Gaithersburg, MD, September 10, 2001 -- MedImmune, Inc. (Nasdaq: MEDI) announced today that it is accelerating the reacquisition of U.S. rights to Ethyol® (amifostine) from ALZA Corporation to be effective October 1, 2001. The rights to Ethyol were originally expected to return to MedImmune on April 1, 2002, pursuant to the 1995 co-promotion agreement between the two companies.
"We are pleased to regain Ethyol rights in the U.S. six months earlier than expected," said Armando Anido, senior vice president, sales and marketing. "This acceleration is in the best interest of our customers, the product and MedImmune and enables us to take full responsibility immediately for building the market for Ethyol, an excellent product that has the unique potential to improve the quality of life for many cancer patients."
As part of the accelerated reacquisition, MedImmune will recognize approximately $20 million of incremental expenses in the third quarter 2001 for: payments to be made to ALZA for the projected profit it would have otherwise made from October 1, 2001 to March 31; the repurchase of Ethyol inventory previously sold to ALZA; and the funding of expanded sales and marketing activities. In exchange, MedImmune will begin recording all sales to wholesalers and distributors in the U.S. on October 1, 2001. Under the terms of the 1995 co-promotion agreement between the two companies, MedImmune was to receive a percentage of U.S. sales of Ethyol until March 31, 2002, when ALZA's co-promotion rights expired. In accordance with the original agreement, MedImmune will pay ALZA a gradually diminishing royalty beginning April 1, 2002.
Anido added, "We are expanding our sales, marketing and medical affairs infrastructure with approximately 50 new professionals, bringing our oncology commercial team to a total of 80. We believe the current annualized worldwide demand for Ethyol is approximately $65 million ($45 million in the U.S.). Ethyol is sensitive to sales promotion and we are looking forward to putting our own expanded oncology commercial team behind Ethyol in the fourth quarter. Our objective is to achieve in excess of 20 percent growth in Ethyol sales in each of the next three to five years, enabling us to more than double Ethyol's worldwide sales by 2005."
Ethyol is a unique product that has the potential to address substantial markets in oncology. It is used to reduce unwanted toxicities caused by certain anti-cancer treatments. Currently, Ethyol is approved as a chemoprotective agent to reduce the cumulative kidney toxicities associated with repeated administration of cisplatin in patients with advanced ovarian cancer and non-small cell lung cancer. It has also been approved for use in head and neck cancer patients undergoing radiation therapy. In this patient population, Ethyol has been demonstrated to limit the degree of xerostomia (dry mouth), an often severe and irreversible side effect of radiation therapy caused by damage to the salivary glands. MedImmune has also dedicated additional research and clinical resources to evaluate new opportunities for the product, including subcutaneous administration and the reduction of mucositis in lung cancer patients.
Financial Impact to MedImmune
Third quarter financial results are expected to be impacted by the accelerated reacquisition of Ethyol as well as by a shift in the anticipated Canadian approval of Synagis® (palivizumab) from the third quarter to the fourth quarter. The Ethyol transaction will reduce MedImmune's previous earnings guidance for the third quarter by approximately $0.09 per diluted share, and the shift in Canadian approval for Synagis will result in an approximate $0.02 shift in other revenues from third quarter to fourth quarter, which will be offset by incremental Ethyol sales and marketing infrastructure expenses in the fourth quarter. MedImmune now expects its loss per share for the third quarter to range from $0.08 to $0.10 on revenues of $44 to $48 million. Revenues and earnings for the fourth quarter are expected to be consistent with prior expectations with earnings in the range of $0.44 to $0.46 per share, resulting in diluted earnings per share for the full year of $0.69 to $0.71. The expansion of the oncology commercial team is expected to result in a modest increase in selling, general and administrative expenses for 2001, as compared to 2000, expressed as a percent of total revenues. All other financial guidance remains as previously communicated in the July 25 earnings release.
"As a result of the acquisition of Ethyol marketing rights, MedImmune will begin recording 100 percent of U.S. Ethyol sales rather than the 35-percent transfer payment we previously recorded as product sales under the co-promotion agreement with ALZA," commented Gregory S. Patrick, MedImmune's chief financial officer. "This transaction will enable Ethyol to begin contributing more significantly to our revenue growth rate going forward. We expect the impact of these events on earnings per share to be about $0.11 in the third quarter, and to be neutral for both the fourth quarter and for 2002. Longer term, we expect the accelerated reacquisition of Ethyol to be accretive as we realize the benefits of our investment in this product."
The forward-looking information above was provided as a convenience to investors. Investors should note that MedImmune's revenues are significantly impacted by sales of Synagis, which occur primarily during the fourth and first quarters when the respiratory syncytial virus (RSV) is most prevalent in the community. Results for the second and third quarters will reflect this seasonality. These projections are based upon numerous assumptions, which MedImmune cannot control and which may not develop as MedImmune expects. Consequently, actual results may differ materially from the projections made here. Please refer to the Disclosure Notice below.
MedImmune, Inc. is a biotechnology company focused on developing and marketing products that address medical needs in areas such as infectious disease, immune regulation and cancer. Headquartered in Gaithersburg, Maryland, MedImmune has manufacturing facilities in Frederick, Maryland and Nijmegen, the Netherlands.
This announcement may contain, in addition to historical information, certain forward-looking statements that involve risks and uncertainties. Such statements reflect management's current views and are based on certain assumptions. Actual results could differ materially from those currently anticipated as a result of a number of factors, including risks and uncertainties discussed in the company's filings with the U.S. Securities and Exchange Commission. The company is developing several products for potential future marketing. There can be no assurance that such development efforts will succeed, that such products will receive required regulatory clearance or that, even if such regulatory clearance were received, such products would ultimately achieve commercial success.