SAN FRANCISCO — MedImmune Inc. said Monday it will pay more than $1 billion in stock to acquire Aviron, the maker of a promising nasal-spray flu vaccine now awaiting government approval.
If consummated, the deal would be one of the largest such biotechnology deals yet.
“I expect to see more deals of similar size,” said Bill Tanner, an analyst with S.G. Cowen Securities Inc., adding that larger biotech companies such as Gaithersburg, Md.-based MedImmune need to quickly add new products to continue to grow.
Buying smaller rivals with products on the market or close to federal approval is the quickest way to add revenues, Tanner said.
Mountain View-based Aviron has developed FluMist, a vaccine that is sprayed into the nose instead of injected by needle, the current vaccination method. Aviron hopes the Food and Drug Administration will approve FluMist next year in time for flu season.
Many doctors say the pain-free method would encourage more people to get vaccinated for the flu, a virus that still kills 20,000 Americans each year and hospitalizes 100,000.
Aviron had hoped to be selling the vaccine by now, but an FDA committee said in July it was concerned that FluMist uses live influenza virus and could pose a risk to children. The committee asked for more data, which will be provided by the end of the year, MedImmune CEO David Mott said Monday in a conference call.
The FDA committee did say the vaccine is effective and eventually could be made safe for Americans to use, prompting expectations of approval.
Once approved, Mott said he expects the vaccination to generate $1 billion in annual sales. Mott predicts FluMist will push MedImmune’s revenues to $2.1 billion in 2006. The company earned $326 million in the first nine months of 2001, mostly on sales of Synagis, which is used to prevent respiratory infections in infants.
The deal calls for MedImmune to exchange 1.075 of its shares for each Aviron share. Based on MedImmune’s stock closing price of $44.10 on Friday, the acquisition values Aviron at $47.41 a share, or about $1.5 billion.
In afternoon trading Monday, MedImmune’s stock fell $5.40 to $38.70 while shares of Aviron traded up $4.10 at $41.15.
Nonetheless, analysts remained bullish on the deal’s long-term prospects.
“For MedImmune, it gets them a late-stage product with great sales potential, and for Aviron it gives them a strong partner working in the same area,” said Dennis R. Harp of Deutsche Banc Alex. Brown.
Government regulators must approve the acquisition, and the deal is expected to close in the first quarter of 2002.
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