MedImmune Inc., the small biotechnology company in Gaithersburg whose stock has slumped in recent weeks after a major product setback, got a helping hand yesterday from pharmaceutical giant American Home Products Corp., which invested $15 million in the struggling company.
The investment boosted market confidence in MedImmune, which is developing treatments for cancer and infectious diseases.
MedImmune's stock, which has tumbled recently from a 52-week high of $15.25 a share, rose yesterday to $10.50, up 87 cents.
"We're obviously very happy about this investment. It will help us focus on some of our strategic priorities for next year," said Mark E. Kaufmann, manager for strategic planning and investor relations at MedImmune.
Specifically, said Mr. Kaufmann, MedImmune will now focus its research on a drug it has in development called Medi-493, a monoclonal antibody scientists believe could be used to prevent infant pneumonia and bronchitis. The drug is in early-stage clinical trials.
Under yesterday's transaction, American Home Products, a diversified prescription drug and health products developer based in New Jersey, purchased 967,742 shares of MedImmune at a premium -- $15.50 per share.
The deal gives American Home a 5.5 percent stake in MedImmune.
The two companies also revamped a strategic alliance agreement they struck in 1993.
Under the new agreement, MedImmune gave up the right to market with American Home a drug called Zosyn, an approved antibody for treating bacterial infections that occur in hospital settings.
Also, American Home will share in the profits from any future sales of Medi-493. The companies also agreed to share in the marketing expenses and profits from MedImmune's laboratory breakthrough, a medicine called RespiGam, also developed for treating infant pneumonia.
The drug has not yet been approved for marketing by the Food and Drug Administration.
Analysts have had strong hopes for RespiGam's potential for moving MedImmune into the black by 1998. But the company got hit with a major setback in July when clinical trails of RespiGam yielded mixed results.
In 1993, the company sought FDA approval for RespiGam based on earlier studies, but an FDA review panel refused to approve it because of research flaws.
Mr. Kaufmann said MedImmune is awaiting an FDA review of new clinical trial data it collected on RespiGam.
RespiGam targets what's known as the RSV virus, which causes lung disease in infants and premature babies, usually during the late fall. The company estimates 90,000 children annually are struck by the virus and about 4,500 die as a result.
The difference between RespiGam and Medi-493 is that Medi-493 is made from biologically engineered antibodies that specifically target the RSV virus. RespiGam is made using antibodies from adults. Medi-493 contains high concentrations of the RSV virus antibodies and can be administered by injection, an advantage over RespiGam, which must be given intravenously.
The American Home Products deal is the second such alliance MedImmune has fashioned to market RespiGam.
Early this year, MedImmune struck an alliance with pharmaceutical heavy hitter Baxter Healthcare Corp to jointly market RespiGam outside North America. Baxter bought 5.6 percent of MedImmune's stock in return.