Crucell Reports Third Quarter 2010 Results
(Thomson Reuters ONE) -
Crucell Reports Third Quarter 2010 Results
One-time inventory provision for Quinvaxem® stock of ?22.8 million.
Total revenues and other operating income of ?89.5 million compared to
?94.3 million in the same period in 2009.
Operating loss of ?31.1 million compared to operating profit of
?15.5 million in Q3 2009. Net loss of ?27.0 million compared to net profit of
?10.0 million in Q3 2009 due to write-downs of Quinvaxem® inventory.
Undiluted EPS of minus ?0.33 compared to ?0.15 in the same quarter of 2009.
Change of 2010 guidance: total revenues and other operating income[1] for the
full year expected to be in-line with 2009 levels. Due to the one-time
provision, operating loss for the year expected to be ?20-25 million.
Leiden, the Netherlands (November 9, 2010) - Dutch biopharmaceutical company
Crucell N.V. (NYSE Euronext, NASDAQ: CRXL; Swiss Exchange: CRX) today announced
its financial results for the third quarter of 2010, based on International
Financial Reporting Standards (IFRS). These financial results are unaudited.
Business Highlights:
* On October 28, 2010 Crucell announced that it has put a temporary hold on
all shipments of Quinvaxem® and Hepavax-Gene®. Crucell also suspended
production at the Shingal facility in Korea as the sterile operation had
been compromised during recent operations. Current analysis indicates that a
microbiological contamination has occurred and investigation into the root
cause is ongoing. The Shingal facility was already scheduled to be vacated
next year. The operations in our new Incheon facility are not affected.
There are no concerns in terms of product safety in relation to the use of
any of the vaccines that have already been distributed. All products
currently in the market were manufactured in compliance with GMP regulations
and have passed all release tests, including, without exception, all
sterility analyses.
The investigation into the root cause of the contamination is progressing
well and actions are being taken to resume manufacturing at the Shingal
facility in the coming weeks. The company has taken a ?22.8 million
inventory provision on all Quinvaxem® stock. Crucell's responsibility to the
children in developing countries is paramount and we have committed all
required resources to resolve this issue expeditiously. We are working with
all stakeholders to understand the circumstances surrounding these events
and to assess the situation.
* On October 6, 2010 Johnson & Johnson and Crucell announced an agreement
whereby Johnson & Johnson, through an affiliate, would acquire all
outstanding equity of Crucell that it does not already own for approximately
?1.75 billion in a recommended cash tender offer; this reflects an intended
all cash offer of ?24.75 per share for all outstanding shares not already
owned by Johnson & Johnson. As reported by Johnson & Johnson in the press
release, Crucell would become the center for vaccines within the Johnson &
Johnson pharmaceutical group whilst retaining its innovative and
entrepreneurial culture and dedicated employees. Crucell expects that it
would further accelerate and expand its product and pipeline development, as
well as its ability to provide vaccines to people around the world, as a
Johnson & Johnson company.
* On October 29, 2010 Johnson & Johnson and Crucell reported that the
companies are making progress on the preparations for the intended public
offer. Johnson & Johnson reported that it currently expects to request and
obtain the final approval of the offer document from the AFM and to be in a
position to launch the Offer before the end of November, as previously
announced.
* Crucell today announces the start of a discovery program leading to the
development and commercialization of an Human Papilloma Virus (HPV) vaccine.
This discovery program is part of the existing strategic collaboration with
Johnson & Johnson, through its subsidiary Ortho-McNeil-Janssen
Pharmaceuticals, Inc., signed in September 2009, to develop innovative
products, including antibodies for influenza prevention and treatment.
* DSM and Crucell announced an expansion of the activities in their existing
joint venture, the PERCIVIA PER.C6® Development Center (Cambridge,
Massachusetts, United States), to transform the company from a development
center into a full biopharmaceutical company for the development of PER.C6®-
based biobetter proteins and monoclonal antibodies as well as global
licensing of the PER.C6® human cell line for production of third party
monoclonal antibodies and other proteins.
* Crucell and the Aeras Global TB Vaccine Foundation announced the start of a
Phase II clinical trial in infants of the jointly developed tuberculosis
vaccine candidate, AERAS-402/Crucell Ad35.
* Crucell announced that the International AIDS Vaccine Initiative (IAVI) has
started with a Phase I clinical trial to evaluate the safety and
immunogenicity of two preventive AIDS vaccine candidates.
Financial Highlights:
* The Company announced combined total revenues and other operating income of
?89.5 million, compared to ?94.3 million in the third quarter of 2009. The
decrease was driven by a decline in respiratory vaccine sales.
* Product sales were ?72.8 million, representing sales of paediatric vaccines
(67%), travel and endemic vaccines (14%), respiratory vaccines (14%), and
other products (5%). Higher sales of paediatric vaccines were more than off-
set by lower sales of respiratory vaccines due to a later start of the flu
season.
* Gross margins were 7%, compared to 39% in the third quarter of 2009. Gross
margins were significantly impacted by the provision for Quinvaxem®
inventory, pricing of Quinvaxem® sales, variation in product mix and
negative operating variances.
* Research and development (R&D) expenses increased to ?26.8 million, compared
to ?16.5 million in the third quarter of 2009 as R&D program spending
accelerated in line with guidance.
* Operating loss of ?31.1 million for the third quarter, compared to ?15.5
million operating profit in the same period of 2009.
* Net loss of ?27.0 million for the third quarter of 2010, compared to a net
profit of ?10.0 million in the third quarter of 2009. Net loss per share of
?0.33, compared to a net profit per share of ?0.15 in the same period of
2009.
* Cash from operating activities decreased to ?17.3 million compared to ?72.1
million in the same period of 2009. In the third quarter of 2009 the cash
received from the Johnson & Johnson collaboration, relating to the
development programs, was included in the cash from operating activities.
* Cash from investing activities amounted to ?29.1 million in the third
quarter, which is mainly due to reclassification of financial deposits.
* Net cash from financing activities in the quarter amounted to ?0.2 million
compared to ?235.0 million in the same period of 2009, as the third quarter
of 2009 included the 18% equity stake of Johnson & Johnson.
* Cash and cash equivalents increased by ?46.6 million during the third
quarter to ?292.1 million.
Key Figures: (? million, except net result per share)
--------------------------------------------------------------------------------
Third Quarter Nine months ended
September 30
--------------------------------------------------------------------------------
2010 2009 Change 2010 2009 Change
unaudited unaudited unaudited unaudited
--------------------------------------------------------------------------------
Total revenues and other
89.5 94.3 (5)% operating income 283.8 246.7 15%
(31.1) 15.5 Operating profit/(loss) (22.3) 21.0
(27.1) 10.0 Net profit/(loss) (20.1) 8.4
Net result per share
(0.33) 0.15 (basic) (0.25) 0.13
Crucell's Chief Executive Officer Ronald Brus said:
"Resolving the contamination issue in our Shingal facility is our number one
priority. We are totally committed to provide children in developing countries
with the highest quality vaccines. We have mobilized all required resources to
investigate and correct the problem so we can resume shipments in the coming
weeks.
We are working together with all stakeholders to understand and correct the root
cause of the contamination. We have no concerns about the safety of our products
in the market, which have passed all release tests. We remain confident in the
safety and quality of our most important paediatric vaccine Quinvaxem® and its
role to protect children in the developing world against five important
infectious diseases.
In October we reached an agreement with Johnson & Johnson for an intended all
cash offer of ?24.75 per share. We will hold an informational EGM on December
10, 2010 to discuss the offer in more detail with our shareholders. The Crucell
Boards fully support this offer as this potential transaction creates a powerful
platform for vaccine development. This potential transaction would allow Johnson
& Johnson to invest in the development of Crucell's products and pipeline and
support Crucell's mission to increase the number of people around the globe
protected from infectious diseases."
Product Sales Update:
Product sales in the third quarter of 2010 decreased 13% over the same quarter
in 2009 to ?72.8 million and represent sales of paediatric vaccines (67%),
travel and endemic vaccines (14%), respiratory vaccines (14%), and other
products (5%). Higher sales of paediatric vaccines were more than off-set by
lower sales of respiratory vaccine sales due to a later start of the flu season.
Paediatric vaccines
Crucell has established that recently the sterile operation of our Shingal
facility (Korea) had been compromised. As a precautionary measure we have put a
temporary hold on all shipments of Quinvaxem® and Hepavax-Gene® that were
planned for delivery. The investigation into the root cause of the contamination
is progressing well and actions are being taken to resume manufacturing at the
Shingal facility in the coming weeks. The company has taken a ?22.8 million
inventory provision on all Quinvaxem® stock, related to the contamination.
All products currently in the market have passed all release tests, including,
without exception, all sterility analyses. There are no concerns in relation to
the use of any of the material that was distributed in terms of product safety.
In the third quarter, Quinvaxem® sales were strong due to additional demand from
UNICEF and PAHO.
Travel and endemic vaccines
After a strong first half of this year, travel sales in the third quarter of
2010 were flat compared to the same quarter of last year. We continue to see
progress in upscaling the production process, required to prepare for
introduction of Epaxal® in the US.
Respiratory vaccines
Sales of Crucell's influenza vaccine Inflexal® V in the quarter were lower due
to strong comparables in the same quarter last year driven by a strong flu
season last season. Due to limited availability of flu antigen and weaker
overall demand, fourth quarter 2010 sales of Inflexal® V are expected to be
lower than the fourth quarter in 2009.
Research & Development Highlights:
* Human Monoclonal Antibodies against a broad range of Influenza strains (pre-
clinical): In September 2009 Johnson & Johnson (JNJ), 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 -
including RSV and HPV (see below). Activities for the universal influenza
vaccine, which started in January, are ongoing. 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.
* Therapeutic Human Papilloma Virus (HPV) Vaccine (pre-clinical): Today
Crucell announces the start of a discovery program leading to the
development and commercialization of an HPV vaccine. Genital infection with
HPV is very common in both men and women and usually spontaneously cleared
within one year after infection. In about 1% of individuals, however, HPV
persists, ultimately resulting in genital neoplastic lesions. This discovery
program is part of the strategic collaboration with JNJ (see above).
* Influenza - Seasonal Influenza Vaccine: Crucell has commenced with the
development of a cell-based influenza vaccine. The introduction of cell-
based Inflexal® V will be the next important step for Crucell's respiratory
franchise. Combining Crucell's high density PER.C6® production system with
the company's proprietary virosomal technology creates a cutting-edge method
to produce Inflexal® antigens both at large scale, at very competitive cost
levels and earlier in the season. Crucell expects to apply for licensure in
2014.
* AIDS/HIV Vaccine (Phase I): In April 2008, Crucell announced the start of a
Phase I clinical study of the novel recombinant HIV vaccine. The preliminary
results of this Phase I study were updated at the AIDS Vaccine 2010
conference in Atlanta, GA in Sept 2010 confirming the safety and
immunogenicity of this HIV candidate vaccine vector.
In August 2010 Crucell announced its participation in an international Phase
I clinical trial in the United States and Africa of a combination of two
AdVac®-based AIDS vaccine candidates, Ad26.ENVA.01 and Ad35-ENV, in healthy
adults who are not infected with HIV. The clinical trial has started in
October 2010 and will be led by the International AIDS Vaccine Initiative
(IAVI), representing a collaboration between IAVI, Crucell, the Ragon
Institute, and Beth Israel Deaconess Medical Center (BIDMC), a major
teaching hospital of Harvard Medical School.
The Ad26.ENVA.01 vaccine candidate used in this study is manufactured by
Crucell, while the Ad35-ENV vaccine is developed by IAVI. Both vaccines
candidates are based on Crucell's proprietary AdVac® technology. The planned
Phase 1 trial of the vaccine combination, which follows a Phase I trial of
the Ad35-ENV vaccine by IAVI and a Phase I trial of Ad26.ENVA.01 by the
Harvard-Crucell consortium, supported by the National Institute of Allergy
and Infectious Diseases (NIAID), represents a key step towards proof of
concept studies to evaluate the efficacy of the vaccine combination in
humans.
* 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.
A Phase II clinical trial in infants of AERAS-402/Crucell Ad35 started in
October 2010. The main objective of the trial is to test the safety and
efficacy of the TB vaccine candidate in infants previously vaccinated with
the Bacille Calmette-Guérin (BCG) vaccine, which is currently the only
vaccine licensed to help prevent TB. The first part of this clinical trial,
which is conducted in Kenya, will establish the optimal dosing regimen. The
selected regimen will then be tested in the second part of the trial,
planned to begin in 2011 in Kenya, Mozambique, South Africa and Uganda.
* Rabies Human Monoclonal Antibody Combination/CL184 (Phase II): Crucell's
monoclonal antibody combination against rabies is being developed in
collaboration with sanofi pasteur using Crucell's PER.C6® manufacturing
technology. The Indian authorities released the material for the additional
Phase II study in India. This start of this trial is now imminent. 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.
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 started in May 2010 and are progressing according to
plan. The results of the comparability studies done to date are fully
satisfactory and most of the comparability work will be completed before the end
of this year. The operations in the new Incheon facility are not affected by the
contamination in the old factory. 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.
Manufacturing & Licensing Agreements:
* Crucell today announces that UK-based Eden Biodesign Limited, signed a non-
exclusive Vendor Network Agreement, whereby Eden has become a pre-approved
authorized provider of services for contract manufacturing on Crucell's
proprietary PER.C6® cell-line technology. Under the terms of the agreement
Eden will be able to offer Contract Manufacturing Services to Crucell's
PER.C6® licensees in the field of vaccines and gene therapy. Financial
details of the agreement were not disclosed. [Oct 2010]
PERCIVIA:
DSM and Crucell have expanded the activities in their existing joint venture,
the PERCIVIA PER.C6® Development Center (Cambridge, Massachusetts, United
States), to transform the company from a development center into a full
biopharmaceutical company for the development of PER.C6®-based biobetter
proteins and monoclonal antibodies as well as global licensing of the PER.C6®
human cell line for production of third party monoclonal antibodies and other
proteins.
The joint venture, in which DSM and Crucell will each hold an equal equity
share, will be known as PERCIVIA LLC. The joint venture will broaden its scope
and will focus on proprietary development of PER.C6®-based biobetter proteins
and monoclonal antibodies, initially to early clinical stages.
Patents:
In Q3 2010 Crucell was granted a total of 34 patents, including patents for:
* Aspects of PER.C6® recombinant protein glycoform expression technology, in
the U.S.
* Different aspects of improved adenoviral AdVac® vectors, in India, in Canada
and in Singapore
* Cell lines for improved adenovirus production, in Australia
* Elements of STAR® technology, in Europe, in Singapore and in the U.S.
* Chimeric adenoviruses that can target different specific cell types, in the
U.S.
* Improvements in influenza virus isolation using PER.C6® technology, in Korea
* Genetically engineered Vibrio choleraestrains, in Europe
Financial Review Third Quarter 2010
Total Revenues and Other Operating Income
The Company announced combined total revenues and other operating income of
?89.5 million, compared to ?94.3 million in the third quarter of 2009. The
decrease was driven by a decline in respiratory vaccine sales.
Product sales in the third quarter of 2010 decreased 13% over the same quarter
in 2009 to ?72.8 million and represent sales of paediatric vaccines (67%),
travel and endemic vaccines (14%), respiratory vaccines (14%), and other
products (5%).
License revenues were ?5.2 million in the third quarter, compared to ?3.8
million in the third quarter of 2009. The increase is mainly due to the
recognition of revenues from the JNJ collaboration which was signed in September
2009.
Service fees for the quarter were ?4.6 million, compared to ?2.4 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 ?6.9 million for the quarter, compared to ?4.4
million in the third quarter of 2009, reflecting a higher level of R&D
reimbursements and one-time transactions.
Cost of Goods Sold
Cost of goods sold for the third quarter of 2010 amounted to ?77.0 million
compared to ?55.1 in the same quarter of the prior year. ?75.5 million
represents product costs; and ?1.5 million the cost of service and license
activities.
Gross margins were 7%, compared to 39% in the third quarter of 2009. Gross
margins were significantly impacted by the provision for Quinvaxem® inventory,
pricing of Quinvaxem® sales, variation in product mix and negative operating
variances.
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 third quarter were ?43.6 million, representing a ?19.9 million increase
over the same period in 2009, driven by an increase in R&D expenses and the
positive effect of the reversal of impairment in the third quarter of 2009.
R&D expenses for the third quarter amounted to ?26.8 million, representing an
increase of ?10.3 million versus the third quarter of 2009 as R&D program
spending accelerated in line with guidance.
SG&A expenses for the quarter were ?16.7 million compared to ?15.2 million in
the third quarter of 2009. This increase was mainly due to higher M&S expenses,
partly as a result of the set-up of the new UK office.
Operating loss of ?31.1 million for the third quarter, compared to an operating
profit of ?15.5 million in the same period of 2009.
Net Result
Net loss of ?27.0 million was reported for the third quarter of 2009, compared
to a net profit of ?10.0 million in the third quarter of 2009. Net loss per
share is ?0.33, compared to a net profit per share of ?0.15 in the same period
of 2009.
Balance Sheet
Tangible fixed assets amounted to ?239.3 million on September 30, 2010.
Intangible assets amounted to ?82.6 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 ?13.5 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 September 30, 2010 amounted to ?773.9 million. A total of 81.7
million ordinary shares were issued and outstanding on September 30, 2010.
Cash Flow and Cash Position
Cash and cash equivalents increased by ?46.6 million during the third quarter to
?292.1 million. Short term financial assets include deposits with maturities
over 90 days for an amount of ?52.5 million. This reduction of ?47.6 million was
due to the reclassification of longer term deposits, where the deposit maturity
was reduced to 3 month or less.
Cash from operating activities decreased to ?17.3 million compared to ?72.1
million in the same period of 2009. In the third quarter of 2009 the cash
received from the Johnson & Johnson collaboration was included in the cash from
operating activities.
Cash from investing activities amounted to ?29.1 million in the third quarter,
which is mainly due to reclassification of financial deposits.
Net cash from financing activities in the quarter amounted to ?0.2 million
compared to ?235.0 million in the same period of 2009, as the third quarter of
2009 included the 18% equity stake of Johnson & Johnson.
Notes to the Condensed Consolidated Interim Financial Statements
The notes to Crucell's Financial Statements for the nine months period ended
September 30, 2010 are available onwww.crucell.com.
About Crucell
Crucell N.V. (NYSE Euronext, NASDAQ: CRXL; Swiss Exchange: 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 vast
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®, this innovative combination vaccine protects against five important
childhood diseases. Over 130 million doses have been sold since its launch in
2006 in more than 50 GAVI countries. With this innovation, Crucell has become a
major partner in protecting children in developing countries. Other products in
Crucell's core portfolio include 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 offices in
China, Indonesia, Italy, Korea, Malaysia, Spain, Sweden, Switzerland, UK, the
USA and Vietnam. The Company employs over 1300 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 a number of 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' and in our second
quarter 2010 financial results, as filed with the Securities and Exchange
Commission on August 17, 2010 in the section entitled 'Risk Paragraph'. The
Company prepares its financial statements under International Financial
Reporting Standards (IFRS).
EGM information
Crucell will convene an Extraordinary General Meeting of Shareholders on
December 10, 2010 in Amsterdam, the Netherlands, to discuss the intended offer
of Johnson & Johnson for all outstanding shares of Crucell not already owned by
Johnson & Johnson. The statutory meeting for shareholders as required by Dutch
takeover regulations will be held in January, 2011 in Amsterdam, the Netherlands
(six business days prior to the expiration of the acceptance period of the
offer).
For further information please contact:
Oya Yavuz
Vice President Corporate Communications & Investor Relations
Tel. +31 (0)71 519 7064
ir(at)crucell.com
www.crucell.com
[1] In guidance currencies = EUR/USD rate of 1.41
[HUG#1460291]
PDF file including financials:
http://hugin.info/132631/R/1460291/399531.pdf
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Source: Crucell N.V. via Thomson Reuters ONE
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Datum: 09.11.2010 - 07:45 Uhr
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