News that MedImmune Inc.'s highly touted nasal spray for flu treatment will not obtain federal approval until at least mid-2003 roiled biotechnology stocks yesterday and crushed the firm's hopes of getting the vaccine on the market in time for the winter flu season.
The Gaithersburg-based company, which is pinning its hopes for growth on FluMist, revised its fiscal-year sales projections downward by about $100 million because of the setback, and shares tumbled $3.05 yesterday, about 11 percent, to close at $24.30.
It was not the news that biotech investors had wanted to hear. The Nasdaq biotech index slid nearly 15 points, or 2.9 percent, to close at 492.90, while its counterpart on the American Stock Exchange fell about 12 points, or 3.3 percent, to close at 339.02.
Rockville-based Celera Genomics Corp., which mapped the human genome, had dour news of its own. The firm said its losses widened more than 25 percent in the just-ended quarter. The company is the midst of a daunting transformation from genetic data merchant to drugmaker, although it does have $881 million in cash on hand to help ease the transition.
MedImmune reported a loss of $36.3 million (14 cents per share) for the quarter, compared with a loss of $19 million (9 cents per share) for the same period a year earlier, crediting costs associated with the acquisition of FluMist earlier this year. Revenue rose 53 percent, to $72.6 million from $47.4 million, because of strong sales of Synagis, used to treat childhood respiratory viruses. Sales of the product accounted for 41 percent of the company's quarterly revenue.
The company, which bought FluMist in a $1.5 billion takeover of Aviron Corp. in January, will present an application for FluMist's approval to a panel of Food and Drug Administration advisers on Dec. 17. A similar panel declined to support Aviron's application two years ago because the company failed to debunk a possible link between FluMist and pneumonia.
"There are a lot questions about the exact potential of the drug right now," said Frank DiLorenzo, a biotechnology analyst at Standard and Poor's Corp.
Analysts say early jubilance about FluMist has been tempered over the past two years as Aviron -- and now MedImmune -- tangle with the FDA over the fate of a needle-free vaccine that MedImmune hopes will eventually fuel more than $800 million in annual sales.
Among their concerns are the drug's safety for children under 5, about 6 percent of the vaccine's potential market, and its price, about $35 a dose, compared with about $10 for most flu shots.
"We believe this is our next licensable product," said MedImmune spokeswoman Lori Weinman. In the past the company has put its eventual sales projections at $1 billion. Jill Kiersky, a biotechnology analyst at MorningStar Inc., said the drug may be approved but "MedImmune's sales numbers are still too optimistic when you look at how much competition there is for flu vaccines."
Todd R. Nelson, an analyst at RBC Capital Markets, said news that FluMist's approval will have to wait is adding to investor anxiety about the sluggish biotechnology sector. "These FDA issues are slowing down the product cycle," he said.
The loss at Celera widened to $19.6 million (28 cents) from $15.6 million (25 cents) a year earlier. Revenue fell to $23.6 million, from $27.3 million, largely because the firm reduced its contract services for gene analysis.
More than 90 percent of Celera's quarterly revenue came from its online information unit, which was transferred to the company's corporate sibling, Applied Biosystems. Revenue from online clients, companies and universities that pay for subscriptions to Celera's genetic database will soon begin to tail off, said chief executive Kathy P. Ordonez. But royalties from products developed from the online subscribers are expected to grow, she said.
Ordonez said that by year's end the company will unveil a broad restructuring program that emphasizes later-stage drug development. The company is developing a variety of compounds that it needs to shepherd into product stage before it can market them to corporate partners.
"Celera's focus has been on early drug discovery," Ordonez said in an interview. "In the current biotech environment, where value is placed on later-stage drug development, we think we can build more value by taking discoveries further downstream."
Shares of Celera closed at $8.26, down 40 cents.