Sales of MedImmune's Flu Vaccine Drop Sharply

MedImmune Inc.'s beleaguered nasal flu vaccine FluMist has suffered another setback, with fourth-quarter and full-year 2005 sales coming in drastically below expectations of analysts and even the company's senior executives.

The Gaithersburg biotechnology company, which reported earnings yesterday, had predicted modest increases in FluMist sales from 2004, when it sold $48 million worth of the vaccine, helped in part by a shortage of flu shots.

But for 2005, sales plunged 56 percent, to $21 million. For the quarter, MedImmune sold just $8 million of FluMist, a 61 percent drop from the fourth quarter of 2004.

During a conference call with investors and analysts, MedImmune chief executive David M. Mott called FluMist sales "disappointingly lower than we had originally hoped for." But he said it was in an "extended pre-launch phase as we prepare" to win federal approval for a repositioned version of the vaccine.

Still, analysts were concerned.

"You'd like to see the product gradually gaining traction through this limited launch, to give it a head start. Obviously, that's not happening," said Phil Nadeu, an analyst for investment bank SG Cowen & Co.

The drop in sales helped drag down MedImmune's yearly earnings, with the company reporting a loss of $16.6 million (7 cents a share) on revenue of $1.24 billion, which came primarily from sales of its blockbuster drug Synagis, which prevents certain respiratory infections in babies. In 2004, the firm lost $3.8 million (2 cents) on $1.14 billion in revenue.

For the quarter, MedImmune lost $22.4 million (9 cents), in comparison with a $50.5 million profit (20 cents) in the comparable period the previous year. Revenue was $492 million, up 6 percent.

FluMist is sold in a frozen form, which is difficult for doctors to store. It is also approved only for healthy people ages 5 to 49, a significant limitation because it eliminates a significant market -- the millions of young children who find injections objectionable.

MedImmune has spent more than $100 million trying to reposition the product and persuade federal regulators to allow use in younger children. It has successfully tested a refrigerated form of FluMist, called CAIV-T, and last year, a $90 million study showed that CAIV-T was 55 percent better at preventing flu in children than the standard flu shot.

MedImmune hopes to win widespread approval for the new FluMist in time for the 2007-08 flu season. By that time, investors' patience could run thin, Nadeu said.

"If you talk to most investors right now, they would say that what is happening with FluMist is not fully predictive of what will happen with CAIV-T," Nadeu said. "I think they are getting the benefit of the doubt. But in 2007, they will only get one shot to get it right."

Shares of MedImmune fell $1.58 yesterday, closing at $32.90.