LEIDEN, NETHERLANDS--(Marketwire - May 11, 2010) -
PRESS RELEASE
Crucell Announces First Quarter 2010 Results
Total revenues and other operating income of EUR65.7 million were lower compared to EUR73.7 million in Q109 due to phasing of shipments into Q210. Strong April sales of Quinvaxem® expected to drive very strong second quarter revenues.
R&D expenses increased 31% to EUR20.0 million. Operating loss of EUR4.3 million.
Net loss of EUR2.3 million. Undiluted EPS of minus EUR0.03.
Quarter-end cash and short-term liquidities EUR382.7 million.
2010 guidance reiterated: Use continued strong operating cash flow to accelerate product development. R&D spending to increase by over one-third.
Maintain a healthy operating profit.
Revenues and other operating income[1] broadly in line with 2009.
Leiden, the Netherlands (May 11, 2010) - Dutch biopharmaceutical company Crucell N.V. (NYSE Euronext, NASDAQ: CRXL) (SWISS: CRX) today announced its financial results for the first quarter of 2010, based on International Financial Reporting Standards (IFRS). These financial results are unaudited.
Business Highlights:
* Crucell today announced the start of a new Phase I clinical study in Burkina Faso of its AdVac®-based malaria vaccine vector. This is the first study evaluating the safety and immunogenicity of this AdVac®- based malaria vaccine vector candidate in a population residing in a malaria endemic area.
* Crucell announced the award from UNICEF of an additional $110 million to supply its paediatric vaccine Quinvaxem® to the developing world. This latest order brings the total value of tenders awarded since the launch of Quinvaxem® at the end of 2006 to $910 million.
* Crucell announced that it has signed a binding letter of agreement with GlaxoSmithKline Biologicals (GSK) to collaborate on developing a second generation malaria vaccine candidate. Pre-clinical data from earlier studies indicated significantly enhanced immune responses against the malaria parasite when Crucell’s Adenovirus (AdVac®) technology and GSK’s RTS,S/AS technology are used in combination, versus either component alone[2].
* Crucell and the Aeras Global TB Vaccine Foundation announced the start of a Phase II clinical trial of the jointly developed tuberculosis vaccine candidate AERAS-402/Crucell Ad35 in with HIV infected adults.
* Research and development expenses increased, in line with full year guidance, with 31% compared to the same quarter in 2009. A key development project involved the production of the unique monoclonal antibody against influenza. This monoclonal antibody has been manufactured in a mobile and fully disposable FlexFactory®. In addition, significant progress has been made in upscaling the production process, required to prepare for introduction of Epaxal® in the US.
* The production of the influenza antigen for Crucell by our Taiwanese partner Adimmune has been accelerated during the first quarter, with process validation ongoing.
* Technical completion of the new vaccine manufacturing facility in Incheon, Korea has been achieved in 13 months, and first test runs will start this month. The new facility will enable the further growth and highly efficient production of Quinvaxem® and Hepavax-Gene®, with a capacity of over 100 million doses annually.
* In the first quarter of 2010 Crucell signed three license/vendor agreements, including agreements with Transgene and the Cancer Research UK Centre.
* Crucell announced the appointment of Jerald C. Sadoff, MD as Chief Medical Officer at Crucell. Dr. Sadoff will be a member of Crucell’s Management Committee. The appointment of Dr. Sadoff follows the decision made by Crucell management in 2009, to establish a Product Development Group - a logical next step toward strengthening Crucell’s product development capabilities.
* Crucell announced the nomination of William Burns, James Shannon and George Siber to join its Supervisory Board. The Supervisory Board of Crucell has nominated Mr. Burns, Mr. Shannon and Mr. Siber as new members of the Board, to be presented to Crucell’s shareholders at the Company’s AGM on June 4, 2010.
Financial Highlights:
* Combined total revenues and other operating income were EUR65.7 million, compared to EUR73.7 million in the first quarter of 2009. The decrease of 11% was attributable to the timing of shipments of Quinvaxem®.
* Product sales were EUR49.3 million, a 22% decrease compared to the same period in 2009, representing sales of paediatric vaccines (53%), travel and endemic vaccines (32%), and other products (15%).
* License revenues were EUR7.5 million in the first quarter, an increase of EUR3.0 million compared to the first quarter of 2009. The increase is mainly due to the recognition of revenues from the Johnson & Johnson collaboration.
* Gross margins were 40%, compared to 45% in the first quarter of 2009. Gross margins were negatively influenced by foreign exchange effects related to the Korean Won and the US Dollar versus the Euro, as well as lower royalty income.
* Research and development expenses increased to EUR20.0 million, compared to EUR15.3 million in the first quarter of 2009.
* Operating loss of EUR4.3 million for the first quarter, compared to EUR2.4 million operating profit in the same period of 2009.
* Net loss of EUR2.3 million for the first quarter of 2009, compared to a net profit of EUR0.2 million in the first quarter of 2009. Net loss per share of EUR0.03, compared to a break-even net result per share in the same period of 2009.
* Cash used in operating activities decreased to EUR14.6 million compared to EUR20.1 million in the same period of 2009, due to movements in working capital.
* Cash used in investing activities amounted to EUR16.5 million, which mainly includes investments in fixed assets.
* Net cash used in financing activities for the first quarter was EUR18.6 million, compared to EUR4.5 million in the same period of 2009, reflecting the repayment of loan facilities in Korea.
* Cash and cash equivalents decreased by EUR45.8 million during the first quarter to EUR282.1 million. In addition, short term financial assets amount to EUR100.6 million and represent deposits with maturities over 90 days, bringing quarter-end cash and short-term liquidities to EUR382.7 million.
* On April 7th, 2010 Crucell filed its 2009 Annual Report and Form 20 F.
Key Figures: (EUR million, except net result per share) --------------------------------------------------------------------------- 2010 2009 First Quarter 2010 unaudited unaudited Change --------------------------------------------------------------------------- Total revenues and other operating income 65.7 73.7 (11)% Operating profit/(loss) (4.3) 2.4 Net profit/(loss) (2.3) 0.2 Net result per share (basic) (0.03) 0.00
Crucell’s Chief Executive Officer Ronald Brus said:
“We are very pleased with the new award for Quinvaxem® and are honored to be able to supply this important vaccine for newborns in the developing world. We have a high quality product and large production capacity to fulfill this demand. Although timing of shipments influenced first quarter revenues, this new order and the acceleration of sales we already see in the second quarter, makes us very confident on the overall outlook for our vaccine sales for the year. “In order to increase the speed of our pipeline development, we have hired leading experts in the field of vaccine development. In particular I am very excited that Dr. Jerry Sadoff has joined our management team as Chief Medical Officer. Our strengthened development organization, combined with increased R&D spending, will be an important value driver for our company going forward.”
Product Sales Update:
Product sales in the first quarter of 2010 decreased 22% over the same quarter in 2009 to EUR49.3 million and represent sales of paediatric vaccines (53%), travel and endemic vaccines (32%), and other products (15%). The decrease in product sales was attributable to the timing of shipments of Quinvaxem®.
Paediatric vaccines
Due to phasing of Quinvaxem® sales into the second quarter, first quarter product sales were lower than expected. This will be compensated by the strong April sales and is expected to drive very strong second quarter revenues.
Crucell announced the award from UNICEF of an additional $110 million to supply its paediatric vaccine Quinvaxem® to the developing world. This latest order brings the overall value of tenders awarded to Crucell for the period of 2010-2012 to $410 million. This is in addition to the $500 million obtained over the tender period 2007-2009. They bring the total value of contracts awarded since the launch of Quinvaxem® at the end of 2006 to $910 million.
Travel and endemic vaccines
Epaxal® sales in the first quarter of 2010 improved over the same quarter of last year, driven by strong sales in Korea. In addition, significant progress has been made in upscaling the production process, required to prepare for introduction of Epaxal® in the US.
Respiratory vaccines
In the absence of another pandemic threat, the overall demand for seasonal respiratory vaccines like Crucell’s influenza vaccine Inflexal® V could be below last year’s levels. In addition, the production of specific antigens for this year’s seasonal vaccine appears more challenging than last year.
Research & Development Highlights:
* Human Monoclonal Antibodies against a broad range of Influenza strains (pre-clinical): In September 2009 Johnson & Johnson, through its subsidiary Ortho-McNeil-Janssen Pharmaceuticals, Inc., and Crucell entered into a strategic collaboration for the development and commercialization of a universal monoclonal antibody product (flu-mAb) for the treatment and prevention of influenza. An important activity in the development of this flu-mAb has been the first production of this antibody product in a mobile and fully disposable FlexFactory®. In addition the strategic collaboration involves four innovative discovery programs focusing on the development and commercialization of a universal influenza vaccine as well as vaccines directed against three other infectious and non-infectious disease targets. Activities for the universal influenza vaccine started in January. The universal influenza vaccine will be designed based on specific epitopes of our broadly cross-neutralizing influenza antibodies. The selection of the other innovation targets is ongoing.
* Rabies Human Monoclonal Antibody Combination/CL184 (Phase II): An additional Phase II study in India is planned to start in the second half of 2010. This study is designed to collect safety and neutralizing activity data of the CL184 antibody in combination with the vaccine in a simulated rabies post-exposure prophylaxis setting.
* Tuberculosis Vaccine (Phase II): To date, data from all AERAS- 402/Crucell Ad35 trials support the immunogenicity and acceptable safety profile of the TB candidate vaccine at all dose levels evaluated.
-- In April Crucell and Aeras announced the start of a Phase II clinical trial of AERAS-402/Crucell Ad35. The Phase II study is designed to test the safety and efficacy of AERAS-402/Crucell Ad35 in adults infected with HIV and is being conducted by the Aurum Institute in Klerksdorp, South Africa.
-- In January 2010, a Phase I clinical trial was initiated in Portland, Oregon. This trial is using a known immunogenic regimen of BCG and the candidate vaccine in healthy adults, followed by collection of large numbers of immune cells, for more detailed analysis of the immune response to AERAS-402/Crucell Ad35. The study is currently enrolling.
* Malaria Vaccine (Phase I): In December 2009 boost vaccinations for the final group of volunteers of a Phase I trial in the USA have been completed. Analysis of unblinded safety data revealed an acceptable safety profile. Available immunogenicity data indicate that the Ad35-CS vector induces humoral and cellular responses.
Crucell today announced the start of a new Phase I clinical study in Burkina Faso. Crucell is developing its malaria vaccine vector in collaboration with the NIAID/NIH, the Centre National de Recherche et de Formation sur le Paludisme’ (CNRFP) in Burkina Faso, and the Noguchi Memorial Institute for Medical Research at the University of Ghana.
In April Crucell announced that it has signed a binding letter of agreement with GlaxoSmithKline Biologicals (GSK) to collaborate on developing a second generation malaria vaccine candidate. Pre-clinical data from earlier studies indicated significantly enhanced immune responses against the malaria parasite (circumsporozoite stage of the Plasmodium falciparum) when Crucell’s AdVac® technology and GSK’s RTS,S/AS technology are used in combination, versus either component alone.
* Flavimun® - Live Attenuated Yellow Fever Vaccine (Phase III): Flavimun® was submitted for registration in Switzerland in March 2009. A dedicated team is currently reviewing outstanding questions from the Swiss authorities.
Appointments and Nominations:
Dr. Jerald C. Sadoff was appointed Chief Medical Officer and serves as a member of Crucell’s Management Committee. Prior to joining Crucell, Dr. Sadoff worked at the Aeras Global TB Vaccine Foundation, were he became President and Chief Executive Officer in June 2003. While at Aeras, Dr. Sadoff developed the world’s leading portfolio of TB vaccine candidates, with two of the four candidates currently being tested in Africa in Phase IIB efficacy trials, built a strong network of development partnerships, and created a world-class vaccine manufacturing infrastructure.
Crucell’s Supervisory Board will propose the nomination of William Burns, James Shannon and George Siber as members of Crucell’s Supervisory Board at the company’s AGM on June 4, 2010.
* Mr. Burns (1947), a British national, has built a distinguished track record in the pharmaceutical industry over the last 40 years. Most recently Mr. Burns served as the CEO of the Pharmaceuticals Division of Roche.
* Mr. Shannon (1956), a British national, with over 20 years of experience in senior development positions, most recently served as Head of Global Development at Novartis Pharma AG in Basel.
* Mr. Siber (1944), an American national, has extensive drug development experience and has been developing vaccines since his days in the public health service, a career of 35 years (post academic work). Previously Mr. Siber was the Executive Vice President and Chief Scientific Officer of Wyeth Vaccines.
Korean Production Facility:
In October 2008 Crucell announced that an agreement was reached to relocate Crucell’s Korean production facility from the Shingal site in Yongin City, Korea to the Incheon Free Economic Zone, Korea. Construction activities at the new site started in December 2008 and technical completion was reached within 13 months. First test runs will start this month. The new facility will enable the further growth and efficient production of Quinvaxem® and Hepavax- Gene®, with a capacity of over 100 million doses. The investments in the new facility are expected to total approximately EUR50 million.
The Crucell Ambition:
In 2008, The Crucell Ambition program was rolled out throughout the Company, focusing on four priority areas. These areas are: Organization & People, Focus, Operational Excellence, and Deliver on Promises.
The Operational Excellence ‘Healthy Ambition’ part of the program achieved just over EUR30 million in run-rate savings at the end of 2009. Subsequently to this program, the Company started an ERP/SAP project. On April 12, implementation of SAP in the Netherlands was successfully achieved. The program will continue to roll out during the year.
Manufacturing & Licensing Agreements:
* Crucell announced a non-exclusive HER96 license agreement with France- based Transgene for use of this technology in the area of infectious diseases. Financial details of the agreement were not disclosed. [January 2010]
* Crucell announced a non-exclusive, worldwide PER.C6® license agreement with the Cancer Research UK Centre, School of Cancer Sciences, University of Birmingham to manufacture, use and develop an adenovirus-based gene therapy product for the treatment and/or prophylaxis of prostate cancer, limited to performing Phase I clinical studies. Financial details of the agreement were not disclosed. [January 2010]
Patents:
In Q1 2010 Crucell was granted a total of 13 patents, including patents for:
* Antibodies against virus that causes SARS, in Australia and in India
* Cell lines for improved adenovirus production, in India
* Engineering of protein glycoforms using PER.C6® expression technology, in Singapore and in the U.S.
* Methods and elements of STAR® technology, in Japan, Korea and the U.S.
* Improved methods for quantifying influenza antigens, in the U.S.
Post Balance Sheet Events:
* Crucell today announces that South Korean-based NeoPharm Co. Ltd., signed a PER.C6® research license agreement for the development of undisclosed recombinant proteins and antibodies. Financial details of the agreement were not disclosed. [April 2010]
* Crucell also signed two additional PER.C6® research license agreements with undisclosed companies for the development of recombinant proteins and antibodies.
Financial Review First Quarter 2010
Total Revenues and Other Operating Income
Total revenues and other operating income amounted to EUR65.7 million for the first quarter of 2010, a decrease of 11% compared to the same quarter of 2009. The decrease in product sales was attributable to the timing of shipments of Quinvaxem®.
Product sales in the first quarter of 2010 decreased 22% over the same quarter in 2009 to EUR49.3 million and represent sales of paediatric vaccines (53%), travel and endemic vaccines (32%), and other products (15%).
License revenues were EUR7.5 million in the first quarter, an increase of EUR3.0 million compared to the first quarter of 2009. The increase is mainly due to the recognition of revenues from the Johnson & Johnson collaboration.
Service fees for the quarter were EUR1.2 million, compared to EUR2.9 million in the same quarter of 2009. Service fees represent revenues for product development activities performed under contracts with partners and licensees.
Other operating income was EUR7.7 million for the quarter, compared to EUR3.2 million in the first quarter of 2009, reflecting a higher level of R&D reimbursements under our agreement with Johnson & Johnson and certain one-time transactions.
Cost of Goods Sold
Cost of goods sold for the first quarter of 2010 amounted to EUR34.9 million. EUR34.5 million represents product costs; and EUR0.3 million the cost of service and license activities.
Gross margins were 40%, compared to 45% in the first quarter of 2009. Gross margins were negatively influenced by foreign exchange effects related to the Korean Won versus the Euro and versus the US Dollar over the past year.
Expenses
Total expenses consisted of research and development (R&D) expenses, marketing and sales (M&S) and general and administrative (G&A) expenses. Total expenses for the first quarter were EUR35.1 million, representing a EUR2.6 million increase over the same period in 2009.
R&D expenses for the first quarter amounted to EUR20.0 million, representing an increase of EUR4.7 million versus the first quarter of 2009. The increase of 31% is in line with full year guidance.
SG&A expenses for the quarter were EUR15.1 million compared to EUR17.2 million in the first quarter of 2009. This reduction was mainly due to lower selling expenses and certain one-time effects.
Operating loss was EUR4.3 million in the first quarter of 2010 compared to EUR2.4 million operating profit in the same quarter of 2009.
The company recorded a EUR0.1 million income tax gain in the first quarter of 2010. In Korea we obtained a further improvement on our tax holiday facility, leading to a one-time non cash tax benefit in Q1 2010.
Net Result
Net result of minus EUR2.3 million was reported in the first quarter of 2010 versus a net result of EUR0.2 million in the same quarter of 2009. Net loss per share in the first quarter of 2010 is EUR0.03, compared to a net result per share of EUR0.00 in the same period of 2009.
Balance Sheet
Tangible fixed assets amounted to EUR211.8 million on March 31, 2010. Intangible assets amounted to EUR80.1 million, including acquired in-process research and development, developed technology, patents and trademarks, the value of customer and supplier relationships, and capitalized IT investments.
Investments in associates and joint ventures amounted to EUR14.1 million and mainly represent investments in AdImmune and the PERCIVIA PER.C6® Development Center. Crucell’s investment in Galapagos NV is classified under available-for-sale investments.
Total equity on March 31, 2010 amounted to EUR769.1 million. A total of 81.7 million ordinary shares were issued and outstanding on March 31, 2010.
Cash Flow and Cash Position
Cash and cash equivalents decreased by EUR45.8 million during the first quarter to EUR282.1 million. In addition, short term financial assets amount to EUR100.6 million and represent deposits with maturities over 90 days, bringing quarter-end cash and short-term liquidities to EUR382.7 million.
Net cash used in operating activities in the first quarter was EUR14.6 million, compared to EUR20.1 million in the same quarter of 2009. Although cash flow before changes in net working capital decreased in the quarter compared to the same quarter of 2009, the effect was more than offset by working capital movements in the first quarter of 2010.
Cash used in investing activities amounted to EUR16.5 million, which includes the investment in the new production facility in Korea, in process development and in information systems.
Net cash used in financing activities in the first quarter was EUR18.6 million, compared to EUR4.5 million in the same quarter of 2009 due to the repayment of outstanding loans in Korea.
Annual Report
Crucell N.V. has filed our 2009 Annual Report and Form 20-F with the U.S. Securities and Exchange Commission as well as published our Statutory Annual Accounts for the year 2009 on April 7, 2010. This year’s report, radiating Crucell’s new branding, includes a comprehensive section on Crucell’s commitment to corporate social responsibility (CSR). Our CSR strategy is part of Crucell’s strategy to make Crucell a world-class biopharmaceutical player.
Change in accounting policy
As of January 1, 2009, Crucell changed its accounting policy of recognizing actuarial gains and losses for its defined benefit pensions plans. The new policy requires that all actuarial gains and losses are recognized in ‘other comprehensive income’ in the period which they occur. Prior to this change all actuarial gains and losses arising from experience-based adjustments and changes in actuarial assumptions were accounted for in line with the ‘corridor’ method, which allowed deferral of these results. The new policy provides more relevant and timely information as all transactions and events of a defined benefit postretirement plan are recognized in the period in which they occur. Comparative amounts were adjusted as if the new accounting policy had always been applied. The change in accounting policy had an effect of EUR 1.0 million on total equity as of January 1, 2009 and no effect on the net result for Q1 2009.
Conference Call and Webcast
At 14:00 Central European Time (CET), Crucell’s management will conduct a conference call, which will also be webcast. To participate in the conference call, please call one of the following telephone numbers 15 minutes prior to the event:
+44 20 7138 0845 for the UK; +1 212 444 0896 for the US; and +3120 201 5469 for the Netherlands
Following a presentation of the results, the lines will be opened for a question and answer session.
The live audio webcast can be accessed via the homepage of Crucell’s website atwww.crucell.com and will be archived and available for replay following the event.
About Crucell
Crucell N.V. (NYSE Euronext, NASDAQ: CRXL) (SWISS: CRX) is a global biopharmaceutical company focused on research development, production and marketing of vaccines, proteins and antibodies that prevent and/or treat infectious diseases. In 2009 alone, Crucell distributed more than 115 million vaccine doses in more than 100 countries around the world, with the fast majority of doses (97%) going to developing countries. Crucell is one of the major suppliers of vaccines to UNICEF and the developing world. Crucell was the first manufacturer to launch a fully-liquid pentavalent vaccine called Quinvaxem®. Quinvaxem® protects against five important childhood diseases and over 130 million doses have been sold since its launch in 2006 in more than 50 GAVI countries. Through Quinvaxem® and its innovation, Crucell has become a major partner in protecting children in developing countries. Crucell’s core portfolio also includes a vaccine against hepatitis B and a virosome- adjuvanted vaccine against influenza. Crucell also markets travel vaccines, such as an oral anti-typhoid vaccine, an oral cholera vaccine and the only aluminum-free hepatitis A vaccine on the market. The Company has a broad development pipeline, with several product candidates based on its unique PER.C6® production technology. The Company licenses its PER.C6® technology and other technologies to the biopharmaceutical industry. Important partners and licensees include Johnson & Johnson, DSM Biologics, sanofi-aventis, Novartis, Wyeth, GSK, CSL and Merck & Co. Crucell is headquartered in Leiden, the Netherlands, with subsidiaries in Argentina, China, Italy, Korea, Spain, Sweden, Switzerland, UK and the USA. The Company employs over 1200 people. For more information, please visitwww.crucell.com.
Forward-looking statements
This press release contains forward-looking statements that involve inherent risks and uncertainties. We have identified certain important factors that may cause actual results to differ materially from those contained in such forward-looking statements. For information relating to these factors please refer to our Form 20-F, as filed with the US Securities and Exchange Commission on April 7, 2010, in the section entitled ‘Risk Factors’. The Company prepares its financial statements under International Financial Reporting Standards (IFRS).
Financial Calendar 4 June 2010 Annual General Meeting of Shareholders
17 August 2010 Q2 Results 2010
9 November 2010 Q3 Results 2010
15 February 2011 Q4/FY Results 2010
For further information please contact Crucell: Oya Yavuz
Vice President Corporate Communications & Investor Relations
Tel. +31 (0)71 519 7064
[1] In guidance currencies = EUR/USD rate of 1.41
[2] Stewart et al. Infection and Immunity, May 2007, p. 2283-2290, Vol. 75, No. 5
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