SOURCE: Crucell N.V.

August 29, 2006 02:37 ET

Crucell Announces Second Quarter 2006 Results

LEIDEN, NETHERLANDS -- (MARKET WIRE) -- August 29, 2006 --

Leiden, The Netherlands, August 29, 2006 - Dutch biotechnology company Crucell N.V. (Euronext, NASDAQ: CRXL, SWX: CRX) today announced its financial results for the first half-year ended June 30, 2006, based on International Financial Reporting Standards (IFRS).

Total revenues for the second quarter were EUR 18.9 million and other operating income was EUR 2.8 million. Net loss for the second quarter of 2006 attributable to equity holders of the parent amounted to EUR 25.7 million. Total revenues for the six months ended June 30, 2006, were EUR 30.6 million; other operating income amounted to EUR 4.8 million for the first six months of 2006. Net loss for the first six months of 2006 attributable to equity holders of the parent amounted to EUR 40.4 million.

Cash and cash equivalents were EUR 177.7 million on June 30, 2006, compared to EUR 178.7 million at the end of the first quarter. Proceeds from the sale of discontinued operations and a reclassification of short-term financial assets to cash, offset cash used in operations in the second quarter. Total assets on June 30, 2006, were EUR 616.1 million.

Crucell's Chief Financial Officer Leonard Kruimer said: "The second quarter results are in line with our expectations as they reflect the effects of purchase price allocation, one-time integration costs, and fully integrated R&D and SG&A costs. Product sales in our Berna subsidiary were up 9% over the same six-month period last year. Given the strong seasonal pattern of these sales, and the expected launch of Quinvaxem™, we reiterate our previous guidance for full-year revenue and cash burn: revenue, including other operating income, of EUR 130 to EUR 150 million, with 2006 operational cash burn in the range of EUR 33 to EUR 38 million."

Operational Review Second Quarter 2006

* Berna Biotech Acquisition: Crucell's offer for Berna Biotech AG was settled on February 22, 2006. The Company now holds 98.4% of all issued Berna shares. The Company is in the process of delisting the remaining shares, which is expected to be completed in the fourth quarter.

* Quinvaxem: The Korea Food and Drug Administration (KFDA) awarded licensure to Quinvaxem™, a fully liquid pentavalent vaccine co-developed with Chiron Corporation, in March 2006. Crucell has started production of the vaccine in Korea and first shipments will be made once pre-qualification is received from the WHO.

* Divestments: Crucell concluded the sale of Rhein Biotech GmbH and veterinary pharmaceuticals company Dr. E. Gräub AG. These divestments enabled Crucell to align its portfolio of activities with its strategic priorities. Total proceeds amounted to EUR 15.4 million.

* Avian influenza vaccine clinical trial: Crucell announced the start of a clinical trial, performed in collaboration with the University of Leicester, UK, testing three types of vaccines against the H9N2 avian influenza virus in humans. The trial involves the vaccination of 560 healthy adults, and will allow Crucell to choose the best vaccine modality for further clinical studies with pandemic flu vaccines. First results of the study are expected by the end of 2006.

* Patent infringement: Crucell settled its patent infringement proceedings against CEVEC Pharmaceuticals GmbH. The final claim in the case was withdrawn following CEVEC's commitment not to use its cell bank in any way that would constitute further infringement of Crucell's European PER.C6® patent.

* STAR™ Technology: Crucell signed a non-exclusive STAR™ research license agreement with Cambridge, Massachusetts-based Millennium Pharmaceuticals Corporation.

* PER.C6® Licensing: Crucell secured new PER.C6® licensing deals with Upstate USA, BIOA&D and Immuno-Biological Laboratories during the second quarter.

* PER.C6® R&D Center: Crucell and technology partner DSM Biologics announced the establishment of a new PER.C6® R&D Center in Cambridge, Massachusetts, and the appointment of Dr Marco Cacciuttolo as CEO. Operations are expected to commence by the end of 2006.

* Supervisory Board: Mr. Pieter Strijkert, chairman of Crucell's Supervisory Board since the Company's incorporation, stepped down at the Annual General Meeting of Shareholders on June 2, 2006. He was succeeded by the vice-chairman of the Supervisory Board, Mr. Jan Oosterveld.

* Suspension of Aerugen® clinical development: On July 18, 2006, the Company announced the suspension of the clinical development program for Aerugen®, a vaccine for the prevention of Pseudomonas aeruginosa infection.

Details of the Financial Results First Half-Year

Revenues and Other Operating Income

Revenues for the first half-year of 2006 were EUR 30.6 million, compared to EUR 13.4 million in the same period last year. Revenues consist of product sales, license revenues and service fees. Revenues in 2006 represent product sales from Berna from the moment of acquisition at February 22, 2006; license revenues and service fees do not include sales from Berna and are therefore included for six months. Product revenues amount to EUR 21.5 million, concentrated in pediatric and travel vaccines. Product revenues are seasonal and have historically been concentrated in the second half of the year. This is due to seasonal sales of influenza vaccine, and the projected sales of the new Quinvaxem™ pediatric vaccine. Comparable product sales from Berna in the first half-year 2006 were up 9% over same period last year.

License revenues were EUR 4.6 million, a decrease of EUR 3.7 million over last year. Last year's license revenues included a EUR 2 million milestone and a significant EUR 2 million up-front fee from a partner. License revenue consisted of initial payments from new contracts as well as annual and other payments on existing contracts. Service fees amount to EUR 4.5 million, compared to EUR 5.1 million last year, which represents a slight decrease in chargeable development activities. Service fees represent revenues for product development activities performed under contracts with partners and licensees.

Other Operating income was EUR 4.8 million, compared to EUR 2.6 million in the same period last year. Other operating income consists of government grants, which increased slightly to EUR 3.0 million, and other income of EUR 1.8 million.

Cost of Goods Sold

Cost of goods sold for the first six months of 2006 amounted to EUR 27.4 million, EUR 24.2 million of which represents product costs and the remainder of EUR 3.2 million represents costs of service activities. The EUR 24.2 million in product costs is relatively high since it includes a EUR 6.4 million inventory purchase price allocation charge. The remaining step-up in inventory on June 30, 2006, as a result of the purchase price allocation, amounts to EUR 11 million, which will be charged to cost of goods sold in future accounting periods.


Total expenses consist of research and development (R&D) expenses and selling, general and administrative (SG&A) expenses. Total R&D and SG&A expenses were EUR 48.6 for the first six months of 2006. That represents a EUR 27.1 million increase over the same period last year. The difference is primarily attributable to combining activities of Crucell and Berna since acquisition.

R&D expenses amounted to EUR 29.8 million, which represents a EUR 16.3 million increase over the first half of 2005. Berna clinical programs accounted for a EUR 10.6 million increase in R&D costs in the first six months of 2006. Amortization as a result of the purchase price allocation added EUR 2.1 million in expenses. In addition, costs for clinical development in Leiden for Rabies, West-Nile and Influenza clinical programs added EUR 3.6 million in development costs over same period last year.

SG&A expenses for the first half-year 2006 were EUR 18.8 million and represent an increase of EUR 10.8 million over the first half- year of 2005. Of the increase, EUR 3.5 million represents the addition of the Berna G&A costs to the organization; EUR 4.8 million represents sales & marketing expenses; and EUR 2.5 million represents integration costs, like Sarbanes-Oxley implementation and various advisory costs.

Net Loss

The Company reported a net loss attributable to equity holders of the parent for the first half-year 2006 of EUR 40.4 million, or EUR 0.75 net loss per share.

Minority interests of EUR 0.5 million represent the share in results of minority shareholders in Berna Biotech AG as well as in Rhein Biotech NV, which is listed at the Frankfurt Exchange (FWB).

Cash Flow and Cash Position

Cash and cash equivalents increased by EUR 65.9 million in the first six months of 2006 up to an amount of EUR 177.7 million. The net increase is a result of the cash acquired in the acquisition. During the second quarter, cash deposits of EUR 13.0 million were re-classified as restricted cash and serve as collateral for company mortgages and financial leases. These deposits are included on the balance sheet as other financial assets.

Net cash used in operating activities in the first six months of 2006 was EUR 24.1 million. Changes in working capital for the acquired company reflect changes in current assets and current liability balances since the date of acquisition.

Cash from investing activities amounted to EUR 79.3 million. This includes cash acquired in the acquisition of EUR 76.9 million. EUR 9.0 million was used to pay acquisition transaction costs. Proceeds from financial assets include EUR 15.4 million of proceeds from divested assets, Rhein Biotech GmbH and Dr. E. Gräub AG., received in the second quarter. Proceeds from financial assets also include EUR 17.9 million of deposits for which the maturity has decreased to less than 3 months in the second quarter, resulting in a reclassification to cash and cash equivalents.

Net cash from financing activities was EUR 11.0 million, of which EUR 7.9 million represents an increase in mortgage loans and leasing liabilities. The Company has entered and intends to enter into financial leases to finance investment in property, plant and equipment, the effect of which will be to reduce cash outflow in the year the investment takes place. In the first six months the Company received EUR 3.4 million from the issuance of ordinary shares for employee stock options exercised.

Balance Sheet

Total equity amounts to EUR 464.3 million, of which EUR 11.2 million represents minority interests. A total of 59 million ordinary shares were issued and outstanding on June 30, 2006.

Inventories increased EUR 12.1 million during the second quarter to EUR 62.7 million by June 30, 2006. The increase in inventory is due to purchase of materials for influenza vaccine production in the second half of the year, as well as stock of intermediate and finished goods of Quinvaxem™ vaccine.

Short-term financial assets decreased over the second quarter due to a reclassification of EUR 17.9 million of deposits to cash and cash equivalents, since these deposits now have a maturity date of less than 3 months.

Intangible assets amount to EUR 116.2 million and represent acquired in-process R&D; patents and trademarks; and value of customer and supplier relationships. The purchase price allocation has been further updated during the second quarter and is expected to be finalized before year-end.

Investments in Joint venture represent investment in Pevion. The Company's investment in Galapagos NV is classified under "Other financial assets."

Reconciliation IFRS to US GAAP

Shareholders equity under US GAAP is EUR 413.4 million, EUR 50.9 million lower than under IFRS. This is primarily due to the different method to determine the Berna acquisition price and write-off of in-process R&D of EUR 61.8 million required under USGAAP.

Net loss under US GAAP for the six months ended June 30, 2006, is EUR 102.4 million versus a loss of EUR 40.9 million under IFRS. The difference is mainly due to the write-off of in-process R&D under US GAAP as well as some other minor differences.


The Company maintains its revenue outlook, including other operating income, for 2006 in the EUR 130 to EUR 150 million range, which is dependent on obtaining WHO pre-qualification of the Company's Quinvaxem™ vaccine.

2006 will be a year of integration, affecting cash used in operations. Net of integration, one-time transaction costs, investment in plant and equipment and other proceeds from divestitures, the total decrease in cash over 2006 is expected to be in the EUR 33 million to EUR 38 million range. The Company expects to achieve operational cash break-even in 2007.

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 U.S. Securities and Exchange Commission on July 6, 2006.

Conference Call and Webcast

Crucell will conduct a conference call today, August 29, 2006, starting at 14:00 pm Central European Time (8:00 am US Eastern time). A presentation will be followed by a question and answer session. To participate in the conference call, please call one of the following toll-free numbers within 10 minutes prior to commencement:

                      888-495-6452 for the US;
                    0800-358-5255 for the UK; and
                 0800-265-8531 for the Netherlands.
About Crucell

Crucell N.V. (Euronext, NASDAQ: CRXL; Swiss Exchange: CRX) is a biotechnology company focused on research, development and worldwide marketing of vaccines and antibodies that prevent and treat infectious diseases. Its vaccines are sold in public and private markets worldwide. Crucell's core portfolio includes a vaccine against hepatitis B and a virosome-adjuvanted vaccine against influenza. Crucell also markets travel vaccines, such as the only oral anti-typhoid vaccine and the only aluminum-free hepatitis A vaccine on the market. The Company has a broad development pipeline, including both early-stage products and products almost ready to go to market. Several Crucell products are based on its unique PER.C6® production technology. The Company licenses this and other technologies to the biopharmaceutical industry. Important partners and licensees include DSM Biologics, sanofi aventis, GSK and Merck & Co. Crucell is headquartered in Leiden (the Netherlands), with subsidiaries in Switzerland, Spain, Italy and Korea. The Company employs about 900 people. For more information, please visit

PDF version (including full external reporting figures):

For further information contact:

Crucell N.V.                For Crucell in the U.S.
Leonard Kruimer             Redington, Inc.
Chief Financial Officer     Thomas Redington
Tel. +31-(0)71-524 8722     Tel. +1 212-926-1733

Paul Vermeij
Director Investor Relations and Corporate
Tel. +31-(0)71-524 8718
Copyright © Hugin ASA 2006. All rights reserved.

Contact Information