment in view of initial expectations, analysts say.

No growth is expected before 2007, when MedImmune hopes to roll out a version of FluMist called CAIV-T. Unlike the current vaccine, which must be stored frozen, CAIV-T will only have to be refrigerated to remain viable.

Ideally, it also would be approved for use by all healthy individuals, unlike the current FluMist, which is only approved for people between 5 and 49. If Wyeth backs out, MedImmune conceded that profits would be reduced 10 cents to 20 cents a share annually through 2007.

The company was "definitely straddling the fence" in its financial outlook without knowing Wyeth's status, said RBC's Chao.

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