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Acambis wins new $425 smallpox vaccine contract

Written by Lautaro Vargas

Wednesday, 23 April 2008

Acambis has won a $425m (£213m), 10-year contract to provide the US government with a warm-base manufacturing capability for the ACAM2000 smallpox vaccine, which it is currently stockpiling. Awarded through US government agency, the Centers for Disease Control and Prevention (CDC), the deal could eventually rise to a headline value of as much as $660m (£330m) through further vaccine purchases. The Cambridge, UK, headquartered company also announced its full year results and plans to raise approximately £43 million through a fully underwritten placing and open offer. This cash injection should allow it to fulfil the new US contract in the short term as well as advance a number of other pipeline drugs. Acambis says award of the “highly valuable contract” marks the achievement of one of its major corporate goals as it will also generate cash to invest in its R & D pipeline and support its manufacturing infrastructure, which enables it to leverage these valuable assets for manufacturing other vaccines in its pipeline. Warm-base manufacturing entails the maintenance of an ongoing production readiness capability through annual production runs. Acambis CEO, Ian Garland, said: “Today’s announcement of our ten-year smallpox vaccine contract with the US Government, and the associated underwritten placing and open offer, are the next stage in the development of Acambis into a leading vaccine company developing novel vaccines. “The net proceeds will enable us to invest in manufacturing facilities for the US contract, progress our vaccine for hospital-acquired C.difficile infections and further our programme of new vaccines against influenza, genital herpes and other significant unmet medical needs.” The contract provides the US government with an ongoing home-based source of production for a licensed smallpox vaccine. Acambis will incur the cost of qualifying ACAM2000 manufacturing within its two US-based manufacturing facilities and will conduct annual production runs to maintain its manufacturing capability. The CDC will procure at least nine million doses per annum from Acambis in contract years three to 10. The structure of the contract allows the CDC to purchase up to 39 million doses in contract years five to 10, should the need arise, which would increase the headline value of the contract to approximately $660m. Acambis will receive payment on a fixed-price basis for producing doses, with pricing including the recovery of costs that Acambis will incur during the first two years of the contract. Throughout the period of the contract, Acambis will also undertake licence maintenance activities, which are funded on a cost-plus-fixed-fee basis. The contract is expected to generate revenues of £212m. Of this, approximately two-thirds relate to the delivery of doses in contract years three to 10, and one-third to licence maintenance activities. The company expects to raise approximately £40m net through its placing and open offer of over 37.7m shares at a price of 115 pence each, a discount of 5.3 per cent to the middle market price of 121.5 pence at close of business on 22 April 2008. The offer, which is fully underwritten by JPMorgan Cazenove and Piper Jaffray, will provide qualifying shareholders with seven new ordinary shares for every 20 existing ordinary shares. The company now has sufficient capital to not only meet the long-term manufacturing costs associated with ACAM2000, but to deliver proof-of-concept data on its C. difficile vaccine, ACAM-CDIFF, and potentially invest in a commercial-scale manufacturing capability. Acambis will also be able to further its work towards submission of Investigational New Drug applications for new vaccines, including its herpes vaccine, and for further working capital. In the firm’s full year results for 2007, Acambis reported a 225 per cent drop in revenues and pre-tax losses, almost double the previous year’s figures. “Acambis has undergone a very significant transition during the past year and our new management team has already delivered a range of important advances,” said chairman, Peter Fellner. “With the ACAM2000 warm-base manufacturing contract in place and today’s announcement of a placing and open offer, we believe Acambis has the innovative products, the pipeline and the funding to create significant value for shareholders in the coming years.” Set as favorite Bookmark Email This Hits: 302 Trackback(0) TrackBack URI for this entry Comments (0) Subscribe to this comment's feed Write comment This content has been locked. You can no longer post any comment.

 

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