Austrian biotechnology group Intercell saw its net loss rocket for the second quarter of 2010 as overall sales dropped and research and development expenses swelled during the period.

The company’s aggregate sales fell 35.2% to 9.7 million euros in the quarter, partly because of lower revenues from collaborations, licensing and grants, which were just 4.5 million euros compared to 12.5 million euros in the year ago period.

In addition, collaboration and licensing revenues dropped 62% to 3.7 million euros, mainly because of a 5.0 million-euro milestone payment from Novartis booked in the year-ago period, while the money stream from grants also narrowed, by 70%, to 800,000 euros.

On the plus side, the decline in revenues masked an impressive growth in product sales for the period, which leapt from 2.4 million euros to 5.2 million euros, representing the best quarterly sales revenues since the launch of Ixiaro/Jespect, its Japanese encephalitis vaccine, in 2009, the company said.

And following the recent approval of Ixiaro by Swissmedic and the successful product launch in Switzerland, Intercell said it expects “enhanced vaccination recommendations and increasing global marketing and sales efforts by its partners Novartis and CSL, fostering disease and product awareness,” which should also help expand its market.

The strong rise in product sales was not enough, however, to prevent a surge in loss for the period, which leapt from 3.1 million euros to 8.3 million euros on the fall in aggregate revenues and a 24% jump in R&D expenses to 16.9 million euros.

However, the company closed the period with a hefty wad of cash - 127.8 million euros of liquid funds - in its back pocket, and predicts growing revenues from product sales for the full year. Still, net loss for 2010 is expected to fall between 20.0 million euros and 40.0 million euros.