ID Biomedical announces strategic alliances for U.S. marketing and distribution of Fluviral vaccine

Dec 6 2004

ID Biomedical Corporation announced today that it has signed long term marketing, distribution and minimum purchase agreements with three of the largest influenza vaccine wholesalers in the United States: Henry Schein, Inc.; AmerisourceBergen Corporation's Specialty Group; and McKesson Corporation.

Under the terms of the agreements, each of the distributors has agreed to purchase a minimum number of doses of Fluviral vaccine from ID Biomedical beginning upon United States Food & Drug Administration (FDA) clearance. The purchases could begin as early as next year, and will end after the 2014/2015 flu season.

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. Based upon current estimates of the 2005 average retail price for influenza vaccine in the U.S., and assuming a modest 4% annual price increase from 2005 through the year 2014, the total value of purchases from ID Biomedical under the agreements is expected to be approximately U.S. $2.3 billion. If Fluviral is approved on an accelerated basis for the 2005/06 and 2006/07 seasons, then the total value of the contract related-revenue to ID Biomedical will increase to approximately U.S. $2.5 billion.

The total value of the contracts could be higher or lower than these estimated amounts depending on market prices for influenza vaccines in the U.S. over the next 10 years. In addition, the estimated total value of the agreements also assumes ID Biomedical does not increase production over its targeted capacity for this particular product over the life of the agreements. If ID Biomedical increases production of injectable influenza vaccine to be sold in the U.S., then each of the parties within the ID Biomedical distribution alliance will have the right, but not the obligation, to increase the minimum number of doses to be purchased.

These purchases are being made from ID Biomedical on a non-returnable basis, and are contingent upon FDA clearance of the product in accordance with industry standard practices for each season and overall licensure prior to the 2008/09 flu season. Other terms of the Fluviral marketing and distribution agreements transactions have not been disclosed.

The agreements do not cover ID Biomedical's intranasal flu vaccine, FluINsure, as the Company has maintained all rights to this product, which is currently in development.

"We are very proud of these agreements, which we believe are among the most unique in the biotechnology industry. Primarily what these agreements accomplish is the reduction in market risk for our injectable vaccine product, Fluviral. So long as we can obtain and maintain regulatory approval for the 2007/08 flu season and continue to successfully manufacture our product, these transactions will ensure a potentially significant revenue stream for years to come," explained Todd Patrick, ID Biomedical's President. "Further, we are excited about the market strength and the mix of this particular group of partners. Collectively, this group currently holds the No. 1 market share position for non-manufacturer distribution of flu vaccine in the U.S. Each of our partners is a well respected company, and we think that on a company-by- company basis, they are penetrated into certain market segments where at least one of them has proven to be particularly strong in the past, including the physician office, nursing home, hospital and HMO segments," added Mr. Patrick.

ID Biomedical manufactures its Fluviral flu vaccine out of its modern facility in Quebec, Canada. The company's production capacity is expected to be approximately 22 million doses in 2005 and is anticipated to increase to 50 million doses by 2007. ID Biomedical has commitments to supply the Canadian market with up to 12 million doses annually through 2011. This year, ID Biomedical has shipped approximately 9 million doses to the Canadian market.