Intercell reports EUR 255.2m net loss for full year 2010

Mar 1 2011

Today Intercell AG (VSE: ICLL) announced its financial results for Q4 and the preliminary results for the full financial year 2010 and presented an update on the Company's development programs.

• Increase in IXIARO®/JESPECT® sales by approximately 66% to EUR 12.8m for the full year 2010, due to increased sales in key travel markets and to U.S. military.
• EUR 255.2m net loss for the full year 2010 resulting mainly from one-time, non-cash impairment cost due to the discontinuation of the Travelers' Diarrhea vaccine program.
• Restructuring charges fully reflected in 2010 result – reorganization and reduction of headcount by approximately 100 employees largely completed.
• R&D expenses for the full year 2010 of EUR 74.7m driven by Phase III studies for Travelers' Diarrhea vaccine program and progression of other clinical stage product candidates and technologies – 40% R&D cost reduction expected for 2011 with increased focus on hospital-acquired infections.
• Cash position of EUR 86.2m at year-end 2010 – recently further strengthened through placement of EUR 33.0m senior unsecured convertible notes.
• Outlook 2011: Growing revenues from product sales and significantly lower expected net loss of EUR 30-40m.

IXIARO®/JESPECT® – Significant year-on-year growth achieved

In 2010, Intercell achieved a strong increase of IXIARO®/JESPECT® sales with a growth of approximately 66% as compared to 2009. Following a very good year-on-year performance in Q4 2010, Intercell also expects strong sales results in Q1 2011 and a continuous, significant increase in sales, with a planned full-year 2011 growth rate of at least 60-70%. Intercell's vaccine is currently marketed to travelers in the U.S., EU, Australia, Canada and Switzerland and it is supplied to the U.S. military under an exclusive five-year contract. Remaining military stock of mouse brain-derived JE-Vax®, which is no longer produced, are expected to be depleted soon, allowing the full transition to the IXIARO®.

Phase III clinical trials for IXIARO® as JE vaccine candidate for children traveling to endemic areas is currently ongoing and the pediatric vaccine launch is expected for end 2012 / beginning of 2013.

Furthermore, the WHO recommends that Japanese Encephalitis vaccination be integrated into national immunization programs in endemic areas. Towards this end, a pivotal Phase II/III trial in children started in February 2011. This randomized and controlled study will be the first pivotal Phase II/III study for the Intercell vaccine in an endemic region and is designed to lead to Asian licensure of the product. The first product launch for the new vaccine in Asia is expected in H1 2012.

Focus on leading position in vaccines against nosocomial infections

Vaccine candidate to prevent infections with Pseudomonas aeruginosa (Phase II)

Intercell previously announced results from a Phase II clinical trial involving the Company's investigational nosocomial vaccine candidate against infections with the bacterium Pseudomonas aeruginosa, one of the leading causes of nosocomial infections. The primary endpoints of the study were met in that all vaccine groups showed good seroconversion rates and a favorable safety profile. Secondary immunogenicity endpoints were also met in this study. Although this trial was not powered for efficacy, the Clinical Endpoint Committee (CEC) confirmed infection rates and mortality were recorded within the secondary endpoints analysis. A lower mortality rate was observed in all vaccine groups as compared to the control group. Novartis and Intercell are currently analyzing all data obtained so far for the vaccine candidate in detail and plan to decide on next development steps, taking into consideration the Novartis opt-in rights, by the end of Q1, 2011.

Staphylococcus aureus vaccine candidate (Phase II/III, Phase II)

In November 2010, Intercell announced top-line results from the Phase II clinical trial of the investigational vaccine for the prevention of S. aureus infections. The study, conducted by Intercell's collaborator, Merck & Co., Inc., was designed to evaluate the safety and immunogenicity of the vaccine in patients with end-stage renal disease (ESRD) undergoing hemodialysis treatment.

The study met primary immunogenicity and safety objectives. Study results show that all formulations of the vaccine were immunogenic following a one- or two-dose application.

The Phase II/III study also conducted and funded by Merck & Co., Inc. in cardiothoracic surgery patients is progressing according to plan. An interim analysis is still expected in 2011.

Clostridium difficile vaccine candidate (Phase I) main cause of nosocomial diarrhea:

In December 2010, Intercell announced the start of a Phase I clinical trial with the Company's vaccine candidate to prevent disease caused by C. difficile. This Phase I trial is a first-in-man study to obtain safety and immunogenicity data in healthy adults aged 18-65 years in the first part of the study as well as from healthy elderly subjects above 65 years of age in a second part of the study, the latter age group representing the main target population for a C. difficile vaccine. The pathogen is one of the main causes of nosocomial diarrhea. First study results are expected for 2011.

Intercell remains committed to the development of patch technology as potential innovation for existing or novel vaccines

In December 2010, Intercell announced clinical results on its investigational Travelers' Diarrhea (TD) Vaccine Patch program and the decision not to pursue further the development of this vaccine candidate. The decision was made following the top-line analysis of results of a randomized and placebo-controlled Phase III study with travelers from Europe to Mexico and Guatemala as well as the pilot efficacy Phase II trial with travelers from Europe to India.

However, the studies clearly support the continued investigation of the patch technology as a suitable route of immunization for future potential vaccine candidates in other diseases. The patch is an innovative and needle-free delivery technology, which can be used to develop new vaccines that are appropriate for transcutaneous administration without a needle (Vaccine Patch) and to enhance the effect of injected vaccines: Vaccine Enhancement Patch (VE Patch).

Activities to adapt the strategic collaboration on patches with GSK based on the findings from the TD studies have been initiated.

Additional candidate vaccines with high medical need progressing in development

Hepatitis C vaccine: Intercell and Romark joined forces in combining therapies against Hepatitis C. The companies are designing a treatment that combines Intercell's investigational Hepatitis C vaccine, IC41, with Romark's antiviral drug, nitazoxanide – a combination Phase II trial is expected to start in H1 2011.

Pneumococcus vaccine: Following the successfully completed Phase I study in healthy adults. Intercell and its partner PATH are currently evaluating the next development steps.

Tuberculosis vaccine: Phase I clinical programs are proceeding according to schedule and promising clinical data have been obtained in multiple Phase I studies. The start of a Phase II study is expected in 2011.

Corporate/Other

Implementation steps for headcount reduction of approximately 20% (corresponding to about 100 people) have been largely completed and the reduction of R&D costs by approximately 40% for full year 2011 as announced in December 2010 is on track.

Last week Intercell announced the successful placement of EUR 33.0m of Senior Unsecured Convertible Notes in a private placement transaction to international institutional investors. The Notes have a conversion price of EUR 11.43 and a fixed rate coupon of 6% per annum.