Crucell Announces Third Quarter 2009 Results

2009-11-03 08:00:04 -

LEIDEN, NETHERLANDS -- (Marketwire) -- 11/03/09 --

Total revenues and other operating income increased by 15% to EUR 94.3
million.
Operating profit of EUR 15.5 million versus EUR 9.6 million in Q3 2008.
Quarter-end cash and short-term liquidities of EUR 411.9 million.
Undiluted EPS of EUR 0.15 for the quarter.

2009 full year guidance reiterated: total revenues and other operating income expected to grow 20% in constant currencies ; operating profit for 2009 expected to improve significantly compared to 2008; strong cash position.

Dutch biopharmaceutical company Crucell N.V. (Euronext, Nasdaq: CRXL; Swiss Exchange: CRX) today announced its financial results for the third quarter of 2009, based on International Financial Reporting Standards (IFRS). These financial results are unaudited.

Highlights:

  * In the third quarter of 2009 total revenues and other operating
    income increased by 15% to EUR 94.3 million, compared to EUR 82.1
    million in the same quarter of 2008. The increase was driven by a
    robust 28% growth in product sales and in particular growth of
    our paediatric and respiratory vaccines.
  * In December 2008, Crucell announced the discovery of a new class
    of human monoclonal antibodies (mAbs) with the unprecedented
    ability to combat a broad range of influenza virus strains[1].
    This breadth of protection opens up the new possibility of
    developing a universal means of influenza control, solving the
    key challenge in influenza prevention and treatment: the ease
    with which influenza viruses mutate, leading to new seasonal
    strains every year, periodic outbreaks of pandemic strains, and
    the emergence of drug-resistant viruses.
  * The exciting therapeutic potential of this discovery attracted
    the attention of global leaders in healthcare innovation, which,
    in September 2009, resulted in a strategic collaboration between
    Crucell and Johnson & Johnson (JNJ). This collaboration focuses
    on the discovery, development and commercialization of monoclonal
    antibodies and vaccines for the treatment and prevention of
    influenza and other infectious and non-infectious diseases.
  * The agreement with JNJ, with a potential deal value of over EUR 1
    billion, also includes an 18% equity investment in Crucell at a
    premium of 30% as well as significant milestones over the
    development period of the innovation programs. JNJ will hold
    commercialization rights for products resulting from the
    collaborations in all countries throughout the world with the
    exception of the European Union, certain additional European
    countries and supranational organizations, where Crucell will
    retain commercialization rights. Additionally Crucell holds all
    bulk manufacturing rights.
  * The strategic collaboration with JNJ follows the announcement in
    August 2009 of an award to Crucell from the National Institute of
    Allergy and Infectious Diseases (NIAID), part of the US National
    Institutes of Health (NIH). The award was designed to support
    early development of Crucell's mAbs for the treatment of seasonal
    and pandemic influenza. The award provides funding of up to $40.7
    million, with additional options that may be triggered at the
    discretion of the NIH worth a further $28.4 million, bringing the
    potential total amount to $69.1 million.
  * Crucell announced $300 million worth of new awards from a large
    supranational organization for supplies of Quinvaxem®, the first
    portion of the new 3-year tender period. The new awards are the
    largest ever received by Crucell and cover the period 2010-2012.
    With only half of the original tender volume awarded to date the
    initial amount of $300 million is expected to grow further over
    the three year period. The new awards are in addition to the $500
    million obtained over the tender period 2007-2009. During the
    first tender round in 2006, Crucell initially received an award
    of $230 million (Dec 2006) and received additional incremental
    awards of $130 million and $140 million in May and September,
    2008, respectively.
  * In line with Crucell's strategy to increase its market share and
    cost efficiency, the company announced the start of its own
    dedicated marketing and sales organization in the United Kingdom.
    The acquisition of an experienced team further strengthens
    Crucell's vaccine sales position in one of the largest vaccine
    markets in Europe.
  * Detailed positive results of the Phase II Philippines study of
    Crucell's rabies monoclonal antibody combination (CL 184) were
    presented at the XX Rabies in the Americas (RITA) Conference in
    Quebec, Canada. The start of the third phase II clinical study in
    India is imminent.
  * Promising preliminary results of the Phase I study of Crucell's
    HIV vaccine were presented at La Conférence AIDS Vaccine 2009 in
    Paris, France, showing that this HIV candidate vaccine is safe
    and immunogenic.
  * Crucell announced that the PANFLUVAC consortium consisting of
    eight European research partners, which includes Crucell,
    completed the first stage of their phase I clinical trial in
    healthy volunteers, using a virosomal vaccine against A/H5N1
    influenza.
  * Crucell signed three new license agreements, which includes
    agreements with Australia-based Patrys Ltd., US-based TapImmune
    Inc. and US-based Calmune Corporation.
  * Construction of the new vaccine manufacturing facility in Korea,
    which started in December 2008, is progressing well. First test
    runs are planned for the first half of 2010.

Financial Highlights:

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Crucell's Chief Executive Officer Ronald Brus said:

"The recently announced collaboration with Johnson & Johnson - the world's largest healthcare company - has a potential deal value of over EUR 1 billion and reflects the innovative strength of our company.
It represents an important validation of the promise of our new class of broadly protective anti-influenza antibodies. The immediate focus of this exciting collaboration will be the development and commercialization of a universal monoclonal antibody product (flu-mAb) for the prevention and treatment of any type of influenza strain. In addition, we will receive a significant amount of potential milestones throughout the development period as well as royalty payments upon commercialization of the products, whilst retaining commercialization rights for the European Union, certain additional European countries and supranational organizations.

"Over the past few years we have made great strides in building on our innovation and excellence in the global fight against infectious diseases. We have been able to accelerate our product sales significantly and expand our promising R&D programs. Our researchers focus on the discovery and development of much-needed solutions for major threats to human health, resulting in a strong pipeline of candidate products with the potential to revolutionize the fight against diseases such as influenza, rabies, malaria and tuberculosis.

"Crucell is becoming stronger and more effective as a global force in healthcare. Our goal has been, and remains, to strengthen our ability to bring meaningful innovation to global health by actively investing in our pipeline and by building on our existing knowledge of the vaccine and antibody markets in infectious disease."

Product Sales Update:

Product sales in the third quarter of 2009 increased 28% over the same quarter in 2008 to EUR 83.7 million and represent sales of paediatric vaccines (46%), travel and endemic vaccines (14%), respiratory vaccines (31%) and other products (9%).

Crucell started its own dedicated marketing and sales organization in the United Kingdom by acquiring an experienced team, which will further strengthen its vaccine sales position in one of the largest vaccine markets in Europe. The UK team will market and sell Epaxal®, Vivotif®, Dukoral® and Inflexal® V. Distribution of the travel vaccines has started, distribution of the influenza vaccine will start in 2010.

Paediatric

Sales of our paediatric vaccines, continued to show good growth in the third quarter 2009, particularly driven by Quinvaxem®.

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Travel and Endemic

In the third quarter of 2009, sales of our travel and endemic portfolio showed solid growth. Our travel portfolio has seen limited impact from the economic crisis as we were able to compensate sales declines with good uptake of our hepatitis A vaccine Epaxal® in new territories.

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Respiratory

The third quarter of 2009 showed solid growth, compared to the same quarter of 2008 of our flu vaccine Inflexal® V. Sales of Inflexal® V were particularly strong, due to the global strong demand for flu products. Shipments of Inflexal® V were mainly phased into the third quarter and thus earlier than sales in 2008.

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Research & Development:

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Building Development Capability:

To strengthen Crucell's capabilities to deliver on its pipeline, the company hired 110 new employees since January 2009. With these new employees Crucell strengthens its team with new leadership and process experts. Many of these new colleagues will be working in Switzerland, in the two buildings that have been reutilized to establish new process development laboratories. Crucell will use these laboratories to get FDA approval for Epaxal® in the USA.

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 are progressing well. First test runs are planned for the first half of 2010. The new facility will enable the further growth and efficient production of Quinvaxem® and Hepavax-Gene®. The investments in the new facility are expected to total approximately EUR 50 million, with the majority of spending in 2009.

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 is targeting savings of EUR 30 million by the end of 2009 compared to the 2007 cost base (excluding R&D). In the first nine months of 2009, a total of EUR 15 million of net cost savings were achieved (Q1 2009 EUR 6 million; Q2 2009 EUR 4 million; Q3 2009 EUR 5 million). Savings were predominantly achieved through improved yields, marketing and sales efficiency gain, and savings in overhead.

Manufacturing & Licensing Agreements:

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Patents:

In Q3 2009 Crucell was granted a total of 22 patents, including patents for:

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Financial Review Third Quarter 2009

Total Revenues and Other Operating Income

Total revenues and other operating income amounted to EUR 94.3 million for the third quarter of 2009, an increase of 15% compared to the same quarter of 2008. The increase of 15% was mainly driven by strong sales of paediatric and respiratory vaccines. Travel and endemic vaccines also showed solid growth due to the growth of Epaxal®, despite the impact of reduced travel from the economic crisis.

Product sales in the third quarter of 2009 increased 28% over the same quarter in 2008 to EUR 83.7 million and represent sales of paediatric vaccines (46%), travel and endemic vaccines (14%), respiratory vaccines (31%) and other products (9%).

License revenues were EUR 3.8 million in the third quarter, a decrease of EUR 6.6 million compared to the third quarter of 2008 (which included milestone payments of EUR 6.0 million for the Phase II results of the rabies monoclonal antibody combination and for Sanofi Pasteur's seasonal influenza vaccine (FluCell).

Service fees for the quarter were EUR 2.4 million, compared to EUR 2.6 million last year. Service fees represent revenues for product development activities performed under contracts with partners and licensees.

Other operating income was EUR 4.4 million for the quarter, compared to EUR 3.5 million in the third quarter of 2008.

Cost of Goods Sold

Cost of goods sold for the third quarter of 2009 amounted to EUR 55.1 million, EUR 53.1 million of which represents product costs and EUR 2.0 million the cost of service and license activities.

In line with expectations, gross margins were 39% in the quarter, compared to 50% in the same period in the prior year. The timing of development milestone payments from partners significantly influence margins and profitability in the period in which they are recognized.
The third quarter of 2008 included EUR 6.0 million milestone payments.
The remaining drop in margins is due to unfavorable movement of the US Dollar versus the Euro.
We expect continued pressure on margins in the last quarter of the year as a result of exchange rates, which affects our reported product sales and cost of goods sold.

Expenses

Total expenses consist 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 EUR 23.7 million, representing a EUR 9.2 million decrease compared to the same period in 2008. The decrease was mainly due to the reversal of impairment of two buildings in Switzerland, which were selected as development production sites for Epaxal® (hepatitis A) and tuberculosis vaccines.

SG&A (M&S+G&A) expenses for the quarter were EUR 15.2 million compared to EUR 15.2 million in the third quarter of 2008.

Operating profit was EUR 15.5 million in the third quarter of 2009 compared to EUR 9.6 million operating profit in the same quarter of 2008. Operating profit was positively affected by a EUR 8.1 million impairment reversal of two state-of-the-art buildings in Bern (Switzerland). The buildings were impaired in the fourth quarter of 2006 as there was no direct use for the buildings. In 2009 alternative use of the buildings arose as additional development facilities were required for two strategic development programs and the buildings proved to be suitable. The buildings are currently being adapted to the specific needs of the development programs, which will avoid major spending in the construction of new development facilities. The initial impairment that was already partially reversed in the first quarter of 2008 for an amount of EUR 5.2 million has now fully been reversed.

Financial Expenses and Taxes

Net financial expenses in the third quarter were EUR 0.9 million. This was mainly the result of interest expenses and currency losses on the US Dollar.

The company recorded a EUR 4.6 million income tax charge in the third quarter of 2009, mainly due in Switzerland, Spain and Korea. The consolidated effective income tax rate was 32% in the third quarter of 2009. The consolidated profit before tax was reduced by a significant operating loss in the Netherlands as a result of R&D expenses for which no tax benefit is recognized. This led to a relatively high effective tax rate. A further tax charge was due to the reversal of impairment.

Net Result

Net income of EUR 10.0 million was reported in the third quarter of 2009 versus a net income of EUR 12.8 million in the same quarter of 2008. Net result per share in the third quarter of 2009 is EUR 0.15, compared to a net result per share of EUR 0.19 in the third quarter of 2008.

Balance Sheet

Tangible fixed assets amounted to EUR 178.3 million on September 30, 2009. Intangible assets amounted to EUR 73.8 million. This includes acquired in-process research and development, developed technology, patents and trademarks, and the value of customer and supplier relationships.

Investments in associates and joint ventures amounted to EUR 9.3 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.

As part of the strategic collaboration with JNJ, the company sold 14.6 million newly issued ordinary shares to JNJ for an aggregate purchase price of EUR 301.8 million, which included a premium of EUR 69.5 million classified as deferred income, which will be amortized over the development period of flu-mAbs.

Total equity on September 30, 2009 amounted to EUR 717.5 million. A total of 81.3 million ordinary shares were issued and outstanding on September 30, 2009.

Cash Flow and Cash Position

Cash and cash equivalents increased by EUR 190.0 million in the third quarter to EUR 311.6 million.

Net cash from operating activities in the third quarter improved significantly to EUR 72.1 million, up from minus EUR 9.9 million in the same quarter of 2008. This was driven by the upfront payments of JNJ for participation in Crucell's development programs.

Cash used in investing activities amounted to EUR 118.0 million, which includes a long term deposit of EUR 100.0 million with a maturity of over 3 months, to take advantage of higher yields on longer term deposits.

Net cash from financing activities in the third quarter was EUR 235.0 million, compared to EUR 11.3 million in the same quarter of 2008. This increase reflects the cash proceeds from the issuance of shares to JNJ.

Outlook 2009 reiterated [2]

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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 22, 2009, in the section entitled 'Risk Factors'. The Company prepares its financial statements under International Financial Reporting Standards (IFRS).

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:

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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 at www.crucell.com :

and will be archived and available for replay following the event.

About Crucell

Crucell N.V. (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. Its vaccines are sold in public and private markets worldwide. Crucell's core portfolio includes a vaccine against hepatitis B, a fully-liquid vaccine against five important childhood diseases and a virosome-adjuvanted vaccine against influenza. Crucell also markets travel vaccines, such as the only 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 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 visit www.crucell.com :

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[1] The discovery and characterization of this unique class of human influenza antibodies was reported in the online journal PloS ONE on 16 December 2008. An imaging study published in the prestigious journal Science on 26 February 2009 described the mechanism explaining their broad-spectrum protection by showing that the antibody binds to a part of the influenza virus that is conserved (invariable) from one viral strain to the next. Antibodies produced by the body in response to influenza infection or vaccination bind to a part of the virus that tends to mutate.

[2] Constant currencies = EUR/USD rate of 1.35

PDF file including financials:
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