Vaccine scarcity might aid Md. producer of FluMist

Opportunity: A sudden disruption in the supply of flu shots could raise sales of MedImmune's nasal-spray vaccine.

October 06, 2004|By William Patalon III | William Patalon III,SUN STAFF

The sudden disruption of the nation's flu-shot supply that materialized yesterday should help MedImmune Inc. win broader near-term acceptance of its troubled Flu- Mist nasal spray vaccine, while solidifying the company's long-term push to make the product profitable, analysts said yesterday.

The surprise opportunity for FluMist developed after British authorities stopped production at a Liverpool manufacturing plant of Chiron Inc., the world's No. 2 maker of influenza vaccines. As a result, Chiron will not deliver the 46 million to 48 million flu shots it had planned for the United States, nearly half of the total doses expected.

Shares of Gaithersburg-based MedImmune gained nearly 6 percent, or $1.41, to close at $25.78.

Frank DiLorenzo, a biotechnology analyst with Standard & Poor's Equity Research Services in New York, said Chiron's travails will almost certainly boost sales of FluMist during the looming 2004-2005 flu season. That will probably lead to some longer-term benefits for MedImmune, he said.

"We think there's the potential scenario for next year's [2005-2006] flu season where you'll see more support for FluMist" out in the marketplace, DiLorenzo said.

U.S. health officials are urging healthy adults to delay, or even skip, getting flu shots this year to conserve supplies for those in the most danger. That could persuade some to use MedImmune's FluMist, a move that make more flu shots available for children, the infirm and the elderly, none of whom qualify for the nasal-spray vaccine.

MedImmune spokeswoman Jamie Lacey said yesterday that the company has produced 1 million to 2 million doses for this season. Because vaccine production takes about four months, making more won't be easy, she said. Nevertheless, the company is exploring the possibility, she said.

"We're just beginning to engage in that. We're just getting started" taking a look, Lacey said.

Despite FluMist's miserable performance in its debut season last year, a flop blamed largely on its relatively high price and limitations on its use, MedImmune repeatedly underscored its commitment to the spray vaccine, contending that it is a key building block for an important new business. Some experts agree.

"I think it's a great product," said vaccine researcher Dr. James Campbell, assistant professor of pediatrics at the University of Maryland School of Medicine and its Center for Vaccine Development.

"I think that, over time, it will rebound."

MedImmune thinks it can engineer that rebound, though it will take years as the company attempts to rescue FluMist.

Last year, MedImmune and its New Jersey-based marketing partner, Wyeth, were optimistic enough to produce 4 million doses of the needle-free vaccine. Ten percent of that total, 400,000 doses, were sold.

Wyeth pulled out of the partnership early this year, with MedImmune spending $100 million to assume global control of FluMist.

MedImmune reduced its 2004 profit forecast twice in less than two months and warned that profit for the next several years would fall short of expectations.

Performance isn't likely to strengthen until 2007, when a new version of FluMist and several other new drugs are scheduled to reach the market.

The company expects to keep losing money on FluMist until its successor, CAIV-T, is introduced.

MedImmune has declined to make specific sales forecasts for FluMist for the current flu season. Before yesterday, the company had repeatedly said that it did not expect much of an improvement.

"We anticipate selling about the same amount of product we sold last year," Armando Anido, MedImmune's senior vice president of commercial operations, said in a recent interview.

Product pricing was viewed as the major element of last winter's flu season debacle. Regular flu shots cost about $10, but FluMist carried a wholesale price of $46, which initially led major health care insurers to decline to cover it, leaving patients to foot the bill.

Some insurers relented last year when flu shot supplies ran out, but the major carriers have said that they will not cover FluMist again this year even though MedImmune cut the price to $23.50.

Nearly as problematic as price was the partnership's failure to win approval for its use on the two largest groups typically targeted for flu vaccines, those younger than age 5 or older than age 50.

FluMist is still approved only for healthy patients ages 5 to 49.

Clinical testing is under way to expand the nasal-spray vaccine's authorized market, an investment MedImmune feels is warranted even though it will take several years to complete.

"There is a long-term value [for] FluMist to MedImmune," Anido said.

MedImmune wants to amass a core business strength in pediatric medicine - with a focus on infectious diseases and respiratory therapeutics -with FluMist and successor CAIV-T as important components, he said.

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