FluMist Flop Dogs MedImmune

Updated from 8:22 a.m. EST

Medimmune said Monday that it would stick with FluMist, its inhaled flu vaccine, conceding that the product wouldn't produce meaningful financial results until the 2007-2008 flu season. FluMist has been a flop, but the company insisted that an improved version of the drug launched in September could eventually produce annual U.S. sales of $500 million.

As a result, the company issued financial guidance for 2004 that fell well below analysts' predictions, triggering a beating of Medimmune's stock. Recently, shares were down $1.69, or 6.6%, to $24.

Medimmune, of Gaithersburg, Md., predicted 2004 earnings per share of 50 cents to 60 cents, caused in part by the reduced revenue role of FluMist and the acceleration of research and development spending on creating a second-generation flu vaccine that will reach more people. R&D will rise to 20% of sales, up from 16%, but the company said some tests on the new version of FluMist are promising.

The consensus estimate by analysts polled by Thomson Analytics was full-year EPS of 94 cents. The company earned 76 cents a share last year.

The company said 2004 sales would be $1.12 billion to $1.16, barely moving ahead of last year's $1.05 billion. Medimmune is being driven primarily by Synagis, a drug for treating respiratory disease in infants, which recorded $849 million in sales last year.

"FluMist continues to have the potential of being an important product" not only for the company, but also for public health, said David M. Mott, Medimmune's president and chief executive. But for the next three years, the company will look at FluMist as if it were a late-stage experimental drug.

FluMist will return to the market this year, but Mott predicted revenue of only $45 million to $55 million, which includes revenue from FluMist sold during the 2003-2004 flu season. That's far lower than the $120 million to $140 million Medimmune and its marketing partner, Wyeth(WYE Quote), had predicted for the current flu season.