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UPDATE 4-Crucell seeking new growth engine, to boost R&D
February 9, 2010 / 7:54 AM / 8 years ago

UPDATE 4-Crucell seeking new growth engine, to boost R&D

* Sees 2010 total revenues broadly in line with 2009

* To boost R&D spending by over one-third in 2010

* Total Q4 revenue 111.3 mln euros vs forecast 101 mln

* Shares down 1.8 percent

(Adds analyst, CEO comments, updates shares)

By Aaron Gray-Block

AMSTERDAM, Feb 9 (Reuters) - Dutch biotech Crucell CRCL.AS said it will boost R&D funding by more than a third, after an investment by U.S. giant Johnson & Johnson (JNJ.N), as it aims to find a new growth engine.

Shares fell despite the firm’s better-than-expected fourth quarter profit on Tuesday, and analysts complained of too few details to gauge the company’s prospects in 2010.

Net profit for the period was 15.6 million euros, hurt by a 4.8 million euro tax charge, but beating the average forecast of 9 million ($12 million) from a Reuters poll of six analysts.

Crucell CRXL.O had a restated net profit of 18.9 million euros in the same period in 2008, boosted by an income tax gain.

Still, Crucell posted its second consecutive full-year profit, driven by growth in its paediatric vaccine sales. It said 2010 revenue and other operating income will be broadly in line with 2009.

Shares in Crucell, which has a market capitalisation of 1.16 billion euros, fell 1.8 percent to 13.96 euros by 1144 GMT. The Amsterdam midcap .AMX index was down 0.3 percent.

Petercam analyst Jan Van den Bossche, said he was very much surprised by the good quarterly results, but his enthusiasm was strongly curbed by the lack of quantified 2010 guidance.

“The challenge of the company is to find the next growth engine. We are waiting with some impatience to see what they are going to do... looking forward to the results on R&D and/or acquisitions,” said Van den Bossche, who has an “add” rating on the stock. “It’s time for the pipeline to deliver.”

LOOMING ACQUISITIONS?

Crucell is considered to be in a luxurious position after selling an 18 percent stake to J&J last year for 302 million euros as part of a flu vaccine development deal, giving it a strong cash position on top of a positive operating cash flow. [ID:nLS212056]

Emerging competition from Indian rivals Panacea Biotech (PNCA.BO) and Sanofi-Aventis’s (SASY.PA) Shantha Biotechnics has dented the growth potential for Crucell, however, sparking talk the company will use its cash position to make acquisitions.

“If we would make an acquisition, it would be of a profitable product or products that are very close to being launched on the market rather than a pipeline product,” Crucell Chief Executive Ronald Brus told reporters.

Crucell said it would use the J&J partnership and operating cash flow to boost R&D spending and accelerate development of its current pipeline of products in clinical or near clinical studies. Crucell spent 70.2 million euros on R&D in 2009.

Brus said Crucell would also move to remove supply limitations for its influenza vaccine Inflexal, working more intensively with its partner Adimmune, but added supply problems are not expected to be removed before 2011.

Crucell had cash of 328 million euros at end-2009, plus 100 million in a short-term deposit and analysts estimate Crucell has an available war chest of about 200-300 million euros.

Crucell won a $300 million contract for its childhood vaccines in 2009 alongside two contracts awarded to Panacea Biotech and Shantha Biotechnics. UNICEF is expected to award more contracts this year, but Brus did not comment on timing.

Crucell is investing 50 million euros in the construction of a new production facility in Korea and said the first test runs of the facility will take place in the second quarter of 2010. The facility will raise production capacity and reduce costs.

Chief Financial Officer Leon Kruimer said once the facility is operational, Crucell will get a seven-year “tax holiday” in Korea, but the facility will not start operations this year. (Editing by Hans Peters and Mike Nesbit) ($1=.7320 euros)

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