MedImmune, Inc.

views updated

MedImmune, Inc.

35 West Watkins Mill Road
Gaithersburg, Maryland 20878
U.S.A.
Telephone: (301) 417-0770
Fax (301) 527-4200
Web site: http://www.medimmune.com

Public Company
Incorporated: 1988
Employees: 664
Sales: $383.4 million (1999)
Stock Exchanges: NASDAQ
Ticker Symbol: MEDI
NAIC: 325412 Pharmaceutical Preparation Manufacturing; 54171 Research and Development in the Physical, Engineering, and Life Sciences

MedImmune, Inc. is a biopharmaceutical company that develops and markets products to combat infectious disease and cancer, among other things. In its brief history, the company has developed drugs that help premature infants from succumbing to respiratory syncytial virus (RSV) and that reduce infection in transplant patients. It is also testing drugs that would prevent Lyme disease, cervical cancer, and other infectious diseases. MedImmune’s 1999 acquisition of U.S. Bioscience added drugs for treating ovarian cancer, AIDS-related pneumonia, and side effects of chemotherapy and radiation to the company’s pharmaceutical portfolio. Since going public three years after its incorporation, the company’s fortunes have risen and fallen with the mercurial biotech market. Despite a disastrous first-round rejection of its RSV drug by the Food and Drug Administration (FDA), the company bounced back to become one of the “premier biotech companies in the world,” according to the Washington Post.

Late 1980s Origins

MedImmune began in 1988 when two doctors at the Walter Reed Army Hospital in Washington, D.C.—Wayne Hockmeyer and Franklin Top—joined forces to find ways to combat and prevent a variety of modern-day plagues, including AIDS, Lyme disease, and Hepatitis B. Hockmeyer has remained CEO and chairman since the company’s inception; Franklin Top was MedImmune’s first executive vice-president and medical director.

In one of its first projects, MedImmune forged a research agreement with Connaught Laboratories, a Canadian vaccine manufacturer. MedImmune’s quest to develop a vaccine to prevent Lyme disease never came to fruition with Connaught, however, and in 2000, the company was still working to develop an improved U.S. vaccine and a second-generation vaccine in Europe.

During its early years, MedImmune also worked to develop and test CytoGam, a drug that attacks life-threatening cytomegalovirus infections that can occur in patients who have had kidney transplants or AIDS. FDA approval in 1991 won MedImmune international attention.

After that success, the 75-employee company decided to go public, launching it on a roller coaster ride of stock prices and revenues. Early on, profits came rolling into the company, based on arrival of CytoGam in the marketplace, and analysts were enthusiastic. One industry observer, in the Washington Business Journal, wrote: “MedImmune Inc.’s initial public offering for $29 million shows one of the strongest local biotech companies to come down the pike in awhile.” In a report in The Insiders’ Chronicle, a Smith Barney analyst said the company was already “equal in quality to any of the first-tier biotechnology companies.” Moreover, when MedImmune announced a pact with Merck to develop new AIDS drugs, a Morgan Stanley analyst told the Chronicle, “MedImmune is now the leading contender in the immunotherapy of AIDS area.”

The AIDS work was spurred by a MedImmune discovery of a monoclonal antibody, dubbed MEDI-488, that was shown in laboratory tests to be effective in killing many strains of HIV. An antibody is a protein secreted by cells in the blood and is part of the body’s natural defense system against viruses. Monoclonal antibodies are antibodies derived from clones, or identical copies, of a single cell. They can be screened in the laboratory and targeted treat a specific disease.

Merck and Co. funded research and testing of 40 monoclonal antibodies, spending approximately $13 million on the project over the next three years. This sent MedImmune stock soaring. When the company went public in May 1991, stock was initially offered at $9.25. After the announcement of work with Merck, stock prices shot up to $47.

“It is very promising in the early laboratory stage, but as with any promising compound, it is a long way for the laboratory to the actual drug,” MedImmune spokesman Fred Spar told the Washington Business Journal. Spar was right; Merck soon balked at disappointing results for testing, which caused MedImmune’s stock to drop. The two companies renegotiated, and in 2000 the company was still working with monoclonal antibodies related to AIDS and HIV. Merck also worked with MedImmune to develop an AIDS vaccine based on forms of a bacteria used in a tuberculosis vaccine.

Other work in the early 1990s focused on vaccines for other illnesses, including schistosomiasis, a parasitic disease that affects as many as 200 million worldwide, causing their extremi-ties to swell Specifically, MedImmune worked to genetically engineer a drug currently used against TB so that it could work against schistosomiasis.

Challenges in the Early 1990s

The company then moved full-speed ahead into developing a vaccine against RSV, which kills about 4,500 infants each year and sends another 90,000 to the hospital. However, in 1993, an FDA panel unanimously rejected the drug, RespiGam, citing sloppy research as its reason for recommending further testing. Within two days, MedImmune’s stock dropped almost 50 percent, causing losses, on paper at least, of $140 million. Stock was down by 70 percent a few months later.

Claiming that MedImmune had made misleading statements about the drug’s chances for approval by the FDA, stockholders filed two class-action lawsuits. MedImmune denied all allegations in the suit, and the suits were settled out of court in late 1995 for $637,500, which the company took as a charge against earnings.

By late 1993, critics were pondering the erratic performance of MedImmune. One Washington Post article explored both the problems the FDA had with the clinical trials and the mutiny by shareholders. The FDA’s concerns were apparently based on worries that the test did not randomly select children to try the drug. Because a nurse had knowledge of the children’s medical histories and earlier tests of the drug, she may have excluded children who were sicker and less likely to respond to the drug, the FDA alleged. “From the statistical side, the whole thing was amateurish, and that was the tragedy,” Paul Meier, a Columbia University statistician, who was a member of the FDA, told Washington Post. In an interview with the Washington Post in 1999, MedImmune’s CEO Wayne Hockmeyer termed this period the company’s “nuclear winter.”

Still, because of RespiGam’s potential—the director of the National Institute of Allergy and Infectious Disease called it an “important advance” —MedImmune decided that rather than scrap the project, it would begin trials again, this time keeping scrupulous records in a more professional format. In deciding to start from scratch on research for RespiGam, MedImmune had to reinvest two years and tens of millions of dollars. “The strategy we pursued was the one I called ‘bet the farm’,” Hockmeyer told the Washington Post, adding that employees “were tense. They were single-minded. They were focused. The entire organization hummed.”

The bet paid off. In 1995, the results of a fresh study were in, showing that RespiGam did work to prevent RSV. The next year, it went on the market, and MedImmune regained footing with investors. However, RespiGam did have a drawback in that it was inconvenient, having to be administered intravenously every month. MedImmune went on to develop a monoclonal antibody as an improved way to fight off the virus. The drug, Synagis, was approved by the FDA in the summer of 1998 and went on the market a few months later. A Washington Post article the next year called it “One of the most successful new products in the history of the biotech industry.”

To promote Synagis, MedImmune teamed up with Ken and Bobbi McCaughey, parents of septuplets born in 1997. With the help of a public relations firm, they provided the McCaugheys with media training and taped a video news release and public service announcement that were distributed via satellite and aired by 1,600 television stations around the world, including the “Oprah Winfrey Show.” Wall Street was enthusiastic. During the first full quarter the drug was on the market, MedImmune’s revenues jumped 73 percent from the same quarter the year before. “The Synagis launch appears to be a blowout,” a 1999 report from Morgan Stanley Dean Witter & Co. maintained, adding “MedImmune continues to exceed our expectations quarter after quarter.”

In 1999, the efficacy of the vaccine was reaffirmed after the first season’s use. Of 1,839 patients evaluated at nine U.S. sites, the RSV hospitalization rate was 2.3 percent. In the pre-approval trials, 4.8 percent of those using Synagis were hospitalized, and 10.6 percent of babies taking a placebo had to be admitted to the hospital.

In 1997, MedImmune signed a $60-million deal with Abbott Laboratories for the rights to market Synagis. Sales of the drug were expected to reach $270 million in 2000. The same year, CytoGam, the drug for kidney and AIDS patients, began marketing in Canada, Poland and Mexico. On the heels of this success, MedImmune began building a new $65 million, 91,000-square-foot facility in Frederick, Maryland, about 25 miles north of its Gaithersburg headquarters.

Company Perspectives:

MedImmune is a fully integrated biopharmaceutical company focused on developing and marketing products that address medical needs in areas such as infectious disease, immune regulation and cancer.

Research Horizons: Late 1990s and Beyond

Drug research and development can take years, and thus many MedImmune projects were in the works at once. In the late 1990s, MedImmune began research on several other fronts, including vaccines to prevent cervical cancer and genital warts. The company entered into a strategic alliance with SmithKline Beecham to develop and commercialize human papillomavirus (HPV) vaccines. In 2000, MedImmune was conducting clinical trials of the vaccine, while SmithKline Beecham was responsible for the final development of the product, regulatory issues, manufacturing, and marketing. The vaccines used recombinant DNA technology to imitate the structure of natural papillomarivurs, but were not infectious themselves. The vaccine was already shown to be effective when tested on dogs.

The company was also developing a vaccine to prevent urinary tract infections, a malady that affects about half of all women by the time they are 30. In preclinical studies, MedImmune’s vaccine helped produce antibodies that blocked E. coli, the main culprit in urinary tract infections, from binding the bladder, thus preventing infections. In 2000, MedImmune was performing clinical trials of the vaccine.

Another vaccine in the works would thwart B 19 parovirus, a usually mild virus, but one that can lead to a number of other serious diseases, especially for those with sickle cell anemia or for pregnant women. MedImmune created a virus-like particle that was non-infectious, in an attempt to induce immunity in vaccinated people. The drug was in trials in 2000.

As antibiotic resistance became more prevalent worldwide, MedImmune was also working to develop new preventive therapies for common infections, including those caused by Streptococcus pneumoniae. This bacterium causes a variety of illnesses in both the elderly and the young, from meningitis to middle ear infections to pneumonia. Working with Human Genome Science and St. Jude Children’s Research Hospital, MedImmune was researching possible vaccines in 2000.

The company developed and tested a new monoclonal antibody dubbed MEDI-507 in the late 1990s. The immunosuppressive agent, it was hoped, would help during bone marrow transplants, when white blood cells sometimes attack the tissue of the recipient. It was also considered potentially useful in treating psoriasis.

MedImmune’s next venture was into the realm of oncology. In 1999, the company formed an alliance with Ixys, Inc., a privately held biopharmaceutical company, to develop new monoclonal antibodies. One, called Vitaxin, was a cancer treatment. The drug, in clinical trials in 2000, appeared to inhibit a key pathway involved in the formation of new blood vessels and could provide a way to combat the growth and spread of tumors. The company’s reach into the oncology field was further solidified when it acquired Pennsylvania-based U.S. Bioscience, which it renamed MedImmune Oncology. In the deal, MedImmune gained two oncology drugs already on the market and several in clinical trials.

One of the drugs on the market was Ethyol, which generated worldwide sales of about $70 million in 1999. The drug worked by protecting normal cells from the toxic effects of chemotherapy and radiation, while not protecting the malignant cells. Ethyol was used mainly in combating toxicity of chemo drugs used to treat ovarian and lung cancers. It was also the first FDA-approved therapy to prevent severe dry mouth, a side effect of radiation therapy. The other drug on the market, Hexalen, a chemotherapy drug, was approved in 1990 for treating ovarian cancer.

Neutrexin, approved in over 30 countries and the United States, was also being studied by MedImmune. The drug was marketed to help severely immunocompromised patients fend off potentially deadly pneumonia infections. In 2000 it was undergoing trials to determine if its anti-tumor properties could help patients with colorectal cancer.

As MedImmune’s researchers worked to develop new treatments for a gamut of diseases, the biotech market was on a roller coaster ride in the volatile stock market of the new millennium. MedImmune’s stock was no exception, trading at a high of $228 a share in early April, then declining to $168 a few weeks later, only to rise again. “For years a laughingstock on Wall Street, the biotech industry is now one of its stars, in every sense,” one analyst noted in a June 2000 Washington Post article.”

Key Dates:

1988:: Company is founded by two Walter Reed Army Hospital doctors.
1990:: Research and development agreement reached to develop Lyme disease and hepatitis B vaccines.
1991:: MedImmune goes public, and its first drug, CytoGam, for kidney transplant recipients, is approved by the FDA.
1994:: RespiGam, a drug to prevent respiratory infection, is rejected by the FDA, causing stock to plummet.
1996:: RespiGam is approved and goes on the market.
1999:: MedImmune enters oncology field when it buys pharmaceutical company U.S. Bioscience.

MedImmune hoped that one of its ventures, begun in 2000, would pan out and help keep the company’s stock up. The company was investigating whether a specific vaccine could stop an addict’s craving for cocaine. As a February 2000 Washington Post report explained, MedImmune was building a “catalytic antibody that eats cocaine in a lab rat’s bloodstream the way Pac Man gobble up the bad guys in a computer maze.” According to Frank Vocci, director of treatment research and development at the National Institute on Drug Abuse, MedImmune could potentially produce “an antibody able to reduce cocaine to an inactive substance as fast as people put it into their bodies.” The President’s Office of National Drug Control Policy had given a researcher, Donald W. Landry, a biochemist at Columbia University’s College of Physicians and Surgeons, $2.8 million in research grants beginning in 1994 to develop such a vaccine. In early 2000, Landry teamed up with MedImmune, which would engineer and test thousands of vari-ants of the antibody Landry developed. The company would also work to develop new ones. Although current antibodies were not efficient enough to quell human cravings for cocaine, MedImmune’s senior vice-president for research, Scott Koenig, remained optimistic, telling the Washington Post: “I don’t want to say it’s a no brainer. It’s challenging, but we have the experience to give it a good shot. If it can be done, we’ll do it.”