Acambis swings into loss; reports 'good' progress on vaccines in the pipeline
Halved revenues, higher R&D costs and tighter margins pushed vaccine developer Acambis into a pre-tax loss of £27.7m in 2005 compared with a profit of £27.0m in the previous year.
The large turnaround was in line with management's expectations and guidance. Chairman Alan Smith said that at the beginning of last year, "we positioned 2005 as a year of investment aimed at building both our product portfolio and the infrastructure or capabilities that we consider to be key to the effective management of our business".
The stock market was mildly disappointed, selling the share price down 5% or 12p to 200.75 which is towards the lower end of its range over the past year. Broker Merrill Lynch reiterated its 'neutral' recommendation.
Vaccines back on the agenda
The company remains optimistic. CEO Gordon Cameron (pictured) said "Vaccines are once again back on the top of the political and healthcare agenda through emerging threats such as Clostridium difficile and pandemic influenza.
"Increased government and industry investment, combined with improved pricing, are making vaccines increasingly attractive to both new and incumbent participants. With this favourable environment, and our strong pipeline and manufacturing capabilities, Acambis is well placed to be a key player in our industry's growth."
Revenue for the year was sharply lower at £40.9m as against £85.5m in 2005, which, Mr Smith stressed, was in line with the predictable revenue guidance given throughout 2005. The main sources of revenue during 2005 were two contracts with the US Government for smallpox vaccine MVA3000, a fixed-price 155 million-dose the ACAM2000 vaccine contract and product sales of oral typhoid vaccine Vivotif. The higher 2004 revenues also included sales of 27.5 million doses of ACAM2000 and £10.2m of exceptional operating income relating to the termination of a manufacturing contract.
R&D spending increased in the year to £34.1m from £29.3m as a result of the successful progression of projects into later stages of development.
The statement of results released to the stock exchange contained a rebuttal of claims and legal actions filed by Bavarian Nordic (BN) with regard to MVA. BN alleges Acambis has used its trade secrets in its development and that it is infringing BN's patents. "We strongly believe these allegations are without foundation and we are vigorously defending our position," Mr Smith said, before outlining details of its strategy "to provide an insight into our view of the litigation" (see the full extract) and concluding that "we are, and always have been, very confident of our ability to counter BN's allegations."
Further progress on pipeline
Mr Smith said Acambis' most notable achievement during 2005 was the progression of each of its proprietary programmes into the next stage of development, including the ChimeriVax-JE vaccine against the mosquito-borne Japanese encephalitis, now undergoing pivotal Phase 3 trials in Australia and the US.
It also expanded the pipeline with the addition of an influenza vaccine programme by acquiring an ongoing project and starting a research collaboration. Its capabilities were increased through the acquisition of a fill/finish facility in the US, which has given it the opportunity not only to bring in-house an increasingly scarce resource but also to complete its manufacturing supply chain.
Mr Smith said Acambis also aims to exploit its competitive strengths in the smallpox arena to gain as much value as possible from its franchise of products. It made progress with its existing MVA3000 contract, including delivering 500,000 doses to the US Government, and, in January 2006, started submission of a US licence application for ACAM2000.
During 2006, based on indications from the Centers for Disease Control and Prevention (CDC), Acambis expects to sign and initiate a US Government warm-base manufacturing contract for ACAM2000. It also expects a decision on the US Modified Vaccinia Ankara (MVA) stockpiling tender, for which it submitted a proposal in October 2005.
Mr Smith said the group expected further "good progress" from its pipeline this year and that it was "confident that during 2006 we will also achieve greater clarity around our smallpox franchise.
"Based on indications from the CDC, we continue to expect to sign and initiate a US Government warm-base manufacturing contract for ACAM2000 and we also expect to receive a decision on the US MVA stockpiling tender process in the second quarter".
He said that as in previous years, some revenues in 2006 will be more predictable than others, namely those from sales of Vivotif and existing ACAM2000 and MVA3000 contracts. "We estimate that, depending upon the timing of activities for the existing smallpox contracts, our predictable revenues in 2006 will be £20-25m," he said.
There is significant potential for additional revenues from contracts currently being pursued, particularly further ACAM2000 and MVA3000 US Government contracts.
9th March 2006
