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Bavarian Nordic Receives Contract Valued up to USD 228 Million from the U.S. Government Securing Continued Production and Deliveries of IMVAMUNE® Smallpox Vaccine

- New order replenishes existing doses in U.S. Strategic National Stockpile, and helps bridge to the next-generation freeze-dried formulation is available

KVISTGAARD, Denmark, April 16, 2013 - Bavarian Nordic A/S (OMX: BAVA) announced today that BARDA (Biomedical Advanced Research and Development Authority), a division of the U.S. Department of Health& Human Services (HHS), has awarded the company a contract valued at up to USD 228 million for the continued supply of the Company's IMVAMUNE® smallpox vaccine. The first USD 110 million of the new order is secured, and the remaining portion will be secured based on availability of funds in 2014. Under the agreement, payments of additional USD 37 million will be received, associated with the delivery of the original 20 million dose order.

With this order, the U.S. Government will continue to maintain the stockpile of IMVAMUNE® for use in case of a public health emergency. Furthermore, the order will sustain the unique manufacturing capabilities established by Bavarian Nordic that contribute to protecting the public against bioterrorism.

"We are grateful that the U.S. Government has ordered another 8 million doses of IMVAMUNE® to maintain the 20 million doses stored in the U.S. Strategic National Stockpile, for use following a declared emergency in individuals of all ages with HIV infection or atopic dermatitis, including children, pregnant women, and nursing mothers," said Anders Hedegaard, President and CEO of Bavarian Nordic. "This order underscores the long-term relationship that exists between BARDA and Bavarian Nordic. As we work to develop a next-generation freeze-dried formulation of IMVAMUNE®that offers a number of advantages, the current order goes a long way to bridge the gap by replenishing the inventory of the current frozen vaccine formulation. Also, it enables us to move the company forward in the development of further countermeasures to serve the government's needs."

The contract stipulates that HHS intends to maintain the U.S. stockpile of IMVAMUNE® and the necessary manufacturing capacity through future orders, pending the availability of future funding.

Since 2010, Bavarian Nordic has been delivering IMVAMUNE® to the U.S. Strategic National Stockpile under a contract (RFP-3) for 20 million doses of the vaccine. As of year-end 2012, 14.4 million doses had been delivered. Upon completion of deliveries under this contract later in 2013, deliveries under the new contract will be initiated. The Company expects to deliver 7 million doses in 2013, of which approximately 1.4 million doses relate to the new contract. Subsequently, approximately 6.6 million doses will remain for delivery.

The cash flow of up to USD 228 million from the new contract consists of: 

  • Four performance-based milestone payments in 2013 totaling USD 20 million, triggered by the production of bulk vaccine for the first 4 million doses
  • Deliveries in 2013 of USD 29 million, after which deliveries of USD 151 million remain
  • Other income in 2013 and 2014 from miscellaneous services totaling USD 28 million 

The entire contract value will be recognized pro rata with the deliveries.

Additionally, the conditions of the RFP-3 contract have been changed allowing USD 37 million in payments that will be recognized during 2013. Upon licensure of IMVAMUNE® in the U.S., the remaining USD 12.5 million will be received under the original 20 million dose order. 

Financial expectations
For 2013, the Company still expects revenue at the level of DKK 1,100 million and a break-even result before tax. The cash preparedness at year-end is expected to be roughly DKK 600 million. 

The Infectious Disease division is expected to generate an EBIT of DKK 360 million, after expenses of capitalized RFP-3 development costs of approximately DKK 150 million. 

The Cancer Vaccine division is expected to generate a negative EBIT of DKK 325 million. 

Research and developments costs are expected to total approximately DKK 460 million, of which DKK 100 million will be capitalized in the balance sheet under intangible assets. Research and development costs include additional approximately DKK 110 million in contract expenses (stated under production costs in the profit and loss statement). 

Conference call
The company will host a conference call today at 5.30 pm CET (11.30 am EDT) to discuss the contract. President and CEO, Anders Hedegaard will participate along with members of the Company’s executive management team. Dial-in numbers for the conference call are: Denmark: +45 32 72 80 18, UK: +44 (0) 844 571 8957, USA: +1 866 682 8490. A webcast of the conference call will be broadcast simultaneously at www.bavarian-nordic.com/webcast. From this page, participants can also download the accompanying presentation. 

Asger Aamund

Chairman of the Board

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

About IMVAMUNE® Smallpox Vaccine
IMVAMUNE® is being developed as a safer smallpox vaccine for immunocompromised individuals, such as people with atopic dermatitis (AD) and HIV. IMVAMUNE® is the Company’s most advanced clinical program based on MVA-BN® - a robust and adaptable vaccine platform suitable for addressing a wide variety of infectious diseases and cancer. Bavarian Nordic has conducted preclinical and clinical studies of recombinant MVA-BN®-based vaccines for a variety of infectious diseases and numerous types of cancer. Studies including more than 3,700 subjects, including people diagnosed with AD or infected with HIV in which replicating vaccines are contraindicated, suggest that MVA-BN®-based vaccines have a favorable safety profile. 

IMVAMUNE® is the first vaccine successfully developed under Project BioShield, a U.S. program created by Congress in 2004 to develop and purchase medicines and vaccines to protect the American public from bioterrorism attacks. Bioterrorism experts are concerned about the possibility of an attack on the U.S. that exposes the population to the smallpox virus. 

IMVAMUNE® is being clinically developed and manufactured under contracts with BARDA as well as the National Institutes of Health (NIH). 

About Bavarian Nordic
Bavarian Nordic is a vaccine-focused biotechnology company developing and producing novel vaccines for the treatment and prevention of life-threatening diseases with a large unmet medical need. The company's pipeline targets cancer and infectious diseases, and includes ten development programs. In oncology, the company’s lead program is PROSTVAC®, a therapeutic vaccine candidate for advanced prostate cancer that is the subject of an ongoing pivotal Phase 3 trial and is being developed under a collaboration agreement with the National Cancer Institute. In clinical Phase 1 and Phase 2 trials, PROSTVAC® has been tested in nearly 600 patients. In infectious diseases, the company’s lead program is IMVAMUNE®, a non-replicating smallpox vaccine candidate that is being developed and supplied for emergency use to the U.S. Strategic National Stockpile under a contract with the U.S. Government. For more information, visit www.bavarian-nordic.com 

Forward-looking statements
This announcement includes forward-looking statements that involve risks, uncertainties and other factors, many of which are outside of our control that could cause actual results to differ materially from the results discussed in the forward-looking statements. Forward-looking statements include statements concerning our plans, objectives, goals, future events, performance and/or other information that is not historical information. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law.

Company Announcement no. 9 / 2013