Weak earnings drove down shares in MedImmune Inc. by almost 12 percent Thursday, the same day the company unveiled an infectious disease in-licensing deal with Elusys Therapeutics Inc.
Gaithersburg, Md.-based MedImmune reported $47 million in earnings for the quarter ended March 31, including earnings per share of 18 cents. That missed the consensus analyst target of 27 cents.
Disappointing sales were behind the earnings, especially for the respiratory syncytial virus drug, Synagis (palivizumab). Its worldwide sales totaled $463 million for the three-month period ended March 31, down from $472 million a year ago. That dip was blamed on prescription drops caused by last year's hurricanes, disrupted distribution channels and new payer guidelines that adversely affected the seasonal drug. Also, the company conceded that seasonally low sales for FluMist has put downward pressure on overall gross margins.
Next-generation versions of both drugs are in Phase III. A 6,600-patient study comparing Synagis to Numax should complete dosing by the end of this month, with data due in the second half of this year and a potential launch forecast for the 2008-2009 season.
Later this quarter, MedImmune plans to file for approval of CAIV-T, a refrigerator-stable version of FluMist. New Phase III data will be disclosed at a pediatric meeting next month - securing the product's availability in children is a priority for the company - with a potential launch in advance of the 2007-2008 flu season.
Under the exclusive licensing and collaboration agreement, MedImmune will work to develop new therapies targeting infectious disease by combining its monoclonal antibodies with Heteropolymer (HP) Antibodies from Elusys. The license initially covers a single target with an option for three more.
Elusys President and CEO Elizabeth Posillico noted that it's the company's first partnership, and she told BioWorld Today that MedImmune's "strong position in infectious diseases and antibodies" made the agreement particularly attractive.
"Working with MedImmune will help us drive these products faster to the clinic," she added, noting that the partnership should complement Elusys' existing programs in Staphylococcus aureus and HIV, with such R&D continuing independently. The agreement is centered on "important commercial targets" for selected bacterial and viral pathogens, Posillico said.
Elusys, which will receive an undisclosed up-front payment, also will get research funding over the next two to three years for its preclinical efforts and would be due milestone payments and royalties on sales.
In addition, MedImmune's wholly owned venture capital arm, MedImmune Ventures Inc., is making an undisclosed equity investment in Elusys. Altogether, Posillico characterized the financial upside as "a very significant preclinical deal."
Jamie Lacey, MedImmune's director of media and public relations, said that "from a research perspective, our scientists feel that this is an interesting technology" to blend into the infectious disease area of the company's pipeline.
The HP Antibodies from Elusys, a development-stage firm in Pine Brook, N.J., are designed to enhance a body's natural immune system mechanisms to pathogens and provide a platform for drug candidates targeted against bacterial, viral and fungal infections. An HP Antibody consists of a monoclonal antibody specific to an immune receptor (CR1) that is linked to a second antibody that binds to a particular pathogen. After administration, the HP Antibody binds the target pathogens to red blood cells.
Recent in vivo studies suggest that in addition to potential infection treatment, HP Antibodies also might provide immunity against secondary infections from the same pathogen, meaning the products could be useful as a therapeutic vaccine to help provide long-term protection from infection. An investigational new drug application for ETI-211, its candidate for S. aureus, is expected to be filed late next year. In addition, Elusys is making progress with its monoclonal antibody for anthrax, Anthim, which recently completed positive safety studies in humans and will continue to undergo efficacy testing in animals.
For MedImmune, investors were not pleased with the first-quarter financial report. Total revenues were $498 million in the preceding three months, down from $510 million a year ago.
Going forward, the company expects worldwide Synagis sales to resume a pattern of high single-digit growth rates in the second half of this year, such that for the full calendar year, the numbers will be about even with last year.
MedImmune, which reinvests just under a third of product sales into research and development, expects full-year revenues will grow about 4 percent to about $1.3 billion, or 30 cents to 35 cents per share, a downward forecast over previous estimates.
As the year progresses, the company expects to have two products under regulatory review, about 15 more in clinical testing, including two in Phase III trials, and at least three investigational new drug applications.
The company had about $1.6 billion in cash and marketable securities on March 31, at which time about 260 million shares were outstanding. On Thursday, its stock (NASDAQ:MEDI) lost $4.17, or 11.8 percent, to close at $31.17.