Intercell reports significant increase in second quarter revenue

Aug 17 2010

Today, Intercell AG (VSE: ICLL) announced its financial results for Q2 and H1 2010.

IXIARO®/JESPECT® sales increased significantly from EUR 2.4m in Q2 2009 to EUR 5.2m in Q2 2010 – Continued focus on growing marketing and sales of product in traveler and military markets

Revenues from IXIARO/JESPECT product sales in Q2 2010 represent the best quarterly sales since the product launch in Q1 2009. The Company expects continued growth of net product sales during H2 2010. Following the recent approval of IXIARO® by Swissmedic and the successful product launch in Switzerland, Intercell expects enhanced vaccination recommendations and increasing global marketing and sales efforts by its partners Novartis and CSL Ltd., fostering disease and product awareness. Besides the traveler's market the focus remains on the U.S. military. The growth rate of 2010 military sales will depend on the use of the stockpile for JE-Vax® and rapid adaption of the broadened recommendations for deployed military personal. At the end of 2009, Intercell initiated a pediatric Phase III study for IXIARO®/JESPECT® in children above 6 months of age travelling from the U.S., Europe, and Australia to JE-endemic areas. The multinational study, which includes 100 children, will be the first of two Phase III trials in support of the IXIARO®/JESPECT® label extension for pediatric licensure for children above 2 months of age. The study investigates the safety and immunogenicity of the vaccine and is progressing according to plan – final data is expected for 2012. Intercell is also working with its partner Biological E. of Hyderabad, India, for the investigational vaccine to protect children and adults from JE – the project is progressing according to plan and the start of a Phase III trial for the investigational Japanese Encephalitis vaccine produced by Biological E. in India is expected to commence by the end of 2010.

Pandemic Influenza Vaccine Enhancement Patch (VEP) – Next clinical evaluation using GSK's pandemic H5N1 vaccine to test single application protection

At the beginning of July, Intercell reported the results of a Phase II clinical trial of its investigational Vaccine Enhancement Patch (VEP) system for Avian H5N1 Influenza. Following encouraging pre-clinical and clinical Phase I proof-of-concept trials conducted under a Health and Human Services (HHS) contract, the clinical Phase II study was designed to determine the safety and the optimal combination/dose of an injectable H5N1 Influenza vaccine and Intercell's VEP applied at the injection site. The study did not identify the optimal combination of antigen and adjuvant and the results did not show a statistically significant difference in seroprotection rates as measured by Haemagglutinin Inhibition (HI) assay when comparing groups with and without VEP.

However, the VEP does appear to be effective in delivering adjuvants and did demonstrate a good safety profile.

Intercell intends to conduct further clinical evaluation using its VEP in combination with an injectable H5N1 vaccine to be supplied by GlaxoSmithKline (GSK) as part of a collaborative agreement signed in December 2009. Timelines for initiation of the next clinical trial are currently being evaluated between GSK, HHS and Intercell.

All clinical programs progressing well – Key data to be announced later this year

Recruitment for the pivotal Phase III study (approximately 2,000 travelers) for Intercell's investigational Travelers' Diarrhea (TD) Vaccine Patch is completed. The randomized and placebo-controlled study will evaluate the efficacy of the TD Vaccine Patch to actively immunize against moderate to severe enterotoxigenic Escherichia coli (ETEC) disease and Diarrhea in a field setting. First data is expected late 2010 or at the beginning of 2011. The enrollment of a complementary Phase II study in travelers to India (approximately 800 travelers) was also completed and first data is expected by Q4 2010.

Phase II results for the vaccine candidate to prevent Pseudomonas infections in hospitals are expected at the end of Q3 / early Q4 2010, depending on data analysis timelines. Intercell's investigational prophylactic vaccine is a recombinant subunit vaccine consisting of two outer membrane proteins of Pseudomonas aeruginosa. In the initial clinical setting, it aims to evaluate protection of intensive care unit (ICU) patients against Ventilator-Associated Pneumonia (VAP) and Bacteremia. The current Phase II clinical trial includes about 400 patients in more than 50 ICUs in 11 countries in Europe and Latin America.

The recruitment for the Phase II/III clinical study testing the Staphylococcus aureus vaccine candidate (V710) in cardiothoracic surgery patients conducted by Merck & Co., Inc. is progressing well. First critical interim analysis (surpassing futility) is now expected in 2011, as disclosed at Merck's R&D day on May 11, 2010.

Pneumococcus vaccine: based on the satisfactory Phase I safety and immunogenicity data in healthy adults, Intercell and its partner PATH are evaluating the timeline for the start of clinical trials in children.

Tuberculosis vaccine: Phase I clinical programs are proceeding according to plan.

Intercell reports good progress towards a collaboration in 2010 for its therapeutic vaccine candidate against Hepatitis C. The potential collaboration aims at conducting combination studies of the vaccine with a small molecule approach.

Additional transactions securing long-term growth and technology leadership

In June 2010, Intercell announced the closing of the acquisition of Cytos' platform technology for monoclonal antibody discovery to treat infectious diseases. Intercell acquired this technology, which is based on expression cloning of monoclonal antibodies from human B-cells, for EUR 15m to complement its technology platform and to open novel medically and commercially relevant applications for the Company's Antigen Identification Program (AIP®), which has already in the past provided promising targets for antibodies such as the S. aureus antibody.

In May 2010, Intercell entered into a worldwide Option and Exclusive License Agreement under which Boehringer Ingelheim Vetmedica has the right to use certain antigens derived from Intercell's Antigen Identification Program (AIP®) to develop animal vaccines. Under the agreement, Intercell will receive upfront, option and milestone payments as well as royalties on product net sales.

Corporate/Other

In July 2010, Bill Gates, Co-chair of the Bill & Melinda Gates Foundation, visited Intercell's headquarters in Vienna for a close look at the Company's product pipeline and innovative technologies to fight infectious diseases. Bill Gates and Intercell's Management team discussed potential ways of future cooperation to develop novel and innovative vaccines for the developing world.

Financial Highlights

Revenues from product sales increased significantly from EUR 2.4m in Q2 2009 to EUR 5.2m in Q2 2010. Aggregate revenues decreased from EUR 14.9m in Q2 2009 to EUR 9.7m in Q2 2010, or by 35.2%. Research and development (R&D) expenses increased from EUR 13.6m in Q2 2009 to EUR 16.9m in Q2 2010, or by 24.0%. This increase was primarily due to increased expenses for our clinical TD Vaccine patch program in Phase III. Intercell's net loss increased from EUR 3.1m in Q2 2009 to EUR 8.3m in Q2 2010. This increase was primarily due to a decrease in revenues and an increase in research and development expenses. As of June 30, 2010, Intercell had liquid funds of EUR 127.8m, of which EUR 51.3m was cash and short-term deposits and EUR 76.5m were available-for-sale financial assets.