West Coast Editor
MedImmune Inc. is taking over all U.S. sales of the monoclonal antibody Synagis (palivizumab) for respiratory syncytial virus from co-promoter Abbott Laboratories after June of next year, a move that is expected to nip earnings per share in the near term but help the company hit goals further down the road.
David Mott, president and CEO of Gaithersburg, Md.-based MedImmune, told investors during a conference call that the altered deal holds "tremendous strategic and financial value" for the company and represents a "positive ending for what has been a terrific long-term collaboration" for Synagis in the U.S.
MedImmune's stock (NASDAQ:MEDI) closed Wednesday at $29.93, up $2.83, or 10.4 percent.
Starting in the 2006-2007 RSV season, MedImmune will be the sole marketer of Synagis in the U.S., and intends to add about 125 staffers to its 300-person pediatric sales force. By getting rid of the co-promotion fees, the deal should be accretive to MedImmune's EPS starting in 2007, a year for which the company has increased its target to about $1.15, excluding stock option expenses, with an EPS goal of $2 in place for 2009.
Under the terms of the amended arrangement with Abbott Park, Ill.-based Abbott, MedImmune will continue to pay a portion of U.S. sales of Synagis to Abbott through 2006, with more payments due to include incentive rewards based on the achievement of certain U.S. sales levels of Synagis during the 2005-2006 season.
If Numax, the next-generation RSV compound that MedImmune intends to replace Synagis with, is not cleared by the FDA by Sept. 1, 2008, MedImmune will make more payments to Abbott based upon sales of Synagis for up to two years, and Abbott's rights to distribute and market Synagis and Numax elsewhere are not affected by the changes to the U.S. deal.
Analysts during the conference call sought more specifics about payments, but Lota Zoth, chief financial officer, said MedImmune had agreed with Abbott not to disclose details. She did say MedImmune's EPS in 2005 and 2006 is expected to drop by 10 cents or 11 cents each year, resulting in a new range for 2005 of 24 cents to 30 cents and a preliminary range for 2006 of 40 cents to 50 cents, excluding stock option expenses.
In 2007, though, the benefit should start showing, with an accretion expected that year of about 28 cents per diluted share.
Synagis, formerly known as MEDI-493, was approved in the summer of 1998, resulting in a $15 million milestone payment from Abbott, which entered what was described as a potential $60 million deal with MedImmune the year before. (See BioWorld Today, Dec. 2, 1997, and June 18, 1998.)
Late last year, MedImmune completed enrollment in one pivotal Phase III study with the more potent, better-binding Numax for RSV in high-risk infants and began recruiting patients for another. Both trials are comparing the drug's safety and efficacy with Synagis. (See BioWorld Today, Nov. 2, 2004.)
In June, MedImmune said it met the primary endpoint in a Phase III study evaluating the immunogenicity of two different formulations of its live, attenuated intranasal influenza vaccine. Preliminary results showed that the approved formulation, FluMist, and the next-generation, refrigerator-stable formulation, CAIV-T (cold adapted influenza vaccine, trivalent), produced similar immune responses.
Final results from the flu vaccine study will be submitted later this year to the FDA. Earlier this week, MedImmune had still more news, disclosing that it had entered a licensing deal with London-based GlaxoSmithKline plc for a number of anti-staphylococcal monoclonal antibodies. (See BioWorld Today, Aug. 30. 2005.)
Mott said new people will be added to the sales force without any disruption of ongoing Synagis efforts.
"Following each of the past two RSV and flu seasons, we've added 50 additional reps to our pediatric infectious disease sales force," Mott said, adding that he expects to hire in May and June, "hoping to have almost everybody on board for the national sales meeting in June."
The company has done such hiring "almost every year over the last five or so," he said. "Frankly, we're getting pretty good at this."