MONTREAL (Reuters) - ID Biomedical Corp. (Toronto:IDB.TO - news)(Nasdaq:IDBE - news) signed a 10-year U.S. distribution deal for its Fluviral drug that could reap sales of $2.3 billion and help U.S. authorities fill a flu vaccine shortage, the company said on Monday.
The deal, subject to approval by U.S. regulators, would transform Vancouver-based ID Biomedical from a small-scale operator with revenues of C$22 million in the first nine months of this year to a major player in a crucial market.
The stock climbed as high as $19.79 on Nasdaq before retreating to $18.17, up 8 percent or $1.38. More than 2.6 million shares changed hands. In Toronto, the stock was up C$1.75 at C$21.80, after touching C$23.69.
"It is the expectation of the parties that ID Biomedical's Fluviral will be licensed in the U.S. by at least the 2007/08 influenza season, meaning the vaccine production and purchase transaction will cover a total of at least 8 influenza seasons," the company said in a statement.
The proposed deals are with Henry Schein Inc. (Nasdaq:HSIC - news), AmerisourceBergen Corp.'s (NYSE:ABC - news) Specialty Group and McKesson Corp. (NYSE:MCK - news), three of the largest flu vaccine wholesalers in the United States.
ID Biomedical, Canada's largest supplier of flu vaccine, said sales could begin next year and continue to the end of the 2014/2015 flu season, assuming Fluviral won clearance from the U.S. Food and Drug Administration.
The U.S. government lost nearly half its targeted supply of 100 million flu shots for the current flu season when Britain shut down Chiron Corp.'s (Nasdaq:CHIR - news) plant in Liverpool because of contamination. U.S. authorities are seeking to prevent future shortages by finding alternative sources of supply.
ID Biomedical said it expects about $2.3 billion in revenue over the term of the agreement, but that could rise to $2.5 billion if Fluviral gets accelerated approval for the 2005/2006 and 2006/2007 seasons.
Company officials declined to forecast profits stemming from the agreement.
"We are going to assume the regulatory and clinical risk to get approval, and so we wanted a long-term commitment on the other side to purchase product," Todd Patrick, president of ID Biomedical, told analysts during a conference call.
ID Biomedical said it expects production capacity of about 22 million doses in 2005, rising to 50 million doses by 2007.
ID Biomedical said it shipped about 9 million doses this year to the Canadian market and has commitments to supply up to 12 million doses annually in Canada through 2011.
Henry Schein said the deal would begin when ID Biomedical gets FDA approval for the vaccine, which could be as early as 2005. It said it would increase the number of vaccine doses it bought over that time, and would pay ID Biomedical an amount per dose based each year on the prevailing market price.
AmerisourceBergen Corp. said it would buy at least 12 million doses a year, also assuming FDA approval. The distributor's acquisition costs are currently $7 to $8 a dose, it said.
($1=$1.20 Canadian)
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