MedImmune Inc. priced $500 million of convertible senior notes and at the same time outlined plans to spend some of the proceeds as part of a plan to buy back $500 million of common stock.

Due in 2023, interest on the 1 percent notes is payable semiannually. In addition, starting with the six-month interest period that begins July 15, 2006, MedImmune will pay contingent interest on the notes during a six-month interest period if the average trading price of the notes is above a specified level.

Among plans for the proceeds, MedImmune plans to use up to $150 million to repurchase common shares in transactions negotiated concurrently with the offering. The Gaithersburg, Md.-based company intends to use the remainder for various general purposes, such as buying back additional common shares on the open market or through privately negotiated transactions.

"We believe that capitalizing on the favorable convertible bond financing market will enable us to enhance shareholder value," Jamie Lacey, MedImmune's associate director of public relations, told BioWorld Today. "This is an opportunity to acquire shares at current prices for the new repurchase program, provide capital for retirement of existing indebtedness that had been issued on less favorable terms, and to provide additional working capital to pursue growth opportunities for the business."

MedImmune's board authorized the stock-repurchase program over a two-year period. Lacey declined to disclose terms of the already negotiated buyback.

The company said it would hold any repurchased shares as treasury shares, and intends to use them for general corporate purposes, including acquisition-related transactions and for issuance related to employee-benefit plans that result in the exercise of outstanding stock options. As of March 31, MedImmune reported about 251.8 million common shares outstanding.

The sale included a 13-day option for the buyers to purchase an additional $75 million of notes on the same terms. Under certain circumstances, the notes would be convertible into MedImmune common stock at an initial conversion price of $68.18 per share, subject to adjustment, representing a 75 percent premium to Wednesday's $38.96 closing bid price. MedImmune's stock (NASDAQ:MEDI) gained 14 cents Thursday to close at $38.99.

On or after July 15, 2006, the company may opt to redeem all or a portion of the notes for cash at a redemption price equal to 100 percent of the principal amount of the notes to be redeemed, plus any accrued and unpaid interest; contingent interest, if any; and liquidated damages, if any. In addition, on July 15 of 2006, 2009, 2013 and 2019, holders may require MedImmune to purchase all or a portion of their notes for cash at 100 percent of the principal amount of the notes to be purchased, plus any accrued and unpaid interest; contingent interest, if any; and liquidated damages, if any.

MedImmune, which markets four products, recorded first-quarter net earnings of $110 million on revenues of $436 million. The company also reported $1.6 billion in cash and marketable securities through March 31.

Its revenue was driven by sales of Synagis (palivizumab), an injectable pediatric respiratory disease product, and Ethyol (amifostine), an oncology product. MedImmune also sells CytoGam (cytomegalovirus immune globulin intravenous [human]), a prophylactic for cytomegalovirus disease associated with the transplantation of a kidney, lung, liver, pancreas or heart.

Marketing efforts are under way for FluMist (influenza virus vaccine live, intranasal), which recently was approved by the FDA and will be sold in partnership with Madison, N.J.-based Wyeth for the upcoming flu season. (See BioWorld Today, June 18, 2003.)

In its pipeline, the company is looking to expand the use of Synagis into congenital heart disease, with Phase III trials just completed. A study of a liquid formulation of the drug recently was completed as well, with plans to file for FDA approval this quarter. MedImmune also selected lead molecules for a next-generation Synagis called Numax.

The company is developing a Phase I-level monoclonal antibody called Vitaxin in rheumatoid arthritis and oncology, selected a lead interleukin-9 antagonist molecule for asthma, and Lacey said Phase II results were positive from a study of an HPV cervical cancer vaccine being developed in partnership with London-based GlaxoSmithKline plc. On the deals front, MedImmune recently acquired oncology technology from Munich, Germany-based Micromet AG. (See BioWorld Today, June 10, 2003.)