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Last Updated

11 Mar 2003

Source: Reuters, March 11, 2003

Acambis signs eight more smallpox deals

By Mark Potter

LONDON, March 11 (Reuters) - British vaccines firm Acambis Plc, which is providing smallpox jabs to the United States, said on Tuesday it had signed contracts to supply eight more countries as it posted a maiden annual profit for 2002.

The firm also moved to address fears about the safety of smallpox vaccines by unveiling an agreement with Cangene Corp to sell the Canadian firm's treatment for adverse reactions to smallpox jabs outside North America and Israel.

Governments across the world have been looking at building up stocks of smallpox vaccine since 2001, after the discovery of anthrax spores in the U.S. mail system sparked fears of bioterrorism.

Scientists believe smallpox -- a highly contagious disease that kills around 30 percent of its victims and is characterised by blistering of the skin and a fever -- poses the biggest risk of blowing up into a worldwide plague in a terrorist attack.

The U.S. government took the lead in 2001, commissioning Acambis and its U.S. partner Baxter International to supply it with 209 million doses, or enough to protect the entire U.S. population, with two contracts worth $771 million.

But few other countries have followed suit on such a scale, and fears about the safety of the vaccine has led to a slower-than-expected take-up in the United States.

Acambis Chief Executive John Brown declined to name the eight countries, but said five were in Europe.

He told Reuters the contracts would be big enough to protect key healthcare workers, and was optimistic larger orders would follow once the firm had won full regulatory approval for its smallpox vaccine, expected in 2004.

"If we're successful in getting an approved product we'd expect governments that have not already made a decision to have a dose for every member of the population would move that way," he said in a telephone interview.

Analysts said the new contracts were likely to be small and so would not give a significant boost to profits this year.

But Navid Malik at stockbrokers Williams de Broe said they would raise hopes Acambis might eventually win the lucrative contract to maintain the U.S. smallpox vaccine stockpile.

"They're looking increasingly like a company that's going to have recurring income," he said, maintaining a "buy" investment rating on Acambis shares.

At 1030 GMT the shares, which tripled in value to 382 pence after the September 2001 attacks on the United States but have since slipped back, were 3.3 percent higher at 220-1/2p, valuing the business at around 223 million pounds.


Acambis said it made a profit before tax of 9.6 million pounds ($15.32 million) in 2002, compared with a loss of 12.6 million in 2001. Revenues soared to 79.7 million pounds from 8.9 million as revenues from the main $428 million U.S. contract kicked in.

Brown said the bulk of the revenues from that contract -- around $240-280 million -- would be booked this year and that Acambis was on course to complete delivery of smallpox jabs to the United States during the first half.

The firm was in talks with other governments about supplying smallpox jabs, and its bargaining position would be strengthened by the deal with Cangene, Brown said.

Two weeks ago Acambis won a third U.S. contract to develop a vaccine that can be given to vulnerable people, such as children and pregnant women, giving Acambis the full complement of smallpox vaccine-related products.

"We're the only company that can offer that," Brown said.

But Mike Mitchell, an analyst at Evolution Beeson Gregory, said it was not clear when Cangene's vaccine would be approved by regulators and there were still gaps in Acambis's smallpox franchise.

He said Acambis shares were overvalued and kept his "sell" investment rating, though he thought they were unlikely to fall over the next few weeks.

Brown said Acambis would use the money generated by its smallpox contracts to accelerate the development of its other vaccines, which are focused on inoculations for travellers, as well as to in-license new products and make possible acquisitions.