Betting on the release next month of positive Phase III data fromMedImmune Inc.'s immunoglobulin drug for respiratory syncytialvirus (RSV) in high risk infants, Baxter Healthcare Corp. made anequity investment of $9.5 million in the Gaithersburg, Md. companyfor rights to commercialize the product outside North America.

MedImmune's stock (NASDAQ:MEDI) jumped 16 percent Monday,gaining $1.87 to close at $13.87. Baxter's purchase of more than826,000 MedImmune shares for $9.5 million, or $11.50 per share,gave the pharmaceutical company about a 5 percent ownership stake.Baxter Healthcare is the U.S. operating subsidiary of BaxterInternational of Deerfield, Ill.

In addition to the equity investment, Baxter agreed to reimburseMedImmune's past research and development expenses forRespiGam based on achievement of specific sales milestones for theproduct. Baxter, which will assume costs of developing RespiGamoutside North America, also will pay royalties to MedImmune.

Eric Hecht, an analyst with Morgan Stanley & Co. in New York,estimated the deal could be worth up to $30 million to MedImmune.

Data from two Phase III clinical trials of RespiGam, involving nearly1,000 patients, is expected to be unblinded and released in July. RSVinflicts common colds on adults, but can be life-threatening tochildren and infants, causing bronchial pneumonia and bronchiolitis.

MedImmune's clinical trials focused on RespiGam as a preventivetherapy to protect infants at high risk of getting the contagiouspathogen, such as those who are born prematurely and those whohave lung and heart problems. In the U.S., the virus strikes about90,000 infants a year, killing 4,500.

In December 1993, MedImmune applied for approval of RespiGamwith data from its first broad clinical study involving 249 patients,but the FDA's Blood Products Advisory Committee rejected thedrug, citing concerns about the trial's methodology and statisticalanalysis. The trials' investigators, in releasing the data in April 1993,concluded the drug significantly reduced incidence and severity ofthe disease. Since then, in April 1994, the company reported resultsof an open-label trial that supported previous findings.

Hecht said the FDA committee's concerns subsequently wereanswered by the company and he expects the recently completedPhase III trials to replicate results of the first study, which "mostthink was a good Phase II trial."

David Mott, MedImmune's executive vice president, said the dealreflects the company's efforts to seek an alliance that enhancedMedImmune's participation in sales outside North America, not onethat defrayed the risk of the drug's failure in clinical trials.

To that end, Mott said, if the Phase III trial results aren't successful,Baxter will receive additional MedImmune shares at no cost,however, the number was not disclosed.

MedImmune has a corporate partnership with American HomeProducts Corp. of Madison, N.J., for marketing RespiGam in the U.S.

RespiGam is a polyclonal antibody derived from human plasma andenhanced with antibodies against RSV.

Mott said Baxter was an attractive partner not only because of itsextensive immune globulin and hospital products business, but alsobecause the two company's work together on the production ofMedImmune's first product, CytoGam, which is a polyclonalantibody marketed for cytomegalovirus associated with kidneytransplants.

Kurt Johnson, vice president of business planning and developmentfor Baxter's Hyland Division in Glendale, Calif., said RespiGam is anatural extension for the company's gamma globulin product line.

Baxter's stock (NYSE:BAX) dropped 50 cents Monday, closing at$35.75. American Home Products (NYSE:AHP) was unchanged at$76.25. n

-- Charles Craig

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