Bavarian Nordic A/S – Third Quarterly Report as of 30 September 2003
Increasingly strong financial position. Revenue of DKK 414 million and profit before interest and tax of DKK 193 million. Financial projection for 2003 of approximately DKK 500 million and a result before interest and tax of approximately DKK 250 million maintained.
Continued positive results on clinical development of HIV vaccine.
MVA-BN smallpox vaccine development programme ahead of plans
Financial review For the period 1 January – 30 September 2003, Bavarian Nordic generated a revenue of DKK 414.3 million and a profit before interest and tax (EBIT) of DKK 192.7 million. Operating income in the first nine months of 2003 was earned from ongoing smallpox vaccine contracts with the governments of the UK, Germany and the USA. This trend is expected to continue in the fourth quarter. Third-quarter revenue was DKK 232.8 million and a profit before interest and tax of DKK 133.0 million.
Major Business Developments
HIV In the extended Phase l/ll study to monitor HIV levels in immune-compromised individuals who had previously received three MVA-BN nef vaccinations, five patients with low HIV-levels (out of 14) still remain off anti-retroviral therapy after 14-8 months of treatment interruption.
Enrolment for the Phase l study evaluating safety and immunogenicity of the MVA-BN nef vaccine in 14 healthy volunteers has been completed. To date, eight subjects have received the first two vaccinations, which were well-tolerated. These results continue to support the safety of MVA-BN vaccines. This study is due to be completed during the second quarter of 2004.
The development of MVA-BN HIV nef vaccine will be continued with high priority.
Bavarian Nordic is also part of a consortium of companies (led by Epimmune) that is participating in a National Institute of Allergy and Infectious Diseases (NIAID)-sponsored programme to develop promising vaccine concepts. The consortium was granted a five-year $16.7 million contract from NIAID to test a multi-epitope vaccine. The vaccine will be delivered in three ways; 1) using Bavarian Nordic’s proprietary MVA-BN vector, 2) as DNA formulated in a polymer to enhance potency, and 3) as a combination of the two.
Smallpox Franchise As reported in September, Bavarian Nordic was awarded an additional/extended contract (with a potential value of $23 million) from the U.S. government to develop a safe third-generation MVA smallpox vaccine. This additional award was granted after Bavarian Nordic had met appropriate milestones and because of the potential of MVA-BN in being a successful MVA vaccine candidate.
The scope of the extended contract is to further study MVA-BN as a safe third-generation smallpox vaccine in Phase ll clinical trials in healthy populations and Phase l and ll trials in “at risk” (i.e. immune-compromised) populations. Bavarian Nordic has already successfully completed similar trials with MVA-BN outside the USA, and is in discussions with the NIAID to finalise plans to commence a Phase l trial with MVA-BN in HIV patients.
In the ongoing Phase II study with MVA-BN in healthy volunteers, all 165 persons have received two vaccinations of MVA-BN, which were well-tolerated. The purpose of the study is to find the dosing of MVA-BN, which gives the optimal immune response and vaccine reaction. Results are expected in the first quarter of 2004.
Bavarian Nordic remains ready to respond to the next step of the US government’s safe smallpox vaccine development programme (RFP ll – Request for Proposal - ll) which is likely to be announced before the end of the year. This second phase of the programme is expected to call for the production of 3-5 million doses of MVA smallpox vaccine.
Bavarian Nordic’s newly-purchased facility in Berlin has been upscaling and optimising the MVA-BN production process. This plant along with the long-standing partnership with contract manufacturer IDT, secures production capacity for the mid-term. The company is in advanced discussions with potential partners to expand production capabilities for the USA, Europe and Asia. These discussions are expected to conclude by the end of the year.
Capital Preparedness, Liquidity and Equity Bavarian Nordic’s financial position is strong with a cash position, or liquid reserve, of DKK 184.7 million.
Cash flow from operating activities continues to provide sufficient cash to fund research and development activities as well as investments to expand production capacity.
Bavarian Nordic’s equity has increased to DKK 331.1 million (30 September 2003) from DKK 196.4 million (31 December 2002). The company’s equity ratio of 82% was slightly below the previous quarter’s ratio of 88% due to normal fluctuation in current liabilities during the third quarter.
Outlook for remainder of 2003 Bavarian Nordic maintains its financial projection for 2003 of approximately DKK 500 million and income before interest and tax of approximately DKK 250 million.
Financial results also in Euro As a service to international stakeholders, Bavarian Nordic will begin publishing its financial results in Euro as well as Danish kroner. Euro-based results will be available on the company’s website (www.bavarian-nordic.com) the day after quarterly financial results are announced. This service will start tomorrow and only apply to today’s and future announcements. Previous financial results will not be converted to Euro.
Proposal from the Board of Directors At the next ordinary Annual Shareholder Meeting, the Board will propose Director Ulrik Bülow to be elected to the Board of Directors of Bavarian Nordic A/S. Until then Ulrik Bülow will participate as an observer in the meetings of the Board of Directors of the company. Ulrik Bülow, 49 years-old, is the former CEO of Sonofon A/S, the second-largest telecommunications company in Denmark, and a member of the Board of Directors of Bryggerigruppen A/S (The Danish Brewery Group A/S).
