The logic would thus be that the company is already reaping in the financial rewards. Certainly, many are worried they won't be able to get vaccinated this year, given that even local county governments are now holding lotteries to select those lucky enough to be jabbed against a flu outbreak, and many are willing to pay far above the market price just to get inoculated. Yet despite such buoyant expectations about the maker of a painless vaccine, MedImmune reported early Thursday that it posted a loss in the third quarter, due mostly to the fact that demand for the inhaled drug was weak when it was first launched onto the market a year ago. The company reported a quarterly loss of $65 million, compared to a $16 million loss it posted in the same quarter a year ago.
Meanwhile, the company's third quarter revenue also tumbled to $93 million from $99 million a year ago, largely as payments from Wyeth for drug development ended in the third quarter of 2003. The payments had accounted for $17 million in revenue.
Outlook for the fourth quarter does not fare much better, as the company lowered its expectations for the October to December period. MedImmune anticipates revenue to reach between $435 million and $475 million.
The single biggest factor for the ballooning loss was MedImmune's severing of ties with Wyeth in April, another pharmaceutical company, which it had partnered up with to market FluMist. But Wyeth decided to get out of the deal, as demand for the product fell significantly short of expectations.
MedImmune said that the split from Wyeth will cost it $138 million this year from charges and lost revenue.
"These included estimated costs associated with the impairment of intangible assets and acquired in-process research and development, as well as technology transfer and transition expenses," MedImmune said.
Such costs have certainly not led to an auspicious start for the now nationally renowned FluMist. The company had produced close to 5 million of the vaccine during the last flu season, largely targeted to children and others who wanted to get vaccinated without getting a shot. Still, the relatively high cost of the medication - up to $70 per dosage, which some insurance companies were unwilling to pay for- led to sluggish sales for the 2003 season. Another problem was that the mist was only available to healthy people between the ages of 5 to 49, when the government has specified that the high-risk groups are those under the age of 2 years and those over 60 years old. In the end, MedImmune sold only about 450,000 doses and it had to destroy about 4 million doses.
Nevertheless, the company is upbeat about its future business prospects, particularly in light of the potential surge in demand for FluMist. Earlier this month, the company said it will produce up to 2 million doses in answer to the national shortage, instead of the 1.1 million doses it had initially planned to produce, by using frozen bulk vaccine that it had prepared. It expects revenues from FluMist to reach $45 million to $57 million this year.
Of course, one of the problems about producing flu vaccines is that they cannot be cultivated in a short period. Moreover, the variety of flu that spreads can differ from year to year, so any stock left over from the previous year is not necessarily effective the following year. At the same time, the profitability of flu vaccines has hitherto been regarded as limited, which has kept most drug makers from making them.
But MedImmune nonetheless has high hopes for FluMist's ability to turn the company's fortunes around in the longer term.
"We believe the additional usage of FluMist this year does have the potential to accelerate future growth," said MedImmune's chief executive David Mott.
Mott added that the company could produce up to 40 million doses of a new version of the spray by 2007. The new product, currently known as CAIV-T, should be available to those in the high-risk age groups, which would expand the product's market base. The drug is currently is currently at a research stage, and costs to develop is have been increased to $73 million from $54 million last year.
Copyright 2004 by United Press International
