- The Washington Times - Monday, October 29, 2001

MedImmune Inc. posted losses of $19 million in the third quarter ended Sept. 30. But analysts aren't worried, since much of that sum was spent on re-acquiring a cancer drug it developed and then sold to another company.

The Gaithersburg biotechnology company had agreed to take over the rights to Ethyol, a cancer-fighting drug originally produced by a small biotech company, U.S. Biosciences. That company and Alza Corp., a California pharmaceutical company, entered into an agreement to market and sell Ethyol. But MedImmune soon bought out US Biosciences and the rights to the drug. Alza was to give MedImmune the drug on April 1, 2002, but MedImmune accelerated the ownership date to Oct. 1 of this year.

MedImmune decided to acquire the drug when it found out that Johnson & Johnson, which acquired Alza, was putting Ethyol production and marketing far down on its priority list.

The biotech company, which also lost 9 cents per share for the quarter, posted net income of $8 million (4 cents) for the like quarter the year before.

Also factoring into this quarter's losses is the fact that MedImmune's Number One product, a drug called Synagis, is used to treat respiratory infections and viruses. Because of that, the company experiences a boom during the first and fourth quarters of the year, which coincide with cold and flu season.

MedImmune's fourth and first quarters are in the fall and winter, prime cold and flu season.

The company's strongest performance for the year came in November of 2000, when it posted a 52-week high of $72.63. A few months later, in late March, the stock fell to its 52-week low of $27.63. MedImmune's stock closed at $40.65 on Friday.

"People expect them to lose money in the second and third quarter. The loss didn't come as a surprise," says Caroline Copithorne, an analyst with Morgan Stanley in San Francisco.

Unlike stocks in the hospitality or transportation industry, biotechnology stocks have recovered quickly from the terrorist attacks. While some smaller biotech companies are looking at ways to fight off anthrax and other destructive biological agents, larger ones, such as MedImmune, are viewed by stockholders as small pharmaceutical companies.

"Whether we are at peace or at war, people need medicine, and these companies do well regardless of political or economic climates," says Dennis Harp, an analyst with Deutsche Bank in New York.

Also, once a company develops a drug for a certain illness, they have a hold on that market. Other biotech companies may develop drugs to treat the same illnesses, but not to cure them.

"We're looking forward to increased valuations" for all biotech companies, Mr. Harp says.

"The industry has come of age over the last year or two. Before, people were feeling like there were a lot of broken promises," Ms. Copithorne says. "Years ago, people had unrealistic expectations (about the biotech industry). Now, they're seeing the products come out which are turning companies profitable."

MedImmune's management team is first-rate, having built their company around Synagis, and creating a pipeline of other drugs that treat other medical conditions, Mr. Harp says.

"They are the best among the biotech companies," he says.

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