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MedImmune allies with drug giant


MedImmune Inc. yesterday announced a deal with Baxter Healthcare Corp. to market the Gaithersburg company's infant pneumonia vaccine outside North America, a move that will shore up the money-losing biotechnology company's balance sheet and could make MedImmune profitable a year sooner than Wall Street had expected.

As part of the alliance, Baxter will pay $9.5 million for stock that represents about a 5.6 percent stake in MedImmune, said Mark Kaufman, strategic planning manager for the Gaithersburg firm. In addition, MedImmune will get royalties on sales of its key RespiGam drug outside the United States, Canada and Mexico and a lump-sum payment if RespiGam sales reach certain "milestone" levels that were not disclosed.

If RespiGam is not a commercial success, MedImmune will give Baxter more stock to help the suburban Chicago-based drug giant recoup its investment.

"In order to commercialize RespiGam, we had to do a deal like this," Mr. Kaufman said. "We would need to build an overseas sales force, which we have no interest in doing."

RespiGam is a "preventive treatment for the most common cause of infant pneumonia," said Eric Hecht, a physician and stock analyst who follows MedImmune for Morgan Stanley & Co. He said up to 100,000 premature infants annually are at risk for the pneumonia-causing virus RespiGam is intended to prevent.

MedImmune will retain the right to market RespiGam in North America. It announced a deal in 1993 under which it will split U.S. marketing and promotion of RespiGam with American Home Products Corp. of Madison, N.J. It will market RespiGam on its own in Mexico and Canada.

The company recently completed the last round of clinical trials on RespiGam, Mr. Kaufman said. If the trials show the drug is safe and effective, the company will ask the U.S. Food and Drug Administration for final U.S. marketing approval.

Overseas, Baxter will handle getting regulatory approvals and will also manufacture the RespiGam that it sells. MedImmune is negotiating with officials in Maryland who hope to persuade the firm to build a factory in the state to manufacture the drug for the North American market.

Wall Street reacted positively to the Baxter news, pushing MedImmune's stock up 2 points to reach a 52-week high of $14.25 before the shares closed at $13.875, up $1.875.

"It's better than commercializing [RespiGam] themselves," Alex. Brown Inc. analyst Kevin Tang said, because Baxter is recognized as a world leader in vaccines. "I think it could be significant."

Dr. Hecht said the deal spares the young company the risk of spending heavily to build a sales force for the overseas market.

"The development of infrastructure is a big [task]; it can't all be done in one bite," Dr. Hecht said. "There's a risk associated with expanding too quickly, and the U.S. is the most fertile territory. To make sure your ducks are lined up in the U.S. is the proper strategy."

MedImmune is one of about a half-dozen Maryland biotechnology firms that Wall Street believes will move beyond the money-losing research phase and turn profitable by 1998, when Morgan Stanley expected MedImmune to earn $1.33 a share before yesterday's announcement. Mr. Hecht and Mr. Tang said the news makes even a 1997 profit more possible for MedImmune.

"It's possible it's enough to move it into 1997," Mr. Hecht said. "Looking more into the 1998-1999 time frame, earnings could be as much as $1.50 or $1.75 a share."

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