Last Updated

20 Feb 2003

Source: Reuters, March 12, 2002.

Acambis says US smallpox vaccine on track

By Mark Potter

LONDON, March 12 (Reuters) - British vaccines firm Acambis Plc said on Tuesday it was on track to supply the U.S. government with smallpox vaccines for every U.S. citizen this year, a contract set to propel it into profitability. "We're on track to fulfill our obligations,'' Chief Executive John Brown told Reuters.

Acambis, whose shares have tripled in value since last year's anthrax attacks on the United States spread fears of bio-terrorism, said it expected to receive 75-80 percent of the revenues from its main $428 million contract this year.

"It is anticipated that the impact of these smallpox contracts will result in profitability for the group in 2002,'' the firm said, while posting a net loss of 12.4 million pounds ($17.6 million) for 2001, in line with expectations.

The contract, won in November against competition from GlaxoSmithKline and Merck & Co, has transformed Acambis, putting it in the rare position of a European biotech firm on the brink of profitability and catapulting it into the FTSE-250 index of mid-cap UK shares as of next Monday.

Acambis's trump card was that it had already won a $343 million contract in September 2000 to supply smallpox vaccines to the U.S. Center for Disease Control and Prevention.

In total, it will supply the United States with 209 million doses of smallpox vaccine this year.

Acambis said it had started Phase I clinical trials for its the smallpox vaccine, though it is expected to deliver the doses well before regulatory approval is granted next year.

Sam Fazeli, analyst at Altium Capital, forecast Acambis earnings per share would surge to 68 pence as a result of the smallpox contracts in 2002, from a loss of 13.7p in 2001.

At 1100 GMT, the firm's shares were 1-1/2p higher at 371p, valuing the business around 344 million pounds.

WORLDWIDE PLAGUE

While bio-terrorist attacks on the U.S. last year focused on anthrax, scientists believe only smallpox -- a high contagious disease characterized by blistering of the skin and a fever which kills around 30 percent of its victims -- has the potential to blow up into a worldwide plague.

Declared eradicated in 1980, the United States and Russia keep the only official supplies of the smallpox virus, but experts fear other countries or groups may have access to the agent and could unleash it as a weapon.

Acambis said revenues from the first U.S. smallpox contract boosted turnover to 8.9 million pounds in 2001 from 6.3 million in 2000, and swelled its cash reserves to 22.2 million pounds on December 31 from 21.2 million the year before.

But higher research and development spending on the smallpox vaccine, along with the cost of revamping its U.S. manufacturing plant, prevented this from reaching its bottom line.

Acambis, formerly called Peptide Therapeutics and founded in 1992 by scientists from Birmingham University, intends to use the windfall from the U.S. smallpox contracts to finance its research into pipeline of anti-viral and anti-bacterial vaccines, which are mostly for tropical diseases and aimed at tourists, the military and local populations.

The company has eight vaccines in clinical trials and expects another two to join them this year.

It expects to submit its most advanced product Arilvax, a vaccine for yellow fever, for final approval by the U.S. Food and Drug Administration in the second half of this year.

Chief Executive Brown countered speculation the firm might slip back into a loss as the smallpox revenues dwindled. "Our ambition is to remain sustainably profitable,'' he said.

He declined to say whether Acambis might be taken over by major shareholder Baxter International Inc, whose 13 percent stake is due to rise to 20 percent by June 2003.

But Altium Capital's Fazeli said such a deal looked increasingly likely, particularly after Baxter said on Monday it was expanding its vaccine operations by building new manufacturing plants in Austria and the Czech Republic.