MedImmune Inc. is still behind FluMist - although it now regards the product as a "Phase III project" - and is planning to expand the label, but the company's 2004 guidance, announced Monday, was below analysts' expectations, and the stock fell.

The company said it expects full-year 2004 earnings per share to range from 50 cents to 60 cents, but the company also will re-invest 20 percent of product sales back into research and development. MedImmune forecast total revenues in 2004 to be between $1.12 billion and $1.16 billion. Consensus estimates for 2004 were 95 cents per share and total revenue of $1.25 billion.

Although MedImmune anticipates the numbers will climb beyond 2004 - it expects to double EPS to $1 to $1.10 by 2007 and achieve compounded annual growth in earnings per share of 25 percent to 30 percent for the period from 2004 to 2009 - the near-term view had some investors stepping away.

Gaithersburg, Md.-based MedImmune's stock (NASDAQ:MEDI) fell $1.59 Monday to close at $24.10, after falling as low as $23. CIBC World Markets Corp. in New York downgraded them from "Sector Perform" to "Sector Underperform."

On the upside, total revenues should climb to $1.5 billion in 2007 and $2 billion by 2009, driven mainly by Synagis (palivizumab) - MedImmune anticipates Synagis sales to grow by 10 percent this year and reach $1 billion in 2005. Synagis is designed to block respiratory syncytial virus in high-risk infants.

While increasing Synagis sales might soothe some investors, for those who had pinned high hopes on FluMist, the nasal flu vaccine spray, the news wasn't so positive, at least not for the near future.

In its year-end earnings comments in January, MedImmune had said several options were on the table for the company's FluMist partnership with Wyeth, including Wyeth pulling out, both companies pulling out, or both staying in. MedImmune had delayed providing 2004 guidance so that it and Wyeth could decide "where each party stood in regards to the future of FluMist," David Mott, MedImmune's CEO and president, said in a conference call. While those discussions did not lead to a definitive answer, the FluMist options have been narrowed to two: "going forward together, or Wyeth will choose to exit the relationship earlier than called for," Mott said, adding that MedImmune would like to "narrow those two options down to one," and then detail that to shareholders when possible. (See BioWorld Today, Jan. 30, 2004.)

Also, Mott said MedImmune and Wyeth, of Madison, N.J., have not made decisions on price or production. Wyeth co-promotes and co-develops the drug in the U.S. and markets it outside the U.S. The co-promotion U.S. rights revert to MedImmune in 10 years, and the ex-U.S. rights also revert. If Wyeth pulls out of the agreement, MedImmune would write off $75 million in unamortized intangibles, Mott said. Not including the write-off, Wyeth's exit would cost MedImmune 10 cents to 20 cents per share annually through 2007, but would then increase EPS by up to 20 cents by 2009.

On the conference call, Mott was unsure of Wyeth's dedication to the product.

"Since we expect the product to generate negative cash flow for at least the next three or four years, we question its role in [Wyeth's] portfolio," he said, but added that the drug was going to be moved forward "with or without Wyeth, and we look forward to their decision."

MedImmune now considers FluMist a "Phase III project with a substantial amount of proven safety and efficacy data already obtained," Mott said. The plan going ahead is to enhance the product's profile and address market issues that "negatively impacted the launch this past season."

Those issues are the approved population and the formula. The company hopes to launch a refrigerator-stable version (CAIV-T) of the drug by 2007, which would "replace the cumbersome frozen product currently marketed," Mott said. At that point, MedImmune also expects to have expanded FluMist's label to include patients below 5 years of age and more than 49 years old. Importantly, Mott said, data from two Phase III trials (Study 514 and Study 515) conducted by Wyeth of a refrigerator-stable version showed it was statistically significantly more effective than the injectable flu vaccine in preventing culture-confirmed influenza.

For 2004, MedImmune now expects to see between $45 million and $55 million from FluMist sales, including sales made during the 2003-2004 flu season.

For the first quarter, MedImmune expects to see revenues of $485 million to $510 million and earnings per diluted share of 40 cents to 43 cents.

MedImmune views the re-aligning as a setback as it awaits bigger things ahead. If and when the CAIV-T version is approved, Mott said, MedImmune expects peak sales "to exceed $500 million in the U.S. and $800 million worldwide."