MedImmune shares at 15-month low

Stock drops 3.2% after earnings report


Shares of MedImmune Inc. dropped yesterday to their lowest point in more than a year after the Gaithersburg biotech company again reported smaller-than-expected earnings.

Revenue for the quarter ending June 30 was $73 million - down 17 percent from the $88 million reported in the second quarter of 2005. Net loss was up 43 percent to $63 million from $44 million a year ago.

Loss per share was 26 cents, slightly higher than the 24-cent average prediction made by analysts polled by Thomson Financial. MedImmune's earnings for the first quarter ending March 31 had fallen short of similar estimates by about 4 cents per share.

The company is considered among the country's top biotech businesses with sales last year topping $1 billion, mostly from its infant respiratory treatment Synagis. It is often mentioned by state economic development officials when they are trying to attract new corporations to the area.

MedImmune's stock closed down 84 cents, or 3.2 percent, to $25.46 yesterday on the Nasdaq, the lowest price since April 2005. Shares have declined 32 percent since reaching a high for the year of $37.38 in late February.

During a conference call yesterday, company officials downplayed the earnings troubles, highlighting the year's achievements instead.

This month, the U.S. Food and Drug Administration approved a new method for making flu vaccine that MedImmune says could revolutionize the industry. And this year, the FDA approved a Merck & Co. cancer vaccine, sales from which MedImmune has begun to receive royalty and milestone payments.

"What's really exciting for me ... is that we are starting to see the fruit of some of our labors over the last couple of years," said James F. Young, MedImmune's president of research and development.

But this week, the FDA also sent MedImmune a letter requesting more information on a new formulation of its nasally inhaled flu vaccine. The company has not outlined the sort of information requested, but an FDA spokesman said the letters are generally sent out when an application for approval is deficient.

Chief Executive Officer David M. Mott said the company expects to provide the data within a month, and it shouldn't change the 2007 anticipated release date of CAIV-T - a refrigerator-stable version of the original FluMist, which has had poor sales in part because it must be stored frozen.

Mott also said yesterday that MedImmune will soon file an application with the FDA to extend the dosage label of CAIV-T to children between the ages of 1 and 5 - a change from earlier plans to ask for approval to administer the vaccine to children 6 months old and older. Children with a history of wheezing also will be exempted from the vaccine, eliminating about 20 percent of that possible population.

The switch was made, Mott said, after reviewing data that showed those children had higher risk of side effects than others.

The current version of FluMist and the CAIV-T approval applications before the FDA target healthy people between the ages of 5 and 49. The company is also looking into distributing the vaccine to older adults.

In a report issued yesterday, S.G. Cowen & Co. biotechnology analyst Phil Nadeau suggested MedImmune's stock might be undervalued at current levels. But he stopped short of recommending it.

"While we do acknowledge that recent weakness has left the stock somewhat oversold," he wrote, "we still do not consider MedImmune a compelling long-term holding because of the risks associated with its core franchises."

Analyst Geoffrey C. Porges of Sanford C. Bernstein & Co. rated MedImmune as an "outperform" stock yesterday in his report, predicting a target price of $40, contingent upon management and board actions. Joel Sendek, an analyst with Lazard Capital Markets, was less optimistic about the stock's potential over the next year, reducing his target price yesterday from $26 to $23 and reiterating a recommendation to sell.

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