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Bavarian Nordic A/S – Interim Report for the period 1 January to 31 March 2010

  • FDA acceptance of manufacturing facilities leads to the imminent initiation of IMVAMUNE® smallpox vaccine deliveries to the US Strategic National Stockpile
  • PROSTVAC™ Phase III design outlined upon positive feedback from US and European regulatory agencies
  • Successful rights issue with net proceeds of approximately DKK 300 million completed

In the first quarter of 2010 Bavarian Nordic generated revenue of DKK 14 million and recorded a loss before tax of DKK 116 million. The expectations for the financial result for the full year 2010 are maintained at revenues in the level of DKK 475 million, and a pre-tax loss in the level of DKK 250 million. As of 31 March 2010 the Group's cash preparedness was DKK 363 million.

Highlights from the period

  • IMVAMUNE® deliveries to begin soon upon the recent acceptance from the FDA In March 2010, Bavarian Nordic received notification that the U.S. Food and Drug Administration (FDA) had accepted all the actions taken by the company to address the observations made during their previous inspection of the manufacturing facilities. Consequently, delivery of the 20 million doses of IMVAMUNE®smallpox vaccines to the U.S. Strategic National Stockpile is expected to commence during first half of 2010.
  • Bavarian Nordic successfully completes end of Phase II meeting for PROSTVAC™ In March 2010, the company announced the successful completion of an end of Phase II meeting with the FDA for the PROSTVAC™ programme. The European Medicines Agency mirrored the input in their Scientific Advice, hence Bavarian Nordic will proceed to assemble a clinical trial protocol and submit it to the Special Protocol Assessment (SPA) process with the FDA.
  • PROSTVAC™ paper published by the peer-reviewed Journal of Clinical Oncology In January 2010, a paper on the previously reported Phase II study with PROSTVAC™ was published in the prestigious Journal of Clinical Oncology, the official journal of ASCO.
  • Approximately DKK 300 million raised in successful rights issue In February 2010, Bavarian Nordic successfully completed an offering, generating net proceeds of approximately DKK 300 million. The rights issue attracted positive attention from both domestic and international investors.

Important events after the period

  • US authorities quantifies the requirement for a safer smallpox vaccine In a recent Broad Agency Announcement, BARDA - the US agency responsible for the procurement of medical countermeasures, noted the requirement for sufficient quantity of attenuated smallpox vaccine (e.g. IMVAMUNE®) to protect 66 million people comprising those for whom traditional smallpox vaccines are contraindicated.

Anders Hedegaard, President & CEO commented on the interim report: "During first quarter of 2010 Bavarian Nordic has made substantial progress through the completion of a number of significant milestones. This has added significant value to the company and not least to our shareholders, who demonstrated their robust support to Bavarian Nordic in the successful rights issue at the beginning of the year. Since then, we have had a strong news flow headed by the fulfilment of FDA requirements for our manufacturing facilities, leading to the imminent initiation of delivery of IMVAMUNE® to the US, and by the endorsement of our planned Phase III programme for PROSTVAC™ from the FDA and the European Medicines Agency."

Conference call The company will host a conference call tomorrow, Wednesday, April 28 at 2. p. m. CET. President and CEO, Anders Hedegaard will present the interim results followed by a Q&A session. Also attending are CFO, Ole Larsen, and Vice President Investor Relations & Communications, Rolf Sass Sørensen. Dial-in numbers for the conference call are: Denmark: +45 3271 4607, UK: +44 (0)20 7162 0077. The accompanying presentation is available on the company's website: www.bavarian-nordic.com.

Management's review

Pipeline

PIPELINE

Programme

Status

Next milestone

Cancer

PROSTVAC™

Phase II

Phase III (2010)

Breast Cancer  (MVA-BN®-HER2)

Phase I/II

Initiate new Phase I/II study (2010)

Prostate Cancer (MVA-BN®PRO)

Phase I/II

Phase I/II data update (2010)

Biodefence

Smallpox (IMVAMUNE®)

Phase II

Initiate Phase III (2010)

Anthrax

Preclinical

Phase I (2010)

Infectious diseases

HIV multiantigen

Phase I/II

Identify partner for full Phase II

Measles and RSV

Phase I

Phase I data (H2, 2010)

 

Biodefence

IMVAMUNE® - smallpox vaccine

Bavarian Nordic fulfils FDA requirements to support the delivery of IMVAMUNE®to the US Government

In March 2010, Bavarian Nordic received notification that the U.S. Food and Drug Administration (FDA) had accepted all the actions taken by the company to address the observations made during the inspection of the manufacturing facilities in 2009. This was the last step along with the clinical and preclinical data that will be used to potentially support the use of IMVAMUNE®following a declared emergency. Subsequently, the company has begun to scale-up production, so the 20 million doses will be produced and delivered according to the contract. The first deliveries are expected to take place during first half of 2010 as previously communicated.

US quantifies the requirement for a safer smallpox vaccine In a recent Broad Agency Announcement, BARDA - the US authority responsible for the procurement of medical countermeasures, noted the requirement for sufficient quantity of attenuated smallpox vaccine (e.g. IMVAMUNE®) to protect 66 million people comprising those for whom smallpox vaccine is contraindicated.

Cancer

PROSTVAC™ - therapeutic prostate cancer vaccine

Bavarian Nordic successfully completes end of Phase II meeting for PROSTVAC™

In March 2010, the company concluded upon the Scientific Advice from the European Medicines Agency and the end of Phase II meeting with the FDA for the PROSTVAC™ programme. Both agencies expressed general agreement with the proposed Phase III clinical programme of PROSTVAC™. Based on the consolidated feedback Bavarian Nordic will proceed to assemble a clinical trial protocol and submit it to the Special Protocol Assessment (SPA) process with the FDA. The final clinical protocol will be based on the outcome of this process.

Based on the consolidated feedback, Bavarian Nordic is planning to achieve marketing approval for PROSTVAC™ via a single global, strongly powered clinical trial that is expected to enrol about 1,200 patients. The study will be placebo-controlled and enrol patients with asymptomatic or minimally symptomatic, metastatic castration-resistant prostate cancer (mCRPC), similar to the patient population studied in the company's placebo-controlled Phase II study.

PROSTVAC™ paper published by the peer-reviewed Journal of Clinical Oncology In January 2010, a paper on the previously reported Phase II study with PROSTVAC™ was published in the prestigious Journal of Clinical Oncology, the official journal of ASCO.

Other issues

Successful rights issue generates net proceeds of approximately DKK 300 million In February 2010, Bavarian Nordic completed an offering in which 3,960,307 new shares were subscribed, corresponding to a subscription rate of 99.6%.

The new shares were subscribed at DKK 80 per share, resulting in gross proceeds to Bavarian Nordic of DKK 317 million, equivalent to net proceeds of DKK 302 million after deduction of expenses related to the offering.

Following registration of the new shares, Bavarian Nordic's nominal share capital will be DKK 119,120,520 corresponding to 11,912,052 shares with a nominal value of DKK 10 each.

Bavarian Nordic and Oxford BioMedica settle all legal disputes on MVA-BN® In January 2010 Bavarian Nordic and Oxford BioMedica reached a global settlement ending the legal disputes between the parties on matters relating to MVA-BN®.

Under the agreement, Bavarian Nordic granted a license to its MVA-BN® patents in return for Oxford BioMedica making milestone payments and royalties.

Under the settlement, the terms of which are confidential, all pending litigation will cease and all oppositions filed at the European Patent Office by Oxford BioMedica will be withdrawn.

Financial statement for the period (1 January - 31 March 2010, un-audited)

The comparison figures for the same period 2009 are stated in parenthesis.

The revenue totalled DKK 14 million (DKK 17 million) in the first quarter. The revenue derives mainly from the sale under the RFP-2 contract, DKK 12 million, and the RFP contract for freeze-dried IMVAMUNE®, DKK 2 million.

Production costs totalled DKK 63 million (DKK 41 million) in the first quarter.

The Group's research and development costs totalled DKK 40 million (DKK 36 million) in the first quarter excluding development costs from the RFP-2 and RFP-3 contracts and the RFP contract for freeze-dried IMVAMUNE® of DKK 10 million, of which DKK 5 million are capitalized as intangible assets under construction.

Distribution costs totalled DKK 6 million (DKK 6 million) and administrative costs totalled DKK 21 million (DKK 23 million).

Income before tax is a deficit of DKK 116 million (deficit of DKK 83 million).

Net result in the first quarter is a deficit of DKK 93 million (deficit DKK 66 million).

The IMVAMUNE® inventory totalled DKK 216 million (DKK 79 million).

As of 31 March 2010 the Group's cash preparedness was DKK 363 million (DKK 647 million). Cash flow from operations is negative with DKK 124 million (DKK -132 million). Cash flow from investment activities is negative with DKK 44 million (DKK 33 million) and cash flow from financing activities is DKK 290 million (DKK -4 million). The net change in cash and cash equivalents is DKK 122 million (DKK -103 million).

The Group's equity as of 31 March 2010 was DKK 900 million (DKK 903 million). The right issue in first quarter 2010 increased the equity by DKK 302 million net after related cost.

Financial expectations Bavarian Nordic maintains its expectations for the financial result for 2010. Management expects revenue at the level of DKK 475 million, and a pre-tax loss at the level of DKK 250 million. Revenue will primarily be generated from the delivery of IMVAMUNE® to the United States under the RFP-3 contract and billing of the continuation of the RFP-2 contract and the RFP contract for freeze-dried IMVAMUNE®.

The cash preparedness at year-end is expected to be in the range of DKK 225 million to DKK 275 million. This is based upon the assumption that a credit facility in the amount of DKK 150 million to DKK 200 million to finance working capital is obtained.

Statement from the Board of Directors and Corporate Management

The Board of Directors and Corporate Management have, today reviewed and approved Bavarian Nordic A/S' interim report for the period 1 January to 31 March 2010.

The interim report has been prepared in accordance with IAS 34 "Presentation of interim reports" as adopted by the EU and additional Danish disclosure requirements for interim reports of listed companies, including those of NASDAQ OMX Copenhagen. The interim report has not been audited or reviewed by the Company's auditors.

In our opinion, the interim report gives a true and fair view of the group's assets and liabilities and financial position as of 31 March 2010 and the results of the group's activities and cash flows for the period 1 January to 31 March 2010. 

In our opinion, the management's review provides a true and fair description of the development in the group's activities and financial affair, the results for the period and the group's financial position as a whole as well as a description of the most important risks and uncertainty factors faced by the group.

 

Kvistgård, 27 April 2010

 

Corporate Management:

Anders Hedegaard President and CEO

 

Board of Directors:

Asger Aamund Chaiman of the Board

Claus Bræstrup Erling Johansen Gerard van Odijk Flemming Pedersen