Despite promises of profit growth, some investors lost confidence in MedImmune Inc. yesterday, sending its stock tumbling 8.7 percent after the Gaithersburg biotech reported flat product sales for 2006 and moderate sales increases for the quarter that ended Dec. 31.
Shares closed down $2.97 to $31.04 in heavy trading on the Nasdaq.
Revenue for the year rose $33 million in 2006 to $1.28 billion compared with 2005. But the increase mostly came from the sale of a drug program to another company and royalty payments from MedImmune's role in developing much-hyped cervical cancer vaccines. Annual sales of its big products - infant respiratory treatment Synagis and the FluMist vaccine, in particular - were virtually unchanged, rising just $200,000.
That led some analysts to wonder how MedImmune planned to top itself this year. "You had no unit growth [in 2006], [yet] there's an assumption of growth for [2007]," Craig Parker, an analyst with Lehman Brothers, said during a conference call to discuss the results. "What are your underlying assumptions for [that]?"
Chief Executive Officer David Mott summed it up with one word: pricing. The company plans to increase prices on its top-selling drug, Synagis, to achieve 9 percent seasonal revenue growth.
The company had income of about $75 million for the year compared with a net loss of $17 million in 2005. Much of the 2006 income was attributed to the $49 million sale of MedImmune's first commercialized product, CytoGam, to another company.
For the final quarter of 2006, MedImmune recorded revenue of $529 million, compared with $492 million in the fourth quarter of 2005, and a profit of $121 million, compared with a loss of $22 million a year earlier.
Quarterly profit was driven by modest gains in sales of Synagis, a doubling in sales of its FluMist vaccine, and $26 million earned from human papillomavirus, or HPV, vaccines made using MedImmune's technology.
In a report issued Tuesday, investment bank Friedman Billings Ramsey noted that sales of Merck's recently approved HPV vaccine Gardasil, which protects against the virus that causes cervical cancer, are already higher than expected, which translates into higher royalties for MedImmune.
The bank expects such payments to drive growth for the company in the future.
In a follow-up report issued yesterday, Friedman Billings acknowledged MedImmune's "so-so revenue" quarter and worried that the company may not be able to launch a new version of Synagis by 2008 as planned.
Another investment house analyst, M. Ian Somaiya of Thomas Weisel Partners, downgraded the company's stock Tuesday to "market weight" from "overweight," telling the Associated Press that the company didn't have much of a second act in the pipeline, with just two drugs - new versions of its old ones - near commercialization.
Somaiya said this year is shaping up to be one of "transition" for MedImmune.
tricia.bishop@baltsun.com