FluMist Price Likely To Be Cut To $20-$25 Per Dose, MedImmune Says

MedImmune is considering reducing the price for the intranasal flu vaccine FluMist to $20-$25 per dose for the 2004-2005 season, CEO David Mott indicated during a first quarter conference call April 21.

While MedImmune and development partner Wyeth have not yet set a price for FluMist for the coming year, Mott suggested it will include the adjustments taken to offset last season's $46 price tag.

"The best thing to sort of take a shot at is to look at the in-market experiment we ran last year with a $25 rebate, which effectively reduced the price to the low $20s versus the $46 that was the factory selling price initially offered," the exec said.

Wyeth began distributing $25 rebate coupons after many insurers declined to cover the cost of the vaccine. The coupons reduced the price to about the same level as injectable flu vaccines (¹ (Also see "Wyeth Offering FluMist Coupons; Prevnar Supply Issue “Resolved,” FDA Says" - Pink Sheet, 17 Nov, 2003.), p. 35).

Will Wyeth Pull Out?

Wyeth and MedImmune are continuing to discuss whether Wyeth will continue its participation in the FluMist marketing program.

MedImmune will continue to develop FluMist, but said that Wyeth may back out in light of the poor initial performance of the product (² (Also see "MedImmune To Continue FluMist Development; Wyeth Remains Undecided" - Pink Sheet, 8 Mar, 2004.), p. 26).

MedImmune expects Wyeth to make a decision before the start of the second half. "I would assume that they will work as promptly as they can to reach final conclusion, as certainly we will," Mott said. "I share your pain on that. I think we all do."

While Mott was careful not to say what direction he thought Wyeth would take, his comments on the details of the discussions necessary to transfer full rights to MedImmune - and past remarks on the issue - indicate that Wyeth is seriously considering terminating the partnership.

Should Wyeth back out of the deal, MedImmune would need a "clear understanding" of exactly how Wyeth's data on the next-generation refrigerated version of FluMist would be analyzed and transferred to MedImmune, Mott said.

"It's just such a complex product with an awful lot of clinical data - now almost 50,000 patients worth of clinical data - that needs to be married and handed off," Mott told investors.

"Going forward together would require reaching an agreement on the product development plan and the commercial plan. Going forward without Wyeth would require agreement on the hand-over in the transition of many...ongoing complex activities."

A "Tragic Squandering" Of Resources

Mott acknowledged that there could be an impact on the role of FluMist if the companies are not able to come to a consensus about the transfer of the clinical data.

Wyeth's data are "important from a public health perspective," Mott said. However, he maintained, it is "not necessarily a dead-stop requirement for regulatory licensure for the product, because we do intend to go ahead and do studies that would bookend our indicated population anyway."

MedImmune is conducting additional Phase III studies to gather more data on children under five and adults 50 and older. The data could expand FluMist's approved indication for use in healthy patients ages five to 49 (³ (Also see "FluMist 60,000-Patient Phase IV Safety Study To Be Conducted With Kaiser" - Pink Sheet, 23 Jun, 2003.), p. 3).

Should MedImmune and Wyeth not reach an agreement on the data transfer, however, "that would be a tragic squandering of massive financial investment, as well as really important medical and clinical information," Mott declared.

Two Wyeth Studies Completed

Mott pointed specifically to two recently completed Wyeth studies (studies 514 and 515) that showed a lower incidence of culture-confirmed influenza with the refrigerator-stable version of FluMist (CAIV-T) versus the injectable vaccine.

"That's really important medical information which commercially is very exciting, but also from a public health point of view," he said.

"We want that data, because we want to be able to describe that in the ultimate labeling for the product, and hopefully, eventually, be able to use that in promotion of the product."

In addition, Wyeth has data on 27,000 patients that can be added to MedImmune's database, including information on patients up to 90 years of age and efficacy and safety data on at least six different circulating strains of influenza, Mott said.

Manufacturing Transfer Proceeding

The companies are also discussing the transfer of manufacturing capabilities for the refrigerated-stable form of FluMist from Wyeth's Marietta, Penn. facility to a MedImmune plant in the U.K. Wyeth is closing the Marietta plant in December (⁴ (Also see "Wyeth Marietta, Penn. Facility Shutdown To Mark End Of Influenza Program" - Pink Sheet, 29 Mar, 2004.), p. 27).

"We need to have a clear understanding with them as to exactly how we're going to transfer all of the assays from that facility to our facility in the U.K.," Mott said.

"They need to finish making certain materials in that facility before they shut it down, such as clinical trial materials for CAIV-T, [and] materials for bridging studies to be conducted between the facilities."

Wyeth's hesitancy about continuing the FluMist partnership relates to the vaccine's slow start on the market and the realization that the product will not become commercially significant until the 2007-2008 flu season, at the earliest.

First Season Sales Are $77 Mil.

FluMist's total revenues for the 2003-2004 season were $77 mil. MedImmune earlier reported $46 mil. in non-sales related revenue, and recognized an additional $31 mil. of last year's revenue in the first quarter.

MedImmune had been waiting for a clearer picture on returns and discounts to develop before reporting the final FluMist numbers (⁵ (Also see "MedImmune FluMist Sales Of $30 Mil. Expected; 50% Return Rate Possible" - Pink Sheet, 2 Feb, 2004.), p. 10).

As expected, about half of the 900,000 doses shipped to practitioners were returned, Mott reported. The companies will destroy a total of 4 mil. of the 5 mil. doses manufactured for the 2003-2004 season.

MedImmune does not expect to sell significantly more FluMist doses during the 2004-2005 flu season, despite the expected lower price tag.

MedImmune plans to produce only 1 mil. to 2 mil. doses of FluMist this year.

MedImmune now considers FluMist as primarily a "Phase III development program," meaning that the company will not be investing as heavily in marketing and promotional efforts this year.

"You should not expect us to spend $30 mil. in direct-to-consumer advertising like was done last year, or to have 3,000 representatives detailing the product this year as was done last year," Mott told investors.

While MedImmune is "backing off the consumerization of the brand through the advertising and promotional campaign," the company believes there are "some real positives in terms of the perceptions in the medical community and some good and important data coming out," Mott said. "Where will that leave you? We honestly don't know."

"So far...we expect it to be relatively consistent with last year, not a lot more, not a lot less, until we can get the label really improved and the formulation improved," Mott said.

Ethyol Reimbursement Confusion

Sales for MedImmune's largest product, the respiratory syncytial virus treatment Synagis (palivizumab) were up 8% to $422 mil. in the quarter. Taking into account a $14 mil. favorable adjustment in the year-ago period, Synagis sales increased 12%.

Ethyol sales totaled $24 mil., an 11.1% decline over the prior-year period, due to wholesaler stocking and the impact of lower oncology reimbursement payments under the Medicare Modernization Act.

The allowable reimbursement rate under Medicare changed from 95% of average wholesale price to 85% of AWP as of Jan. 1, and will be based on average sales price plus 6% starting in 2005 (⁶ (Also see "J&J Procrit Medicare Reimbursement Will Be 87% Of AWP Under Final Rule" - Pink Sheet, 5 Jan, 2004.), p. 10).

The changes under Medicare have proved "confusing" to physicians, Mott said. MedImmune responded with a series of conference calls to help explain the new benefit and its impact on reimbursement for the cytoprotective agent.

Synagis drove MedImmune's net sales growth of 13% to $489 mil. during the quarter. Net earnings were flat at $111 mil.