SOURCE: Crucell N.V.

November 14, 2006 02:13 ET

Crucell Announces Third Quarter 2006 Results

LEIDEN, NETHERLANDS -- (MARKET WIRE) -- November 14, 2006 --

Leiden, The Netherlands, November 14, 2006 - Dutch biotechnology company Crucell N.V. (Euronext, NASDAQ: CRXL, SWX: CRX) today announced its financial results for the third quarter of 2006 ended September 30, 2006, based on International Financial Reporting Standards (IFRS).

Combined total revenues and other operating income for the third quarter was EUR 28.4 million. Gross operating margin for the third quarter was EUR 8.3 million. Net loss for the third quarter amounted to EUR 21.7 million. Combined total revenues and other operating income for the nine months ended September 30, 2006 were EUR 64.5 million. Gross operating margin for the nine months ended September 30, 2006 was EUR 16.3 million. Net loss for the first nine months of 2006 amounted to EUR 62.7 million.

Cash and cash equivalents decreased EUR 55.4 million during the third quarter to EUR 122.3 million on September 30, 2006. Net cash used in operations is EUR 26.6 million, which is strongly influenced by the seasonal increase in net working capital for accounts receivable and inventories related to sales and inventory buildup of Inflexal® V influenza vaccines; net cash used in investments was EUR 30.7 million, primarily as a result of cash payments related to the investment in Berna Products Corp, Inc. of EUR 13.1 million that will be effectuated in the fourth quarter and a EUR 12.0 million reclassification of cash to short term financial assets. Total assets on September 30, 2006 were EUR 597.9 million.

Key Figures Third Quarter and 9 Months ended September 30 (YTD) (EUR million, except net loss per share)

|                       |         |         |        |          |   |
|                       | Q3 2006 | Q3 2005 | YTD    | YTD 2005 |   |
|                       |         |         |  2006  |          |   |
|                       |         |         |        |          |   |
| Revenue and other     |    28.4 |     9.5 |   64.5 |     25.5 |   |
| operating income      |         |         |        |          |   |
| Net loss              |  (21.7) |   (3.7) | (62.7) |   (12.7) |   |
| Net loss per share    |  (0.36) |  (0.09) | (1.12) |   (0.32) |   |
| (basic and diluted)   |         |         |        |          |   |
|                       |         |         |        |          |   |
| Cash and cash equivalents at September 30, 2006:   | 122.3    |   |
| Cash and cash equivalents at December 31, 2005:    | 111.7    |   |

Chief Financial Officer Leonard Kruimer said: "Crucell's third quarter revenues increased 37% over the previous quarter, reflecting the strong seasonal pattern. Revenues this year will be even more concentrated in the fourth quarter, due to the late start of the flu season and the market introduction of our new pediatric vaccine, Quinvaxem™, in October. First shipments of our Inflexal® V influenza vaccine started in the third quarter. We have sold out completely for the year and expect to ship all our flu shots before year-end." He added: "The over EUR 55 million decrease in cash last quarter was mainly the result of high seasonal inventory levels and receivables. We also invested in higher yield deposits with a maturity of over 90 days, which required a reclassification from cash to 'short term financial assets'. We feel very comfortable with our guidance for 2006 for combined revenue and other operating income between EUR 130 to EUR 150 million. We reiterate our aim to achieve cash break even in 2007."

Operational Review Third Quarter 2006

  * WHO pre-qualification granted for Quinvaxem™: The World Health
    Organization (WHO) granted pre-qualification for Quinvaxem™, a
    fully liquid pentavalent vaccine, which was ready for delivery to
    supranational purchasing organizations starting the fourth
    quarter of 2006.
  * PER.C6®-based seasonal influenza vaccine clinical trial started:
    Partner sanofi pasteur initiated a phase I clinical study with a
    PER.C6®-based influenza vaccine. The trial conducted in the
    United States is part of a contract awarded by the U.S.
    Department of Health and Human Services (HHS) to accelerate the
    development of a new cell culture-based influenza vaccine. The
    phase I clinical trial involves the vaccination of 100 healthy
    adults, 18-64 years of age.
  * PER.C6®-based pandemic influenza vaccine clinical trial started:
     FLUPAN, a collaborative research project funded by the European
    Commission, started a phase I clinical trial, initiated in
    Norway, with 60 healthy adults.  The trial is the first to assess
    safety and ability to generate an immune response of a split,
    inactivated pandemic H7N1 vaccine produced on PER.C6® cells.
  * Ebola vaccine clinical trial started: Crucell announced that the
    Ebola vaccine it is developing in partnership with the Vaccine
    Research Center (VRC) of the National Institute of Allergy and
    Infectious Diseases (NIAID), part of the U.S. National Institutes
    of Health (NIH), entered a phase I clinical study. The
    randomized, double-blind, placebo-controlled study in 48 healthy
    volunteers will test the single-shot vaccination in a
    dose-escalation trial.
  * New PER.C6® License: Crucell and DSM Biologics signed a second
    PER.C6® licensing agreement with MorphoSys AG.
  * PER.C6® Vendor Network: Crucell and DSM Biologics announced that
    Invitrogen is the first company to enter the partnership's
    PER.C6® licensing business Vendor Network, which was created to
    provide high-quality biotechnology tools and services
    specifically tailored to PER.C6® for monoclonal antibodies and
    recombinant proteins.
  * New STAR® licenses: Crucell signed a non-exclusive STAR™
    research licensing agreement with Brussels-based UCB, and started
    an evaluation program with Novartis AG.
  * Berna Biotech de-listed from SWX: Crucell announced that the
    squeeze-out of Berna Biotech shares has been completed and
    Crucell now holds all outstanding Berna Biotech shares. The
    delisting of Berna Biotech AG (Swiss Exchange: BBIN) was approved
    by the SWX Swiss Exchange and was effected on September 18,
  * Aerugen® clinical development suspended: Crucell announced the
    suspension of the clinical development program for Aerugen®, a
    vaccine for the prevention of Pseudomonas aeruginosa infection.
Details of the Financial Results Third Quarter 2006

Revenues and Other Operating Income

Revenues for the third quarter of 2006 were EUR 25.8 million, compared to EUR 8.2 million in the same period last year. Revenues consisted of product sales, license revenues and service fees. Product revenues amounted to EUR 22.0 million, which are seasonal and have historically been concentrated in the second half of the year. The seasonal sales of influenza vaccine will be concentrated more than usual in the fourth quarter, due to the late start of the flu season this year. The new Quinvaxem™ pediatric vaccine was granted pre-qualification on September 26, 2006 and first shipments commenced in October.

License revenues were EUR 2.0 million in the third quarter, a decrease of EUR 2.3 million compared to the same quarter last year. License revenues consisted of initial payments from new contracts as well as annual and other payments on existing contracts. The decrease in license fees is related to a lower number of new licenses closed, compared to the same period last year. Service fees amounted to EUR 1.8 million, compared to EUR 3.9 million last year, which represents a decrease in chargeable development activities now that the majority of development programs have entered clinical trials. Service fees represent revenues for product development activities performed under contracts with partners and licensees. Other operating income was EUR 2.6 million for the quarter, compared to EUR 1.3 million in the third quarter last year. Other operating income consists of government grants.

Cost of Goods Sold

Cost of goods sold for the third quarter of 2006 amounted to EUR 20.8 million, EUR 19.0 million of which represents product costs and the remainder of EUR 1.8 million represents costs of service activities. Cost of goods sold for the quarter include an accounting charge of EUR 5.9 million for amortization as a result of the purchase price allocation related to the Berna Biotech AG acquisition last February. The remaining step-up in inventory on September 30, 2006 amounts to EUR 9.9 million.


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 29.6 for the third quarter. That represents a EUR 17.3 million increase over the same period last year.

R&D expenses amounted to EUR 18.9 million, which represents a EUR 10.5 million increase over the third quarter of 2005. The addition of Berna clinical programs accounted for a EUR 9.4 million increase in R&D costs in the third quarter of 2006, which includes a EUR 1.8 million charge for amortization as a result of the purchase price allocation.

SG&A expenses for the third quarter of 2006 were EUR 10.7 million and represent an increase of EUR 6.8 million over the same quarter in 2005. Of the increase, EUR 5.4 million represents the addition of the Berna Biotech's SG&A costs to the organization; and EUR 1.4 million represents integration costs, such as Sarbanes-Oxley implementation and other advisory costs.

Crucell announced on October 30th that it will concentrate its R&D activities in Leiden, The Netherlands. The restructuring will result in a reduction of approximately 60 positions. The Company will set up a restructuring reserve in the fourth quarter, which will not affect cash flow for 2006.

Net Loss

The Company reported a net loss for the third quarter of 2006 of EUR 21.7 million, or EUR 0.36 net loss per share. The delisting of Berna Biotech was completed during the quarter. As a result, minority interest now only represent the share in results of minority shareholders in Rhein Biotech NV, which is still partly listed on the Frankfurt Exchange (FWB). The Company intends to de-list the remaining Rhein Biotech shares.

Cash Flow and Cash Position

Cash and cash equivalents decreased by EUR 55.4 million in the third quarter to EUR 122.3 million. Net cash used in operating activities in the third quarter of 2006 was EUR 26.6 million. Increases in accounts receivable of EUR 7.9 million and increases in inventories of EUR 3.0 million are related to sales of Inflexal® V influenza vaccine and the seasonal buildup of influenza vaccine inventory. Quinvaxem™ vaccine inventory is also high, since shipments only started in October. The decrease in accounts payable is related to payments for influenza vaccine ingredients. Cash used in investing activities amounted to EUR 30.7 million. This includes the cash paid related to the fourth quarter acquisition of Berna Products Corp, Inc. in North America from Acambis; capital expenditures of EUR 6.6 million; and a EUR 12.0 reclassification of cash financial assets, as a result of investments in higher yield deposits with a maturity over 3 months, and a EUR 2.6 million increase in restricted cash related to new equipment lease contracts. Net cash from financing activities was EUR 1.9 million, which represents an increase in mortgage loans and leasing liabilities. Crucell 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 442.7 million, of which EUR 6.3 million represents minority interests. A total of 59.4 million ordinary shares were issued and outstanding on September 30, 2006.

Inventories increased to EUR 65.4 million during the third quarter. The increase in inventory is due to buildup of influenza vaccine stocks as a result of the delay in the start of the flu season as well as to buildup of stock of Quinvaxem™ vaccine.

Short-term financial assets increased by EUR 9.5 million during the third quarter due to a reclassification of deposits from cash and cash equivalents. Cash was invested in higher yield maturities of more than 3 months. Other financial assets increased to EUR 39.5 million, mainly related to the acquisition of Berna Products Corp, Inc. on October 2, 2006.

Intangible assets amount to EUR 114.5 million, which represent acquired in-process R&D; developed technology; patents and trademarks; and value of customer and supplier relationships.

Investments in joint ventures represent the investments in Pevion and Kenta. The Company's investment in Galapagos NV is classified under "Other financial assets."


The Company maintains its guidance for combined revenue and other operating income for 2006 in the EUR 130 to EUR 150 million range. The Company expects very strong fourth quarter revenues as a result of sales of its Inflexal® V influenza vaccine, and of its Quinvaxem™ pediatric vaccine, which have started in October 2006.

The total decrease in cash over 2006 (excluding the cash acquired in the Berna Biotech acquisition in February 2006) will exceed the company's prior estimate of EUR 33 million to EUR 38 million by up to EUR 14 million, as a result of the cash acquisition of Berna Products Corp, Inc. and related costs. The Company aims to achieve 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, November 14, 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 numbers within 10 minutes prior to commencement:

        888-408-5406 (toll-free) or 480-293-1748 for the US;
    0800-358-5255 (toll-free) or +44-20-7190-1492 for the UK; and
  0800-265-8531 (toll free) or +31-20-794-8505 for the Netherlands.
The conference call will also be webcast. The live audio webcast can be accessed via the homepage of Crucell's website at, and will be archived and available for replay following the event.

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, a fully-liquid vaccine against five important childhood diseases, 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, with several Crucell products 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, Korea and the US. The Company employs about 900 people. For more information, please visit

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

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