By Jim Shrine
MedImmune Inc. is calling convertible subordinated notes issued three years ago in a move expected to save the company about $17 million in interest over the remaining life of the notes.
Separately, the Gaithersburg, Md., company reported the Committee for Proprietary Medicinal Products (CPMP) recommended approval of Synagis in Europe, paving the way for possible approval of the monoclonal antibody there before the next respiratory syncytial virus (RSV) season. The product generated sales of $226 million in the U.S. in the 1998-99 RSV season, making it one of the most successful launches of a biotechnology product.
The 7 percent convertible subordinated notes were sold in July 1996 and due in July 2003. Some of the proceeds were used to construct a manufacturing facility for two products that were approved at the time ¿ CytoGam and RespiGam. There were 60,000 units sold at $1,000 each. (See BioWorld Today, June 21, 1996, p. 1.)
The units are convertible into MedImmune shares at $9.84 per share, which equals nearly 102 shares for each $1,000 principal amount. Those who don¿t convert by July 6 will receive the redemption price of $1,041.36 per $1,000 principal amount.
MedImmune¿s stock (NASDAQ:MEDI) closed down $4.312 per share Friday at $55. So holders of the notes clearly would be expected to convert them into common stock rather than wait for the redemption. The company¿s 65.5 million diluted shares outstanding, reported on March 31, already took into account the notes conversion.
Mark Kaufmann, MedImmune¿s director, planning and analysis, said it makes sense to call the notes ¿as soon as you can so you don¿t have to pay future interest. If everyone converts, about $60 million will be taken out of long-term debt and placed into shareholders¿ equity. The debt on March 31, 1999, was about $83.5 million.¿
MedImmune had product sales of $127 million in the first quarter and ended the period with about $194 million in cash and equivalents.
Synagis accounted for most of that revenue. It is a humanized monoclonal antibody approved last June for preventing RSV in children and infants. The approval came in time for the 1998-99 RSV season, which runs from about September through March in the Northern Hemisphere.
Kaufmann said action on CPMP recommendations usually takes three to six months, and the company hopes approval will come before the upcoming RSV season in Europe. ¿However, we have no control over that,¿ he said.
MedImmune disclosed for the first time that Synagis has gained approval in a number of other markets: Argentina, Australia, Brazil, Colombia, Kuwait and Mexico. Many of those countries are in the Southern Hemisphere, so the RSV season is the opposite of that in the U.S. Product is available for those markets, he said, and expected to be sold over the summer. n