Boston University MedImmune Key Issues & Recommendations Case Study Discussion For a successful case write up, you will need the following: Case papers sh

Boston University MedImmune Key Issues & Recommendations Case Study Discussion For a successful case write up, you will need the following:

Case papers should address the key issues that pertain to the financial strategy and then make clear recommendations with as much support as possible.
Papers should be no more than three double-spaced pages (not including exhibits) and include a cover page with your name, the date, the course number, and the title of the assignment (case name).
Papers should be organized into specific sections. For example, Background, Key Issues, Recommendations with support. Keep the Introduction short and don’t be so quick to jump to the recommendation. If the issues are wrong, the recommendation can’t be correct.
Late Papers will not be accepted.
Your grade will depend on how well you identify the issues and argue your recommendation.
All Footnotes and References Must use the APA Format.
The answer is not on the internet. You may use the internet for additional background and information, but I don’t care what the company actually did. All that really matters is in the case. MedImmune
Medimmune, Incorporated, a biotechnology company with five products on the market and a series
of products in the pipeline, has considered expanding its operations and market power through the purchase
of a smaller biotech firm that would compliment their existing product base.
In their search for a suitable candidate, the management of Medimmune began to target Aviron,
biopharmaceutical company based in Mountain View, California. While the company’s lead product,
Flu Mist, helped Aviron generate $11.7 million in revenue for the first nine months of 2001, it reported a
net loss of $89.2 million for the same period. The company’s goal is to become a leader in the discovery,
development, manufacture, and marketing of vaccines that are safe, effective, and can be marketed to a
large population,
while the acquisition looked like a fairly good strategic fit for Medlmmune, the financial condition
of the new biotechnology firm made a decision on an offer difficult to calculate. – issuu
Drug Cycles
For pharmaceutical and biotechnology companies to remain competitive, a continuous flow of new
and improved drugs must be developed. Many companies start with a series of early possible drugs that
have merit, but as research and clinical trials progress, many hopeful therapies are deemed ineffective and
are either discarded, or part of the research is used in other areas for possible other products.
Drugs are considered to enter “phases” of development as they progress from hypothesis to
manufacturing. At the earliest stage of testing, products are in Phase 1 and Phase 2 clinical trials. These
clinical trials generally involve the administration of the drug to a small number of patients to examine the
safety, dosage, and to a lesser extent, efficacy. Once the product has passed through Phase 1 and Phase 2
clinical trials, the drug enters Phase 3 where efficacy is tested. On average, it takes between ten to twelve
Case Studies in Mergers & Acquisitions
John D. Sullivant, PhD.
years to bring a drug to market and the cost, depending on each product’s complexity, can reach as high as
In 1993, the company began selling and marketing the drug through its hospital sales force. By
su sales of CytoGam reached $36.5 million in the United States 32 Sales of the drug may increase as the
y of organs for transplant increases.
$500 million.
or
MedImmune Background
RespiGam
Approved by the Food and Drug Administration in 1996, RespiGam is an intravenous drug used
p beat respiratory syncytial virus for small children. The company believes that the drug is largely being
Headquartered in Gaithersburg, Maryland, Med Immune presently has five products on the market
and a wide portfolio of potential products in the research phase of development. The company uses its
strength in advanced immunology and other areas of biology to target unmet needs in infectious diseases
and patients suffering from immune deficiencies. The company also focuses on cancer treatment through
its wholly owned subsidiary, Medimmune Oncology, inc. This subsidiary, formerly under the name
placed by Synagis.
products,
Ethyol
Bioscience, Inc., was acquired in November 1999.31
To prevent renal toxicity associated with patients being repeatedly administrated with cisplatin for
Synagis
de treatment of ovarian cancer or non-small cell cancer, Ethyol acts as a cytoprotective agent. Ethyol was
initially approved by the Food and Drug Administration in 1995 for the treatment of patients with ovarian
er.
Approved by the Food and Drug Administration in 1998 for marketing, Synagis is prescribed for
pediatric patients for the prevention of serious lower respiratory tract disease caused by respiratory syncytial
virus. Administrated by an injection, the drug is given once per month during anticipated times of disease
prevalence
Neu Trexin
CytoGam
Approved in the United States and Canada in 1993, Neu Trexin is most commonly used as an anti-
cancer agent as a treatment for Pneumocystis carinii pneumonia, a condition also experienced by patients
that suffer from AIDS. However, due to the rapid improvement in the treatment of AIDS through new and
To prevent cytomegalovirus in kidney, lung, liver, pancreas, and heart transplants, the company
developed the intravenous drug CytoGam. Cytomegalovirus is a species specific herpes virus and usually
improved drugs, the company has seen a slow decline in the use of NeuTrexin for AIDS patients.
is harmless. For those with immune deficiency system however, it may cause a fatal pneumonia.
In 1994, the European Union approved the use of NeuTrexin for patients suffering from Pneumocystis
With approximately 20,000 transplants in the United States each year, CytoGam has been shown
carinii pneumonia with compromised immune systems.
through clinical studies to reduce cytomegalovirus by 56% in liver and 50% in kidney transplant patients.
Med Immune, Inc. Securities and Exchange Form 10-K. December 30, 2000,
Medimmune, Inc. Securities and Exchange Form 10-K. December 30, 2000,
152
153
toGam. Hexalen, Neu Trexin, and RespitGam were marketed and sold by various smaller
Case Studies in Mergers & Acquisitions
John D. Sullivan, Ph.D.
Products Under Development
serbution companies
The company has a long line of products under development. A list of these products is listed in
employee Base
Exhibit 1.
At year-end 2000, the company maintained a good relationship with its 790 full time employees.
Manufacturing
covernment Regulation
MedImmune’s manufacturing facility is located in Frederick, Maryland and contains a large cell
culture production area for the manufacture of products such as Synagis and MEDI-507, if it clears clinical
trials and FDA approval. The company also maintains a small manufacturing facility in Nijmegan, the
The research, development, and marketing of pharmaceuticals are subject to regulations set forth
the United States and other countries. In the United States, all drugs must be approved by the Food
Drug Administration and fall under several statutes and regulations including the Food, Drug and
Cmetics Act and the Public Health Service Act. The Food and Drug Administration also has the right to
Netherlands
orow
mole product licenses.
Marketing
To market and sell the company’s line of products, Medimmune employs 240 people dedicated to the
United States with approximately 50 representatives covering 500 hospitals specializing in transplantation,
pediatric, or neonatal care. These sales reps concentrate on the promotion of Cytogam, Respigam, and
Synagis. About 90 sales and marketing representatives cover the top 10,000 hospitals in the United States
promoting Synagis and RespiGam. Other representatives that specialize in oncology and immunology
market products such as Ethyol to physicians practicing in cancer treatment centers, large hospitals, and
private practices.
Medimmune also utilizes Abbott labs’ Ross Products division to co-promote its products in the
United States. Ross Products employs roughly 500 sales representatives and promotes Synagis to 27,000
To encourage research into areas of rare disease, the United States government enacted the Orphan
Ang Act. Because the financial costs are typically so high to develop new drugs, many of these companies
de searching for cures to mass disease rather than disease populations with less than 200,000 persons.
nder this act, any company that receives Food and Drug Administration approval can potentially provide
fe company with market exclusivity for seven years. In addition, the company will receive tax credits up
osty for qualified clinical research in these areas and the opportunity for clinical research grants.
Aviron Background
Aviron is a biopharmaceutical company that concentrates its efforts on the prevention of disease
office-based pediatricians and 6,000 birth hospitals.
drough innovative and cutting edge vaccine technology. The company’s lead product for development and
Sales made outside the United States are done through distributors. Abbot serves as the company’s
commercialization is FluMist, a live virus vaccine delivered to the patient as a nasal mist for the prevention
exclusive distribution company for Synagis. For Europe, Scherico sells and markets Ethyol. Other products
of influenza. Research focuses on vaccine development programs that are based on producing weakened
154
155
Case Studies in Mergers & Acquisitions
live vaccines and on its genetic engineering technologies. Weakened live virus vaccines have had a strong
John D. Sullivan, Ph.D.
Conclusion
history in preventing disease such as smallpox, polio, measles, mumps, rubella, and chicken pox
The board of MedImmune believed that Aviron was a good strategic fit but didn’t know what to
der While the company had some attractive features, it still lacked positive earnings and cash flow to
te traditional financial value. They didn’t want to insult the management of Aviron with a low offer,
Ara felt the pressure to offer an appropriate price. It had also been their experience that a purchase like
one was better done as a friendly transaction
Flu Mist
FluMist, Aviron’s primary product, has undergone and continues to undergo clinical trials. Many
of these trials are coordinated with the National Institute of Health investigators. Flu Mist has been tested in
24,000 healthy children and adults and has been generally shown to provide a protection against influenza
Typical side effects of the treatment were sore throat, nasal decongestion, and a slight fever.
The Biologics License Application, or BLA, for frozen FluMist was submitted to the United
States Food and Drug Administration in October 2000. In September 2001, the FDA requested additional
information regarding clinical and manufacturing data from the company.
Other Aviron Research
PIV-3
PIV-3 is a common childhood respiratory virus that causes croup, cough, fever and pneumonia. For
children in the United States, more than 60% are infected by the age of two and 80% of those who contract
the disease do so by age four. Aviron is presently engaged in the research and development of a vaccine to
treat this disease.
CMV
A member of the herpes virus family, CMV infections can result in mild symptoms such as a
sore throat, headache, fatigue and swollen glands. In more drastic cases of infection, CMV can diminish
the strength of the immune system and can often be found in patients with AIDS, cancer, and transplant
patients.
156
157
Case Studies in Mergers & Acquisitions
adibit 2
MedImmune
John D. Sullivan, Ph.D.
Exhibit 1
Stock Performance
2000
MedImmune
High
Low
1999
High
Low
76.25
Products Under Development
43
22
80.69
14.33
42
24.67
86.13
15
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Year End Close
57.75
40.21
72.63
22.96
44.63
58.6
55.29
29.67
47.69
Product
Indication
Synais RSV Marketed Prevention of RSV disease
CytoGam Marketed Prophylaxis of cytomegalovirus
RespiGam Marketed Prevention of serious RSV
Ethyol Marketed Reduction of cumulative renal toxicity
Ethyol Marketed Reduction of the incidence of severe xerostomia
Neu Trexin Marketed Alternative treatment of Pneumocystis carinii
pneumonia
Synagis RSV Phase 3 RSV disease in bone marrow transplant
Synagis RSV Phase 4 Prevention of RSV children under 2 years
Synagis RSV Phase 3 Children under 2 years with congenital heart disease
Ethyol Phase 3
Treatment of NSCLC
Ethyol Phase 2/3 Reduction in radiotherapy
Neutrexin Phase 3 Treatment of colorectal cancer
MEDI-507 Phase 1 Treatment of graft-versus-host disease
MEDI-507 Phase 2 Treatment of psoriasis
Ethyol Phase 2/3 Head and neck cancer
MEDI-491 Phase 1 Prevention of B19 parvovirus infection
UTI Vaccine Phase 2 Prevention of urinary tract
HPV Cervical Cancer Prevention of cervical cancer
Vitaxin Anti Phase 1 Treatment of cancer
Numax Preclinical Prevention of RSV disease
158
159
MedImmune
Medimmune, Incorporated, a biotechnology company with five products on the market and a series
of products in the pipeline, has considered expanding its operations and market power through the purchase
of a smaller biotech firm that would compliment their existing product base.
In their search for a suitable candidate, the management of Medimmune began to target Aviron,
biopharmaceutical company based in Mountain View, California. While the company’s lead product,
Flu Mist, helped Aviron generate $11.7 million in revenue for the first nine months of 2001, it reported a
net loss of $89.2 million for the same period. The company’s goal is to become a leader in the discovery,
development, manufacture, and marketing of vaccines that are safe, effective, and can be marketed to a
large population,
while the acquisition looked like a fairly good strategic fit for Medlmmune, the financial condition
of the new biotechnology firm made a decision on an offer difficult to calculate. – issuu
Drug Cycles
For pharmaceutical and biotechnology companies to remain competitive, a continuous flow of new
and improved drugs must be developed. Many companies start with a series of early possible drugs that
have merit, but as research and clinical trials progress, many hopeful therapies are deemed ineffective and
are either discarded, or part of the research is used in other areas for possible other products.
Drugs are considered to enter “phases” of development as they progress from hypothesis to
manufacturing. At the earliest stage of testing, products are in Phase 1 and Phase 2 clinical trials. These
clinical trials generally involve the administration of the drug to a small number of patients to examine the
safety, dosage, and to a lesser extent, efficacy. Once the product has passed through Phase 1 and Phase 2
clinical trials, the drug enters Phase 3 where efficacy is tested. On average, it takes between ten to twelve
Case Studies in Mergers & Acquisitions
John D. Sullivant, PhD.
years to bring a drug to market and the cost, depending on each product’s complexity, can reach as high as
In 1993, the company began selling and marketing the drug through its hospital sales force. By
su sales of CytoGam reached $36.5 million in the United States 32 Sales of the drug may increase as the
y of organs for transplant increases.
$500 million.
or
MedImmune Background
RespiGam
Approved by the Food and Drug Administration in 1996, RespiGam is an intravenous drug used
p beat respiratory syncytial virus for small children. The company believes that the drug is largely being
Headquartered in Gaithersburg, Maryland, Med Immune presently has five products on the market
and a wide portfolio of potential products in the research phase of development. The company uses its
strength in advanced immunology and other areas of biology to target unmet needs in infectious diseases
and patients suffering from immune deficiencies. The company also focuses on cancer treatment through
its wholly owned subsidiary, Medimmune Oncology, inc. This subsidiary, formerly under the name
placed by Synagis.
products,
Ethyol
Bioscience, Inc., was acquired in November 1999.31
To prevent renal toxicity associated with patients being repeatedly administrated with cisplatin for
Synagis
de treatment of ovarian cancer or non-small cell cancer, Ethyol acts as a cytoprotective agent. Ethyol was
initially approved by the Food and Drug Administration in 1995 for the treatment of patients with ovarian
er.
Approved by the Food and Drug Administration in 1998 for marketing, Synagis is prescribed for
pediatric patients for the prevention of serious lower respiratory tract disease caused by respiratory syncytial
virus. Administrated by an injection, the drug is given once per month during anticipated times of disease
prevalence
Neu Trexin
CytoGam
Approved in the United States and Canada in 1993, Neu Trexin is most commonly used as an anti-
cancer agent as a treatment for Pneumocystis carinii pneumonia, a condition also experienced by patients
that suffer from AIDS. However, due to the rapid improvement in the treatment of AIDS through new and
To prevent cytomegalovirus in kidney, lung, liver, pancreas, and heart transplants, the company
developed the intravenous drug CytoGam. Cytomegalovirus is a species specific herpes virus and usually
improved drugs, the company has seen a slow decline in the use of NeuTrexin for AIDS patients.
is harmless. For those with immune deficiency system however, it may cause a fatal pneumonia.
In 1994, the European Union approved the use of NeuTrexin for patients suffering from Pneumocystis
With approximately 20,000 transplants in the United States each year, CytoGam has been shown
carinii pneumonia with compromised immune systems.
through clinical studies to reduce cytomegalovirus by 56% in liver and 50% in kidney transplant patients.
Med Immune, Inc. Securities and Exchange Form 10-K. December 30, 2000,
Medimmune, Inc. Securities and Exchange Form 10-K. December 30, 2000,
152
153
toGam. Hexalen, Neu Trexin, and RespitGam were marketed and sold by various smaller
Case Studies in Mergers & Acquisitions
John D. Sullivan, Ph.D.
Products Under Development
serbution companies
The company has a long line of products under development. A list of these products is listed in
employee Base
Exhibit 1.
At year-end 2000, the company maintained a good relationship with its 790 full time employees.
Manufacturing
covernment Regulation
MedImmune’s manufacturing facility is located in Frederick, Maryland and contains a large cell
culture production area for the manufacture of products such as Synagis and MEDI-507, if it clears clinical
trials and FDA approval. The company also maintains a small manufacturing facility in Nijmegan, the
The research, development, and marketing of pharmaceuticals are subject to regulations set forth
the United States and other countries. In the United States, all drugs must be approved by the Food
Drug Administration and fall under several statutes and regulations including the Food, Drug and
Cmetics Act and the Public Health Service Act. The Food and Drug Administration also has the right to
Netherlands
orow
mole product licenses.
Marketing
To market and sell the company’s line of products, Medimmune employs 240 people dedicated to the
United States with approximately 50 representatives covering 500 hospitals specializing in transplantation,
pediatric, or neonatal care. These sales reps concentrate on the promotion of Cytogam, Respigam, and
Synagis. About 90 sales and marketing representatives cover the top 10,000 hospitals in the United States
promoting Synagis and RespiGam. Other representatives that specialize in oncology and immunology
market products such as Ethyol to physicians practicing in cancer treatment centers, large hospitals, and
private practices.
Medimmune also utilizes Abbott labs’ Ross Products division to co-promote its products in the
United States. Ross Products employs roughly 500 sales representatives and promotes Synagis to 27,000
To encourage research into areas of rare disease, the United States government enacted the Orphan
Ang Act. Because the financial costs are typically so high to develop new drugs, many of these companies
de searching for cures to mass disease rather than disease populations with less than 200,000 persons.
nder this act, any company that receives Food and Drug Administration approval can potentially provide
fe company with market exclusivity for seven years. In addition, the company will receive tax credits up
osty for qualified clinical research in these areas and the opportunity for clinical research grants.
Aviron Background
Aviron is a biopharmaceutical company that concentrates its efforts on the prevention of disease
office-based pediatricians and 6,000 birth hospitals.
drough innovative and cutting edge vaccine technology. The company’s lead product for development and
Sales made outside the United States are done through distributors. Abbot serves as the company’s
commercialization is FluMist, a live virus vaccine delivered to the patient as a nasal mi…
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