INTERCELL AG 
By August 16, 2011
Intercell announces Q2 and H1 2011 financial results and provides an update on execution of strategic plan- IXIARO®/JESPECT® sales growth up by 85% in H1 2011
- Net loss reduced by 80% in Q2 and by 44% in H1 2011
- USD 6.0m milestone payment received from Merck & Co., Inc. for S. aureus interim data
Two years after the global launch of Intercell's vaccine against Japanese Encephalitis, the product is showing strong year-on-year revenue growth. In H1 2011, the IXIARO®/JESPECT® sales were up 84.9% compared to H1 2010 resulting in the best quarterly sales since launch of the product. This was made possible through a strong uptake in the military sector and strong growth in key travel markets such as the U.S. and the UK. Hence Intercell is on track to meet its expectation of full-year 2011 growth rate of at least 60-70%.
Together with its distribution partner Novartis, Intercell will continue to focus resources to further increase penetration in the key markets, the military sector, and expand into new territories. As previously announced, the approval for the vaccine against Japanese Encephalitis for Hong Kong was obtained, and product market launch is imminent. The approval for Singapore is expected in the next months, and the first application for approval in South America has also been submitted.
Enrollment for the Phase III clinical study for the IXIARO® pediatric label extension is completed. The pediatric approval is expected by the end of 2012 or beginning of 2013.
Leveraging the product into the Asian endemic markets for IXIARO® will complement the global territory expansion. The pivotal Phase II/III trial in children living in India is the first study for the Intercell vaccine in an endemic region and is designed to lead to Asian licensure of the product. Since the study has been fully enrolled and is progressing according to plan, partner Biological E. Ltd. is moving towards submission for licensure in India, with a planned launch in 2012. The vaccine is manufactured in India by Biological E. Ltd. and is based on Intercell's technology. The WHO recommends that the Japanese Encephalitis vaccination be integrated into national immunization programs in endemic areas.
Following an "Out of Specification" result in a follow-up test for potency of IXIARO® lot JEV09L37 after a period of 11 months, Novartis and Intercell initiated a batch-specific, voluntary recall in Canada (March), Europe (May) and Australia (May), in close coordination with the relevant authorities. Vaccinee safety is of primary importance to Intercell, and re-vaccination was initiated for individuals who had received vaccine from the respective lot.
In addition, Intercell is performing a comprehensive investigation and root cause analysis in order to reduce the risk for further potential recalls, regulatory actions or batch-specific measures in the future. These activities as well as other relevant measures and clinical implications are overseen and governed by the EMA (European Medicines Agency) under a procedure according to Article 20 of the Commission Regulation (EC) 726/2004. Novartis and Intercell are working closely with the authorities to execute against the regulatory requirements.
Following a detailed analysis of the data from the Phase II/III clinical trial evaluating V710, an investigational vaccine for the prevention of Staphylococcus aureus (S. aureus) infections, the external Data Monitoring Committee (DMC) unanimously recommended the termination of the study. On June 8, 2011, Merck & Co., Inc. (Merck) and Intercell announced the termination of the trial.
After a pre-planned meeting in April, the DMC informed Merck that the trial had not met the formal futility criteria. The DMC recommended suspension of enrollment in the Phase II/III clinical trial pending completion of additional analyses by Merck regarding benefits and risks of vaccination. Following further review of the statistical analyses by the DMC – which also considered events that had occurred after the pre-specified data cutoff date utilized for the April meeting –, the recommendation to terminate was made based upon both the observation that V710 was unlikely to demonstrate a statistically significant clinical benefit as well as a safety concern regarding overall mortality and multi-organ dysfunction that occurred with greater frequency in vaccine recipients, compared to placebo recipients. Additional analyses showed that this safety difference was not found to be statistically significant and was also determined not to warrant any action beyond routine safety follow-up.
However, as the trial did meet the pre-specified criteria for non-futility, Intercell received the related USD 6.0m milestone payment from Merck. Furthermore, Intercell and Merck are currently evaluating potential future approaches in the field of S. aureus under the existing licensing agreement.
Focus on core R&D programs
Pseudomonas aeruginosa infections – A high unmet medical needIntercell and its partner Novartis are preparing for a pivotal clinical efficacy trial of the Pseudomonas aeruginosa vaccine candidate in ventilated ICU (Intensive Care Unit) patients. The planned double-blind study is powered to show a clinically meaningful and statistically significant reduction in overall mortality between the vaccine and control group and expects to enroll approximately 800 subjects.
The study is subject to final regulatory concurrence. The trial preparation activities are progressing towards a study start in early 2012, and first interim data is expected in 2013. Intercell's Pseudomonas aeruginosa vaccine program is one of the development programs within the strategic alliance between Intercell and Novartis. The trial costs will be shared with Novartis.
The trial will compare two study groups, both receiving standard of care in addition to the vaccine or placebo. The subjects in the vaccine group, which will comprise about 400 ventilated ICU patients, will be vaccinated twice within a 7-day interval with the non-adjuvanted product formulation that was found to have the highest impact on observed survival. The primary endpoint of the trial will be mortality at day 28 after first vaccination in both study groups. Secondary objectives are to investigate Pseudomonas aeruginosa infections and infection-related mortality as well as immune response to the vaccine candidate and its safety and tolerability. The trial is expected to be conducted in various countries, predominantly within the EU, involving up to 50 study sites.
Clostridium difficile vaccine candidate – Leading cause of nosocomial diarrheaC. difficile is the main cause for nosocomial diarrhea in Europe and the U.S. It is estimated that in the U.S. alone, about 500,000 to three million people become infected every year while receiving hospital treatment. Currently, no vaccine against C. difficile exists and antibiotic treatment of the established disease has significant limitations.
Intercell aims at developing a vaccine for the prevention of recurring C. difficile diarrhea for hospital prophylaxis and eventually a community-wide prophylaxis on an age- and risk-based vaccination strategy. The Phase I clinical study started at the end of 2010 and is progressing according to plan. First study results are expected for 2011.
Pandemic Influenza Vaccine Enhancement Patch (VEP) – Pursuing confirmatory mode of action trial with GSK antigenIntercell started a further trial in the field of Pandemic Influenza, using Intercell's adjuvant patch (Vaccine Enhancement Patch – VEP) containing LT (a heat-labile toxin from E. coli) in combination with GlaxoSmithKline's (GSK) H5N1 pandemic antigen.
The enrollment for the confirmatory Phase I trial is ongoing and a first safety analysis has been completed. The study will involve 300 healthy adults and will investigate various combinations of antigen and patch doses in one and two injection regimes to confirm the mode of action and the value of "external" adjuvantation. GSK's adjuvanted and licensed H5N1 vaccine will be used to provide a positive control for the patch. Final data are expected by mid-2012.
Additional candidate vaccines with high medical need progressing in development
Tuberculosis: The start of a Phase II study is expected in 2011. The Phase I clinical programs are proceeding according to schedule, and promising clinical data have been obtained in multiple other Phase I studies.
IC31® adjuvant: The Phase I clinical trial (undisclosed indication) with Intercell's adjuvant IC31®, initiated by Novartis, is ongoing. In 2007, Novartis acquired a non-exclusive license for the use of IC31® in selected new vaccines.
Pneumococcus vaccine: As part of Intercell's pipeline prioritization, the development of a Pneumococcus vaccine candidate has been put on hold.
Hepatitis C: Intercell and Romark joined forces in combining therapies against Hepatitis C. Romark is still awaiting regulatory clearance for study initiation of a combination Phase II trial which is expected to start in H2 2011. The trial is fully funded by Romark.
Progress on renewal strategy executionIn June 2011, Intercell announced the key elements of the Company's renewal strategy, aiming at creating shareholder value by balancing pipeline investments with financial performance objectives. The renewal strategy is to strive towards financial self-sustainability in the mid-term by pursuing a combination of the following four key pillars:
- Revenue growth
- Pipeline investments
- Operational and financial discipline
- Leveraging partnerships
First strategic initiatives have already been implemented, and due to the best quarterly sales result of IXIARO®/JESPECT® (up 85% in H1 2011 compared to H1 2010), the Company achieved significant revenue growth. Hence, Intercell is on track to meet its expectation of a full-year 2011 growth rate of at least 60-70%.
Continuous focusing of pipeline investments resulted in a reduction of R&D costs by 57.7% in H1 2011 compared to H1 2010 based on a completed pipeline refocusing process. The net loss reduction to EUR 1.6m in Q2 2011 was driven by higher JEV revenues, strong operational and financial discipline achieved through restructuring and the revenue effect of the milestone payment by Merck & Co., Inc.
Intercell is continuously leveraging partnerships as evidenced by the recent milestone payment by Merck & Co., Inc.
Corporate/OtherIn May 2011, IXIARO®, the Company's vaccine against Japanese Encephalitis (JE), was awarded the French Prix Galien 2011 in the category "Medicines available solely in international vaccination centers". This prestigious award aims to promote significant advances in pharmaceutical research. The award is made each year by a committee of independent experts and eminent specialists recognizing important healthcare treatment innovations introduced into the public market.
Key Financial Information
EUR in thousands | 3 months ended June 30, 2011 | 3 months ended June 30, 2010 | 6 months ended, June 30, 201 | 6 months ended, June 30, 2010 | Year eded Dec 31, 2010 |
Revenues | 12,686 | 9,659 | 18,377 | 14,414 | 34,215 |
Nett loss | (1,608) | (8,346) | (12,866) | (23,048) | (255,182) |
Net operationg cash flow | (5,452) | (11,026) | (28,905) | (26,494) | (65,120) |
Cash and marketable securties, end of period | 76,649 | 127,802 | 79,649 | 127,802 | 86,182 |
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