Crucell Reports Fourth Quarter and Full Year 2010 Results

Mon Feb 7, 2011 2:24am EST

* Reuters is not responsible for the content in this press release.

  LEIDEN, NETHERLANDS, Feb 07 (MARKET WIRE) -- 


 PRESS RELEASE

    Crucell Reports Fourth Quarter and Full Year 2010 Results Total revenues
and other operating income of EUR365.4 million for the full year 2010
compared to EUR358.0 million in 2009.

    Due to write-downs of Quinvaxem(R) inventory and higher operating
expenses, operating loss for the year was EUR34.3 million compared to
EUR39.0 million operating profit in 2009. The year ended with a net loss
of EUR27.6 million compared to EUR23.9 million net profit in the previous
year and undiluted EPS of minus EUR0.34 compared to EUR0.34 in 2009.

    Dutch biopharmaceutical company Crucell N.V. (NYSE Euronext, NASDAQ:
CRXL) (SWISS: CRX) today announced its financial results for the fourth
quarter and the full year of 2010, based on International Financial
Reporting Standards (IFRS). These financial results are unaudited.

    Business Highlights:

  * On October 28, 2010 and November 9, 2010 Crucell announced that it put
    a temporary hold on all shipments of Quinvaxem(R) and Hepavax-
    Gene(R) and suspended production at its Shingal facility in Korea as
    the facility's sterile operation had been compromised due to a
    microbiological contamination. In December 2010, Crucell resumed
    shipments of the non-contaminated stock of Quinvaxem(R).

    In December 2010, the Korea Food & Drug Administration (KFDA) audited
    the Shingal facility and informed Crucell in January 2011 that it
    supported the restart of manufacturing. Crucell has started commercial
    manufacturing of Quinvaxem(R) at full capacity and will release
    Quinvaxem(R) to the market through the normal release procedures. In
    the third quarter financial results, Crucell took a EUR22.8 million
    inventory provision on Quinvaxem(R) stock related to the Korea
    manufacturing issues.

    In December 2010, Crucell was able to release a batch of
    Quinvaxem(R) that had previously been provisioned, resulting in a
    decrease in operating loss of EUR1.9 million in the fourth quarter.
    The release of two further Quinvaxem(R) batches currently also
    fully provisioned  for, is dependent on the results of further
    assessments by the company and consultation with regulatory
    authorities. Release of these two batches would decrease the
    operating loss for the year 2010 by another EUR4.2 million.

  * On December 8, 2010 Johnson & Johnson and Crucell announced that
    Johnson & Johnson is making a recommended cash offer for all of the
    issued and outstanding ordinary shares in the capital of Crucell N.V.
    at an offer price of EUR24.75 per share. The Offer represents a premium
    of 58% over the EUR15.70 closing price of the Ordinary Shares as of 16
    September 2010, the day before Johnson & Johnson and Crucell announced
    they were in negotiations for the Offer, and a premium of 63% over the
    30-day trading average of the Ordinary Shares of EUR15.20 as of 16
    September 2010.

  * On December 10, 2010 Crucell held an informational Extraordinary
    General Meeting of Shareholders to discuss Johnson & Johnson's offer.

  * In November 2010 Crucell announced the start of a discovery program
    leading to the development and commercialization of a 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.

Financial Highlights 2010:

  * The Company announced combined total revenues and other operating
    income of EUR365.4 million, compared to EUR358.0 million in 2009, in-
    line with prior guidance given to the market.

  * Product sales were EUR290.6 million, representing sales of paediatric
    vaccines (61%), travel and endemic vaccines (25%), respiratory vaccines
    (7%), and other products (7%). Higher sales of travel and endemic
    vaccines were more than off-set by lower sales of respiratory vaccines
    due to the limited availability of flu antigen, weaker overall demand
    and the temporary suspension of Quinvaxem(R) shipments.

  * Gross margins were 30%, compared to 42% in 2009. Gross margins were
    significantly impacted by the provision for Quinvaxem(R) inventory,
    pricing of Quinvaxem(R) sales, variation in product mix and negative
    operating variances.

  * Research and development (R&D) expenses increased to EUR100.0 million,
    compared to EUR70.2 million in 2009. R&D spending accelerated
    significantly in line with guidance, mainly as a result of an increase
    in clinical development expenses.

  * Operating loss was EUR34.3 million for 2010, compared to EUR39.0
    million operating profit in 2009, due to write-downs of Quinvaxem(R)
    inventory and higher operating expenses.

  * Net loss was EUR27.6 million for 2010, compared to a net profit of
    EUR23.9 million in 2009. This translates to a net loss per share of
    EUR0.34, compared to a net profit per share of EUR0.34 in 2009.

  * Cash used in operating activities was EUR36.4 million compared to cash
    from operating activities of EUR76.9 million in 2009. This is due to
    lower net results, movements in working capital and receipt of
    significant upfront payments in 2009 related to the collaboration
    agreement with Johnson & Johnson.

  * Cash used in investing activities was EUR15.7 million in 2010, which is
    mainly due to the purchase of property, plant & equipment and
    investments in intangible assets, partially offset by proceeds from
    financial assets. The latter are cash proceeds from deposits with
    maturities over 3 months at the beginning of the period.

  * Net cash used in financing activities in 2010 amounted to EUR50.7
    million due to the repayment of financial liabilities to reduce
    interest expenses

  * Cash and cash equivalents decreased by EUR95.8 million in 2010 to
    EUR232.0 million.

Key Figures: (EUR million, except net result per share)
--------------------------------------------------------------------------
      Fourth Quarter                                    Full Year
--------------------------------------------------------------------------
     2010      2009 Change                           2010      2009 Change
unaudited unaudited                                  unaudited unaudited
--------------------------------------------------------------------------

                         Total revenues and other
   81.6   111.3  (27)%      operating income        365.4     358.0     2%

 (12.0)    18.0         Operating profit/(loss)     (34.3)      39.0

  (7.5)    15.6            Net profit/(loss)        (27.6)      23.9

                          Net result per share
 (0.09)    0.19                 (basic)             (0.34)      0.34

    


Crucell's Chief Executive Officer Ronald Brus said:

    "The key event of the year was the agreement we reached with Johnson &
Johnson for a recommended cash offer of EUR24.75 per share to acquire
Crucell. We strongly believe that this agreement is in the best interest
of Crucell and all our stakeholders, including our shareholders,
partners, employees, patients and customers. I am looking forward to
Crucell becoming a Johnson & Johnson company as the combination of these
two companies will enable us to further accelerate growth. The shared
expertise and talent will help to make a difference in the lives of
people worldwide.

    In the last quarter of 2010 our top priority was resolving the
contamination issue in our Shingal facility. We started shipping the
non-contaminated stock of Quinvaxem(R) in December, and have also
restarted full production at our facility. The KFDA has informed us that
they support the restart of production and we soon expect to be able to
release our vaccines to the market, to continue to protect young children
from life threatening diseases in the world's developing countries."

    Product Sales Update:

    Product sales in the full year of 2010 decreased slightly compared to last
year to EUR290.6 million and represent sales of paediatric vaccines (61%),
travel and endemic vaccines (25%), respiratory vaccines (7%), and other
products (7%).

    Paediatric vaccines

    Crucell is experiencing continued strong demand for Quinvaxem(R) from
supranational organizations worldwide. With the exception of the first
months of 2011, due to limited product availability, Crucell expects
strong Quinvaxem(R) sales in 2011.

    Travel and endemic vaccines

    Sales of Dukoral(R) rose sharply in the fourth quarter as a result of a
successful TV campaign in Sweden, which is the main market for Dukoral(R)
today. The company is currently establishing its own sales organization
in Canada, which is considered the biggest growth market for Dukoral(R).

    In December 2010, a voluntary withdrawal procedure was initiated for a
limited number of batches of our oral typhoid vaccine Vivotif(R), since
projections showed that these product batches may not have as long a
shelf life as indicated. All individuals who have recently received
Vivotif(R) are effectively protected against typhoid. Crucell will
provide Vivotif(R) replacement material for the concerned batches. The
financial impact is limited to approximately EUR1 million.

    Respiratory vaccines

    As expected, sales of Crucell's influenza vaccine Inflexal(R) V in 2010
were significantly lower than in 2009 due to weaker overall demand and
limited availability of flu antigen.

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(R).

    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. Selection of the last
    innovation target is ongoing.

  * Therapeutic Human Papillomavirus (HPV) Vaccine (pre-clinical): In
    November 2010, Crucell announced 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).

  * Universal Respiratory Syncytial Virus (RSV) Vaccine (pre-clinical): In
    June 2010, Crucell announced the start of a discovery program leading
    to the development and commercialization of a universal RSV vaccine.
    This discovery program is part of the strategic collaboration with
    Johnson & Johnson (see above). The RSV vaccine will be designed to
    prevent severe infections with the most common RSV strains in infants
    and the elderly.

    As an encouragement towards the RSV research community, Crucell has
    provided financial support to the VII Respiratory Syncytial Virus
    Symposium and established the Innovation Award for RSV Research,
    underscoring Crucell's long-standing commitment to health improvement
    in infectious diseases worldwide.

  * Influenza - Seasonal Influenza Vaccine: Crucell has commenced with the
    development of a cell-based influenza vaccine. The introduction of
    cell-based Inflexal(R) V will be the next important step for
    Crucell's respiratory franchise. Combining Crucell's high density
    PER.C6(R) production system with the company's proprietary virosomal
    technology creates a cutting-edge method to produce Inflexal(R)
    antigens both at large scale, at competitive cost levels and earlier in
    the season. Crucell expects to apply for licensure in 2014.

  * 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(R) manufacturing technology. The planned Phase II trial in
    India is expected to start in the first half of 2011, after continued
    delays in the clinical trial approval process with the Indian Health
    Authorities. 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.

  * Malaria Vaccine (Phase I): Crucell and its collaborator, the US
    National Institute of Allergy and Infectious Diseases (NIAID), part of
    the National Institutes of Health (NIH), conducted a Phase I trial in
    the USA for a recombinant malaria vaccine, Ad35-CS, based on the
    company's AdVac(R) technology and PER.C6(R) manufacturing
    platform. In December 2009 boost vaccinations for the final group of
    volunteers were 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.

    In May 2010 Crucell announced the start of a new Phase I clinical study
    in Burkina Faso. Crucell is developing its malaria vaccine vector in
    collaboration with 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.
    Enrolment has been completed. Boost vaccinations are ongoing.

    The study is a randomized, controlled, double-blinded, dosage-
    escalation clinical trial evaluating the immunogenicity and safety of
    the recombinant malaria vaccine vector Ad35-CS in malaria semi-immune
    healthy adult volunteers living in Burkina Faso. This is the first
    study evaluating the safety and immunogenicity of this AdVac(R)-
    based malaria vaccine vector candidate in a population residing in a
    malaria endemic area.

  * Tuberculosis Vaccine (Phase II): To date, data from AERAS-402/Crucell
    Ad35 clinical trials support the immunogenicity and acceptable safety
    profile of the candidate TB vaccine.

    A Phase II clinical trial in infants of AERAS-402/Crucell Ad35 started
    in Kenya 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-Guerin (BCG)
    vaccine, which is currently the only vaccine licensed to help prevent
    TB. The first part of this clinical trial 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 other African countries.

    
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. The product test runs
('consistency runs') have been completed successfully and the
commissioning of the new Incheon facility is on track for approval in the
second half of 2011. The new facility will enable the further growth and
highly efficient production of Quinvaxem(R) and Hepavax- Gene(R), with a
capacity of over 100 million doses annually.

    Manufacturing & Licensing Agreements:

  * Crucell announced 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(R) cell-line technology. Under the
    terms of the agreement Eden will be able to offer Contract
    Manufacturing Services to Crucell's PER.C6(R) licensees in the
    field of vaccines and gene therapy. Financial details of the agreement
    were not disclosed. [Oct 2010]

    
Patents:

In Q4 2010 Crucell was granted a total of 64 patents,
including patents
for:

  * Aspects of PER.C6(R) cell lines and recombinant adenovirus
    technology, in Canada
  * Aspects of PER.C6(R) protein expression technology, in the U.S.
  * Aspects of AdVac(R) technology, in Europe Canada and Mexico
  * Aspects of influenza virus production using PER.C6(R) technology,
    in the U.S.
  * Aspects of improved adenoviral AdVac(R) vectors, in the U.S.
  * Elements of STAR(R) technology, in the U.S., Eurasia, Japan and
    Europe
  * Aspects of recombinant measles virus vector technology, in the U.S.
  * Cell lines for improved adenovirus production, in the U.S.

    
Financial Review Fourth Quarter 2010

    Total Revenues and Other Operating Income

    The Company announced combined total revenues and other operating income
of EUR81.6 million, compared to EUR111.3 million in the fourth quarter of
2009. The decrease was mainly driven by the suspension of Quinvaxem((R))
shipments.

    Product sales in the fourth quarter of 2010 decreased 32% over the same
quarter in 2009 to EUR62.4 million and represent sales of paediatric
vaccines (36%), travel and endemic vaccines (34%), respiratory vaccines
(18%), and other products (12%).

    License revenues were EUR9.7 million in the fourth quarter, compared to
EUR11.3 million in the fourth quarter of 2009. The decrease was mainly
due to lower milestone payments in the fourth quarter of 2010.

    Service fees for the quarter were EUR0.4 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 EUR9.2 million for the quarter, compared to
EUR6.0 million in the fourth quarter of 2009, reflecting a higher lever
of R&D reimbursements.

    Cost of Goods Sold

    Cost of goods sold for the fourth quarter of 2010 amounted to EUR43.5
million compared to EUR56.2 million in the same quarter of the prior
year. EUR42.3 million represents product costs; and EUR1.3 million the
cost of service and license activities.

    Gross margins were 40% compared to 47% in the fourth quarter of 2009. This
decrease is due to negative operating variances, product mix and the one-
off impact from the voluntary withdrawal of Vivotif((R)), partially
off-set by the reverse of some of the Quinvaxem((R)) stock provision in
the fourth quarter of 2010.

    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 fourth quarter were EUR50.1 million, representing
a EUR13.0 million increase over the same period in 2009.

    R&D expenses for the fourth quarter amounted to EUR29.8 million,
representing an increase of EUR7.4 million versus the fourth quarter of
2009 as R&D program spending accelerated in line with guidance.

    SG&A expenses for the quarter were EUR17.6 million compared to EUR13.8
million in the fourth quarter of 2009. This increase was mainly due to
higher M&S and IT expenses.

    During the fourth quarter we also incurred EUR2.7 million transaction
costs related to the offer of Johnson & Johnson.

    Operating loss of EUR12.0 million for the fourth quarter, compared to an
operating profit of EUR18.0 million in the same period of 2009.

    Taxation

    In December 2010, Crucell was granted a tax holiday in Switzerland for the
period 2011 to 2020. This tax holiday will reduce the effective tax rate
and resulted in a Q4 one-time benefit of EUR 3.3 million.

    Net Result

    Net loss of EUR7.5 million was reported for the fourth quarter of 2010,
compared to a net profit of EUR15.6 million in the fourth quarter of
2009. Net loss per share is EUR0.09, compared to a net profit per share
of EUR0.19 in the same period of 2009.

    Balance Sheet

    Tangible fixed assets amounted to EUR256.7 million on December 31, 2010.
Intangible assets amounted to EUR85.0 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 EUR14.3 million
and mainly represent investments in AdImmune and the PERCIVIA PER.C6((R))
. Crucell's investment in is classified under available-for-sale
investments.

    Total equity on December 31, 2010 amounted to EUR786.4 million. A total of
81.7 million ordinary shares were issued and outstanding on December 31,
2010.

    Cash Flow and Cash Position Cash and cash equivalents decreased by
EUR60.1 million during the fourth quarter to EUR232.0 million.

    Cash used in operating activities of EUR30.9 million compared to cash from
operating activities of EUR31.7 million in the same period of 2009, mainly
due to net results and the movement of inventory balances due to antigen
purchases in the fourth quarter of 2010.

    Cash used in investing activities amounted to EUR13.8 million in the
fourth quarter, which is mainly due to the purchase of property, plant &
equipment and investments in intangible assets, offset by proceeds from
financial assets.

    Net cash used in financing activities in the quarter amounted to EUR15.8
million due to the repayment of financial liabilities.

    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 2010 alone, Crucell distributed more than 105
million vaccine doses in more than 100 countries around the world.
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(R), this innovative
combination vaccine protects against five important childhood diseases.
Over 180 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. Crucell has
a broad development pipeline, with several product candidates based on
its unique PER.C6(R) production technology. Crucell licenses its PER.C6(R)
technology and other technologies to the biopharmaceutical industry.
Important partners and licensees include Johnson & Johnson, DSM
Biologics, sanofi-aventis, Novartis, Pfizer/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. Crucell employs over 1300 people. For more
information, please visit www.crucell.com.

    Annual Report

    Crucell N.V. is currently finalizing the financial statements for the year
ended December 31, 2010. We expect to be able to file our 2010 Annual
Report on Form 20-F with the U.S. Securities and Exchange Commission as
well as publish our Statutory Annual Accounts for the year 2010 before
the end of April 2011. The consolidated balance sheet of Crucell N.V. as
of December 31, 2010, the related consolidated statements of operations
and consolidated statements of cash flows for the year ended December 31,
2010, and all quarterly information as presented in this press release
are unaudited.

    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).

    Information on Offer EGM

    On 8 February 2011, at 14:00 hours CET an extraordinary general meeting of
shareholders (the Offer EGM) will be held by Crucell at the Okura Hotel,
Ferdinand Bolstraat 333, 1072 LH Amsterdam, the Netherlands. At the Offer
EGM, the Offer, among other matters, will be discussed in accordance with
the Decree. In connection with the Offer, the shareholders are being
asked to adopt a resolution to amend (i) the Articles of Association to
implement certain changes to the corporate governance structure of
Crucell (the Governance Resolutions) and (ii) the composition of the
Crucell Supervisory Board. A position statement providing further
information to the shareholders as required pursuant to article 18 of the
Decree published by the Crucell Boards dated 8 December 2010 (the
Position Statement), the Crucell Shareholders' Circular (of which the
Position Statement forms a part) (the Shareholders' Circular), the
solicitation/ recommendation statement on Schedule 14D-9 (the Schedule
14D-9) filed by Crucell with the U.S. Securities and Exchange Commission
(SEC) on 8 December 2010, the agenda of the Offer EGM, the explanatory
notes and other relevant information is available on Crucell's website
atwww.crucell.com


 
 
 
 
 PDF file including financials:
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    Source: Crucell N.V. via Thomson Reuters ONE

    [HUG#1485773]

For further information please contact:
Oya Yavuz
Vice President Corporate Communications & Investor Relations
Tel. +31 (0)71 519 7064
ir@crucell.com

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