BioWorld International Correspondent

LONDON - Flush with revenue from its U.S. government smallpox vaccine contracts, Acambis plc joined the exclusive ranks of profitable UK biotechnology companies, announcing a maiden profit of £9.6 million for 2002. The Cambridge-based company also said that by December 2003 it would have a cash mountain of £100 million, all generated from operations.

Reporting on what he said was "a great set of figures," CEO John Brown said in a teleconference, "First profit from a biotech company is the thing, I think, we are all striving for."

Acambis shot to profitability in the past year on the back of two large contracts from the U.S. government to develop and supply a second-generation smallpox vaccine. Revenue in 2002 was up more than 800 percent to £79.7 million.

The company is on course to complete delivery of one contract of 155 million doses of ACAM2000 vaccine, worth $428 million, in the first half of 2003. As a result, the cash balance will rise to more than £100 million at the end of December 2003. Gordon Cameron, chief financial officer, commented, "This is a formidable amount of cash to have, given it is coming from operations and not from fundraising."

Brown laid out the strategy of investing the money to ensure Acambis remains profitable once the spike in revenues from the U.S. contracts fades and said, "Having got the taste for being profitable, I don't intend to go back."

There will be continuing revenues from maintaining the U.S. stockpile, and eight more governments, including five in Europe, have signed smallpox vaccine contracts.

"Other governments have not taken the same view [as the U.S.] of having a dose for all the population, but they want emergency stocks," Brown said.

Acambis intends to build a broader smallpox franchise. At the end of February the company was awarded a $9.2 million contract by the National Institute of Allergy and Infectious Diseases, a division of the National Institutes of Health in Bethesda, Md., to develop a modified vaccinia ankara (MVA) vaccine. It is expected that MVA, modified to remove around 33 percent of the genome and thus prevent replication in human cells, would allow safe inoculation of people with weakened immune systems who could not otherwise be vaccinated against smallpox.

The U.S. government has said it would request bids to stockpile 30 million doses of MVA later this year.

Acambis also announced an exclusive deal with Cangene Corp., of Toronto, to market its vaccinia immune globulin product, used for treating adverse reactions to smallpox vaccination, outside North America.

"We will be the only company going to see governments with all three pieces [of a smallpox vaccination program] in place," Brown said. He also expects to see private sales of the vaccine develop, once it receives regulatory approval.

"This is something that is not going to go away - the smallpox vaccine franchise is sustainable," he said.

Acambis intends to use some of its cash to hasten development of its West Nile virus vaccine. Brown said reacting to the U.S. government smallpox vaccine contracts created an ethos in Acambis of getting things done quickly.

"We will apply that to the West Nile vaccine because there is a real need to do it," he said. The virus has spread since it was first reported in the U.S. in 1999, reaching 41 states with 3,873 cases and 246 deaths in 2002. Acambis has been working on its vaccine for three years and is planning the first human trials this year.

Resources also will be devoted to building up a travel vaccines business in the U.S., which Brown noted is expected to be one of the fastest-growing segments of the vaccines market in the next 10 years. The company has U.S. rights to Arilvax, a yellow fever vaccine that already is registered in the UK, and has vaccines against Japanese encephalitis, typhoid fever and traveler's diarrhea in development.