MedImmune ( MEDI) said Tuesday that it expects to produce 1.7 million to 2 million doses of its FluMist vaccine during the current flu season. The company said it was refining its sales estimates for the nasal-spray vaccine based on "the turmoil in the flu vaccine marketplace." MedImmune said it had planned to sell 450,000 doses, then raised its estimate to 1 million to 2 million doses after Chiron ( CHIR) announced in early October that it wouldn't provide any flu vaccine for the current season. Chiron had been counted on for some 48 million doses, or about half of the U.S. flu-vaccine supply. But problems at its manufactguring plant in the U.K. caused contamination of some batches and the ultimate rejection by British regulators of the whole supply. MedImmune, whose 2003 introduction of FluMist
was a financial failure , has scaled back its ambition for its vaccine. Even though MedImmune increased production this year, "we don't anticipate FluMist becoming a meaningful contributor to revenue growth or profitability" until the company introduces an improved version of the vaccine, said David M. Mott, the company's CEO. That improved version, called CAIV-T, is in late-stage clinical trials. Mott is hoping for a 2007 launch. Mott's remarks followed by one day a downgrade from Banc of America Securities. Biotechnology analyst Michael King cut his rating to neutral from buy due to "our increased concerns over increased competition in the flu vaccine market, our broader concerns about the flu vaccine market and the resulting medium-term outlook for FluMist." Noting that national demand for flu vaccine has been weak despite media coverage of Chiron's troubles, King said, "We find MedImmune's inability to capitalize on Chiron's misfortunes particularly disappointing." On Tuesday, King cut his rating on Chiron to sell from neutral. King said he was cutting FluMist revenue projections for the next three years and was decreasing his growth-rate projections for the total flu market. He cut MedImmune's 12-month price target to $25. (He doesn't own shares in MedImmune or Chiron; his firm has had an investment banking relationship with both companies.) MedImmune's stock was up 8 cents to $24.86. Chiron's stock was off 79 cents to $34.50.