Federal regulators say MedImmune's nasal spray flu vaccine is effective for children under age 5 even though it may increase the risk of respiratory problems.

The vaccine, Flumist, was once thought to be a possible blockbuster drug, but has had modest sales because approved use is limited to healthy people between the age of 5 and 49 years old.

Gaithersburg, Md.-based MedImmune wants Food and Drug Administration approval to market the nasal spray vaccine to young children, which could provide a major revenue boost for the company since the U.S. Centers for Disease Control and Prevention recommends children between 6 months and six years old get an annual fluenza virus vaccine.

Flumist sales totaled $36.4 million last year, well behind MedImmune's top-selling respiratory virus drug Synagis, which posted sales of $1.1 billion.

The FDA said in documents posted to its Web site Monday that the vaccine appears to prevent influenza in children as young as six months. However, reviewers also noted that children taking MedImmune's nasal spray vaccine were more likely to develop wheezing problems when compared to children treated with an injectable vaccine.

According to one FDA-reviewed study, about 3 percent of children 6 months to 1 year old who took Flumist were hospitalized for respiratory problems compared to 1 percent of children that age who took the injected vaccine.

Although the respiratory problems did not cause any deaths, FDA will ask a panel of outside experts Wednesday whether the side effects warrant limiting the vaccine's use in young children. FDA is not obligated to follow the panel's recommendation though it usually does.

Earlier this year MedImmune won the FDA's OK to market a new version of Flumist, which was first approved in 2003, that can be stored in refrigerators instead of freezers. The company said the new formulation should expand the vaccine's use and will be available for the 2007-2008 flu season.

Last month, MedImmune agreed to be bought out by British drug maker AstraZeneca for $15.6 billion. The deal is expected to close in June.

Shares of MedImmune Inc. rose 4 cents to $57.04 in early afternoon trading.