Vivalis : annual results for 2010 and 2011 objectives
19 April 2011
2010 highlights: asset base reinforced and major milestones achieved
In fiscal 2010, Vivalis significantly strengthened its asset base through the acquisition of the Humalex® technology platform for the discovery of fully human monoclonal antibodies. It now has a comprehensive and integrated offering from the discovery of antibodies to the production of clinical and preclinical materials on the proprietary EB66® or CHO lines.
New commercial successes for the EB66® technology and a major regulatory milestone achieved
Seven new licenses were signed by Vivalis in 2010 including three commercial licenses. These new agreements both for vaccines and therapeutic proteins highlight once again the interest of all major players in the human and veterinary pharmaceutical industries in the EB66® technology.
The EB66® cell line also achieved a major milestone at the end of 2010 after its partner GSK received the green light to initiate human clinical trials with an influenza vaccine produced using the EB66® cell line. Its avian cell line is consequently the first to have received FDA approval as well as one of only five cell lines to have received approval at the worldwide level for all origins combined.
Its portfolio of 17 commercial licenses and the FDA approval provides Vivalis with solid and convincing base to pursue sustained growth.
Integration of the Humalex® platform and first commercial success
In early 2010, Vivalis acquired the Lyon-based company Humalys, specialised in the generation of human monoclonal antibodies based on the Humalex® technology. This acquisition was rapidly followed by the first major commercial agreement in June 2010 granting research, development and commercialisation rights to Sanofi Pasteur for the discovery of monoclonal antibodies against several infectious disease targets. This represents the most important financial agreement signed by Vivalis to date.
Shareholders' equity strengthened
In July 2010, Vivalis successfully completed its first rights issue since its initial public offering in June 2007. This rights issue raised Euro 29 million, considerably strengthening the already solid balance sheet and providing resources to support the company's development for the discovering and development of biologicals.
Infrastructure, teams and intellectual property reinforced
Teams were also reinforced, increasing from 80 employees at 31st December 2009 to 102 at the end of 2010. These included additions to the business development and R&D departments. Pascale Tavera, Chief Financial and Purchasing Officer joined the Executive Committee. Philippe Rousseau resigned from his functions while continuing to serve as a consultant to Vivalis for investor relations.
Protecting its technology remains a key ongoing priority for Vivalis. At the end of 2010, the group had a portfolio covering 23 patent families with more than 250 patents. This intellectual property strategy represents a formidable barrier to entry, especially when added to the
considerable technological know-how of its teams.
2010 annual results: important investments and a stronger financial base
Operating income amounted to Euro 8.4 million in fiscal 2010, up 26% over the same period last year driven largely by the 56% rise in revenue (income from ordinary activities) reflecting the combined growth of:
- revenues from services (+128%) from the EB66® and Humalex® technologies;
- licensing income (+34%) in the form of milestone payments for these two technologies.
At the same time, income from public source financing declined marginally (-4%) following the reduction in public grants partially offset by an increase in Research Tax Credits.
Capitalised research and development expenditure increased 125% between 2009 and 2010 though remained at a low level.
On an IFRS basis, in accordance with IAS 18, income from upfront license fees and milestone payments (recognised under French GAAP at stages defined in the contracts) is instead spread over the entire term of the development period. Under this latter method of recognition, revenue is accordingly smoothed out over time.
2010 annual results
In 2010, the company pursued its development with the integration of Humalys teams and further significant capital investments.
Operating expenses: an increase reflecting sustained R&D
The 30% rise in recurring operating expenses between 2009 and 2010 reflects mainly the 33% rise in R&D expenditures whereas sales and overhead expenses increased 20% and split as follows:
- raw materials purchased increased 19% to Euro 2.1 million reflecting the development of Vivalis programs;
- other purchases and external expenses rose 30% following the end of the characterisation of the EB66® cell line and increased use of services for other research programs;
- personnel expenses rose 24% to Euro 6.9 million on a new increase in the average number of employees by 23 employees to 95 in 2010 (+32%) notably in connection with the Humalys acquisition and reinforced teams. Personnel expenses were the main component of operating expenses in 2010 accounting for 41%;
- amortisation and depreciation expenses were up 54% reflecting mainly the move to the new R&D laboratory and the acquisition of the Humalex® technology and the beginning of the recognition of the corresponding charges.
This increase in operating expenses is consistent with Vivalis ongoing focus on R&D over the period with R&D expenses as a percentage of total recurring operating expenses from 76% to 78%. On this basis the net loss from continuing operations for the year ended 31st December 2010 was Euro 8.4 million compared to Euro 6.3 million in the prior year.
Net financial expense amounted to Euro 0.4 million in 2010 compared with net financial income of Euro 0.2 million in 2009. This change reflects the combined effect of lower rates on interest income from cash investments, an increase in average debt between the two periods and above all the recognition of expense in connection with the Humalys acquisition (difference on present value).
Tax income of Euro 1.5 million was recognized in 2010 following the acquisition of the Humalex® technology. For fiscal 2010, Vivalis had a net loss of Euro 7.9 million compared with Euro 6.1 million in 2009.
A healthy and solid financial structure
Shareholders' equity at the 31st December 2010 amounted to Euro 44.3 million, up from Euro 22.5 million a year earlier. This increase includes new equity capital of Euro 29 million raised by Vivalis' successful rights issue in July 2010.
Long-term borrowings rose 6% in the year to Euro 6.8 million. Vivalis' objective at all times is to optimise its development financing structure, notably through bank borrowings.
Property, plant and equipment at the 31st December 2010 increased 50% to Euro 13.1 million that included notably installations for the new R&D laboratory while intangible fixed assets rose 200% to Euro 15.5 million in connection with the new Humalys acquisition.
At the 31st December 2010, the total balance sheet was Euro 80 million compared with Euro 46 million at the end of 2009. Cash equivalents and current financial assets at the 31st December 2010 amounted to Euro 42.5 million, up from Euro 3.6 million at year-end 2009. Cash burn for operating activities was Euro 3.4 million and Euro 8.6 million for investing activities in 2010 while financing activities generated an inflow of Euro 23.3 million.
Outlook and objectives
On the strength of its solid and complementary base of technological assets and sound financial position, Vivalis has set ambitious targets for 2011:
- execute 6 to 7 new license agreements for the EB66® cell line including 2 commercial licenses;
- one new authorization for human clinical trials for vaccines manufactured with the EB66® cell line;
- the signature of a new commercial agreement for the Humalex® platform;
- a year-end cash position of approximately Euro 30 million, after factoring in capital investments of Euro 8 million;
- launch of the first program to develop proprietary monoclonal antibodies.
Vivalis' strategy is to establish its position as an integrated worldwide provider with a global offering ranging from the discovery of new antibodies to the production of biologicals through its unique proprietary technologies, Humalex®, EB66® and 3D Screen, in addition to its GMP compliant (BPF in French) biomanufacturing facilities. The strategy has contributed to a balanced business model combining:
- short and medium-term revenue streams from the sale of licenses for these technologies and high added value services;
- the creation of significant value by gradually building a portfolio of proprietary products to be licensed for phase I or II trials.
Franck Grimaud, CEO and Majid Mehtali, CSO, co-managers of Vivalis, concluded: "2010 was a year of major transformation for Vivalis. Reaping the benefits of our past investments, our efforts were rewarded by the US FDA authorization for the EB66® cell line. We have also started to build our future by acquiring the Humalex® technology that will enable us to become an integrated provider with a global offering ranging from the discovery of new antibodies to the production of preclinical and clinical materials. In addition to the important commercial agreement concluded with Sanofi Pasteur for this technology, we are also particularly pleased by the successful integration of the Humalys team within our group. While continuing to actively promote the EB66® technology, in the coming months we will also focus on strengthening the leadership of the Humalex® technology and launch our first program for the discovery and development of a proprietary monoclonal antibody. With our strong asset base, teams and financial resources we are particularly well equipped to successfully implement our strategy."
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Vivalis is a biopharmaceutical company that provides innovative cell-based solutions to the pharmaceutical industry for the manufacture of vaccines and proteins, and develops drugs for the prevention and treatment of unmet medical needs.
Vivalis has established more than 30 partnerships and licenses with world leaders in this sector, including Sanofi Pasteur, GlaxoSmithKline, Merck, CSL, Kaketsuken, Merial, Intervet, SAFC Biosciences. Vivalis is a member of the Lyonbiopôle bio-cluster.