CRUCELL 
By
PRESS RELEASE
Crucell Reports Record Revenues in Second Quarter 2010
Total revenues and other operating income of EUR128.6 million, a 63% growth
compared to the same period in 2009 (EUR78.7 million).
Strong sales of Quinvaxem(®) drive record second quarter revenues.
Operating profit of EUR13.1 million compared to EUR3.2 million in Q2 2009.
Net profit of EUR9.2 million compared to net loss of EUR1.8 million in Q2 2009.
Undiluted EPS of EUR0.11 compared to minus EUR0.03 in the same quarter of 2009.
2010 Revenue Guidance Increased
As a result of strong sales in the first half of the year, we expect total
revenues and other operating income[1] for the full year to exceed 2009 levels.
Leiden, the Netherlands (August 17, 2010) - Dutch biopharmaceutical company
Crucell N.V. (NYSE Euronext, NASDAQ: CRXL; Swiss Exchange: CRX) today announced
its financial results for the second quarter of 2010, based on International
Financial Reporting Standards (IFRS). These financial results are unaudited.
Business Highlights:
* Crucell announced the award from UNICEF of an additional $110 million to
supply its paediatric vaccine Quinvaxem(®) to the developing world. This
latest order brings the overall value of tenders awarded to Crucell for the
period of 2010-2012 to $410 million. This is in addition to the $500 million
obtained over the tender period 2007-2009. They bring the total value of
contracts awarded since the launch of Quinvaxem(®) at the end of 2006 to
$910 million.
* Crucell and sanofi pasteur reached an agreement on a series of transactions
to restructure their long standing partnership. Crucell waived its right to
terminate an existing license agreement between Crucell Switzerland and
sanofi pasteur's subsidiary Shantha Biotechnics Limited (Shantha) for the
development of paediatric vaccines, based on Haemophilus influenzae b.
Sanofi pasteur returned the commercial rights to Crucell that sanofi pasteur
held under an exclusive license agreement for the development and
commercialization of a cell-based influenza vaccine (FluCell), based on
Crucell's PER.C6(®) technology.
* Crucell announced its intention to participate in a Phase I clinical trial
in the United States and Africa of a combination of two AdVac(®)-based AIDS
vaccine candidates, Ad26.ENVA.01 and Ad35-ENV, in healthy adults who are not
infected with HIV. The clinical trial, which will be led by the
International AIDS Vaccine Initiative (IAVI), represents a collaboration
between IAVI, Crucell, the Ragon Institute, and Beth Israel Deaconess
Medical Center (BIDMC), a major teaching hospital of Harvard Medical School.
* Crucell announced the start of a new Phase I clinical study in Burkina Faso
of its AdVac(®)-based malaria vaccine vector. This is the first study
evaluating the safety and immunogenicity of this AdVac(®)-based malaria
vaccine vector candidate in a population residing in a malaria endemic area.
* Crucell announced that it has signed a binding letter of agreement with
GlaxoSmithKline Biologicals (GSK) to collaborate on developing a second
generation malaria vaccine candidate.
* Crucell and the Aeras Global TB Vaccine Foundation announced the start of a
Phase II clinical trial of the jointly developed tuberculosis vaccine
candidate AERAS-402/Crucell Ad35 in with HIV infected adults.
* First test runs at the new vaccine manufacturing facility in Incheon, Korea
started in May. The test runs are progressing according to plan. The new
facility will enable the further growth and highly efficient production of
Quinvaxem(®) and Hepavax-Gene(®), with a capacity of over 100 million doses
annually.
* In the second quarter of 2010 Crucell signed four license/vendor agreements,
including agreements with NeoPharm Co. Ltd and Yeda Research and Development
Company Ltd.
* During the Company's AGM held on June 4, 2010 in Leiden, Mr. J.P. Oosterveld
was reappointed as Chairman of the Supervisory Board; Mr. W. Burns, Mr. J.
Shannon and Mr. G. Siber were appointed as new members of the Supervisory
Board.
Financial Highlights:
* The Company announced combined total revenues and other operating income of
EUR128.6 million, compared to EUR78.7 million in the second quarter of 2009, a
63% growth. The increase was driven by a 60% growth in product sales, and
tripling of license revenues.
* Product sales were EUR106.1 million, representing sales of paediatric vaccines
(73%), travel and endemic vaccines (23%), and other products (4%).
* License revenues were EUR10.4 million in the second quarter, compared to EUR3.5
million in the second quarter of 2009.
* Gross margins were 36%, compared to 39% in the second quarter of 2009. Gross
margins were negatively influenced by foreign exchange differences.
* Research and development expenses increased to EUR23.3 million, compared to
EUR15.9 million in the second quarter of 2009.
* More than a threefold increase of operating profit from EUR3.2 million in the
second quarter of 2009 to EUR13.1 million in this quarter.
* Net profit of EUR9.2 million for the second quarter of 2009, compared to a net
loss of EUR1.8 million in the second quarter of 2009. Net profit per share of
EUR0.11, compared to a net loss per share of EUR0.03 in the same period of 2009.
* Cash used in operating activities was largely in line with the same period
of 2009 at EUR6.9 million.
* Cash used in investing activities amounted to EUR14.4 million, which mainly
includes investments in life-cycle management, in property, plant and
equipment, and IT investments.
* To strengthen our balance sheet even further, we repaid financial leases
bringing net cash used in financing activities in the quarter to EUR16.5
million, up from EUR0.3 million in the same period of 2009.
* Cash and cash equivalents decreased by EUR36.6 million during the second
quarter to EUR245.5 million. Short term financial assets include deposits with
maturities over 90 days for an amount of EUR100.0 million, bringing
quarter-end cash and cash equivalents to EUR345.5 million.
* On April 7th, 2010 Crucell filed its 2009 Annual Report and Form 20 F.
Key Figures: (EUR million, except net result per share)
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Second Quarter Half Year
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2010 2009 2010 2009
unaudited unaudited Change unaudited unaudited Change
--------------------------------------------------------------------------
Total revenues and
other operating
128.6 78.7 63% income 194.3 152.4 27%
13.1 3.2 313% Operating profit 8.8 5.6 57%
9.2 (1.8) Net profit/(loss) 6.9 (1.6)
Net result per share
0.11 (0.03) (basic) 0.09 (0.02)
Crucell's Chief Executive Officer Ronald Brus said:
"Our most important paediatric vaccine, Quinvaxem(®), showed stellar growth in
the second quarter. With significant growth in overall product sales and license
revenues we expect total revenues and other operating income[2] for the full
year to exceed 2009 levels.
We continue to build on our strong track record by delivering high-quality and
safe vaccines to protect millions of children and adults around the globe from
life-threatening diseases.
In line with our strategy, we continue to make significant investments in
Research & Development to bring much-needed innovative solutions to global
health, whilst maintaining a healthy profit.
In another important development during the second quarter, we reached an
agreement with sanofi pasteur that returns full control of our cell-based
influenza vaccine program to Crucell. This enables us to move full steam ahead
with development, with the aim of applying for licensure in 2014."
Product Sales Update:
Product sales in the second quarter of 2010 increased 60% over the same quarter
in 2009 to EUR106.1 million and represent sales of paediatric vaccines (73%),
travel and endemic vaccines (23%), and other products (4%). The increase in
product sales was a result of very strong sales of our paediatric and travel
vaccines.
Paediatric vaccines
Due to the phasing of Quinvaxem(® )sales from the first into the second quarter,
as well as additional demand from UNICEF, second quarter product sales reached a
record high. We expect a lasting positive impact on demand for Quinvaxem(®) as
the World Health Organization (WHO) has withdrawn the prequalification of one
competing liquid pentavalent vaccine.
Travel and endemic vaccines
Epaxal(®) sales in the second quarter of 2010 increased significantly compared
to the same quarter of last year. We continue to see progress in upscaling the
production process, required to prepare for introduction of Epaxal(®) in the US.
Respiratory vaccines
In the absence of another pandemic threat, the overall demand for seasonal
respiratory vaccines like Crucell's influenza vaccine Inflexal(®) V will be
below last year's levels.
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(®). 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 -
one of which is RSV (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. The selection of the other
innovation targets is ongoing.
* Universal Respiratory Syncytial Virus (RSV) Vaccine (pre-clinical): In June
Crucell announced the start of a discovery program leading to the
development and commercialization of a universal RSV vaccine. The RSV
vaccine will be designed to prevent severe infections with the most common
RSV strains in infants and the elderly. RSV is the most important cause of
viral lower respiratory illness in infants and children. RSV-induced disease
is the last of the major paediatric diseases for which no preventive vaccine
is available. Current prevention in developed countries is based on the
administration of an RSV-neutralizing antibody, which is given to high-risk
infants, in particular premature newborns. RSV also induces severe disease
in immunocompromized adults and elderly with weak immune systems, for whom
the costly antibody is not available. This discovery program is part of the
strategic collaboration with JNJ (mentioned above).
* Influenza - Seasonal Influenza Vaccine: Crucell and sanofi pasteur reached
an agreement on a series of transactions to restructure their long standing
partnership. As part of the agreement sanofi pasteur returned to Crucell the
commercial rights they held under an exclusive license agreement for the
development and commercialization of a cell-based influenza vaccine
(FluCell). The exclusive license, agreed upon in December 2003, left Crucell
with the marketing rights for FluCell in Japan only. With the return of the
world-wide marketing rights, Crucell has commenced with the development of a
cell-based influenza vaccine. The introduction of cell-based Inflexal(®) V
will be the next important step for Crucell's respiratory franchise.
Combining Crucell's high density PER.C6(®) production system with the
company's proprietary virosomal technology creates a cutting-edge method to
produce Inflexal(®) antigens both at large scale, at very competitive cost
levels and earlier in the season. Crucell expects to apply for licensure in
2014.
* AIDS/HIV Vaccine (Phase I): In April 2008, Crucell announced the start of a
Phase I clinical study of the novel recombinant HIV vaccine. The vaccine is
based on Crucell's AdVac(®) and PER.C6(®) technologies, using adenovirus
serotype 26 (rAd26) as vector, and is jointly developed by Crucell and the
BIDMC, funded by a grant from the US National Institute of Allergy and
Infectious Diseases, part of the National Institutes of Health. The rAd26
vector is designed to avoid pre-existing neutralizing antibodies to the more
commonly used adenovirus serotype 5 (Ad5). Phase I clinical studies are
being conducted at the Brigham and Women's Hospital in Boston, USA and are
focused on assessing the safety and immunogenicity of the vaccine in several
trials including single and multi-dose regimens. In October 2009,
preliminary results of the Phase I study were presented at La Conférence
AIDS Vaccine 2009 in Paris, France. The presentation was given by Dr Dan H.
Barouch, MD, PhD, Associate Professor of Medicine, Division of Vaccine
Research, Department of Medicine, BIDMC, Boston, USA. The preliminary
results of this study show that a 3-dose regimen of this HIV candidate
vaccine is safe and immunogenic.
In August 2010 Crucell announced its intention to participate in an
international Phase I clinical trial in the United States and Africa of a
combination of two AdVac(®)-based AIDS vaccine candidates, Ad26.ENVA.01 and
Ad35-ENV, in healthy adults who are not infected with HIV. The clinical
trial, which will be led by the International AIDS Vaccine Initiative
(IAVI), represents a collaboration between IAVI, Crucell, the Ragon
Institute, and Beth Israel Deaconess Medical Center (BIDMC), a major
teaching hospital of Harvard Medical School.
The Ad26.ENVA.01 vaccine candidate used in this study is manufactured by
Crucell, while the Ad35-ENV vaccine is developed by IAVI. Both vaccines
candidates are based on Crucell's proprietary AdVac(®) technology. The
planned Phase 1 trial of the vaccine combination, which follows a Phase I
trial of the Ad35-ENV vaccine by IAVI and a Phase I trial of Ad26.ENVA.01 by
the Harvard-Crucell consortium, supported by the National Institute of
Allergy and Infectious Diseases (NIAID), represents a key step towards proof
of concept studies to evaluate the efficacy of the vaccine combination in
humans.
* Tuberculosis Vaccine (Phase II): To date, data from all AERAS-402/Crucell
Ad35 trials support the immunogenicity and acceptable safety profile of the
TB candidate vaccine at all dose levels evaluated.
- In April 2010 Crucell and Aeras announced the start of a Phase II clinical
trial of AERAS-402/Crucell Ad35. The Phase II study is designed to test the
safety and efficacy of AERAS-402/Crucell Ad35 in adults infected with HIV
and is being conducted by the Aurum Institute in Klerksdorp, South Africa.
The first group of participants has been enrolled and dosed, and there have
been no serious adverse events reported to date.
* Malaria Vaccine (Phase I): In December 2009 boost vaccinations for the final
group of volunteers of a Phase I trial in the USA have been completed.
Analysis of unblinded safety data revealed a good safety profile. Available
immunogenicity data indicate that the Ad35-CS vector induces humoral and
cellular responses.
A Phase I clinical study is currently ongoing in Burkina Faso. Crucell is
developing its malaria vaccine vector in collaboration with the 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.
In April 2010 Crucell announced that it has signed a binding letter of
agreement with GlaxoSmithKline Biologicals (GSK) to collaborate on
developing a second generation malaria vaccine candidate. Pre-clinical data
from earlier studies indicated significantly enhanced immune responses
against the malaria parasite (circumsporozoite stage of the Plasmodium
falciparum) when Crucell's AdVac(®) technology and GSK's RTS,S/AS technology
are used in combination, versus either component alone.
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. First test runs started in May 2010 and are progressing according to
plan. The test runs with the Hepatitis B production process have shown a good
comparability between the batches produced in Incheon and the product produced
in the past. The results of the comparability study for Quinvaxem(®) are
expected in the third quarter of 2010. The new facility will enable the further
growth and highly efficient production of Quinvaxem(®) and Hepavax-Gene(®), with
a capacity of over 100 million doses annually.
Manufacturing & Licensing Agreements:
* Crucell today announces that South Korean-based NeoPharm Co. Ltd., signed a
PER.C6(® )research license agreement for the development of undisclosed
recombinant proteins and antibodies. Financial details of the agreement were
not disclosed. [April 2010]
* Crucell also signed two additional PER.C6(® )research license agreements
with undisclosed companies for the development of recombinant proteins and
antibodies.
* Crucell today announces that Israel-based Yeda Research and Development
Company Ltd, the Technology Transfer Company of the Weizmann Institute of
Science, signed an exclusive license agreement for the development of
antibodies against Hepatitis B. Under the terms of the agreement Crucell
will further develop the antibodies discovered from a technology invented by
the group headed by Prof. Yair Reisner at the Weizman Institute of Science.
Crucell will have the exclusive rights to evaluate Yeda's panel of
antibodies in-house and has the option to trigger a worldwide commercial
license. Financial details of the agreement were not disclosed. [May 2010]
Patents:
In Q2 2010 Crucell was granted a total of 109 patents, including patents for:
* Aspects of PER.C6(®) recombinant adenovirus technology, in Hong Kong
* Aspects of PER.C6(®) protein expression technology, in Europe and the U.S.
* Different aspects of improved adenoviral AdVac(®) vectors, in Japan, in the
U.S. and in New Zealand
* Antibodies against, and technology relating to, virus that causes SARS, in
Europe, in the U.S. and in New Zealand
* Elements of STARTM technology, in Europe, in Japan and in the U.S.
* Antibodies against rabies, in the Philippines, in Mexico and in the U.S.
* Adenovirus vaccines against tuberculosis, in New Zealand
* Aspects of adenovirus manufacturing technology, in Japan and in the U.S.
Nominations:
During the Company's AGM held on June 4, 2010 in Leiden, shareholders
reappointed Mr. J.P. Oosterveld as Chairman of the Supervisory Board. In
addition, Mr. W. Burns, Mr. J. Shannon and Mr. G. Siber were appointed as new
members of the Supervisory Board.
Financial Review Second Quarter 2010
Total Revenues and Other Operating Income
The Company announced combined total revenues and other operating income of
EUR128.6 million, compared to EUR78.7 million in the second quarter of 2009. The
increase was driven by a 60% growth in product sales, and tripling of license
revenues.
Product sales in the second quarter of 2010 increased to EUR106.1 million and
represent sales of paediatric vaccines (73%), travel and endemic vaccines (23%),
and other products (4%).
License revenues were EUR10.4 million in the second quarter, an increase of EUR6.9
million compared to the second quarter of 2009. The increase is mainly due to
the recognition of revenues from the JNJ collaboration which was signed in
September 2009.
Service fees for the quarter were EUR0.3 million, compared to EUR2.5 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 EUR11.9 million for the quarter, compared to EUR6.3
million in the second quarter of 2009, reflecting a higher level of R&D
reimbursements and one-time transactions.
Cost of Goods Sold
Cost of goods sold for the second quarter of 2010 amounted to EUR74.5 million.
EUR74.2 million represents product costs; and EUR0.3 million the cost of service and
license activities.
Gross margins were 36%, compared to 39% in the second quarter of 2009. Gross
margins were negatively influenced by foreign exchange differences.
Expenses
Total expenses consisted of research and development (R&D) expenses, marketing
and sales (M&S) and general and administrative (G&A) expenses. Total expenses
for the second quarter were EUR41.0 million, representing a EUR10.0 million increase
over the same period in 2009.
R&D expenses for the second quarter amounted to EUR23.3 million, representing an
increase of EUR7.4 million versus the second quarter of 2009.
SG&A expenses for the quarter were EUR17.7 million compared to EUR15.1 million in
the second quarter of 2009. This increase was mainly due to higher direct
marketing and sales expenses, IT project expenses and one-time effects.
Operating profit was EUR13.1 million in the second quarter of 2010 compared to
EUR3.2 million in the same quarter of 2009.
The company recorded a EUR5.5 million income tax charge in the second quarter of
2010. The income tax charge relates mainly to taxable income in Korea,
Switzerland, Sweden and the US.
Net Result
Net result of EUR9.2 million was reported in the second quarter of 2010 versus a
net loss of EUR1.8 million in the same quarter of 2009. Net result per share in
the second quarter of 2010 is EUR0.11, compared to a net loss per share of EUR0.03
in the same period of 2009.
Balance Sheet
Tangible fixed assets amounted to EUR229.1 million on June 30, 2010. Intangible
assets amounted to EUR83.3 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 EUR15.0 million and
mainly represent investments in AdImmune and the PERCIVIA PER.C6(®) Development
Center. Crucell's investment in Galapagos NV is classified under
available-for-sale investments.
Total equity on June 30, 2010 amounted to EUR798.2 million. A total of 81.7
million ordinary shares were issued and outstanding on June 30, 2010.
Cash Flow and Cash Position
Cash and cash equivalents decreased by EUR36.6 million during the second quarter
to EUR245.5 million. Short term financial assets include deposits with maturities
over 90 days for an amount of EUR100.0 million, bringing quarter-end cash and cash
equivalents to EUR345.5 million.
Net cash used in operating activities in the second quarter of EUR6.9 million was
in line with the same quarter of 2009.
Cash used in investing activities amounted to EUR14.4 million, which includes
investments in life-cycle management, in property, plant and equipment, and IT
investments.
To strengthen our balance sheet even further, we repaid financial leases
bringing net cash used in financing activities in the quarter to EUR16.5 million,
up from EUR0.3 million in the same period of 2009.
+------------------------------------------------------------------------------+
|2010 guidance: |
| |
| * As a result of strong sales in the first half of the year, we expect |
| total revenues and other operating income[3] for the full year to exceed |
| 2009 levels |
| * We continue to use our strong operating cash flow to accelerate product |
| development |
| * R&D spending is expected to increase by over one-third |
| * Maintain a healthy operating profit |
| |
| |
+------------------------------------------------------------------------------+
Annual Report
Crucell N.V. has filed our 2009 Annual Report and Form 20-F with the U.S.
Securities and Exchange Commission as well as published our Statutory Annual
Accounts for the year 2009 on April 7, 2010.
+------------------------------------------------------------------------------+
|Conference Call and Webcast |
|August 17, 2010, at 14:00 Central European Time (CET), Crucell's management |
|will conduct a conference call, which will also be webcast. To participate in |
|the conference call, please call one of the following telephone numbers 15 |
|minutes prior to the event: |
| |
| +44 20 7806 1956 for the UK; |
| +1 212 444 0413 for the US; and |
| +3120 707 5511 for the Netherlands |
| |
|Following a presentation of the results, the lines will be opened for a |
|question and answer session. |
|The live audio webcast can be accessed via the homepage of Crucell's website |
|atwww.crucell.com and will be archived and available for replay following the |
|event. |
+------------------------------------------------------------------------------+
About Crucell
Crucell N.V. (NYSE Euronext, NASDAQ: CRXL; Swiss Exchange: 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 2009 alone, Crucell distributed more than 115 million
vaccine doses in more than 100 countries around the world, with the fast
majority of doses (97%) going to developing countries. 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(®), this innovative combination vaccine protects against five
important childhood diseases. Over 130 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. The Company has a broad
development pipeline, with several product candidates based on its unique
PER.C6(®) production technology. The Company licenses its PER.C6(®) technology
and other technologies to the biopharmaceutical industry. Important partners and
licensees include Johnson & Johnson, DSM Biologics, sanofi-aventis, Novartis,
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. The Company employs over 1300
people. For more information, please visit www.crucell.com.
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'. The Company prepares
its financial statements under International Financial Reporting Standards
(IFRS).
Financial Calendar
9 November 2010 Q3 Results 2010
15 February 2011 Q4/FY Results 2010
For further information please contact Crucell:
Oya Yavuz
Vice President Corporate Communications & Investor Relations
Tel. +31 (0)71 519 7064
ir@crucell.com
www.crucell.com
Financial Half Year 2010 Report
This report contains the half year financial report of Crucell N.V. ('Crucell',
or the 'Company'), a company with limited liability, headquartered in Leiden,
the Netherlands. The Company and its subsidiaries together constitute the
Crucell Group or the 'Group'. The principal activities of the Group are
described in note 1.1 of the condensed consolidated interim financial
statements.
The half year financial report for the six months ended June 30, 2010 consists
of the condensed consolidated interim financial statements, the half year
management report and responsibility statement by the Company's Management
board. The information in this half year financial report is unaudited.
The condensed consolidated interim financial statements do not include all the
information and disclosures required in the annual financial statements, and
should be read in conjunction with the Company's consolidated IFRS financial
statements for the year ended December 31, 2009.
Financial Review Half Year 2010
Total Revenues and Other Operating Income
The Company announced combined total revenues and other operating income of
EUR194.3 million, compared to EUR152.4 million in the first half of 2009, a growth
of 27%. The increase was driven by strong growth in product sales and license
revenues.
Product sales in the first half of 2010 increased to EUR155.4 million and
represent sales of paediatric vaccines (67%), travel and endemic vaccines (26%),
and other products (7%).
License revenues were EUR17.9 million in the first half of 2010, an increase of
EUR9.9 million compared to second period of 2009. The increase is mainly due to
the recognition of revenues from the Johnson & Johnson collaboration.
Service fees for the first half of 2010 were EUR1.5 million, compared to EUR5.4
million in the same period of 2009. Service fees represent revenues for product
development activities performed under contracts with partners and licensees.
Other operating income was EUR19.5 million for the first half of 2010, compared to
EUR9.5 million in the first half of 2009, reflecting a higher level of R&D
reimbursements and one-time transactions.
Cost of Goods Sold
Cost of goods sold for the first half of 2010 amounted to EUR109.3 million. EUR108.7
million represents product costs; and EUR0.6 million the cost of service and
license activities.
Gross margins were 37%, compared to 42% in the first half of 2009. Gross margins
were negatively influenced by foreign exchange differences.
Expenses
Total expenses consisted of research and development (R&D) expenses, marketing
and sales (M&S) and general and administrative (G&A) expenses. Total expenses
for the first half of 2010 were EUR76.1 million, representing a EUR12.6 million
increase over the same period in 2009.
R&D expenses for the first half of 2010 amounted to EUR43.3 million, representing
an increase of EUR12.1 million versus the first half of 2009.
SG&A expenses for the first half of 2010 were EUR32.8 million compared to EUR32.3
million in the same period of 2009. This increase was mainly due to higher
direct marketing and sales expenses, IT project expenses and one-time effects.
Operating profit was EUR8.8 million in the first half of 2010 compared to EUR5.6
million in the same period of 2009.
The company recorded a EUR5.4 million income tax charge in the first half of
2010. The income tax charge relates mainly to taxable income in Korea,
Switzerland, Sweden and the US.
Net Result
Net result of EUR6.9 million was reported in the first half of 2010 versus a net
loss of EUR1.6 million in the same period of 2009. Net result per share in the
first half of 2010 is EUR0.09, compared to a net loss per share of EUR0.02 in the
same period of 2009.
Balance Sheet
Tangible fixed assets amounted to EUR229.1 million on June 30, 2010. Intangible
assets amounted to EUR83.3 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 EUR15.0 million and
mainly represent investments in AdImmune and the PERCIVIA PER.C6(®) Development
Center. Crucell's investment in Galapagos NV is classified under
available-for-sale investments.
Total equity on June 30, 2010 amounted to EUR798.2 million. A total of 81.7
million ordinary shares were issued and outstanding on June 30, 2010.
Cash Flow and Cash Position
Cash and cash equivalents decreased by EUR82.3 million during the first half of
2010 to EUR245.5 million. Short term financial assets include deposits with
maturities over 90 days for an amount of EUR100.0 million, bringing half year-end
cash and cash equivalents to EUR345.5 million.
Net cash used in operating activities in the first half of 2010 of EUR22.7
million, compared to EUR27.0 million in the same period of 2009.
Cash used in investing activities amounted to EUR31.0 million, which includes the
investment in life-cycle management, in property, plant and equipment, and IT
investments.
Net cash used in financing activities in the first half of 2010 was EUR35.2
million, compared to EUR4.8 million in the same period of 2009. Given the solid
cash position and current interest yields in the market, the Group repaid
financial leases and loans.
Risk paragraph
A summary of our principal risks is provided below. This information is also
presented under the section 'risk factors' in our Annual Report and Form 20-F
for the financial year 2009 as filed with the US Securities and Exchange
Commission
(SEC) and the Netherlands Authority for Financial Markets (Autoriteit Financiële
Markten or AFM) on April 7, 2010.
We have classified these risk factors in accordance with the categories
identified in the COSO[4] model.
* Strategic risks: Concentration of sales; Use of our technologies by our
partners or licensees; and Competition & pricing pressures
* Operational risks: Product development and clinical trials; Interrupted
product supply; Regulatory approval; Intellectual property; Product
liability exposure; Qualified personnel; Hazardous biological materials; and
Competition laws.
* Financial risks: Substantial use of capital; Weakness in the global economy;
Foreign currency risk; and Taxation.
* Compliance and other risks: Ethical legal and social issues related to the
use of genetic technology; Protective measures included in articles of
association; Not able to exercise pre-emption rights; Difficulties
protecting interests in a Dutch limited liability company; and share price
volatility.
Principal risks and uncertainties for the Group as at Q2 remain unchanged
compared to those applicable as at the end of 2009 except for those updated
below.
Weakness global economy
The weakness in the global economy that started in 2008 remains a challenge for
many companies. The financial crisis continues to adversely affect businesses in
many industries and geographical areas all over the world.
In the first half year of 2010 there has been increased public awareness of
government expenditures. Several countries have had negative public exposure
regarding their government deficits. As we have governmental agencies and
supranational organizations as our customers, we may be affected if these
entities decide to realign priorities and allocate fewer funds to public health
initiatives, which could have a material adverse effect on our revenues.
Foreign currency risk
During the first half of 2010, our margins were negatively affected by currency
fluctuations. The US Dollar experienced significant volatility; our cost of
goods sold were negatively impacted, as inventories sold in the first half year
were purchased at a relatively high price compared to the same period in prior
year.
As in prior year, the Swiss Franc continued to strengthen against the Euro,
which had a negative currency effect on our results as we produce Inflexal(®),
Epaxal(®) and Vivotif(®) at our Swiss facilities. The Korean Won strengthened
against the Euro, which had a negative currency effect on our results as we
produce Quinvaxem(®) and Hepavax-Gene(®) at our Korean facilities. In the
remainder of 2010, our results will continue to be impacted by currency
movements.
Related parties
The Group has related party transactions and balances with joint venture
partners, associates and directors and executive officers. For a detailed
description of these transactions we refer to the notes of the condensed
consolidated interim financial statements.
Director's Statement
Crucell's Management Board confirms that to the best of their knowledge:
* The condensed consolidated interim financial statements for the period ended
June 30, 2010 give a true and review of the assets, liabilities, financial
position and the profit or loss of the Group; and
* The interim Directors' report gives a fair review of the information
required pursuant to section 5:25d, subsection 8 and subsection 9 of the
Dutch Financial Markets Supervision Act (Wet op het Financieel Toezicht).
August 17, 2010
Ronald Brus
Leon Kruimer
Cees de Jong
Jaap Goudsmit
Condensed Consolidated Interim Financial Statements
The following statements are included in the PDF file of this press release:
* Condensed Consolidated Statements of Income
* Condensed Consolidated Statements of Comprehensive Income
* Condensed Consolidated Statements of Financial Position
* Condensed Consolidated Statements of Cash Flows
* Condensed Consolidated Statements of Changes in Equity
* Notes to the Condensed Consolidated Interim Financial Statements
Notes to the condensed consolidated interim financial statements
[All amounts are in thousands of Euro, unless otherwise stated]
1 General
1.1 Corporate information
Crucell N.V. is incorporated and domiciled in Leiden, the Netherlands. Its
shares are publicly traded on NYSE Euronext Amsterdam (CRXL), and SWX Swiss
Exchange Zurich (CRX). Its American Depositary Shares (ADSs) are publicly traded
on NASDAQ New York (CRXL). The Company has subsidiaries in the Netherlands,
Switzerland, Spain, Italy, Sweden, Korea, the UK and the US. The Group employed
1,324 people at June 30, 2010 (June 30, 2009: 1,168).
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, an oral cholera vaccine and the only aluminum-free
hepatitis A vaccine on the market. The Group has a broad development pipeline,
with several product candidates based on its unique PER.C6® production
technology. The Group licenses its PER.C6® technology and other technologies to
the biopharmaceutical industry.
There have been no changes to the organizational structure in the first half of
2010.
1.2 Basis of preparation
This condensed consolidated interim financial statements for the six months
ended June 30, 2010 has been prepared in accordance with IAS 34, 'Interim
financial reporting'. The condensed consolidated interim financial statements
should be read in conjunction with the financial statements for the year ended
December 31, 2009 which have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by the European Union. These
consolidated interim financial statements have not been audited or reviewed.
Accounting policies
Except as described below, the accounting policies applied are consistent with
those applied in the financial statements for the year ended December 31, 2009
as described in those financial statements.
The following revised standard is mandatory for the first time for the financial
year beginning 1 January 2010.
IFRS 3 (Revised), 'Business combinations'. The revised standard continues to
apply the acquisition method to business combinations, with some significant
changes. All payments to purchase a business are to be recorded at fair value at
the acquisition date, with contingent payments classified as debt subsequently
re-measured through the statement of income. There is a choice on an acquisition
by- acquisition basis to measure the non-controlling interest in the acquiree
either at fair value or at the non-controlling interest's proportionate share of
the acquiree's net assets. All acquisition-related costs should be expensed.
The Group applies IFRS 3 (Revised) prospectively to business combinations from
January 1, 2010.
Not all standards, amendments to standards and interpretations, which are
mandatory for the first time for the financial year beginning 1 January 2010
have been listed above as they are not expected to be relevant for the Group or
do not vary from our current accounting policies.
Change in accounting policy as of January 1, 2009
As of January 1, 2009, Crucell changed its accounting policy of recognizing
actuarial gains and losses for its defined benefit pensions plans. The new
policy requires that all actuarial gains and losses are recognized in 'other
comprehensive income' in the period which they occur. Prior to this change all
actuarial gains and losses arising from experience-based adjustments and changes
in actuarial assumptions were accounted for in line with the 'corridor' method,
which allowed deferral of these results. The new policy provides more relevant
and timely information as all transactions and events of a defined benefit
postretirement plan are recognized in the period in which they occur.
Comparative amounts were adjusted as if the new accounting policy had always
been applied. The change in accounting policy had an effect of EUR 1.0 million on
total equity as of January 1, 2009.
1.3 Estimates and judgments
The preparation of the interim financial statements requires Management to make
judgments, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions
to accounting estimates are recognized in the period in which the estimate is
revised and in any future periods affected. In particular, information about
significant areas of estimation uncertainty and use of critical judgments in
applying accounting policies that have the most significant effect on the amount
recognized in the financial statements relates to:
* Revenue recognition;
* Valuation of deferred tax assets and liabilities;
* Impairment reviews of property, plant and equipment, intangible assets and
goodwill;
* Valuation of defined benefit plans and share-based payments; and
* Recognition of provisions for litigations and claims
The above uncertainties are described in detail in the notes to the financial
statements of our Annual Report and Form 20-F for the financial year 2009 as
filed with the Autoriteit Financiële Markten (AFM) on April 7, 2010.
Management is not aware of any changes in the nature of uncertainties, changes
in estimates of amounts reported in prior interim periods or other changes that
should be disclosed in these notes.
2 Seasonality
A part of the sales of the Group's products is exposed to seasonal variations,
and most of these sales are made in the second half of the year. This is
specifically the case for influenza vaccines, as vaccination programs mainly
take place in the second half of the year. Furthermore, the travel vaccine
portfolio sales are subject to seasonal travel patterns.
3 Credit risk
Credit risk represents the risk of financial loss caused by default of the
counterparty. The Group's principal financial assets are cash and cash
equivalents, deposits and trade and other receivables.
Cash and cash equivalents and deposits are placed with numerous financial
institutions that meet our credit-rating requirements. In addition, the
investments have a low-risk profile as the majority of the investments are
short-term deposits with a maturity up to one year. Management does not expect
any counterparty to fail to meet its obligations.
The Group holds the following financial assets with financial institutions.
+---------------------------+-----------+----------+--------------+
| | Duration | June 30, | December 31, |
| | | 2010 | 2009 |
+---------------------------+-----------+----------+--------------+
| Cash and cash equivalents | On demand | 42,201 | 95,297 |
+---------------------------+-----------+----------+--------------+
| Cash and cash equivalents | <3 months | 203,293 | 232,540 |
+---------------------------+-----------+----------+--------------+
| Other current assets | < 1 year | 100,000 | 100,000 |
+---------------------------+-----------+----------+--------------+
| Other financial assets[5] | > 1 year | 13,040 | 13,023 |
+---------------------------+-----------+----------+--------------+
| Total | | 358,534 | 440,860 |
+---------------------------+-----------+----------+--------------+
The Group normally trades only with recognized, credit-worthy third parties. It
is the Group's policy that all customers who wish to trade on credit terms are
subject to credit verification procedures. Allowances are recognized for
receivable balances deemed uncollectible upon identification.
4 Segmentation
The Group identified the Management board as the 'chief operating decision
maker'. The Management board reviews the consolidated operating results
regularly to make decisions about resources and to assess overall performance.
This led to the identification of one reportable segment, which comprises the
development, production and marketing of products that combat infectious
diseases.
4.1 Information about major products
In thousands of Euro
+------------------+------------------+
Year ended December 31, | First half, 2010 | First half, 2009 |
+------------------+------------------+
Paediatric vaccines | 103,914 | 85,253 |
| | |
Travel vaccines | 39,761 | 28,131 |
| | |
Other vaccines | 5,041 | 6,353 |
| | |
Proteins and other business | 6,661 | 9,829 |
+------------------+------------------+
| 155,377 | 129,566 |
5 Income taxes
In the first half of 2010, the tax charge increased by EUR 823 or 18.0% to EUR
5,396 compared to EUR 4,573 in the same period prior year. The increase in tax is
mainly caused by taxable income in Korea, Sweden, Switzerland and the US.
During the first 6 months of 2010 the Group had an effective tax rate of 43.7%.
This relatively high tax rate is due to the particular structure of our
organization. In most of our subsidiaries we realize taxable profits, however,
in the Netherlands; we realized a taxable loss for which no deferred tax asset
has been recognized. As a result, our tax charges are divided by a relatively
low profit base which leads to an effective tax rate of 43.7%.
We expect our effective tax rate to remain high until we benefit from the tax
exemptions in Korea starting in 2011 or until we are able to start generating
profits in the Netherlands.
In Korea we obtained a further improvement on our tax holiday facility, leading
to a one-time non cash tax benefit in the first half year of 2010.
6 Property, plant and equipment
In thousands of Euro
+---------+
Net book value PPE, January 1, 2010 | 192,615 |
| |
Additions | 30,048 |
| |
Disposals | -805 |
| |
Depreciation charge for the period | -9,228 |
| |
Effect of movements in exchange rates | 16,457 |
+---------+
Net book value PPE, June 30, 2010 | 229,087 |
In the first half of 2010 the Group invested a total of EUR 30,048 in property,
plant and equipment. These investments mainly related to our new Korean
production facility; investments in our facilities in Bern (Switzerland), which
will improve current production processes and allow in-house production of
materials currently acquired from third parties; and investments in our new
filling line in Madrid (Spain).
The remaining contractual commitments for property, plant and equipment for the
new Korean production facility in the Incheon, Free Economic Zone, Korea amount
to EUR 6,440 (December 31, 2009: EUR 15,755).
No impairments or reversals of impairments were recognized in the first half of
2010.
7 Intangible assets
In thousands of Euro
+--------+
Net book value, January 1, 2010 | 75.398 |
| |
Additions | 4,078 |
| |
Amortization charge for the period | -5,624 |
| |
Effect of movements in exchange rates | 9,400 |
+--------+
Net book value, June 30, 2010 | 83.252 |
8 Inventories
In thousands of Euro
+----------+--------------+
| June 30, | December 31, |
| 2010 | 2009 |
+----------+--------------+
Raw materials and consumables | 29,747 | 22,560 |
| | |
Work in progress | 81,102 | 85,667 |
| | |
Finished products | 12,301 | 10,193 |
| | |
| 123,150 | 118,420 |
In order to be able to meet the demand from the market (e.g. in case of outbreak
of a disease) the Group stocks some inventories to a level such that they might
not be utilized in one year. Provisions are recognized for obsolete inventory.
9 Issued share capital and reserves
+------+--------------+-------------+
Ordinary shares Issued and fully paid |Shares|Issued capital|Share Premium|
+------+--------------+-------------+
| 000| EUR 000| EUR 000|
| | | |
At January 1, 2009 |65,833| 15,800| 743,746|
| | | |
Issue of shares | 728| 175| 6,304|
| | | |
Costs share based payment transactions| -| -| 4,191|
+------+--------------+-------------+
At June 30, 2009 |66,561| 15,975| 754,241|
+--------+--------+---------+
At January 1, 2010 | 81,446 | 19,547 | 988,996 |
| | | |
Issue of shares | 261 | 63 | 1,866 |
| | | |
Costs share based payment transactions | - | - | 3,628 |
+--------+--------+---------+
At June 30, 2010 | 81,707 | 19,610 | 994,490 |
No dividends were distributed during the first half of 2010.
Total cash proceeds on share issuances amounts to EUR 1,929 (2009: EUR 6,479). The
costs of EUR 3,628 (2009: EUR 4,191) represent the non-cash period costs for the
share-based payment transactions.
10 Share-based payment plans
The Company maintains stock option plans whereby the Remuneration committee of
the Supervisory Board may grant options to employees, directors and members of
the Supervisory Board. The compensation expenses included in operating expenses
for those plans during the first half of 2010 were EUR 3,280 (first half year
2009: EUR 3,886).
In the first half of 2010 a total number of 235,920 options were exercised under
the Company's stock option plans. In the first half of 2010 a total number of
1,247,826 options were granted under the Company's stock option plans.
11 Retirement benefit obligations
Pension cost for an interim period is calculated on a year-to-date basis by
using the actuarially determined pension cost rate at the end of the prior
financial year, adjusted for significant market fluctuations since that time and
for significant curtailments, settlements, or other significant one-time events.
In the first half year of 2010 no actuarial gains or losses were recognized.
12 Short-term and long-term financial liabilities
In thousands of Euro
+--------+------------+
|June 30,|December 31,|
|2010 |2010 |
+--------+------------+
Mortgage loan | 15,905| 16,094|
| | |
Equipment lease | 197| 17,924|
| | |
Comprehensive credit limit Berna Biotech Korea Corp.| -| 14,990|
| | |
Mortgage loan korea | -| 2,998|
| | |
Derivatives | -| 294|
+--------+------------+
Total financial liabilities | 16,102| 52,300|
Following the strategic agreement with affiliates of JNJ in 2009 and positive
earnings the liquidity of the Group improved significantly. Given the solid cash
position and current interest yields in the market, the Group has limited needs
for external debt. Consequently the Group initiated a program to reduce the
level of debt.
Equipment lease
On April 21, 2010 the Group terminated several financial lease contracts by
paying the remaining redemptions including a penalty for early payment. The
leases mainly related to equipment for the facility in the Netherlands.
Comprehensive credit limit Berna Biotech Korea Corp.
During the first quarter in 2010 the Group fully repaid its short-term
comprehensive credit limit transaction agreements that were entered into by our
Korean subsidiary. As at December 31, 2009 an amount of KRW 37 billion
(EUR 20,855) was drawn under these agreements.
Mortgage loan Korea
During the first quarter in 2010 the Group fully repaid its mortgage loan
facility that was entered into by our Korean subsidiary. As at December
31, 2009 an amount of KRW 5 billion (EUR 2,998) was drawn under this agreement.
13 Current and non-current liabilities and deferred income
In thousands of Euro
+------------------------------------------------------+
|June 30, 2010 December 31, 2009 |
+------------------------------------------------------+
|Current Non-current Total Current Non-current Total |
+------------------------------------------------------+
Deferred income | 20,640 47,663 68,303 21,301 54,980 76,281|
+------------------------------------------------------+
Other accruals | |
and liabilities | 28,572 479 29,051 26,211 504 26,715|
+------------------------------------------------------+
| 49,212 48,142 97,354 47,512 55,484 102,996|
Total deferred income decreased by EUR 7,978, mainly due recognition of EUR 10,254
deferred income from the Johnson & Johnson collaboration. The decrease was
partially offset by receipt of a deferred payment of $ 4,000 from the same
collaboration
14 Related parties
14.1 General
The Group has related party transactions and balances with joint venture
partners, associates and directors and executive officers. All transactions with
related parties were carried out under normal market conditions (arm's length
principle). There are no related party transactions outside the normal course of
business. There were no material changes in the nature, scale or scope of
related party transactions in the first half of 2010 compared with those
disclosed in the Financial Statements for the year ended December 31, 2009.
14.2 Remuneration Management Board and Supervisory Board
For detailed descriptions of the remuneration structure for the Members of the
Supervisory and Management Board, reference is made to the 'Remuneration policy
for Management Board and Supervisory Board' as included in the Corporate
Governance section of the 2009 Annual Report and Form 20-F. Any relevant changes
are highlighted below.
Remuneration
In 2010, the base salary levels of the Management Board were increased by 6% to
10%. Each year, the Supervisory Board considers whether base salary levels
should be adjusted according to external and internal business factors.
Long-term incentive plan
On January 1, 2010, as part of the long-term incentive plan, a total number of
80,670 conditional options were granted to members of the Management Board.
At the General Meeting of Shareholders on June 4, 2010, our shareholders
approved to increase long term incentive levels in order to bring the
compensation package for the Management board more in line with competitive
market levels (taking account of AMX-listed companies and direct competitors),
as specified below:
Chief Executive Officer 65%
Other Board functions 50%
Options and shares
On March 18, 2010 a number of 40,000 options with an exercise price of EUR 3.49
were exercised by Ronald Brus, the Company's CEO. On February 9 and March
3, 2010 a total of 50,000 options with an exercise price of EUR 5.49 and 20,000
options with an exercise price of EUR 3.49 were exercised by Leon Kruimer, the
Company's CFO. There were no other exercises of share options held by members of
the Management Board or Supervisory Board during the first half of 2010.
At the General Meeting of Shareholders on June 4, 2010, our shareholders
approved the grant of 150,000 options with an exercise price of EUR14.43 to Mr. de
Jong, the Company's COO. This option grant is governed by the ordinary employee
stock option plan 2008.
Share grants to Supervisory Board
During the first half year of 2010 a total of 25,000 shares were granted to
members of the Supervisory Board, which forms part of their annual remuneration.
15 Litigation
In the first half of 2010, there were no material changes to litigation
affecting the Group from those disclosed in the Financial Statements for the
year ended December 31, 2009.
16 Contingent liabilities or contingent assets
In the first half of 2010, there were no material changes to the Group's
commitments and contingent liabilities from those disclosed in the Financial
Statements for the year ended December 31, 2009.
[1] In guidance currencies = EUR/USD rate of 1.41
[2] In guidance currencies = EUR/USD rate of 1.41
[3] In guidance currencies = EUR/USD rate of 1.41
[4] Committee of Sponsoring Organizations of the Treadway Commission
[5] Other financial assets as at June 30, 2010, exclude EUR2.9 million of
rent-deposits.
[HUG#1438262]
PDF file including financials:
http://hugin.info/132631/R/1438262/382858.pdf
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(i) the releases contained herein are protected by copyright and
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(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
All reproduction for further distribution is prohibited.
Source: Crucell N.V. via Thomson Reuters ONE
CRUCELL : Reports Record Revenues in Second Quarter 2010
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