FluMist unable to inoculate maker against loss

Drug's rosier outlook no help to biotech's 3Q

October 22, 2004|By M. William Salganik | M. William Salganik,SUN STAFF

MedImmune Inc. expects to reap an extra $10 million from sales of its FluMist vaccine over the next three months as a result of the flu shot shortage and believes it could increase production to sell millions more next year, company officials said yesterday.

The Gaithersburg company now expects to sell 1 million to 2 million doses of FluMist this winter. And it could make as many as 20 million doses of FluMist for next winter, and 40 million by 2007 or 2008, Chief Executive Officer David M. Mott told analysts in a conference call after the company released third-quarter earnings.

The company was cautious, however, in projecting the future of FluMist, which proved a resounding flop in its first season last winter. The debacle forced MedImmune to retrench, and it subsequently said it did not expect the vaccine to be profitable until 2007.

"The current situation is quite fluid," Mott said.

Mott said MedImmune would lose money on FluMist until sales reach 6 million to 8 million doses a year. But he did not say when that might happen, even as he raised the possibility of producing millions of doses next year.

Analysts also said they did not expect FluMist to turn into a near-term bonanza.

"We continue to believe that FluMist will not be a significant contributor to revenue or earnings until 2007 at the earliest, pending approval of the [next generation] CAIV-T version of the product for children," wrote John R. Woolford, an analyst at Legg Mason Wood Walker in Baltimore, in a research note released after the conference call.

The flu shot crisis had raised FluMist's profile but it wasn't yet clear how much it might increase the vaccine's popularity, said James Reddoch, an analyst with Friedman, Billings, Ramsey Group, Inc. in Arlington, Va.

"Investors, in rewarding the stock so much in the past few weeks, may have overvalued it," Reddoch said.

Share prices rose about 15 percent over two weeks after the dimensions of the flu shortage became clear. The stock rose 77 cents yesterday to close at $26.40.

FluMist contributed no revenue in the quarter that ended Sept. 30; this year's product didn't begin shipping until this month.

MedImmune yesterday reported a loss of $65 million, or 26 cents a share, including some $16 million in one-time charges related to the withdrawal of its FluMist partnership with Wyeth. Excluding the special charges, the third-quarter loss would have been $55 million, or 22 cents a share, the company said, 1 cent below the consensus estimate of analysts.

That compared with a loss of $16 million, or 7 cents a share, in the 2003 quarter and marked MedImmune's fourth consecutive third-quarter loss.

Revenue in the quarter rose 12 percent to $92.6 million, with $61 million of that from Synagis, the company's blockbuster drug to prevent respiratory infections in infants. Synagis sales rose 25 percent. Like FluMist, Synagis sells mostly in the quarters between October and March.

Revenue in the third quarter last year was $99 million, but that included $17 million in non-sales revenue, chiefly payments from Wyeth related to FluMist.

As for FluMist this year, Mott said the shortage of injected vaccine, caused when a production problem blocked distribution of nearly half the 100 million doses produced, had led to "a very different level of demand and confidence in the product."

MedImmune produced more than 4 million doses of FluMist for last winter's flu season, but sold only about 10 percent of that and had to throw away most of the rest.

Before the current flu shot shortage developed, MedImmune had expected to sell about 400,000 doses this winter as well, and readied 1.1 million doses for shipment. It subsequently announced it would package its remaining bulk vaccine to produce nearly 1 million more doses, which should be available in late November or early December.

Mott said discussions with government regulators would guide MedImmune in deciding how much FluMist to produce for next winter.

There is no one specific approval needed from regulators that would trigger a decision to increase production, Mott continued. "It's kind of like pornography - you know it when you see it," he said.

Among the issues MedImmune will be discussing is how to demonstrate that FluMist, now approved only for healthy people ages 5 to 49, is safe for younger children and adults up to age 65. It also is seeking a change in the rules governing how the vaccine is inspected and released, allowing for quicker distribution, and trying to convince federal officials that FluMist can be stable when stored in regular freezers, rather than the special freeze boxes currently required.

The CAIV-T version of the product, now in clinical trials, would require refrigeration, but not freezing, making it easier to store and ship.

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