SEARCH:
Print

Bavarian Nordic A/S – Interim Report for the period 1 January to 31 March 2009

  • Positive developments in the biodefence and cancer business areas
  • End of Phase II meeting lays down pathway for the licensure of IMVAMUNE®
  • Preparations for the delivery of IMVAMUNE® to the USA are progressing according to plan
  • PROSTVAC™ data have been accepted for an oral presentation at the ASCO Annual Meeting

In the first quarter of 2009 Bavarian Nordic generated revenue of DKK 17 million and recorded a loss before tax of DKK 83 million. The expectations for the financial result for the full year 2009 are maintained at revenues in the region of DKK 375 million, and a pre-tax loss in the region of DKK 225 million. As of 31 March 2009 the Group's net free liquidity was DKK 627 million.
Highlights from the period

  • IMVAMUNE® - end-of-Phase II meeting held with the FDA After concluding the Phase II development of IMVAMUNE®, Bavarian Nordic held an end-of-Phase-II meeting with the US health authorities (FDA) in the beginning of 2009 in order to discuss the Phase III study design. Based on the meeting, Phase III studies are expected to be initiated in 2010.
  • PROSTVAC™ data presented at international cancer symposium In February 2009, data on PROSTVAC™ were presented at the international cancer congress, 2009 Genitourinary Cancers Symposium in Orlando, Florida. The data from three different studies once again confirm the excellent safety and efficacy results previously reported, and they support the further investigation of the vaccine in patients suffering from advanced prostate cancer. The data also indicates that PROSTVAC™ may be used in earlier disease settings and thus in a larger patient group.

Important events after the period

  • PROSTVAC™ data accepted for an oral presentation at the ASCO Annual Meeting Professor Philip Kantoff, MD, Dana-Farber Cancer Institute, Harvard Medical School who is the principal investigator in the PROSTVAC™ study will present the Phase II results at the 2009 American Society of Clinical Oncology (ASCO) Annual Meeting in Orlando May 29 to June 2, 2009.

Anders Hedegaard, President & CEO of Bavarian Nordic said: "Bavarian Nordic recorded strong progress in the first quarter of 2009. We successfully held an end of Phase II meeting with the FDA on IMVAMUNE® and have essentially agreed a pathway for the licensure of the vaccine. Data from studies with our new prostate cancer vaccine, PROSTVAC™ were presented at a major international cancer symposium and we are pleased to see, that these data indicate that the vaccine can be used in an earlier disease setting. This broadens the market potential of the vaccine. We also got the acceptance from ASCO to present PROSTVAC™ at this year's annual meeting in May and we see this as a great recognition of the excellent potential of the vaccine."

 

Management's review
Biodefence
IMVAMUNE® More than 2.700 subjects have now been vaccinated with IMVAMUNE®.
Following the completion of the Phase II clinical development of IMVAMUNE®, a third-generation smallpox vaccine, Bavarian Nordic has held an end of Phase II meeting with the FDA in the beginning of 2009 to discuss the Phase III development. The meeting was a success and there was an open and highly constructive discussion with the FDA.
This meeting represented the first ever formal discussions with the agency to license a vaccine under the new legislation of the animal rule - a new regulatory path which allows the efficacy of products for indications like smallpox to be established in suitable animal efficacy models. This marks a major regulatory milestone in the successful development of IMVAMUNE®.
The animal efficacy models and phase III protocol have essentially been agreed with the agency - outlining a clear path for licensure of IMVAMUNE®. Once all protocols have been agreed with the FDA a Vaccines Related Biological Product Advisory Committee (VRBPAC) will be scheduled to ratify the license strategy. This exceptional review path will likely push the initiation of the Phase III studies into late 2010, leading to the submission of a BLA in 2013.
The outcome of the meeting has no impact on the delivery of vaccines to the Strategic National Stockpile (SNS) under the RFP-3 contract with the US government. The preparations for initiating delivery are progressing according to plan. Bavarian Nordic expects to receive confirmation from the US health authorities by mid-2009 that the Phase II data package meets the conditions for using IMVAMUNE® in a declared emergency situation, and subsequently the deliveries will be initiated.
Cancer
PROSTVAC™ In February 2009 PROSTVAC™ data were presented at the 2009 Genitourinary Cancers Symposium in Orlando, Florida.
The data, collected from three different studies confirm the excellent safety and efficacy results previously reported, and they support the further investigation in patients suffering from advanced prostate cancer. Also, the data indicate that PROSTVAC™ can be used in earlier disease settings and thus in a larger patient group.
MVA-BN®-HER2 - breast cancer In February 2009, Bavarian Nordic reported data from its clinical Phase I/II studies with its breast cancer vaccine, MVA-BN®-HER2, in development as therapy of metastatic breast cancer patients, The study met its primary endpoint with regards to safety and by showing an immune response.
Additionally Bavarian Nordic has completed preclinical studies with an improved version of the MVA-BN®-HER2 vaccine. In those studies, the new vaccine induced up to 20-fold higher T-cell immune response as compared to the original version. Furthermore, it proved to be efficacious in additional tumour immunotherapy models in HER2 transgenic mice. The immunological situation regarding HER2 in those mice strongly resembles the situation in humans.
Based on those encouraging data from both clinical and preclinical studies Bavarian Nordic decided to advance the clinical development of MVA-BN®-HER2 in further clinical studies with the new and improved vaccine. Specifically, a new, single-site Phase I/II study in the US will be initiated by 2009 and evaluate 24 patients in both metastatic breast cancer as well as in an adjuvant therapy of breast cancer setting.
Legal matters
Patent infringement suit against Oxford BioMedica The patent infringement suit that Bavarian Nordic filed against Oxford BioMedica will continue. In January 2009, Bavarian Nordic filed a new complaint after the Judge for procedural reasons dismissed the first complaint. If the court eventually should decide to dismiss the suit this decision will bear no influence on the substance of the patent case. It only influences the timing of the start of the infringement case.
Organisational matters
Changes in management On 27 March 2009 Steen Vangsgaard was appointed new Executive Vice President, Commercial Affairs. Steen Vangsgaard holds an MBA from London Business School and joins Bavarian Nordic from Actavis A/S, where he previously held the position as Vice President Commercial Operations. He succeeded Nicolai Buhl Andersen, who will leave the company by 1 May 2009.
Warrants The Board of Directors in Bavarian Nordic A/S has decided on 27 March 2009 to award warrants to a member of executive management and employees in the Company and its subsidiaries. The Board decision is made in accordance with the shareholder authorisation for the Board of Directors adopted as Article 5f of the Articles of Association and the Company's guidelines regarding incentive programs. The award is made by the Board of Directors and exercise is limited by and governed by the Danish Act on Options for Employees (the Stock Option Act/aktieoptionsloven) regarding termination of employment prior to exercise of warrants.
A total of 25,000 warrants were awarded for subscription of up to 25,000 shares of a nominal value of DKK 10 at an exercise price of DKK 124 per share. The exercise price has been established on the basis of the average share price ("closing price") for the Company's share in a period of 15 business days prior to this day added a 15 % premium.
The warrants can be exercised wholly or partly in a period of 14 days commencing from the day of publication of the Company's Annual Report for 2011, from the day of publication of the Company's Half Yearly Interim Results for 2012, from the day of publication of the Company's Annual Report for 2012 and in a period of 14 days commencing from the day of publication of the Company's Half Yearly Interim Results for 2013.
Referring to the Danish Securities Act, Section 28a it is announced that Steen Vangsgaard, who is a member of executive management and obliged to notify the Company of transactions involving Bavarian Nordic securities is awarded 5,000 warrants under the abovementioned award of warrants.
The value of each warrant equals DKK 39 and is calculated on the Black-Scholes model with a risk-free interest rate of 2.5 per cent and on the historical volatility of the shares. The calculation is based on a market value of the share of DKK 103 per share.
The award of warrants will incur consequential amendments to the Articles of Association.
Outstanding warrants as of 31 March 2009

 

Programme

2006

2007

2007

2008

2009

Exercise price (DKK)

542

549

505

156

124

Exercise period

2 weeks in Q4-2009

and/or Q2-2010

2 weeks in Q4-2010

and/or Q2-2011

2 weeks in Q4-2010

and/or Q2-2011

2 weeks inQ3-2011

and/orQ2 2012

and/orQ3 2012

and/orQ2 2013

2 weeks in Q2 2012

and/or Q3 2012

and/or Q2 2013

and/or Q3 2013

Number of warrants:

         

Board of Directors

15,837

15,000

-

20,000

0

CEO & President

-

30,000

-

20,000

0

Group Management

47,515

30,000

10,000

75,000

5,000

Other Employees

39,061

52.000

-

60,000

20,000

Retired Employees

39,066

28,000

-

0

0

Total

141,479

155,000

10,000

175.000

25.000

 

Financial statement for the period (1 January - 31 March 2009, un-audited) The comparison figures for the same period 2008 are stated in parenthesis.
The revenue totalled DKK 17 million (DKK 14 million) in the first quarter. The revenue derives from sale under the RFP-2 contract with the U.S. health authorities.
Production costs totalled DKK 41 million (DKK 32 million) in the first quarter. The production costs are higher due to higher batch production at the Kvistgaard facility.
The Group's research and development costs totalled DKK 36 million (DKK 28 million) in the first quarter excluding development costs from the RFP-3 contract of DKK 10 million, of which DKK 8 million are capitalised as intangible assets under construction.
Sales costs totalled DKK 6 million (DKK 4 million) in the first quarter. The increase primarily derived from increase in commercial activities on IMVAMUNE®.
Administrative costs totalled DKK 23 million (DKK 17 million) in the first quarter.
Income before tax is a deficit of DKK 83 million (deficit of DKK 62 million) in the first quarter.
Net result in the first quarter was a deficit of DKK 66 million (deficit of DKK 50 million).
As of 31 March 2009 the Group's net free liquidity was DKK 627 million (DKK 971 million). Year to date cash flow from operations is negative with DKK -132 million (DKK -67 million). Cash flow from investment activities is DKK 33 million (DKK 127 million) and cash flow from financing activities is DKK -4 million (DKK -4 million). The net changes in cash and cash equivalents is negative with DKK -169 million (DKK +57 million) year to date.
After the close of the first quarter, the company decided to reduce the outstanding foreign exchange contracts. The remaining foreign exchange contracts of USD 46 million cover the expected USD income from the RFP-3 contract in 2009. The reduction in the outstanding foreign exchange contracts has been executed in order to eliminate the adverse effect on the liquidity a rise in USD will have.
The Group's equity as of 31 March 2009 was DKK 893 million (DKK 1,226 million.). The decrease flows from retained earnings.
Financial expectations Bavarian Nordic maintains its expectations for the financial result for 2009. Thus, the company expects revenue in the region of DKK 375 million, and a pre-tax loss in the region of DKK 225 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 contracts for smallpox vaccines already entered with other countries.
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 2009.
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 2009 and the results of the group's activities and cash flows for the period 1 January to 31 March 2009.
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 2009
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