Editor

Influenza: It's the Italian word for "influence," derived from the Medieval Latin word "influential," which means "to flow into." In the old days, disease was believed to be caused by liquid emanating from stars.

The nasty bug is better understood in the modern age, but - as we're finding out this season - not always well prepared for.

Characterized in its worst form by fever, chills, aches, coughing and fatigue, the flu comes in three strains. Type A is the bad one, which can spread fast. Type B is less severe and usually regional in its affects. Type C rarely causes significant illness and is not included in the vaccine.

Sometimes, too, the virus mutates or "drifts." That, of course, is what happened this year. Early on, the Centers for Disease Control and Prevention had forecast a flu season more severe than usual. Scientists started noticing what soon was being blared in panic-making headlines across the land as the Fujian strain: a "drift" of Type A.

Rumblings about vaccine shortages sent the populace scurrying to clinics for their vaccination shots, each of which contains three killed flu viruses - two Type A, known as H3N2 and H1N1, and one Type B. H1N1 is the lingering strain that caused the flu pandemic of 1918-1919, history's worst, claiming the lives of 20 million to 40 million people worldwide. H3N2, of which the Fujian strain is a variant, caused the pandemic of 1968-1969, the mildest of the 20th Century - but hardly worth repeating.

The shot is not guaranteed against the Fujian flu, though officials were optimistic that the vaccine would provide at least some protection. Citizens got the message - as word about the virus spread (along with the virus itself), clinics in some areas of the country ran out of medicine.

Enter FluMist. The intranasal flu vaccine from MedImmune Inc. (acquired in its 2001 merger with Aviron Inc. and partnered with Wyeth) gained U.S. approval in June after years of FDA deliberation. The spray contains live but weakened versions of the dead viruses used in the flu shot.

MedImmune, capitalizing on the Fujian frenzy, said earlier this month that new data show FluMist gained a strong antibody response against the drift strain. In a clinical trial with 48 children, 67 percent of those immunized with one dose exhibited a significant rise (at least fourfold) in antibody response against the drifted variant, as compared to 4 percent of children given one dose of an inactivated influenza vaccine. Other favorable data came from a study in ferrets.

Less than a week after the news from MedImmune, the CDC updated its advice on flu prevention, encouraging patients who qualify - that is, healthy people between ages 5 and 49 - to use the spray form of the vaccine. Not only that, but Robert Parente, analyst with Leerink Swann & Co., told BioWorld Financial Watch last Monday he had learned the CDC is in negotiations to buy a load of FluMist.

"We think it's for nine states," he said. "We're still trying to figure that out."

Parente said the CDC likely would bid "less than half" of the $46 per dose MedImmune and Wyeth are getting for FluMist, but the company has inventory it had better unload before the flu season ends.

The companies, he said, must decide, "Is the bird in the hand worth more than two in the bush? Can they sell more product into this historic demand before the demand falls off the cliff?"

The CDC, "from what I understand, really likes the technology," he said. "They like what MedImmune is offering. The problem is, the cost is just too darn high, so how do you drop it?"

The company, Parente said, "is caught between a rock and a hard place, since the only way to drop [the price] is to make more" - which means added risk of getting stuck with shelves of unsold FluMist at the end of the season. He predicted a sale to the CDC of some available FluMist, and continued marketing of the rest.

Later Monday, the Department of Health and Human Services disclosed it had negotiated to buy up to 3 million doses of FluMist at $20 each from MedImmune.

Lazarus' Could Rise Again, Says Analyst

Could the product, once hailed as bearing blockbuster potential, live up to that long-ago promise? MedImmune was not optimistic in November. The company has lowered guidance for its fourth quarter and full year as a result of lower-than-expected demand for FluMist in the product's first season on the market. The company revised expected full-year FluMist revenues to range between $55 million and $85 million, down from the previous guidance of $120 million to $140 million.

At the time, MedImmune said about 4.1 million doses of FluMist had been shipped to partner Wyeth, which distributed just shy of 400,000 doses at that time, only a small percentage of which was reorders.

"Now things have changed, but a lot of the fundamentals haven't," Parente said. "The product is very expensive and there will be limited reimbursement next year, but maybe better than this year's."

Rampant flu cases have led third-party payers including Aetna, Cigna and Blue Cross Blue Shield of North Carolina to expand coverage and include FluMist because of scarce supplies of the injected vaccine. That's good news for MedImmune, even though Aetna and Cigna said they would go back to the old rules next year, Parente said.

On the other hand, the CDC recommends vaccines for adults over 50, healthy children between 6 months and 23 months, pregnant women in their second and third trimesters, and high-risk children and adults - FluMist is approved for none of these.

What's more, the shortage of vaccines was only in certain zones, and the CDC last week was trying to get distributed another 250,000 doses of Fluzone, developed by Aventis Pasteur Ltd. (the vaccines business of Lyon, France-based Aventis SA), along with 375,000 more doses of Fluvirin, Chiron Corp.'s shot. This year, a total of 83 million doses were made, as compared to the 70 million to 75 million typically manufactured, and the highest number of doses ever administered in a single year was 80 million.

The "real crux" of the FluMist issue is how many eligible patients will buy the medicine, Parente said. "Typically, they didn't step up [in past years], but this season they are," he noted. Further "stepping up" could make the short-term gains by MedImmune satisfying, he said, but whether the "Lazarus" that is FluMist will continue adding major earnings beyond this season is far from certain, especially when the government might step in and offer subsidies to shot-makers as a way of avoiding shortfalls in future years.

MedImmune's flagship product, also seasonal, is Synagis (palivizumab) for respiratory syncytial virus. In fiscal 2002, it sold $668 million, which is about 79 percent of total revenues. The product gained a market penetration rate of more than 65 percent in the U.S. for the 2002/2003 RSV season, and analysts are expecting sales growth to slow in the next few years.

"Synagis is definitely what people are focused on," Parente said.