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Crucell Reports Fourth Quarter and Full Year 2010 Results
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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: http://hugin.info/132631/R/1485773/420938.pdf This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients. The owner of this announcement warrants that: (i) the releases contained herein are protected by copyright and other applicable laws; and (ii) they are solely responsible for the content, accuracy and originality of the information contained therein. 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 firstname.lastname@example.org Copyright 2011, Market Wire, All rights reserved. -0-