MedImmune to sever partnership with Abbott

Gaithersburg biotech company's stock jumps 10 percent to $29.93

Firm will market drug Synagis itself

`Our dependence' on partner `has declined,' CEO Mott says

September 01, 2005|By Tricia Bishop | Tricia Bishop,SUN STAFF

Shares of MedImmune Inc. reached a 22-month high yesterday on news that the Gaithersburg biotech would soon regain U.S. control of its best-selling product by severing a partnership with pharmaceutical giant Abbott Laboratories.

MedImmune's stock jumped 10 percent on the Nasdaq market to close at $29.93 - up $2.83 from Tuesday's close of $27.10. It was the highest share price since Oct. 16, 2003, when the stock reached $30.01. The spike came after MedImmune announced it would take on full responsibility for promoting Synagis, a treatment for infant respiratory infection. The company had been paying Abbott a portion of the drug's annual profits - more than $200 million in recent years - in exchange for marketing help.

Yesterday's news went against trends in the industry, where in recent years biotechs teamed up with pharmaceutical companies with deeper pockets to develop and market new drugs. Earlier this week, MedImmune announced that it would be the developer of a product that originated within GlaxoSmithKline, rather than the other way around.

"Quite frankly, we've sort of come of age as a company over the last couple of years," MedImmune Chief Executive Officer David M. Mott said yesterday during a conference call. "Our dependence upon that organization has declined."

The Synagis agreement with Abbott, which has its headquarters in Illinois, was struck in late 1997. It required Abbott to provide sales and marketing staff for Synagis in exchange for a portion of the U.S. proceeds. It also called for the partnership to last as long as the drug was on the market.

The end of that arrangement, set to take effect June 30, means MedImmune will have to bear the costs of promotion and bolster its 300-person pediatric sales staff by 125 people, a 42 percent increase that will cost about $25 million a year. But the company will also be able to control the drug's future.

Mott said he had been looking for a way out of the deal - a "smooth transition and a positive ending" - for some time, but had to wait until the company was better established.

Under the amended agreement announced yesterday, Abbott will still market Synagis through the first half of 2006 and receive a portion of sales through the end of that year. The deal does not affect Abbott's stake in Synagis abroad, where it retains co-promotion rights.

The announcement also caused MedImmune to alter its earnings per share forecast, decreasing the 2005 and 2006 predictions by about a dime, and increasing 2007 estimates by 28 cents to $1.15 per share, according to Chief Financial Officer Lota Zoth.

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