The bidding for MedImmune Inc. can now begin in earnest.

The Gaithersburg, Md.-based company, apparently bowing to pressure from disgruntled shareholders, said it was exploring the option of selling the company. Opening bids likely would start at more than $10 billion, following the 15.3 percent gain in the stock's price Thursday.

The move was a turnaround for MedImmune, which in February stated that it planned to continue to remain independent and "aggressively implement its business plan." That comment had come in response to letters from shareholder Matrix Asset Advisors Inc., which had been saying since last fall that MedImmune should put itself up for sale in order to maximize shareholder value.

Momentum picked up in February after an earnings report that disappointed investors, the disclosure that billionaire investor Carl Icahn had purchased 2.4 million MedImmune shares, and another letter from Matrix.

The stock, too, has been gaining momentum of late, based more on buyout speculation than earnings outlooks. The shares (NASDAQ:MEDI) jumped another $5.79 Thursday to close at $43.63 - a price the stock had not reached since March 21, 2002. The stock ended 2006 at $32.37 and trended down through March 14, when it closed at $30.88. Since then it gained steadily before closing Wednesday at $37.84.

David Katz, president and chief investment officer of New York-based Matrix Asset Advisors, got the stock jump he was looking for when he began urging MedImmune to pursue a sale in November.

"We are very pleased with the board's action," Katz told BioWorld Today. "We think this ultimately will result in a very good profit and valuation. The rumor mill is indicating there are expressions of interest north of the mid-$40s, maybe higher than we anticipated.

"We thought the company was rich with products but has been light on converting that wonderful product portfolio into commercial success," said Katz, whose firm owns a relatively small stake in MedImmune with nearly 1.79 million shares. "Management had not paid enough attention to delivering the bottom line, and repeatedly did not meet targeted goals."

The other piece of the equation, Katz said, is that MedImmune is rich in products, candidates and technologies in areas where pharmaceutical companies are looking to fill gaps: vaccines, oncology and virology.

With its stock at $43.63, MedImmune, which reported about 237.7 million shares outstanding as of Feb. 21, has a market capitalization of about $10.4 billion.

MedImmune in 2006 had revenues of about $1.28 billion, primarily on $1.1 billion in sales of Synagis (palivizumab), a monoclonal antibody indicated for the prevention of serious lower respiratory tract disease caused by respiratory syncytial virus in at-risk pediatric patients. Revenues for Ethyol, a product to reduce dry mouth in patients undergoing chemotherapy or radiation therapy, were $87 million. And revenues for FluMist, a nasal-spray influenza vaccine, were $56 million.

MedImmune also had about $1.5 billion in cash as of Dec. 31, along with a pipeline that includes about 45 clinical and preclinical projects. It also has a number of ongoing collaborations and license deals.

Joel Sendek, a managing director and senior biotechnology analyst at Lazard Capital Markets Inc., said in an intraday research note Thursday that "MedImmune offers a mixed bag to potential acquirers. While the company has a blockbuster franchise in Synagis, the franchise is mature, and we project that MedImmune will generate average annual revenue growth of only 11 percent through 2009. The flu vaccine franchise is not profitable and the pipeline, though promising, is in early stage development, at least three years from generating revenue."

MedImmune, in its news release, said its board authorized management to "evaluate whether third parties would have an interest in acquiring the company at a price and on terms that would represent a better value for its stockholders than having the company continue to execute its business plan on a stand-alone basis."

It said that decision was made due to "indications of interest by major pharmaceutical companies, coupled with recent expressions by certain stockholders of dissatisfaction with the company's short-term stock price performance."

MedImmune hired Goldman, Sachs & Co. and Dewey Ballantine LLP to assist in the effort to gauge third-party interest, "which is well under way."

"The company will not publicly disclose further information regarding the status of its evaluation until the process has been completed," MedImmune said, adding it would at that time announce a definitive agreement or a decision to remain independent.

Sendek said acquisitions of comparable biotechnology companies of late "suggest little stock price upside." He cited the $13.3 billion acquisition of Serono SA by Merck KGaA, which closed early this year, and Novartis AG's $5.4 billion purchase a year ago of the 56 percent of Chiron Corp. it didn't already own.

"We note that recent transactions involving similar-sized biotech companies took place at price-to-revenue multiples of less than 5 times forward sales," Sendek said. "MedImmune is trading at over 7 times forward sales, suggesting to us that any takeover premium relative to current levels is likely to be modest, even if there are multiple bids."

His comments were made after the stock opened higher on the news, but before it gained a second wind in afternoon trading.

Sendek later told BioWorld Today, however, that there are number of outside factors that could influence the eventual price paid for MedImmune, if it is sold, influences that could increase what he perceives as the company's value.

"Anything can happen," he said. "You could get to share prices that don't necessarily reflect the way financial analysts tend to value a stock. Big pharma is going to value the asset a different way than I am," especially if there is a bidding war, "which makes it a little difficult to analyze using traditional techniques."

MedImmune's first-quarter earnings report is scheduled for release before the market's opening on May 3. In preliminary guidance offered Monday, MedImmune said it anticipated Synagis sales would increase 9 percent to 10 percent from the year-earlier quarter, and that earning would come in at 62 cents to 67 cents per share, a sharp jump from the year earlier that it attributed to increased revenues and margins. It previously had offered guidance projecting total revenues of $1.5 billion for 2007, with earnings of 90 cents to 95 cents per share.

Among the near-term events at MedImmune are the May 28 Prescription Drug User Fee Act date for a label expansion for CAIT-V (FluMist), a refrigerator-stable formulation of FluMist that was approved by the FDA in January for prevention of influenza infection in healthy children and adults ages 5 to 49. MedImmune is seeking to expand the label to include children younger than 5.

It also plans to file a biologics license application by the end of the year for Numax, an antibody distinct from Synagis but also targeting the respiratory syncytial virus. The company has not discussed its transition plans from Synagis to Numax.