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MedImmune: Skies Clearing for FluMist?

Posted on: Wednesday, 21 February 2007, 15:01 CST

The approval of a new refrigerated formulation of FluMist had suggested a brighter future for a product previously burdened by an inconvenient frozen dosage, a narrow approved age range and a high price in comparison to conventional vaccines. However, without a strong marketing partner, investors continue to urge MedImmune management to put the company up for sale.

In 2003, Gathersburg-based MedImmune became the first company to launch a needle-free influenza vaccine, when the FDA approved FluMist, a trivalent, cold-adapted virus vaccine that combines the core of a live-attenuated influenza virus with the envelope of the virulent strain(s) prevalent in respective flu season. Although FluMist's intranasal mode of administration was considered a step forward, uptake of the vaccine was largely hampered by three factors: frozen formulation, high price and narrow approved age range.

Approval of CAIV-T solves formulation issues

Initially, FluMist was only available in a frozen formulation, requiring storage and transport at temperatures of -15 degrees centigrade or below, and commanding a premium price of $19-25 per dose compared to an average of $12.20 for conventional injected vaccines. As standard flu vaccine distribution channels and providers such as pharmacies and schools are often not equipped to handle frozen products, this proved to be a significant obstacle to commercial success.

However, in January 2007, a new formulation gained FDA approval: CAIV-T (cold adapted influenza vaccine-trivalent) can be stored in a standard refrigerator rather than frozen, MedImmune expects CAIV-T to become available for the 2007-2008 influenza season, and has announced that the new formulation will be cheaper than its frozen first-generation predecessor with a preliminary launch price of $16-20.

Expected approval to broaden market opportunity

However, the largest obstacle on FluMist's path to capturing a significant share of the $1.8 billion global influenza vaccine market was the small patient population for which the vaccine had been approved. Being restricted to use in children, adolescents and adults aged from 5 to 49 years, FluMist was excluded from any of the typical groups at risk from serious influenza infections such as young children and elderly.

These groups, particularly recommended to receive the flu shot, are eligible for full reimbursement and account for the majority of vaccine sales. Aware of this obstacle, MedImmune has been trying to expand FluMist/CAIV-T's label to include young children from the age of six months, who are believed to benefit most from the inhaled mode of administration. The market opportunity is promising: in the US, MedImmune's only market, Sanofi Pasteur's Fluzone is currently the only flu vaccine approved for children aged 6-59 months. In July 2006, the CDC furthermore broadened its influenza vaccination recommendations to include children aged 24-59 months, creating a large patient potential.

FluMist not only holds a competitive edge over Fluzone with respect to its more convenient mode of administration, but also because it appears to show superior efficacy: In May 2006, MedImmune announced excellent efficacy results of a pivotal head-to-head phase III trial. The study, published in the February 15th edition of the New England Journal of Medicine, showed that less than half the number of culture-confirmed influenza infections occurred in children vaccinated with CAIV-T than those who received conventional vaccines. MedImmune's shares jumped by 6.9% as a result of the publication.

The company has subsequently filed a supplemental Biologics License Application (sBLA) for use of CAIV-T in children 12 months to 59 months of age who do not have a history of wheezing or asthma, containing data from more than 30,000 subjects in 15 clinical studies. An FDA decision is expected for May 2007.

Investors encourage takeover

However, despite these positive scientific developments, investors are increasingly becoming dissatisfied with the company's lack of commercial progress. MedImmune's main investor, Matrix Asset Advisors, has been urging the company repeatedly to consider the possibility of a takeover.

FluMist revenues have been disappointing for the past three years now, yielding sales of just $21 million in 2005 and $36 million in 2006. It accounts for only three million vaccine doses of the total of 120 million doses provided to the US flu vaccine market during the current flu season, which is far below MedImmune's manufacturing capacity. However, MedImmune's board has so far stressed its intention to keep the company independent.

Finding a partner will prove difficult for MedImmune

Since success in the flu vaccine market is determined not only by product quality, but also by the strength of the marketing and distribution network, it is doubtful that MedImmune will be able to realize FluMist's potential without an established partner in the long run.

A look at the partnering history of the company reveals that previous deals have been either unsuccessful or disbanded: MedImmune took over full responsibility for distribution of Synagis, its main product (a monoclonal antibody to prevent RSV infections in infants) in the US from Abbott in last year; an agreement with Australia-based CSL for development of FluMist in Australia, New Zealand and certain other Pacific countries was cancelled in 2004; a licensing deal with Wyeth, granting the big player co-marketing rights in the US and exclusive marketing rights for FluMist in Europe was terminated in the same year due to the weak sales of the vaccine in its first year after launch.

Considering that most of the key players in the flu vaccine market such as Sanofi Pasteur, GSK and Novartis are targeting MedImmune's market with products of their own and furthermore have strong in-house development pipelines, their interest in the company will also be limited.

This leaves just two major Pharma companies with an interest in influenza vaccines as possible candidates for a takeover bid, Merck & Co. and Pfizer. The former has an early stage pipeline developing universal and pandemic vaccines, the latter entered the human vaccine market only in October 2006 when it acquired UK-based PowderMed - ironically a spin-off from Chiron, now part of Novartis.

Source: Datamonitor

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