Investor

Bavarian Nordic Announces 2010 Full Year Results and Provides Update on Development Strategy for PROSTVAC®

10 March 2011

Kvistgård, Denmark, March 10, 2011 - Bavarian Nordic A/S (OMX: BAVA) today published its Annual Report 2010, which is available on the Company's website. Below is an extract of the most significant matters in the report as well as important events after the balance sheet date.

In 2010, Bavarian Nordic generated revenues of DKK 314 million and recorded a loss before tax of DKK 484 million. The financial result for the year 2010 was roughly in line with the Company's expectations and latest guidance. At year-end 2010, the cash preparedness was DKK 460 million.

Anders Hedegaard, President & CEO of Bavarian Nordic said: "With the initiation of IMVAMUNE® deliveries to the U.S. and the regulatory progress of PROSTVAC®, 2010 was a great year in Bavarian Nordic. We overcame the challenges in the scale up of our production, and are now geared for production and delivery of the remaining 18 million doses of IMVAMUNE® under the base contract with the U.S. Government. Already by the end of 2011, the deliveries will generate a positive cash flow in our Infectious Disease division. Our Cancer Vaccine division has been working diligently to finalize the preparations for the first programme in Bavarian Nordic to enter pivotal Phase 3 studies; PROSTVAC®."

Updated development strategy for PROSTVAC®

Following recent agreement with the FDA on the Special Protocol Assessment (SPA) received in December 2010 for the pivotal Phase 3 trial of PROSTVAC®, it is the Company's belief that the development of PROSTVAC® carries a more favourable regulatory approval threshold than previously anticipated.

PROSTVAC® represents a significant product opportunity for Bavarian Nordic. PROSTVAC® is an "off-the-shelf" therapeutic vaccine moving into late stage clinical development that in a fully controlled Phase 2 study has demonstrated the potential to extend the lives of people with advanced prostate cancer by 8.5 months (approx. 50% increase) compared to placebo. PROSTVAC® has created enthusiasm in the medical community and has received positive feedback as a potential new and efficient vaccine for prostate cancer.

It is the Company's opinion, that this potential is not fully recognised in the current proposed deal terms, and that there could be more benefits in terms of shareholder value from retaining control in a full in house development program.

The Company believes that the overall development plan and the timing of the PROSTVAC® Phase 3 trial shall be maintained in order to secure speed to market.

Bavarian Nordic has ongoing partnership discussions for the development and commercialization of PROSTVAC®. While securing a partner for PROSTVAC® continues to be a key strategic goal for Bavarian Nordic, the Company believes that maintaining the momentum in the development of PROSTVAC® is critical for maximizing value for shareholders.

Therefore, the Company is currently reviewing alternate options to fund the continued development of PROSTVAC®, in particular opportunities to pursue an independent development in parallel with continuing the partnership discussions. As part of this review the Company is considering a rights issue to generate sufficient funds that in combination with positive cash flow from existing operations in coming years can fund the pivotal PROSTVAC® Phase 3 trial. The Company intends to finalize its considerations and present the conclusions at the Annual General Meeting on 26 April 2011.

Outlook for 2011

Bavarian Nordic's guidance for revenues and pre-tax results include the financial effects of initiating the PROSTVAC® Phase 3 trial in 2011.

In 2011, Bavarian Nordic expects to deliver 4 million doses of IMVAMUNE® to the U.S. Strategic National Stockpile, of which approximately 3 million will be revenue recognized but only around 2 million contribute to the 2011 cash flow due to anticipated late delivery and acceptance from BARDA in the fourth quarter of 2011.

In 2011, the Company expects revenue at the level of DKK 500 million and a pre-tax loss at the level of DKK 350 million.

Prospects for IMVAMUNE® 2012-13

The delivery of the expected remaining 14 million doses after 2011 under the RFP-3 contract is anticipated to be approximately evenly split between 2012 and 2013. In summary, the projected delivery schedule of IMVAMUNE® is expected to enable the Bavarian Nordic Infectious Disease Division to be cash flow positive as of fourth quarter of 2011 and onwards.

In 2012-2013, the accumulated free cash flow for the Infectious Disease Division is expected to be positive by approximately DKK 350 million including costs for the Phase 3 trial for IMVAMUNE®, but excluding the cash from the hold back of USD 50 million.

2010 highlights

Regulatory progress for PROSTVAC® with the US health authorities (FDA), including the successful completion of an end of Phase 2 meeting, Fast Track status, and Special Protocol Assessment agreement for the Phase 3 programme
Fulfilment of FDA requirements to potentially support the use of IMVAMUNE® in HIV infected subjects following a declared emergency and subsequent initiation of deliveries to the U.S. Strategic National Stockpile. 2 million doses were delivered in 2010
Performance-based milestone payment of USD 25 million received under the RFP-3 contract
Phase 2 data from study in atopic dermatitis patients submitted to the FDA, potentially able to expand current planned use of IMVAMUNE® in the US
Phase 3 protocols submitted to the FDA to support the licensure of IMVAMUNE® under the animal rule
Milestones in development of freeze-dried IMVAMUNE® completed, triggering the continued funding from the U.S. Government (BARDA)
Funding received from the U.S. National Institutes of Health (NIH) to advance Bavarian Nordic's early research in the prevention of filoviruses (Ebola and Marburg virus), using the MVA-BN® platform

Important events after the balance sheet date

New Phase 2 study comparing PROSTVAC® and chemotherapy versus chemotherapy

A new multicenter, randomized Phase 2 study of 144 patients with metastatic castration-resistant prostate cancer (mCRPC) treated with PROSTVAC®. The study will compare PROSTVAC® followed by docetaxel (chemotherapy) versus docetaxel alone.

Patients in the PROSTVAC® arm will receive an accelerated treatment with PROSTVAC® (5 immunizations over 2 months) followed by docetaxel and prednisone. The control arm will receive upfront docetaxel and prednisone. After completion of study therapy, patients are followed up every 3-6 months for 5 years.

The primary endpoint of the study is to evaluate the overall survival. Secondary endpoints include the evaluation of prostate-specific antigen (PSA) response rates and evaluation of the association between development of PSA-specific immune responses, time to progression, and overall survival in patients treated with these regimens.

The study is being conducted by The Eastern Cooperative Oncology Group (ECOG) - one of the largest clinical cancer research organizations in the United States. Dr. Doug McNeel (University of Wisconsin) is the Principle Investigator of the study. The DCTD/NCI-sponsored1) study is being conducted under the cooperative research and development agreement (CRADA) that Bavarian Nordic has with the NCI for further development of PROSTVAC®.

Bavarian Nordic in new research project aimed at developing new cancer vaccines

In March 2011, Bavarian Nordic entered into a new Danish research project, established with the purpose of identifying pathogens (viruses and bacteria) that may cause cancer. The identification of such viruses is an important step towards the development of cancer vaccines. Bavarian Nordic has been elected as partner in this project and will obtain the exclusive rights to commercialize any cancer vaccines that may emerge from the project. Until any viruses, leading to the development of new vaccines is identified; the project carries minimal costs for Bavarian Nordic.

The research project is part of a larger project, which today received a large grant of almost DKK 90 million from the Danish National Advanced Technology Foundation.

First quarterly results release date changed

The company has moved its reporting date for the first quarterly results 2011 from 18 May 2011 to 31 May 2011.

Annual General Meeting

The 2011 Annual General Meeting will be held at 4 p.m. on Tuesday, 26 April 2011, at Comwell Borupgaard, Nørrevej 80, DK-3070 Snekkersten, Denmark. In accordance with Article 12 in the Company's Articles of Association, any shareholders who wish to have specific issues on the agenda must submit a written request to the Board of Directors no later than Monday 14 March 2011. Requests must be sent by e-mail to investor@bavarian-nordic.com or by ordinary post to the Company's headquarters.

Asger Aamund

Chairman of the Board

Webcast and conference call

The Company will host two conference calls today; one at 9 am CET (3 am EST) and again at 4 pm CET (10 am EST). President and CEO, Anders Hedegaard will present the annual results. The accompanying presentation is available on the company's website: www.bavarian-nordic.com/ar2010. Additional participants from Bavarian Nordic are Reiner Laus, Executive Vice President and Division President Cancer Vaccines, Ole Larsen, CFO and Rolf Sass Sørensen, Vice President Investor Relations.

Dial-in numbers for the conference calls are: UK: +44 (0)20 7162 0077. USA: +1 334 323 6201

For additional countries and further details please visit www.bavarian-nordic.com/ar2010.

Financial Review 2010

A pre-tax loss of DKK 484 million (2009: loss of DKK 331 million) was recorded for the year. The Company's latest guidance was an expected loss for 2010 of DKK 450 million. The negative deviation is mainly because the Company had slightly lower revenue than expected and has progressed further than expected with preparations for PROSTVAC® Phase 3 studies, leading to increased costs.

Bavarian Nordic generated revenue of DKK 314 million in 2010 (2009: DKK 75 million). The revenue is primarily composed of revenue from deliveries of 2 million doses of IMVAMUNE® to the US health authorities. The remaining revenue mainly comes from ongoing contracts with the US health authorities (development contracts RFP-2 and freeze-dried IMVAMUNE®).

The Group's cash preparedness was DKK 460 million at the end of the year (2009: DKK 205 million).

Equity stood at DKK 810 million at 31 December 2010 (2009: DKK 704 million).

Outlook for 2011

Bavarian Nordic's guidance for revenues and pre-tax results include the financial effects of initiating the PROSTVAC® Phase 3 trial in 2011.

The Company is currently reviewing alternate options to fund the continued development of PROSTVAC®, in particular opportunities to pursue an independent development in parallel with continuing the partnership discussions. As part of this review of options the Company is considering a rights issue to generate sufficient funds that in combination with positive cash flow from existing operations in coming years can fund the pivotal PROSTVAC® Phase 3 trial. The Company intends to finalize its considerations and present the conclusions at the Annual General Meeting on 26 April 2011, where the Company expects to provide guidance for its 2011 year-end cash preparedness as well.

In 2011, the Company expects revenue at the level of DKK 500 million and a pre-tax loss at the level of DKK 350 million. The revenue of DKK 500 million is expected to be generated from deliveries of IMVAMUNE® under the RFP-3 contract and revenue from ongoing research contracts, including the contract for freeze-dried IMVAMUNE® and the RFP-2 IMVAMUNE® contract.

The free cash flow from operations and investments for 2011 are projected to be negative by approximately DKK 600 million and are expected to be almost equally split between the two divisions. In the Infectious Disease Division, these financial effects are primarily due to the scale up in production from two to four batches per week, as well as the time gap between deliveries in late 2011 and payment. In January, the Company successfully scaled up production from two to three batches per week and a scale-up to four batches per week is projected for the third quarter of 2011. In the Cancer Vaccines Division, the negative cash flow is mostly related to the initiation of the Phase 3 trial for PROSTVAC®. The trial cost is estimated to be USD 150m over the period 2011 to 2015.

In case no alternate options to fund the continued development of PROSTVAC® in 2011 materialises, Bavarian Nordic will be in a situation where the Group would have to postpone the initiation of the pivotal Phase 3 trial for PROSTVAC® and reduce existing research and development programmes except for IMVAMUNE® and reduce costs in the supporting functions and investments in order to continue operations.

Group Key Figures 2006-2010

DKK million 2010 2009 2008 2007 2006

Income statement

Revenue 314.1 74.8 208.8 332.1 175.3

Production costs 444.5 140.1 196.7 64.5 136.3

Research and development costs 210.8 164.0 129.6 243.6 118.4

Distribution and administrative costs 132.9 111.9 92.0 89.1 124.4

Income before interest and tax (EBIT) (474.1) (341.2) (209.5) (65.0) (203.8)

Financial items, net (9.4) 10.1 26.2 14.5 (1.0)

Income before company tax (483.4) (331.1) (183.3) (50.5) (204.8)

Net profit for the year (389.9) (266.3) (150.4) (63.5) (160.9)

Balance sheet

Total non-current assets 829.2 715.1 594.2 538.8 568.2

Total current assets 637.9 556.0 1,100.0 1,193.2 386.2

Total assets 1,467.1 1,271.1 1,694.3 1,732.1 954.4

Equity at year-end 810.4 704.2 1,015.1 1,217.7 691.4

Long-term current liabilities 106.5 113.0 52.7 134.7 150.6

Short-term current liabilities 550.2 453.9 626.5 379.7 112.4

Cash Flow Statement

Securities, cash and cash equivalents 355.7 185.0 795.9 913.6 332.7

Cash flow from operating activities (239.9) (484.0) (22.4) 163.2 (194.5)

Cash flow from investment activities (45.8) 26.1 (81.5) (16.1) (192.2)

Investment in tangible assets 45.7 50.6 12.0 5.8 73.9

Cash flow from financing activities 471.0 (30.8) (15.1) 440.4 219.0

Financial Ratios (in DKK)

Earnings per share

- basic earnings per share of DKK 10 (33.5) (34.0) (18.7) (8.0) (25.8)

- diluted earnings per share of DKK 10 (33.5) (34.0) (18.7) (8.0) (25.8)

Net asset value per share 62.5 88.6 129.9 155.8 108.4

Share price at the year-end 245 144 132 293 582

Share price/Net asset value per share 3.9 1.6 1.0 1.9 5.4

Numbers of outstanding shares at the year-end 12,962 7,952 7,816 7,816 6,376

Equity share 55% 55% 60% 70% 72%

Number of employees (full-time) at year-end 402 354 294 264 233

Earnings per share (EPS) is calculated in accordance with IAS 33 "Earning per share". The financial ratios have been calculated in accordance with "Anbefalinger og Nøgletal 2010" (Recommendations and Financial ratios 2010).

Contact:

Anders Hedegaard, President & CEO.
Phone: +45 23 20 30 64