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euro adhoc: Intercell AG / Quarterly or Semiannual Financial Statements / Intercell Announces Second Quarter 2005 Results (E)

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»EMEA Scientific Advice confirms Intercell’s development strategy for Japanese Encephalitis Vaccine to be suitable for licensure in Europe »Preparation of JEV Phase III clinical material on track. Start of Phase III clinical trials planned for September
»$ 6.6 million R&D grant from US NIH for Intercell to develop biodefense vaccines
»Intercell coordinates the development of a novel vaccine against lyme borreliosis - European Commission provides support of EUR 1.4 million for the next two years
»Revenues of EUR 4.1 million in the first six month 2005. Net loss of EUR 8.1 million in first half of 2005 - up 14.9 % compared to first two quarters of 2004 - driven by advancement of JEV vaccine development

Vienna (Austria), August 12, 2005 - Vaccine company Intercell AG (VSE: ICLL) today announced its financial results for the second quarter of 2005. Intercell's aggregate revenues in the first six months of 2005 were EUR 4.1 million, compared to EUR 4.0 million in the same period in 2004. The revenues from collaborations and licensing were EUR 3.5 million in the first half of 2005 and EUR 3.4 million in the first six months of 2004. Revenues from public subsidiaries were EUR 0.6 million in both the actual and the comparative period. However, revenues have been distributed very unequally over the first two quarters of 2005 and 2004 and we expect to continue to experience fluctuations in our quarterly revenue figures.
The company's net loss in the second quarter of 2005 increased by 29.4 percent to EUR 3.1 million compared to EUR 2.4 million in the second quarter of 2004. The net operating expenses increased from EUR 6 million in the quarter ended June 30, 2004 to EUR 7.1 million in the quarter ended June 30, 2005. The increase in net operating expenses and net loss was primarily due to an increase in research and development costs, which was partly offset by a decrease in sales, general and administration costs and other operating expenses, net. Intercell had EUR 66.0 million in liquid reserves as of June 30th 2005, of which EUR 6.1 million was cash and cash equivalents and EUR 59.9 million was available-for-cash securities. Intercell intends to use its liquid reserves for the further development and commercialization of the product candidates and the further development of technologies.

Latest Achievement
After the US FDA’s agreement on Intercell’s development strategy last fall, the company has now received final guidance for the Phase III development program from the Scientific Advice Group of the European Medicines Agency (EMEA). Based on this advice, Intercell will proceed with the global development program also with a view to submitting a Marketing Authorization Application (MAA) in Europe through the centralized procedure. Furthermore, Intercell has also received approval for design and start of Phase III clinical studies for the Japanese Encephalitis Vaccine (IC51) from major European authorities. The Phase III clinical trial is now approved in Australia, Austria, Bulgaria, Germany, Romania, the UK and the US and is planned to start in September 2005.

Financial Highlights

EUR million First two quarters ended Year ended June 31, 2005 June 31, 2004 Dec. 31, 2004 Revenues 4.1 4.0 4.6 Net loss (5.1) (7.1) (20.3) Net operating cash flow (10.7) (6.6) (11.9) Cash and marketable securities, end of period 66.0 41.8 31.3

Operational and Business Strategy Review Second Quarter 2005

Japanese Encephalitis (JEV)
The highest priority is given to the preparations for the start of Phase III trials in 2005, which include the manufacturing of clinical consistency lots in our facility in Livingston (Scotland). Global, multi-center Phase III trials are planned to start in September involving about 800 individuals to demonstrate immunogenicity of the Intercell vaccine, compared to mouse brain derived JE-VAX®, which is the only Japanese Encephalitis vaccine approved in the US. At the same time, a series of additional Phase III trials will be carried out to gather further immunogenicity and safety data in approximately 4.000 subjects.

Hepatitis C
The development of our therapeutic vaccine against Hepatitis C continues to be fully on track. After completion of our first Phase II clinical study in 2004, the clinical development program has been further extended. A follow-up study has been designed to further increase the T-cell response that is pivotal to fight the infection by optimizing the route and the frequency of vaccinations. The new study, for which recruitment has recently been completed, is being performed at the General Hospital of Vienna, where Intercell´s IC41 Hepatitis C vaccine is applied to more than 50 healthy volunteers by administering up to 16 vaccinations at weekly intervals. Should results warrant it, the study will be extended to chronic HCV patients in 2006. Intercells therapeutic Hepatitis C vaccine is also being tested in combination with the Interferon/Ribavirin standard therapy in another Phase II trial. This trial is expected to be completed in 2006.

Research and Pre-clinical Products
Significant progress has been made in our research and pre-clinical programs:
»Under a European Union Sixth Framework project we have started research activities to develop a novel vaccine against Lyme borreliosis, which is supported by the European Commission with EUR 1.4 million over the next two years. Intercell is the coordinator of this project, which brings together expertise of leading scientists and biotech companies from six institutions in Austria, the Czech Republic, Germany, and Sweden.
»Intercell has received an R&D grant from the National Institute of Health (NIH) of the United States amounting to $ 6.6 million. The grant supports the incorporation of Intercell’s proprietary adjuvant program (IC31TM) into the development of biodefense vaccines.
Within Intercell's preclinical programs, the company primarily focuses on vaccines against Streptococcus Pneumoniae and Group A Streptococcus infections in order to define product candidates for future clinical development. For the development of our novel antibody therapies we intend to partner at least one program in 2005.

Strategic Alliances & Licensing
All existing strategic alliances which have resulted from Intercell's highly successful antigen identification and adjuvant (IC31TM) technologies are moving forward according to the intended timelines:
»sanofi pasteur has exercised its option on exclusive worldwide commercial rights on certain bacterial vaccine antigens identified by Intercell's Antigen Identification Program. Over the entire term of the agreement, Intercell will be entitled to milestone based license payments totaling to about EUR 23 million, as well as royalties on future net sales.
»The joint project with the Statens Serum Institut for the development of a new prophylactic tuberculosis vaccine has gained the support of the Aeras Global TB Vaccine Foundation. Aeras will fund the development of the vaccine and subsequent clinical trials and in return will be given a sublicense for the future TB vaccine for a number of developing countries.
In some of our partnerships, first clinical trials are expected within this year. Intercell's major strategic partners are: Merck&Co., Inc. (US), sanofi pasteur (France), Statens Serum Institut (Denmark) and SciGen Ltd. (Australia/Singapore). We expect further alliances resulting from our technology plattforms within the next months.

The full quarterly report including un-audited financial statements can be downloaded at www.intercell.com

Conference Call regarding the report Q2 2005
Friday, August 12, 2005
14.00 CET
Tel: +43.1.23032
PIN: 618421 (special PIN for analysts on request)

This communication expressly or implicitly contains certain forward-looking statements concerning Intercell AG and its business. Such statements involve certain known and unknown risks, uncertainties and other factors which could cause the actual results, financial condition, performance or achievements of Intercell AG to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Intercell AG is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.

Further inquiry note:
Intercell AG
Mag. Katharina Wieser
Head of Corporate Communications
Tel. +43 1 20620-303

end of announcement euro adhoc

emitter: Intercell AG
Campus Vienna Biocenter 6
A-1030 Wien
phone: +43 1 20620-0
FAX: +43 1 20620-800
mail: investors@intercell.com
WWW: www.intercell.com
ISIN: AT0000612601
sector: Biotechnology
language: English