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FluMist output tripling for '09

When Gaithersburg-based MedImmune Inc. first introduced a needle-free flu vaccine five years ago, shareholders were as excited as the kids who needed it.

So far, the product has fallen short of expectations. But that could change after a federal panel that advises the U.S. Centers for Disease Control and Prevention recommended yesterday that all children, from six months of age to 18, be vaccinated for the flu. If adopted by the CDC, an additional 30 million children would need immunizations.

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In anticipation of the change, MedImmune plans to triple production of FluMist - to a record 12 million doses - for the next flu season. So far this season, the company has sold 4 million doses of FluMist, generating about $55 million in revenue, said Dr. Frank J. Malinoski, senior vice president of medical and scientific affairs for MedImmune.

With the marketing muscle of its new parent company, London-based AstraZeneca PLC, the company hopes to garner the lion's share of sales to schools and pediatricians.

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"We've got a great partner with AstraZeneca in terms of infrastructure and marketing, which truly makes us a serious player here," Malinoski said in Atlanta, where he is attending the International Conference on Emerging Infectious Diseases.

Four other companies - including GlaxoSmithKline PLC and Novartis AG - manufacture flu vaccines, but FluMist is the only one sold as a nasal spray. Those companies plan to boost production for next year's flu season, the CDC said.

Malinoski said MedImmune has an edge on the competition in that it can grow strains of flu - a critical component of a vaccine - in eggs faster and easier than by other known means. FluMist also uses a live but weakened form of the virus, as opposed to a dead virus. The live form has been shown to protect against strains for which a vaccine wasn't matched in past flu seasons, Malinoski said.

However, FluMist is more expensive than flu shots, though its price has dropped by more than a third. Ultimately, the market is expected to decide how this latest development will affect MedImmune and its corporate parent.

FluMist was approved in 2003 for healthy children older than 5 and adults under age 50. The company had hoped to earn Food and Drug Administration approval for ages 1 to 64, but the FDA noted that in previous studies some children under 5 experienced wheezing problems. The age restriction, and the requirement that it be frozen, limited sales.

In 2006, FluMist sales represented 3 percent - or $36 million - of company revenue.

In September, the FDA approved FluMist for ages 2 to 5, after MedImmune addressed problems - including bacterial contamination - at its FluMist manufacturing plant in England. The FDA said in a letter that the problems did not affect the "safety, purity or potency" of the vaccine.

Last year the company participated in vaccination programs at 60 schools nationally, including in Maryland.

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FluMist costs $17.95 per dose wholesale compared with as little as $10 for flu shots, which may put it out of reach for some school systems and state programs, said analyst Damien Conover at Morningstar Inc.

FluMist is covered by 94 percent of health insurance plans with immunization benefits and is available at no cost to children eligible for the federal Vaccines for Children program, the company said.

However, pediatricians and parents may be willing to pay more out of pocket for a nasal spray to avoid the tears that often come with injections, Conover said.

"I don't think it's going to move the needle with AstraZeneca, but it is important," he said.

AstraZeneca stock closed yesterday down 88 cents to $39.15 on the New York Stock Exchange.

allison.connolly@baltsun.com

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Bloomberg News contributed to this article.


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