MedImmune Inc. said yesterday that it will build a 710,000-square-foot manufacturing facility in the city of Frederick and may add up to 840 employees to its workforce by 2008.

Frederick and the state of Maryland fought to keep the company from building in another state. The financial incentives the governments put together to keep MedImmune are expected to be worth $19.5 million.

"Had we not gotten it to expand here, it would've been an embarrassment," said Aris Melissaratos, Maryland's secretary of business and economic development. "MedImmune has always been our poster child for how to grow a biotech company and a biotech industry."

MedImmune, an 18-year-old company best known for its production of FluMist, a nasal-spray flu vaccine, will use the new space to manufacture products including treatments for infectious diseases.

The new facility will be built adjacent to a 150,000-square-foot site in Frederick that was built in the mid-1990s and is used to produce Synagis, which prevents some respiratory infections in babies. FluMist is manufactured primarily in Philadelphia.

The company already owned about 35 acres of land surrounding its Frederick facility, and the state transportation department improved the deal yesterday by saying it will spend more than $100 million on road improvements in the area. David M. Mott, MedImmune's chief executive, said the company spent a year investigating possible sites for the facility, both inside and outside the United States. The Frederick location was the only one in Maryland the company considered seriously.

Mott said the financial package presented by the state, city and Frederick County played a significant role in its decision to stay in Frederick, as did the relationship it has with the local government and biotechnology community. The incentives included $3.75 million in business and property tax forgiveness and $1.2 million for workforce training. The first phase of MedImmune's expansion is expected to cost $250 million.

The company's plan is to turn the Frederick site into its primary manufacturing facility, while the Gaithersburg building will continue to house its research and development operations and corporate offices.

"We really value the close proximity to our R&D staff in Gaithersburg, so that there's a real a back and forth between both locations," Mott said.

Last year MedImmune posted a $3.8 million loss on $1.14 billion in revenue. Synagis is far and away MedImmune's most successful drug, but Mott said the company has about 30 drug candidates in development right now, including potential treatments for lupus and some types of cancer. "We're going to need to manufacture them somewhere," he said.

Though high profile and well connected with the Bethesda-based National Institutes of Health, Maryland's biotech sector has disappointed many in terms of the number of jobs it has generated and the number of drugs it has brought to market. The announcement of a new manufacturing facility was therefore cheered in the biotech community.

"To me this indicates a maturation of an industry," said John W. Holaday, chairman of Harvest Bank of Maryland and founder of EntreMed Inc. "Once they're manufacturing, that means we have a fully integrated biopharmaceutical company that can serve as the cornerstone of our growing biotech industry."

MedImmune has about 2,200 employees, half of them in Maryland. The new manufacturing facility is expected to create about 225 jobs in Frederick, and the rest of the workforce expansion is expected to come at the Gaithersburg site over the next few years.

Shares of MedImmune rose 35 cents to close at $35.10 yesterday.

Maryland Gov. Robert L. Ehrlich Jr. announces that MedImmune Inc. will build a new facility in Frederick rather than out of state.