Acambis steps up R&D spending; aborts pursuit of 'major acquisition'
Heavy spending on research and development widened losses at Cambridge biotech Acambis plc (ACM.L) in the first quarter of 2006.
It reported a pre-tax loss of £11.4m, 97% higher than in the first quarter of 2005 as revenue was flat at £6.0m. R&D costs grew to £9.8m from £7.2m and administrative expenses jumped to £3.2m from £1.1m.
The company had £49.7m in cash at end March, compared with £68.0m three months earlier. The main sources of revenue were smallpox vaccine contracts and product sales of typhoid vaccine Vivotif.
The company said the quarter's unusually high cash consumption also included costs from an aborted 'major acquisition' (close to £2m) and litigation expenses relating to Danish vaccine maker Bavarian Nordic's allegation that Acambis's MVA smallpox vaccine infringes one of its patents.
The first hearing in the dispute started yesterday at the International Trade Commission in Washington. Acambis said the judge's initial determination on the case is expected in the third quarter this year, after which his decision will be reviewed by a panel of ITC Commissioners who are required to rule on the decision by the end of November. Some analysts expect an out of court agreement on royalty sharing before then.
But none of this was a surprise to the stock market, suggesting it has been kept in the picture by Acambis. The company's share price was unchanged by midday at 182p - its lowest level in the past year - valuing the company at £192.3m.
Chief Executive Gordon Cameron (pictured) said: "Since the beginning of 2006, we have continued to make good progress in our development programmes, including completing recruitment of subjects into our pivotal Phase 3 ChimeriVax-JE trials and submitting the ACAM2000 product licence application to the US FDA. We are looking forward to further pipeline progress in the coming months and to important decisions on the US Government smallpox vaccine contracts we are pursuing."
Chairman to retire
Chairman Alan Smith said he would be standing down after 10 years on the board in observance of good corporate governance practices
He said the company's "particularly heavy level of investment" in the pipeline ensured its key proprietary programmes continued on track.
"The level of our R&D investment reflects the fact that our pipeline is now becoming increasingly advanced and as we continue to progress our proprietary programmes towards commercialisation we will be evaluating partnering opportunities," he said.
The company said it was making good progress towards agreeing a warm-base manufacturing contract with the US Government for the smallpox franchise and was continuing through the stages of the US Modified Vaccinia Ankara procurement process.
R&D Update
In updating its research and development pipeline, Acambis said:
• It has completed enrolment of subjects into both pivotal Phase 3 trials of its ChimeriVax-JE vaccine against Japanese encephalitis. More than 2,800 subjects have been enrolled into the safety and efficacy trials, being conducted in Australia and the US, ahead of schedule.
• It has received approvals for conducting the first of two paediatric trials in India - its initial target market - of ChimeriVax-JE.
• It has completed the enrolment of subjects for the second Phase I trial of its vaccine candidate against C. difficile, a leading cause of hospital-acquired infections.
• The first component of the Phase 2 trial of ChimeriVax-West Nile, its vaccine candidate against the West Nile virus, a dose-ranging study in healthy young adults, is fully recruited.
• It is on track to start the first clinical trial with its universal pandemic influenza vaccine in 2007.
• Novartis AG has completed its acquisition of Chiron Vaccines, which owns and manufactures Arilvax, the yellow fever vaccine to which Acambis has US sales rights. Talks on resolving outstanding issues on the programme have now transferred to Novartis.
• Sales of Vivotif, the oral typhoid vaccine to which Acambis has North American distribution rights, continue to be strong, in spite of a competitor vaccine being back on the market, suggesting it has retained some of the additional customers gained last year.
9th May 2006
