The following article is about MEDI, but BTRN mentioned in very positive light....
MedImmune's Stock Looks Lucrative
November 12, 2001 10:03am
New York, Nov 12, 2001 (123Jump via COMTEX) -- MedImmune Inc. (MEDI)
Focus
MedImmune develops and markets products for infectious diseases, immunology and cancer. The company's flagship product is Synagis, a monoclonal antibody for preventing lower respiratory disease from Respiratory Syncytial Virus in infants.
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Highlights
MedImmune compares favorably with other biotechnology companies with similar market capitalizations, which too sell a flagship product and enjoy positive earnings.
The business is vertically integrated to include discovery as well as sales and marketing, thus positioning the company to reap 100% of the profits from the products it develops.
Recently, a development group at MedImmune discovered a new manufacturing process that would enable Synagis to enhance the yield by four times at no additional cost.
Synagis has achieved a 46% growth in sales - from $293 million in 1999 to $427 million in 2000.
Despite its strong sales growth however, market penetration for Synagis still remains low. Consequently, there is a significant opportunity for a further increase in sales .
MedImmune has five products on the market and a robust pipeline of drugs at all phases of clinical trials with indications ranging from psoriasis to urinary tract infection.
Due to the delays in approval for Genentech's (DNA) Xanelim and Biogen's (BGEN) Amevive, MedImmune's MEDI-507 for psoriasis is fast catching up with its competitors in terms of timing its market entry.
After the sale of Alza to Johnson & Johnson Inc. (JNJ), MedImmune acquired full rights to its oncology drug Ethyol and will now be able to book all sales of Ethyol.
The company's balance sheet is very healthy - with $487.9 million in cash, $472.6 in working capital as on June 30, 2001 , and only $9 million in long-term debt.
Company Description
The company was founded in 1988 under the name Molecular Vaccines -which was later changed in 1990 to MedImmune. The company soon emerged from among a slew of biotech startups in the 1980s to become a leader in the industry .
MedImmune develops products for infectious diseases, transplantation medicine and autoimmune diseases. The firm is also involved in the clinical development and marketing of cancer products through its subsidiary MedImmune Oncology Inc.
Frederick, Maryland-based MedImmune has five products in the market and a strong product portfolio which includes vaccines for urinary tract infections, tissue transplant rejection, cancer and two forms of human papillomavirus that are major causes of cervical cancer.
The company's flagship product, Synagis, which prevents diseases that result from Respiratory Syncytial Virus (RSV) in infants, accounts for almost 90% of its sales. In the last twelve months, the company has generated revenue of $578.27 million. Net income for the same period amounted to $191.13 million. This is MedImmune's third year of profitability since the launch of Synagis in September, 1998.
The company uses advances in immunology and other biological sciences to develop its products. Its strategy for vaccine development is based on a Virus-Like Particle (VLP) technology for producing a structurally identical, non-infectious form of the virus.
Synagis Produced by recombinant DNA technology, Synagis is the first monoclonal antibody used for infectious disease. It is used to prevent infants from developing infections due to RSV - a highly contagious virus that affects approximately two thirds of all infants during the first year of life, and almost 100% of infants by age two. Most RSV infections result in minor upper respiratory illness and cold-like symptoms. However, in certain high-risk patients, RSV results in serious lower respiratory tract diseases such as pneumonia or broncholitis. Synagis is administered by an intramuscular injection once per month during anticipated periods of RSV prevalence, usually the fall and winter seasons.
According to the company, more than 125,000 infants are hospitalized every year with RSV. The target patient population for Synagis is about 314,000 infants, and is growing by 2% to 3% every year. These are infants who are born severely or moderately premature, children who have heart problems or lung problems, or whose immune systems are compromised - such as in kids who have had a bone marrow transplant.
At the UBS Warburg Global Life Sciences Conference, the MedImmune management claimed that the market potential for treatment of these infants is $1.25 billion and could go up to $2.5 billion for a population of 525,000 infants as the number of indications for Synagis increases.
Last year, 106,000 children were treated, representing a mere 33.8% penetration rate in a market where there is no major competition as yet for Synagis. There does exist another treatment for diseases resulting from RSV - Ribavirin, which kills the virus. However, Ribavirin only treats the RSV disease - it does not prevent it .
Premature infants form the largest target group for Synagis. In this market, Synagis has only a 58% penetration in the severely premature infants market, and a 28% penetration in the moderately premature market . Furthermore, only 11% of mothers realize that premature infants are at higher risk of RSV disease.
MedImmune is trying to increasingly educate parents about RSV, especially among those in underserved populations, where increased awareness about Medicaid coverage of Synagis could boost sales. The company is advertising in both English and Spanish-speaking baby magazines.
At the UBS Warburg conference, the MediImmune management also mentioned that the second-season usage of Synagis was increasing, bolstering the company's top and bottom line growth as older infants require more vials of Synagis due to their weight. Out of the 106,000 infants treated 15,000 were in second season usage.
Synagis is expensive. It costs about $6,000 to $12,000 to treat a baby for the season, and there has been a debate in medical circles over whether the antibody is worth the high price because it doesn't prevent kids from getting RSV, but limits the severity of the consequences of RSV. However, the increased usage of Synagis over the past three years is proof that parents prefer to pay for Synagis rather than risk their babies getting sick. For doctors, it provides additional visits when patients receive the shots, and for insurance companies, it can shorten or avoid hospital stays.
In 2000, MedImmune sold Synagis worth $427 million. The net transfer revenue accrued by MedImmune for sales of Synagis in 2000 from the international division of Abbott Laboratories (ABT) was $27.5 million. Abbott's international arm markets Synagis in 43 countries outside the United States .
In general, most of the company's Synagis sales occur in the fourth and first quarters of the fiscal year because of the seasonality of RSV. MedImmune has a patent protecting Synagis through Oct. 20, 2015
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Other Products on the Market
CytoGam, or CMV-IGIV (Cytomegalovirus Immune Globulin Intravenous (Human)), is an intravenous immune globulin product enriched in antibodies, which helps prevent and treat cytomegalovirus (CMV) disease associated with transplantation of kidney, lung, liver, pancreas and heart.
CMV is the most common cause of infection occurring after any solid organ transplant, contributing significantly to morbidity and mortality in organ transplant recipients. It has also been associated with an increased risk of rejection of the transplanted organ.
CytoGam has been designated as an orphan drug for use in lung, liver, pancreas and heart. It has market exclusivity for these indications until 2005.
Orphan drug status is given to drugs that treat less than 200,000 patients in the United States annually. It ensures protection from competition to encourage companies to develop medicines for rare diseases.
The company's data indicates that there are about 20,000 kidney, lung, liver, pancreas and heart transplants performed annually in the United States. In 2000, sales of CytoGam in the United States amounted to $36.5 million, compared with $12.4 million in 1999.
Synagis' predecessor was RespiGam. This was an RSV treatment developed by MedImmune for children under two years of age who are considered to be at high risk for RSV infections - such as, being born premature (five or more weeks before the due date) or having a chronic lung condition such as bronchopulmonary dysplasia.
RespiGam was licensed in the United States by the Food and Drug Administration (FDA) in January, 1996. However, the product has been largely replaced in the market by the company's next generation anti-RSV product - Synagis.
RespiGam is available as monthly intravenous infusions, each requiring about 4 hours to perform. Treatment with RespiGam involves an intravenous dose once a month beginning in the fall through March or April. The monthly doses are required as the antibodies only fight off the RSV for about 4 weeks.
RespiGam is made from plasma taken from large numbers of healthy individuals and contains a high concentration of protective antibodies against RSV. These antibodies do not prevent RSV infections, but do help protect children against the most serious consequences of the virus.
NeuTrexin is a lipid-soluble, intravenously administered analog of methotrexate. It is indicated for the treatment of moderate-to-severe Pneumocystis Carinii Pneumonia (PCP). Pneumocystis Carinii are micro-organisms that cause pneumonia in patients with Acquired Immunodeficiency Syndrome (AIDS).
PCP can affect the lungs as well as other parts of the body, including the skin and internal organs. Symptoms of PCP include shortness of breath, dry cough and fever.
NeuTrexin is an alternative for people that cannot take other approved treatments like trimethoprim-sulfamethoxazole therapy. It can also be used if the PCP pneumonia does not get better with the standard treatments. Due to very serious and potentially life-threatening side-effects of this drug, leucovorin must be co-administered for at least 72 hours after the last dose. Leucovorin is used with drugs that decrease levels of folic acid, which helps red and white blood cell formulation and the synthesis of hemoglobin.
The standard treatment, trimethoprim-sulfamethoxazole, is highly effective because of its two-enzyme blockade; the drug inhibits two different enzymes of the target organisms. NeuTrexin is much more powerful than trimethoprim in blocking one of those enzymes, but does not affect the other.
In mid-1999, MedImmune Oncology gained sole responsibility for the distribution, marketing and promotion of NeuTrexin in the United States market, which had previously been conducted under a co-promotion agreement with ALZA Corp.
Due to the improvement in drugs targeting AIDS patients, the use of NeuTrexin has gradually declined in recent years. In October, 1995 and March, 1996 MedImmune started two Phase 3 clinical studies to expand use of NeuTrexin for treatment of colorectal cancer.
The product's orphan drug status in the United States for PCP expired in Dec. 2000. If NeuTrexin gains FDA approval for the colorectal indication, it would be entitled to seven years of marketing exclusivity for that indication.
MedImmune's main oncology product is currently Ethyol. The selective cytoprotective agent Ethyol (amifostine) protects healthy cells and tissues from the damaging effects of radiation and chemotherapy. It is designed for the reduction of cumulative renal toxicity associated with repeated administration of cisplatin in patients with advanced ovarian cancer or Non-Small Cell Lung Cancer (NSCLC). It has another indication to reduce the incidence of moderate to severe xerostomia in patients undergoing post-operative radiation treatment for head and neck cancer.
MedImmune regained U.S. marketing rights for Ethyol on Oct. 1 from ALZA Corp, which has been co-promoting the drug with MedImmune since 1995. However, since ALZA was bought by Johnson & Johnson, MedImmune has full rights to Ethyol and will begin booking full sales of the drug, which could be up to three times what the company is currently making on Ethyol.
Net product sales in the United States for 2000 were $14.8 million. International sales amounted to $6.5 million. MedImmune officials believe the market for Ethyol is worth $65 million worldwide and $45 million in the United States.
Products in the pipeline
MEDI-507 (siplizumab) is a monoclonal antibody undergoing mid-stage tests. MEDI-507 targets psoriasis and acts by suppressing the function of certain types of immune cells, or T cells. The drug is not likely to hit the market until 2005.
MedImmune has licensed MEDI-507 from the biotechnology company BioTransplant Inc. (BTRN), which also stands to profit if the drug proves to be a success. MedImmune is funding the development of the drug, but will pay BioTransplant a royalty rate in the low double-digits of the drug's sales.
Competitive psoriasis drugs under development include Biogen's Amevive and the joint venture between Genentech and Xoma - Xanelim. Significantly, MEDI-501 was expected to be launched after that of these drugs, but due to unexpected delays in approval for Amevive and Xanelim, MedImmune's MEDI-507 launch is not far behind that of its competitors. It will be a big triumph to capture market share in psoriasis, which is estimated to be a $2 billion market.
Psoriasis is a condition characterized by thick, scaly patches on the skin. It is a chronic and non-fatal disease, meaning that people who take medication for it will do so for life, and they live just as long as people without psoriasis. Psoriasis patients are desperate for an effective treatment. It affects an estimated 7 million people in the United States, with about 1.4 million suffering from moderate-to-severe cases, according to the National Psoriasis Foundation.
MedImmune has been developing a series of angiogenesis inhibitors for the treatment of cancer, the most advanced of which is Vitaxin, an antibody in Phase II studies. Vitaxin has the potential to stop the growth of new blood vessels. The company believes it could also be used to treat inflammatory diseases such as rheumatoid arthritis and restenosis as well as cancer.
MedImmune licensed Vitaxin from Applied Molecular Evolution Inc. (AMEV) two years ago. Last year, the two companies worked together to develop a more potent version of the original molecule.
Rheumatoid arthritis afflicts more than 2.1 million Americans. There are several competitive anti-inflammatory therapies, such as Johnson & Johnson's Remicade, Immunex Corp.'s (IMNX) Enbrel and Amgen's Kineret.
MedImmune is developing a third generation anti-RSV molecule called Numax to improve the compliance and efficacy of Synagis. Numax is in preclinical trails.
MedImmune and Genaera Corp. (GENR) are developing and commercializing antibodies or recombinant molecules against IL-9 (IL-9 Antagonists) to prevent symptoms of asthma and other respiratory diseases. The companies' aim is to provide a novel approach to the treatment of asthma.
Vaccines
Human Papillomavirus Vaccine: MedImmune and GlaxoSmithKline plc (GSK) are co-developing a vaccine designed to fight human papillomavirus (HPV), the sexually transmitted virus that causes cervical cancer. There are currently no vaccines to prevent HPV infection, which is estimated to affect 24 to 40 million men and women in the United States.
Urinary Tract Infection Vaccine: The vaccine candidate is designed to prevent Urinary Tract Infections (UTIs) caused by Escherichia Coli - a bacteria that causes 30% of all UTIs. UTIs result in more than 7 million physician and hospital visits per year at a cost of greater than $1 billion. Presently, there are no competitive vaccines and UTIs are treated with antibacterial drugs.
In the fourth quarter of 2000, MedImmune started its first Phase 2 study.
MEDI-491: MedImmune is working on a vaccine to prevent infections caused by B19 parvovirus, which is associated with a number of serious conditions including miscarriages caused by B19 infection during early pregnancy, life-threatening sudden reduction of red blood cells in sickle cell anemia patients, chronic anemia in AIDS and chemotherapy patients, and persistent arthritis in some adults. Presently, there are no agents targeting the B19 parvovirus infection.
In 1998, MedImmune entered into an agreement with Chiron Corp. (CHIR) to use its proprietary vaccine adjuvant, MF59, to improve the antibody response of MEDI-491. A Phase 2 study is under development.
Streptococcus Pneumoniae Vaccine: Streptococcus pneumoniae causes more than 1 million deaths per year and is the most common cause of childhood death in developing countries. The emergence of antibiotic-resistant strains worldwide has made the need of vaccination more urgent.
During 2000, MedImmune granted GlaxoSmithKline an exclusive license to its Streptococcus pneumoniae vaccine. It completed the technology transfer to GSK by the fourth quarter of 2000. The technology was originally developed in collaboration with Human Genome Sciences Inc. (HGSI) and St. Jude's Children's Research Hospital.
Where MedImmune Stands
MedImmune is a good buy because it is trading at a lower valuation than other biotechnology companies that have a blockbuster product, good revenues, earnings, promising pipelines, and are of comparable size. These companies include IDEC Pharmaceuticals Corp. (IDPH), Immunex and Biogen. MedImmune looks attractive relative to its peers - with high profit margins and lower price/sales and price/earnings ratios. It is worth noting that Biogen's stock has been under pressure due to pending competition from Serono SA's (SRA) multiple sclerosis drug, Rebif, which is expected to steal market share from its Avonex, if it is approved in the United States.
MedImmune's short-term and long-term prospects are positive, as the company has the opportunity to continue to grow sales and earnings of Synagis, Cytogam and Ethyol and enter into exciting markets especially with respect to its psoriasis candidate MEDI-507 and its upcoming vaccines. |
