SOURCE: Crucell N.V.

May 23, 2006 02:00 ET

Crucell Announces First Quarter 2006 Results


Leiden, The Netherlands, May 23, 2006 - Dutch biotechnology company Crucell N.V. (Euronext, NASDAQ: CRXL, SWX: CRX) today announced its financial results for the first quarter ended March 31, 2006, based on International Financial Reporting Standards (IFRS).

  * Successful acquisition of Berna Biotech and global integration of
    the companies substantially completed.

  * Agreement reached on the divestment of two subsidiaries outside
    Crucell's core activities, resulting in a decrease in operational
    costs going forward and cash proceeds from sale.

  * Purchase price allocation leads to EUR 141.1 million increase in
    fair market value of acquired assets.

  * Net loss attributable to Crucell shareholders is EUR 14.7 million
    for the first quarter driven by one-time integration costs and
    higher costs of sales related to inventory and plant and
    equipment revaluation.

  * Outlook: Company expects 2006 revenues to be EUR 130 to EUR 150
    million; decrease in cash over 2006 to be EUR 33 to EUR 38 million.

  * Company expects to reach cash break-even in 2007.
Crucell formally concluded the acquisition of Berna Biotech on February 22, 2006 and held 98% of outstanding Berna Biotech shares at March 31, 2006. First quarter consolidated results include revenues, expenses and minority interest of the acquired company from the date of acquisition, February 22, 2006. Assets and liabilities have been valued at fair market value at acquisition date. This has resulted in a significant increase in asset value of EUR 141.1 million and remaining goodwill of EUR 43.7 million at March 31, 2006. The valuation process will be formally completed after the close of the first quarter and consequently final asset values and resulting goodwill may still be subject to change.

Total revenues for the three months ended March 31, 2006 were EUR 11.7 million, compared to EUR 4.3 million for the first three months of last year. Product sales are historically concentrated in the second half of the year, mainly due to seasonal sales of influenza vaccine. In addition, sales of the newly approved Quinvaxem™ pediatric vaccine are not expected to start until the third quarter. The net loss for the first three months of 2006 attributable to equity holders of the parent amounted to EUR 14.7 million.

Cash and cash equivalents were EUR 178.7 million on March 31, 2006. In addition, the Company's short-term cash deposits classified under short-term financial assets, at March 31, 2006 amounted to an additional EUR 19.0 million. Total assets at March 31, 2006, were EUR 641.8 million, compared to EUR 169.7 million at the end of last year, reflecting the acquired and subsequently revalued assets of Berna Biotech.

Crucell's Chief Financial Officer Leonard Kruimer said: "This is the first time Crucell's consolidated financials reflecting the Berna acquisition are published. These financials now reflect the very different, fully integrated vaccine company Crucell is today, versus the development company we were before." He continued, "The acquired identifiable assets have now been revalued at fair market value of EUR 320.0 million. As a result we are able to record an increase of EUR 141.1 million over book value of the assets. A relatively modest goodwill of EUR 43.7 million remains on our books. The effect of the step up in value will be to increase future depreciation and amortization expenses. We estimate the additional non-cash expenses for 2006 to be approximately EUR 29 million, partly reflected in this quarter's high cost of sales."

Operational Review First Quarter 2006

  * Berna Biotech Acquisition: Crucell's offer for Berna Biotech AG.
    was settled on February 22, 2006. The Company now owns more than
    98% of all issued Berna shares and has filed for the cancellation
    of the remaining minority held shares. Berna shares will be
    de-listed upon completion of the cancellation procedure currently
    underway. February 22, 2006 was also the first trading day of
    Crucell shares on the SWX Swiss Exchange (ticker symbol: CRX).
    With the acquisition of Berna, Crucell acquired a portfolio of
    marketed vaccine products, one scheduled for launch later this
    year and two scheduled for launch in 2007.

  * Quinvaxem: The Korea Food and Drug Administration awarded
    licensure to Quinvaxem™, a fully liquid pentavalent vaccine
    co-developed with Chiron Corporation, and to be produced by
    Crucell in Korea. Production of the vaccine has started and first
    sales are expected in the second half of 2006 after
    pre-qualification of the WHO. Current demand exceeds 50 million
    doses, with annual demand expected to increase to more than 150
    million doses per year over the next 5 years.

  * Divestments: Crucell divested biopharmaceutical and vaccine
    manufacturer Rhein Biotech GmbH, a company 93% owned by Berna
    Biotech, in a cash transaction. The sale of Rhein Biotech in
    April, as well as the planned sale of veterinary pharmaceuticals
    company Dr. E. Gräub AG, enables Crucell to align its portfolio
    of activities with its strategic priorities.

  * STAR™ Technology: Crucell signed a non-exclusive STAR™
    research license agreement with Berkeley, California-based XOMA

  * PER.C6® Licensing: The Crucell-DSM partnership secured new
    PER.C6® licensing deals with UMN Pharma and UCB S.A. A renewed
    research and commercial agreement was negotiated with Ark

  * IFRS Adoption: Crucell adopted IFRS as its primary financial
    reporting method as of January 1, 2006. The Company will report
    its quarterly, half-year and full-year financial results under
    IFRS with a reconciliation to US GAAP for the half-year and
    full-year results.

Details of the Financial Results First Quarter

Revenues and Other Operating Income

Total revenues consist of product sales, license revenues and service fees. In addition, other operating income consists of government grants and other, mainly contract manufacturing income. Reported product sales and other revenues related to the Berna acquisition are only included from acquisition date February 22 to March 31, 2006.

Revenues for the first quarter of 2006 therefore were EUR 11.7 million, compared to EUR 4.3 million in the same quarter last year. Product revenues amount to EUR 7.0 million, of which pediatric and travel vaccines represent over 55 percent. Product revenues are seasonal and historically have been concentrated in the second half of the year. This is due to seasonal sales of influenza vaccine and the sales of the newly approved Quinvaxem™ pediatric vaccine, which are expected to start in the third quarter. Product sales in March 2006 were up 9% over March 2005.

License fees amount to EUR 2.3 million and service fees to EUR 2.4 million. License revenue consisted of initial payments from new contracts as well as annual and other payments on existing contracts. Service fees represent revenues for product development activities performed under contracts with partners and licensees.

Other Operating Income of EUR 2.0 million represents other income from partners and government grants.

Cost of Goods Sold and Expenses

Cost of goods sold amounts to EUR 11.4 million. This includes increased depreciation of production assets and inventory changes of EUR 5.5 million resulting from the purchase price allocation. The remaining step-up in inventory value at March 31, 2006, amounts to EUR 16.2 million and will be charged to cost of goods sold in the current accounting year.

Research and development expenses amount to EUR 10.6 million and reflect the expenditure on clinical programs and research conducted in Leiden and Berne.

Selling, general and administrative expenses for the first quarter 2006 were EUR 7.1 million and reflect integration costs of EUR 1.5 million. Transaction costs are considered part of the purchase price and as such are recorded as part of goodwill.

Discontinued Operations and Minority Interest

Results from discontinuing operations combine the net results of Rhein Biotech GmbH and the veterinary business Dr. E. Gräub. The sale of both entities will be consummated after the close of the first quarter.

Minority interests of EUR 0.3 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).

The Company reported a net loss attributable to equity holders of the parent for the first quarter 2005 of EUR 14.7 million, or EUR 0.29 net loss per share.

Cash Flow and Cash Position

Cash and cash equivalents increased by EUR 67.4 million in the first three months of 2006 up to an amount of EUR 178.7 million. This excludes additional cash deposits of EUR 19.0 invested with a maturity date exceeding three months, but shorter than 12 months, which are classified under short-term financial assets.

Net cash used in operating activities in the first three months of 2006 was EUR 12.8 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 70.2 million. This includes EUR 77.9 million in cash acquired in the acquisition. Net cash from financing activities was EUR 9.6 million.

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.

Balance Sheet.

Total equity amounts to EUR 495.7 million, of which EUR 13.3 million represents minority interests. A total of 58.7 million ordinary shares were issued and outstanding at March 31, 2006.

Accounts receivable of EUR 31.5 million represents receivables from partners and customers for services performed.

Inventories of EUR 50.6 million include a EUR 16.2 million step up resulting from the restatement to fair market value. The step up in inventory value will be charged to cost of goods sold within the current accounting year.

Assets held for sale EUR 15.7 million represent both Rhein Biotech GmbH and Dr. E. Gräub, which will be divested subsequent to the end of the first quarter.

Intangible assets represent acquired in-process R&D; patents and trademarks; value of customer and supplier relationships.

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


The Company presented its outlook for 2006 during the Analyst Briefing last April 27, 2006. The Company expects total revenues for 2006 to be in the EUR 130 to EUR 150 million range, driven by strong vaccine sales of the Company's new Quinvaxem™ vaccine.

2006 will be a year of integration, driving the amount of 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.

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 April 14, 2005, and the section entitled "Risk Factors" in the Shareholders' Circular dated December 15, 2005.

Conference Call and Webcast

Crucell will conduct a conference call today, May 23, 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:

                      888-495-6450 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 vaccines against hepatitis B and virosomal influenza. Crucell also markets travel vaccines, such as the only oral anti-typhoid 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, elsewhere in Europe, and in Korea. The Company employs about 900 people. For more information, please visit

Click below for a PDF version of this press release, including full external reporting figures:

For further information contact:

Crucell N.V.
Leonard Kruimer
Chief Financial Officer
Tel. +31-(0)71-524 8722

Harry Suykerbuyk
Director Investor Relations and Corporate Communications
Tel. +31-(0)71-524 8718

For Crucell in the U.S.
Redington, Inc.
Thomas Redington
Tel. +1 212-926-1733

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