|
The Board of Directors of Bavarian Nordic A/S have approved the Company’s interim report for the period of 1 January to 30 June, 2006 at an ordinary board meeting held today.
During the first six months of 2006, Bavarian Nordic realised revenues of DKK 111.0 million (as of 31/06/05; DKK 142.3 million) and a loss before interest and tax of DKK 111.6 million (as of 31/06/05; loss of DKK 23.3 million). The timing of the decision of the award of the RFP-III contract for the supply of 20 million doses IMVAMUNE® is not yet known. For that reason it has been decided not to include the expected effect of the award in the company’s revenues and financial result for 2006. Expectation for the full year 2006 result is revised to expected revenues of DKK 220 million and an expected loss before tax of DKK 280-300 million.
KEY HIGHLIGHTS
- Bavarian Nordic established a new company in Washington DC, USA, Bavarian Nordic Inc., in order to strengthen the company’s business activities in the US.
Smallpox
- Clinical trial programme for IMVAMUNE® as a third generation smallpox vaccine has been progressing rapidly.
- Positive results from a clinical Phase II trial of vaccination with IMVAMUNE® followed by Dryvax® were presented at the Ninth Annual Conference on Vaccine Research May (8-10 May, 2006).
- Half a million doses IMVAMUNE® were delivered in accordance with the delivery plan agreed with National Institutes of Health (NIH).
HIV
- Positive data have been generated from a clinical Phase II trial with MVA nef in 77 HIV-infected subjects.
IMVABOOST™
- Preparation for studies exploring the potential of MVA-BN®as an immune-stimulating agent continue.
Commenting on the smallpox vaccine program performance for the quarter, Peter Wulff, President & CEO, Bavarian Nordic, said: “This has been a quarter with significant progress for our IMVAMUNE® clinical development programme. We have initiated three clinical Phase II trials, including a trial in HIV-infected subjects with a more advanced stage of the disease, another trial with healthy subjects, and a third trial in subjects with atopic dermatitis. This complements the already available data in over 190 HIV-infected subjects. Our advanced clinical programme confirms Bavarian Nordic’s leading position in the development of a third generation smallpox vaccine and makes us confident to win an RFP award. However, due to the uncertainty on the exact timing of decision on the award of the RFP-III contract we have decided not to include the effect of the award in our expected financial result for 2006. Bavarian Nordic will initiate a cost savings programme to ensure that the consumption of resources are in line with operating activities and cash flow in the event that the RFP-III order is awarded to Bavarian Nordic at the end of 2006."
Report for the period (1 January – 30 June, 2006, un-audited)
Financial Review
Revenue for the second quarter of 2006 was DKK 111.0 million (as of 31/06/05: DKK 142.3 million). Revenue was derived from the ongoing contracts with the US government health authorities (the RFP-I and RFP-II contracts).
Result before interest and tax was a loss of DKK 111.6 million (31/06/05: loss of DKK 23.3 million).
The increased loss compared to the same period in 2005 is attributed to a decrease in revenues, while production, sales and administration costs increased.
Production costs increased due to increased activity at the production facility in Kvistgaard, while sales and administration costs increased due to the cost for legal fees in connection with ongoing lawsuits and patents, and also due to increased marketing activities.
Cash flow for investments totalled DKK 288.1 million, of which DKK 18.9 million were tangible non-current assets. The remaining funds for investment were net proceeds of DKK 231.2 million generated from the capital increase. These funds have been invested in securities. Expired securities have been converted from securities with a maturity of less than 3 months to securities with a maturity of more than 3 months.
Net cash and securities totalled DKK 432.0 million whish is an increase of DKK 49.5 million since the start of the fiscal year. Of this amount, DKK 115.0 million has been pledged to financial institutions. The increase in liquidity is a result of increase in the company’s share capital.
Since the timing for decision of the award of the RFP-III contract is not yet known, it has been decided not to include the effect of the award in the company’s revenues and financial result for 2006. Expectations for the full year 2006 are revised to revenues of DKK 220 million and a loss before tax DKK 280-300 million. Cash preparedness is expected to amount to DKK 180 million at the end of the year. Bavarian Nordic will initiate a cost savings programme to ensure that the consumption of resources are in line with operating activities and cash flow in the event that the RFP-III order is awarded to Bavarian Nordic at the end of 2006.
Bavarian Nordic is in regular contact with the US authorities, and it is Bavarian Nordic’s assessment that no significant changes have been made to the RFP-III tender.
CLINICAL DEVELOPMENT PROGRAMMES
IMVAMUNE® Smallpox Vaccine Programme
Clinical Development
Bavarian Nordic has made significant progress in the path to register its third generation smallpox vaccine IMVAMUNE®. In two clinical Phase II trials more than 170 HIV-infected subjects have received all vaccinations with IMVAMUNE®, which has proven again to be safe and highly immunogenic. Data from both trials will be reported in the fourth quarter of 2006.
Three additional Phase II trials, which are pivotal not only for an application of Emergency Use Authorization in the US, but also registration of IMVAMUNE® are progressing according to plan.
The programme consists of:
- A double-blinded randomised and placebo-controlled study in 800 healthy subjects in Germany.
- A pivotal study to demonstrate the safety and immunogenicity of IMVAMUNE® in HIV- infected with a more advanced stage of the disease has been started in the US.
- A third study in subjects with atopic dermatitis has been started in multiple sites in Mexico and the US.
To date more than 150 subjects have been vaccinated in these three recently initiated Phase II trials.
Results of an NIH-sponsored trial in 90 subjects were presented by Dr. Sharon Frey, at the Ninth Annual Conference on Vaccine Research in Baltimore (8-10 May, 2006). The results confirmed the immunogenicity and safety profile of IMVAMUNE® when compared to administration of a traditional smallpox vaccine. The trial also demonstrated that vaccination of subjects with IMVAMUNE® prior to DryVax®, as expected, resulted in a weakened DryVax® virus replication at the site of vaccination and a faster time to healing, suggesting that IMVAMUNE® is protective against vaccinia virus infections. Moreover, this trial provides the first results in humans demonstrating immune responses 14 days after IMVAMUNE® are in a similar range as 28 days after Dryvax®. These data confirm our preclinical findings of a more rapid onset of protection with IMVAMUNE® when compared to traditional smallpox vaccines.
HIV Vaccine Programme
MVA nef Vaccine
New data from a clinical Phase II trial with MVA nef in 77 HIV-infected subjects (in highly active antiretroviral therapy (HAART)) has been generated, and will be presented at the AIDS Vaccine 2006 Conference in Amsterdam (29 August - 1 September, 2006). All participants in the ongoing Phase II trial with MVA nef have received three vaccinations. Thirty-seven persons have interrupted their HAART therapy and are being closely monitored on their disease progression, i.e. changes in viral load and T-cell counts.
MVA-BN® polytope Vaccine
Two clinical Phase I trials with MVA-BN®polytope vaccine, one in HIV-infected patients, and one in healthy subjects, are expected to start in autumn 2006 pending approval of the IMPD (Investigational Medicinal Product Dossier) by German regulatory authorities. Results are expected in second half of 2007.
OTHER DEVELOPMENT PROGRAMMES
Breast Cancer Vaccine
BN ImmunoTherapeutics continues preparation for submitting a pre-Investigational New Drug (IND) data package to the FDA. A clinical Phase I study with MVA-BN®/HER-2/Neu is expected to start in the second-half of 2006.
Immunotherapy Programme - IMVABOOST™
Preparations for studies exploring the potential of MVA-BN® as an immune-stimulating agent continue. Two proofs-of-concept trials, one in an HIV-infected persons and another in immune-compromised patients with cancer will be conducted in Denmark. Clinical trial applications are planned to be submitted to the Danish Regulatory Authorities shortly (second half of 2006) and the clinical trials expected to start in the beginning of 2007.
PRODUCTION
- Production permit Kvistgaard
Extensive qualification of the technical production installations facility and the production equipment have essentially been completed. Documentation for the qualification of the installations and production equipment in accordance with European GMP regulations is planned to be forwarded to the Danish Medicines Agency early third quarter, 2006. The Danish Medicines Agency’s authorisation to start sterile production of vaccines at the production facility in Kvistgaard is expected in second half of 2006.
- Delivery of half a million doses IMVAMUNE® under the RFP-II
Half a million doses IMVAMUNE® were delivered in accordance with the delivery plan agreed with National Institutes of Health (NIH).
- Production and release of MVA-BN® recombinant vaccines
The production facility in Berlin has produced and released a number of vaccine batches for use in preclinical studies (animal studies). Furthermore, three batches for use in clinical studies in humans have been produced and are pending release: MVA-BN® polytope vaccine (for use against HIV), MVA-BN® HER-2/Neu (for use against breast cancer) and MVA-BN® Measles vaccine. The first two vaccines are expected to be released in third quarter 2006, and not as previously announced in second quarter, 2006. The change is due to delays in external quality analyses. The measles vaccine is expected to be released at the end of third quarter or beginning of fourth quarter, 2006.
BUSINESS DEVELOPMENT
Bavarian Nordic established a new company in Washington DC, USA, Bavarian Nordic Inc., in order to broaden and strengthen the company’s business activities in the US, with focus particular on providing efficient service to US governmental authorities and to develop the market for Bavarian Nordic’s vaccines in the USA. Bavarian Nordic Inc. will also play an important role in the process of registering of IMVAMUNE® smallpox vaccine with the US Food and Drug Administration (FDA).
Strategic alliance
Bavarian Nordic continues to conduct exploratory dialogue with potential partners and expects that the discussions will continue throughout the remainder of 2006.
LEGAL MATTERS
Extraordinary General Meeting
An extraordinary general meeting was held on 24 May where the Board of Directors’ proposals to amend § 5a of the Articles of Association (authorisation for increase of the company’s share capital) and § 21 (adoption of the IFRS Regulation (EC)) were adopted.
Enforcement of Intellectual Property
To enforce its intellectual property rights, Bavarian Nordic has filed three legal actions against Acambis Inc. and Acambis plc’s MVA-based smallpox vaccine products. Bavarian Nordic filed a patent infringement action against Acambis plc’s MVA-based smallpox vaccine products at the U.S. International Trade Commission (ITC) based in Washington DC, and filed a misappropriation of trade secrets action against Acambis plc and Acambis Inc. in the U.S. Federal District Court based in the state of Delaware. Furthermore, Bavarian Nordic A/S filed a patent infringement action against Acambis plc and Acambis Inc. at the Commercial Court in Austria.
- ITC
A hearing in the patent infringement action against Acambis plc’s MVA3000 product at the ITC was held on May 8 - 15, 2006. An initial determination from the ITC is expected on August 24, 2006.
- Delaware
In the lawsuit against Acambis in the Federal District Court in Delaware claiming misappropriation of trade secrets, it is expected that the discovery phase will be completed at the end of August, 2006.
- Austria
On 16 February 2006 Bavarian Nordic filed a patent infringement action against Acambis plc and Acambis Inc. at the Commercial Court in Austria. The patent infringement awaits an oral hearing on the issue of whether the case should be stayed pending a separate opposition proceeding at the European Patent Office (EPO), or continue in parallel.The legal action was initiated to enforce Bavarian Nordic’s patent granted by the European Patent Office (EPO) which covers the company’s MVA-BN® technology.
Developments After the Close of the Fiscal Period (1 July– 11 August, 2006)
Bavarian Nordic A/S awards warrants to the company’s management and certain employees
The Board of Directors in Bavarian Nordic A/S has decided to award warrants to management, certain employees in the Company and subsidiaries and the Board of Directors. The Board decision is made in accordance with the shareholder authorisation for the Board of Directors adopted as Article 5b of the Articles of Association. The award is made by the Board of Directors and is subject to that the recipient is employed and not under notice for termination at the time of the award.
A total of 175,000 warrants are awarded for subscription of up to 175,000 shares of a nominal value of DKK 10 at a price of DKK 572. The price has been set based on the average price in July 2006 with an addition of 10%. The warrants can be exercised wholly or partly in a period of 14 days commencing from the day of publication of the Company’s Quarterly Report for the third quarter in the year of 2009 and/or in a period of 14 days commencing from the day of publication of the Company’s Annual Results for 2009 (spring 2010).
Under this program the Board of Directors will receive a total of 20,000 warrants, President & CEO 15,000 warrants, Managerial Staff 133,500 warrants and other employees 6,500 warrants.
The value of each warrant equals DKK 49 and is calculated on the Black-Scholes model with a risk-free interest rate of 3% and on the historical volatility of the shares. The calculation is based on a market value of the share of DKK 387 per share (as of 10 August, 2006).
The award of warrants will incur consequential amendments to the Articles of Association.
Referring to the Danish Securities Act, Section 28a it is announced that the following people, obliged to notify the Company of transactions involving Bavarian Nordic securities, are awarded warrants:
Chairman of the Board Asger Aamund (5,000 warrants), other members of the Board of Directors Eigil Bjerl Nielsen (5,000 warrants), Erling Johansen (5,000 warrants) and Flemming Pedersen (5,000 warrants), President and CEO Peter Wulff (15,000 warrants), other members of corporate management Morten Max Rasmussen (15,000 warrants), René Djurup (15,000 warrants) and Hans Christian Teisen (15,000 warrants). Furthermore, Paul Chaplin receives 30,000 warrants.
Bavarian Nordic A/S introduces an incentive program for all employees
The Board of Directors has decided to introduce an incentive program for all employees in Bavarian Nordic A/S and Bavarian Nordic GmbH. The incentive program will be based on the company’s shares/the development in the company’s share price. It is anticipated that the program will be introduced during fall 2006. The conditions will be announced when the programme has been determined.
Key Financial Figures in Euro
As a service to international stakeholders, Bavarian Nordic will publish key financial figures in Euro (Income statements - 1 January to 30 June 2006, Balance Sheets as of 30 June 2006 – Assets/Liabilities, Cash Flow Statements – Consolidated Financial statements, and Equity) after the results are released. The figures can be downloaded at the Bavarian Nordic website, www.bavarian-nordic.com
Statement from the Board of Directors and Corporate Management
The Board of Directors and Corporate Management have, as of today, reviewed and approved Bavarian Nordic A/S’ first quarterly report for the period 1 January – 30 June, 2006.
The interim report, which is un-audited, is prepared in accordance with the provisions on recognition and agreement set aside in the International Finance Reporting Standards (IFRS) as approved by the EU, and the additional Danish requirements for submission of interim reports for companies listed on the Copenhagen Stock Exchange.
We consider that the chosen accounting policies applied are appropriate. It is our opinion, that the first quarterly report gives a true and fair view of the group’s assets, liabilities, financial position, results, and cash flow.
Kvistgaard, 11 August 2006
Corporate Management:
Peter S. Wulff
President and CEO
Board of Directors:
Asger Aamund, Chairman
Eigil Bjerl Nielsen
Erling Johansen
Flemming Pedersen
Bavarian Nordic issues stock exchange announcements in both Danish and English, however in case of doubt the Danish version is the legally-binding document.
Webcast
In connection with the release of the interim report, a taped webcast presentation will be held. President and CEO Peter Wulff and Vice President, Investor Relations & Communications, Rolf Sass Soerensen will present. The webcast will be held in English, and can be viewed here.
|
