Sales up but MedImmune posts loss

Rising expenses blot gain at maker of FluMist

February 04, 2005|By Tricia Bishop | Tricia Bishop,SUN STAFF

MedImmune Inc., the Gaithersburg-based maker of the FluMist nasal spray vaccine, reported a drop in fourth-quarter earnings and a loss for the year yesterday, despite increased sales of its most popular product.

Annual revenue was $1.14 billion, up 9 percent from 1.05 billion in 2003. But rising expenses, which grew to $1.2 billion from $813 million for 2003, more than offset the gain. Among the expenses were research and development costs, which tripled last year to $120 million, and charges associated with the breakup of a partnership with drug company Wyeth.

The company reported a loss of $3.8 million, or 2 cents a share, for 2004. In 2003, MedImmune had net earnings of $183.2 million, or 73 cents per share.

Fourth-quarter earnings fell 34 percent to $50.5 million, or 20 cents per diluted share, in the quarter that ended Dec. 31, compared with $76.6 million, or 31 cents per share, in the corresponding quarter of 2003. Still, the quarter performance was better than expected. Analysts polled by Thomson First Call predicted MedImmune stock would earn 17 cents per share.

That helped shares of MedImmune gain 91 cents, or almost 4 percent, to close at $24.42 yesterday on the Nasdaq stock market.

MedImmune said termination of an agreement with former FluMist partner Wyeth of Madison, N.J., which helped develop and market the vaccine, in the second quarter of 2004 also affected earnings. They would have come in at $82 million, or 33 cents per share, for the year without the one-time expense, the company said. Fourth-quarter earnings would have been $55 million, or 21 cents per diluted share, without the one-time charge.

Product sales for the quarter increased 15 percent to $458 million from $399 million over the same period a year earlier.

That was largely driven by a 13 percent increase in worldwide sales of Synagis, a treatment for respiratory infection in infants. For the year, sales reached $1.12 billion, 84 percent of which was made up of Synagis sales.

This was "the first time that sales of our products have surpassed the billion-dollar mark," David M. Mott, MedImmune's chief executive officer and president, said in a conference call yesterday morning. The company - which develops products to treat infectious diseases, cancer and immune system disorders - has a goal of generating $2 billion in revenue by 2009.

Perhaps the best known is FluMist, which sold about 1.7 million doses this winter of the 3 million prepared, and generated $54 million in revenue in 2004. The company tripled its planned production of the vaccine after a shortage developed with the shutdown of flu-shot maker Chiron Corp. because of contamination.

MedImmune hopes to release a new version of FluMist in 2007 that can be more easily stored and will likely be approved to treat a greater range of people, Chief Financial Officer Lota S. Zoth said. FluMist is approved for healthy individuals between the ages of 5 and 49, but not for infants or the elderly, the groups potentially in greatest peril from the flu.

MedImmune officials said they expect revenue to grow 10 percent this year, with earnings per share ranging between 35 cents and 40 cents, surprising at least one analyst.

"That was a little less than what we expected," said Hamed Khorsand, who follows MedImmune for California-based BWS Financial. "We were expecting somewhere in the 45s."

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