After only one influenza season for the marketed FluMist vaccine, Wyeth shifted all manufacturing and marketing responsibilities to MedImmune Inc. as the two companies terminated their collaboration.
Wyeth's exit means MedImmune gains worldwide rights to the FluMist franchise, including a second-generation product called CAIV-T.
It also means MedImmune will reduce earnings-per-share (EPS) estimates for the company by 10 cents to 20 cents annually. The Gaithersburg, Md.-based company on Tuesday made several adjustments to its 2004 guidance estimates.
"Both companies believe that this is ultimately what's best for the product," said Jamie Lacey, MedImmune's director of media and public relations.
"We continue to believe in the importance of this product and are excited to move forward with the development plan," she told BioWorld Today.
Investors weren't displeased, as the company's stock (NASDAQ:MEDI) rose $1.64 on Tuesday, to close at $25.71.
FluMist is a frozen intranasal live influenza vaccine that had $31 million in revenues during the 2003-2004 flu season. It was approved last June. (See BioWorld Today, June 18, 2003.)
CAIV-T - Cold Adapted Influenza Vaccine-Trivalent - is a second-generation liquid formulation of FluMist that MedImmune will take into U.S. Phase III trials this year. It could be the subject of a U.S. regulatory filing in 2006, MedImmune's CEO David Mott said. Previous Phase III studies of the refrigerator-stable product showed statistically superior efficacy over a traditional flu shot in preventing culture-infirmed influenza in children.
MedImmune inherited FluMist and the Wyeth collaboration when it acquired Mountain View, Calif.-based Aviron Inc. in January 2002.
Although FluMist sales for the 2003-2004 flu season were disappointing, MedImmune officials believe adding another 55-person sales force to educate pediatricians might do the trick. With worldwide rights to the product, MedImmune expects to book all sales-related revenues for FluMist, and potentially for CAIV-T, which is in late-stage development. That could bring the company to its goal of achieving $2 billion in revenues in 2009.
MedImmune no longer will receive revenues in the form of milestone payments and reimbursements from Wyeth, and it will take a one-time charge of about $73 million this quarter to write-off unamortized intangibles associated with the termination. Also this year, it will record non-recurring charges of about $30 million for newly acquired research and development costs.
As part of the agreement with Madison, N.J.-based Wyeth, MedImmune will acquire Wyeth's distribution facility in Louisville, Ky. Until the transfer is completed - expected in the fourth quarter - Wyeth will provide manufacturing services and move all clinical data to MedImmune.
Mott said in a conference call that the company will make between 1 million and 2 million doses of FluMist for the upcoming flu season, significantly fewer than the 4 million doses manufactured last year.
Wyeth will receive a $25 million up-front payment as part of the termination agreement. It also will receive up to $10 million in milestone payments this year if it completes certain transition activities in a timely manner, Mott said.
"We built milestones into the termination agreement with Wyeth to incentivize them to complete the transfer to us by the end of 2004," he said.
Wyeth also would receive future developmental and regulatory milestone payments, as well as royalties on product sales of CAIV-T.
The new sales force will market to pediatricians not only FluMist, but also Synagis, which is designed to block respiratory syncytial virus in high-risk infants. Synagis sales are expected to grow by 10 percent this year and could reach $1 billion in 2005. Worldwide sales in 2003 totaled $849 million.
MedImmune intends to keep the marketing of FluMist to children in-house, but it might use distributors for marketing to the general population.
"In terms of North America, we don't see that there would be a partner at this time, although there could be distributor relationships," Lacey said. "Ex-U.S., at some point when we go internationally, a partnership could be a part of the equation, but it's too soon to say."
Receiving the worldwide rights to FluMist caused MedImmune to adjust its 2004 guidance estimates. The company now is projecting revenues of about $1.1 billion in total, and between $35 million to $45 million for FluMist - about $10 million less than originally thought due to the lost milestone and reimbursement revenue from Wyeth. Costs for research and development now are at 25 percent of product sales. MedImmune also expects a loss per share of 48 cents to 52 cents in 2004.
"Our expectation is the foundation that we're building with this franchise, as well as with our existing pipeline, will help us achieve our long-term goal of reaching $2 billion in revenues by 2009, and achieving a five-year annual compound growth rate of approximately 35 percent," Mott said.