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Progress in all programs; significant reduction in cash burn
Leiden, July 9, 2004 - Dutch biotechnology company Crucell N.V. (Euronext, NASDAQ: CRXL) today announced its financial results for the second quarter of 2004. Crucell's revenues for the quarter increased to 8.0 million (US$ 9.7 million), compared to 1.1 million (US$ 1.3 million) for the same quarter last year. The net loss for the second quarter 2004 reduced to 2.0 million (US$ 2.5 million), compared to 6.2 million (US$ 7.5 million) for the same quarter last year.
The strong revenue growth during the quarter raised total revenues for the first six months of 2004 to 12.0 million (US$ 14.5 million), a 3.6-fold increase over the 3.3 million (US$ 3.9 million) reported in the same period last year. Operating costs for the first half-year of 2004 were 20.1 million (US$ 24.3 million), compared to 12.8 million (US$ 15.5 million) for the first half of 2003. The majority of the increase in operating costs consists of non-cash items. The net loss for the first half-year was 9.1 million (US$ 11.0 million), down from a net loss of 9.9 million (US$ 11.9 million) in the same period last year. Cash burn for the first six months of 2004 decreased substantially to 0.9 million (US$ 1.1 million), which includes the acquisition of ChromaGenics for 4.0 million in cash. Cash and cash equivalents amount to 86.3 million (US$ 104.3 million) at June 30, 2004.
"The increase in revenues and reduction in net loss enabled us to leave our cash reserves virtually untouched, putting Crucell in a very strong position to fund its development programs," said CFO Leonard Kruimer. "Based on these results and our forecast for the rest of the year, we are at this stage revising our guidance for cash burn for the full year 2004 down to 15-20 million, from the original 20-25 million communicated earlier."
"The increased investment in our core development programs was more than covered by the solid increase in revenues," added Crucell CEO Ronald Brus M.D. "This reflects the strength of our business model based on licensing revenue and selective external funding of programs. Our programs with the NIH/USAMRIID and our alliance with DSM are prime examples of how we've been able to make significant progress while at the same time we maintain the Company's solid financial position."
Highlights Second Quarter 2004
Ebola: Experiments performed by the Vaccine Research Center (VRC) of the US National Institutes of Health (NIH) and the US Army Medical Research Institute of Infectious Diseases (USAMRIID) demonstrated that a single dose of Crucell's PER.C6ฎ-based vaccine protects macaque monkeys from Ebola infection;
West Nile: The State of Israel granted market authorization for a West Nile virus veterinary vaccine for geese developed by Crucell together with the Israeli Kimron Veterinary Institute;
SARS: The Lancet medical journal published the results of a study demonstrating that a human monoclonal antibody, discovered with the use of Crucell's MAbstractฎ technology and produced on the PER.C6ฎ cell line, was able to effectively protect ferrets from SARS. These results may pave the way for the development of the antibody for human use;
In the clinic: The first antibody produced on PER.C6ฎ technology entered clinical trials in the US.
Milestone: Crucell and DSM Biologics achieved the first development milestone pertaining to their protein production collaboration, with the joint development program demonstrating industry-high yields;
Licensing: New PER.C6ฎ licensing deals were secured by the Crucell-DSM alliance with PanGenetics, Merus and Chiron during the second quarter;
Supervisory Board: Mr. Jan Pieter Oosterveld of Philips Electronics and Crucell's founder Mr. Dinko Valerio were confirmed to Crucell's supervisory board by shareholders. Mr Oosterveld's appointment is effective immediately while Mr Valerio will begin in January 2005;
Management: Ronald Brus was confirmed as the new President, CEO and Chairman of the Management Board of Crucell at the Annual General Meeting of Shareholders on June 3. Jaap Goudsmit, CSO, and Leonard Kruimer, CFO, were confirmed as members of the Company's Management Board.
Key Figures Second Quarter 2004
( million, except net loss per share)
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Q2 2004
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% change |
Q2 2003 |
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Revenues |
8.0 |
627% |
1.1 |
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Net loss |
(2.0) |
(67%) |
(6.2) |
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Net loss per share (basic and diluted) |
(0.06) |
(67 %) |
(0.17) |
|
|
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|
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Cash and cash equivalents on June 30, 2004 and December 31, 2003 |
86.3 |
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87.2 |
Details of the Financial Results
Revenues
Second Quarter
Crucell revenues for the second quarter of 2004 were 8.0 million (US$ 9.7 million), compared to 1.1 million (US$ 1.3 million) in the same quarter last year. License revenues amounted to 7.2 million (US$ 8.7 million), compared to 0.8 million (US$ 1.0 million) in the second quarter of 2003. Revenues in the second quarter consisted of upfront payments from new contracts as well as annual and milestone payments on existing contracts. Pfizer Animal Health did not exercise the option to enter into a license agreement for the development of a West Nile veterinary vaccine with Crucell production technology.
Government grants and other revenues amounted to 0.8 million (US$ 1.0 million) in the second quarter of 2004, compared to 0.3 million (US$ 0.4 million) in the same quarter in 2003. This reflects an increase in the number of grant applications the Company has made to support its development programs.
Half Year
Crucell revenues for the first half of 2004 were 12.0 million (US$ 14.5 million), a 3.6-fold increase over the 3.3 million (US$ 3.9 million) in the same six months of 2003. License revenues in the first half of 2004 amounted 10.0 million (US$ 12.1 million), compared to 2.6 million (US$ 3.1 million) in the first half-year of 2003. Revenues consisted of upfront payments from new contracts as well as annual and other periodic payments on existing contracts.
Government grants and other revenues amounted to 2.0 million (US$ 2.4 million) in the first half-year 2004, compared to 0.7 million (US$ 1.0 million) in the same period in 2003.
The Company has in the past experienced significant fluctuations in quarterly revenues and expects to continue to experience such fluctuations in the future.
Results
Second Quarter
The net loss for the second quarter of 2004 was 2.0 million (US$ 2.5 million), or 0.06 net loss per share (US$ 0.07), compared to a net loss of 6.2 million (US$ 7.5 million), or 0.17 net loss per share (US$ 0.21) in the second quarter of 2003.
Total research and development expenses in the second quarter of 2004 decreased to 5.9 million (US$ 7.2 million), from 6.1 million (US$ 7.4 million) in the second quarter of 2003. Selling, general and administrative (SG&A) expenses were 3.6 million (US$ 4.3 million), compared to 1.0 million (US$ 1.2 million) during the same quarter last year. Increases in SG&A expenses were mainly due to changes to our compensation plan in 2003 which resulted in a one-time, non-cash reduction of compensation expense in 2003 and to the increase in non-cash expenses of warrants granted to certain external consultants for services.
Half Year
The net loss for the first half of 2004 was 9.1 million (US$ 11.0 million), or 0.25 net loss per share (US$ 0.30), a decrease of 8% compared to the net loss of 9.9 million (US$ 11.9 million), or 0.28 net loss per share (US$ 0.34) for the first six months of 2003.
Total research and development expenses in the first half-year 2004 were 12.4 million (US$ 15.0 million), compared to 10.2 million (US$ 12.3 million) in the first half-year of 2003. Selling, general and administrative expenses for the first half of 2004 were 7.7 million (US$ 9.3 million), compared to 2.6 million (US$ 3.2 million) for the same half-year in 2003. The increase in expenses is due to higher program development costs and changes made to our compensation plans in 2003 which resulted in a one-time, non-cash reduction of compensation expenses. Finally, non-cash costs of warrants granted to external consultants for services account for 1.8 million (US$ 2.2 million) in extra expenses over the first half-year 2004.
Cash Flow and Cash Position
Half Year
In total, cash burn during the first half of 2004 amounted to 0.9 million (US$ 1.1 million). This low level of cash outflow comes despite the investment of 4.0 million (US$ 4.8 million) in the cash acquisition of ChromaGenics. It represents the lowest cash burn figure since Crucell's Initial Public Offering. It compares to a cash burn of 11.4 million (US$ 13.8 million) for the same period last year.
Cash flow from operating activities in the first half of 2004 was positive and amounted to 3.7 million (US$ 4.5 million), compared to a spend of 10.3 million (US$ 12.5 million) in the same period in 2003. This is a result of strong cash inflows from new and existing commercial contracts the Company entered into. Investment in plant and equipment were in line with first half 2003 figures at 1.0 million (US$ 1.2 million). The investment in developed technology represents the acquisition of ChromaGenics.
The company's cash and cash equivalents amount to 86.3 million (US$ 104.3 million) on June 30, 2004.
The company is expected to reach profitability once products based on Crucell's production technology are brought to market.
Note: Euros are converted to US Dollars at June 30, 2004 exchange rate of 1.2085.
About Crucell
Crucell N.V. is a biotechnology company focused on developing vaccines and antibodies that prevent and treat infectious diseases, including Ebola, influenza, malaria and West Nile virus. The company's development programs include collaborations with Aventis Pasteur for influenza vaccines, the U.S. National Institutes of Health for Ebola and malaria vaccines, and GlaxoSmithKline (GSK), Walter Reed Army Institute of Research and New York University for a malaria vaccine. Crucell's products are based on its innovative PER.C6ฎ technology, which offers a safer, more efficient way to produce biopharmaceuticals. The company licenses its PER.C6ฎ technology to the biopharmaceutical industry on a mostly non-exclusive basis. Licensees and CMO partners include DSM Biologics, GSK, Centocor/J&J and Merck & Co., Inc. Crucell is headquartered in Leiden, The Netherlands, and is listed on the Euronext and NASDAQ stock exchanges (ticker symbol CRXL). For more information, please visit www.crucell.com.
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 February 27, 2004, and the section entitled "Risk Factors". The company prepares its financial statements under generally accepted accounting principles in the United States (US GAAP).
For the complete PDF-version of this release, including financial statements, please click on the following link:
Q2 2004 Results Press Release
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