Bavarian Nordic A/S - Interim Report for the period 1 January to 30
September 2009
2009-11-11 09:10:08 -
London, November , 11, 2009
In the first nine months of 2009 Bavarian Nordic generated revenue of
DKK 53 million and recorded a loss before tax of DKK 261 million. As
of 30 September 2009 the Group's net free liquidity was DKK 304
million The company maintains its expectations for the financial
result for the full year 2009 with revenues in the range of DKK
100-300 million and a pre-tax loss of between DKK 275-325 million. A
prerequisite for maintaining the high end of the guidance is that the
company will receive delivery allowance from the US authorities no
later than beginning of December, leading to the possible initiation
of deliveries of IMVAMUNE® to the US Government before the end of
2009. The net free liquidity at year-end is expected to be
approximately DKK 175 million as a potential delivery to the US
Government by late 2009 will not have a cash effect in 2009.
Following the FDA inspection of the IMVAMUNE® manufacturing
facilities in May, Bavarian Nordic has made progress in the
implementation of the corrective actions as required due to
observations made by the FDA. The company expects to finalise its
responses to the FDA no later than in the beginning of December and
subsequently will await the FDA review and acceptance hereof.
Consequently, the company maintains its expectations to initiate
delivery of IMVAMUNE® to the US government before the end of second
quarter of 2010.
During the first nine months of 2009, Bavarian Nordic reported
further confirmatory data on PROSTVAC(TM), the company's late-stage
prostate cancer vaccine candidate. Oral presentations were held at
several cancer congresses, including ASCO and ECCO annual meetings.
Bavarian Nordic expects that an end of phase II meeting with the FDA
will take place during January 2010. While partnership negotiations
are ongoing, the company is in preparations for Phase III and these
are proceeding as planned.
Lately, the prostate cancer field has witnessed positive clinical
results followed by attractive partnership deals. It has proven
worthwhile for a number of companies to independently advance their
projects into Phase III, thus maximising their value before they
would eventually sign a licensing deal. Similarly, Bavarian Nordic is
seeking to maximise and retain the value of its cancer portfolio.
Consequently, Bavarian Nordic seeks the ability to advance
PROSTVAC(TM) into Phase III of its own. In order for Bavarian Nordic
to gain the independence to execute its short and long term
activities within biodefence and cancer, the company is exploring
available options for securing an optimum financial position.
Anders Hedegaard, President & CEO of Bavarian Nordic said: "During
2009 we have recorded strong progress in our two leading programmes,
IMVAMUNE® and PROSTVAC(TM). As the acceptance from FDA to initiate
deliveries of IMVAMUNE® draws closer, we have initiated negotiations
with the US on further development of the vaccine. We have seen
positive developments in the market outside the US with the Canadian
order now being delivered and talks are ongoing with the authorities
on the licensing of the vaccine. We also entered the first IMVAMUNE®
contract in the EU during third quarter. Further positive
PROSTVAC(TM) data were reported, demonstrating a great potential for
this promising therapeutic approach for the treatment of advanced
prostate cancer. With PROSTVAC(TM) moving into Phase III trials we
are well underway to establish ourselves as a key player in the
cancer therapeutics industry, which is currently attracting a lot of
positive attention due to promising data and lucrative partnership
deals. We intend to ride this wave and further advance our cancer
portfolio."
Contact
Anders Hedegaard, President & CEO. Phone +45 23 20 30 64
Conference call
A conference call will be held today at 11.00 a.m. (CET). President
and CEO, Anders Hedegaard will present the interim results followed
by a Q&A session. Also attending are Executive Vice President and
CSO, Paul Chaplin, Executive Vice President and CEO of BN
ImmunoTherapeutics, Reiner Laus, Executive Vice President and 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.
Highlights from the period
* Bavarian Nordic has signed contract with an EU country for
the delivery of IMVAMUNE®
In September, Bavarian Nordic signed a contract with the military of
an undisclosed EU country for the delivery of a small order for
IMVAMUNE®. The size and value of the contract is undisclosed. This
marks the first time, Bavarian Nordic enters a contract with an EU
country for the delivery of IMVAMUNE®, and it demonstrates that there
exists a real demand inside of EU for new and safer smallpox vaccines
for preparedness stockpiles. The vaccines have been delivered.
* Negotiations with the US authorities for the further
development of IMVAMUNE®
Bavarian Nordic is currently in late-stage negotiations with the US
authorities for a new contract to develop a freeze-dried version of
the IMVAMUNE® smallpox vaccine. This potential new project will have
no influence on the ongoing RFP-3 contract for the procurement of 20
million doses of IMVAMUNE® and the licensure of the current
liquid-frozen formulation, but represents an additional business
opportunity of major strategic importance. The company expects that
the prospective contract will constitute the gateway towards securing
additional contracts with the US Government and outside the US as
well.
* Further detailed PROSTVAC(TM) data presented at the ECCO
15 - 34th ESMO Congress
Further data from the Phase II study with PROSTVAC(TM) were presented
at the European CanCer Organisation (ECCO), ECCO 15 - 34th ESMO
Congress in Berlin in September. The data indicate the potential for
a broader therapeutic use of PROSTVAC(TM) in metastatic prostate
cancer
Important events after the period
* Delivery of IMVAMUNE® to Canada completed
As planned, Bavarian Nordic has delivered 20,000 doses of IMVAMUNE®
to the Canadian government. A pre-New Drug Submission (NDS) meeting
with Health Canada (National Regulatory Authority) was held in
October 2009 to discuss the potential to file an NDS in 2010 for
IMVAMUNE® as a safer smallpox vaccine under a Notice of Compliance
with Conditions (NOC/C). Conclusions from the meeting have not yet
been finalised.
* Encouraging data for MVA-BN® HIV multiantigen warrant
further studies
Bavarian Nordic has completed the analysis of the Phase I/II studies
with MVA-BN® HIV multiantigen. The final safety and immunogenicity
data demonstrate that the vaccine induces a broad T cell response in
HIV infected subjects. The high number of responders to the vaccine
is encouraging and warrant further studies. Thus, in line with its
strategy, Bavarian Nordic is now looking for a partner in order to
secure the continued development of MVA-BN® HIV multiantigen in a
full Phase II.
Management's review
Pipeline
+-------------------------------------------------------------------+
| PIPELINE | Programme | Status | Next milestone |
|------------+------------------+-------------+---------------------|
| | Smallpox | Phase II | Initiate Phase III |
| Biodefence | (IMVAMUNE®) | | (2010) |
| |------------------+-------------+---------------------|
| | Anthrax | Preclinical | Phase I (2010) |
|------------+------------------+-------------+---------------------|
| | PROSTVAC(TM) | Phase II | Phase III (2010) |
| |------------------+-------------+---------------------|
| | Breast Cancer | | Initiate new Phase |
| Cancer | (MVA-BN®-HER2) | Phase I/II | I/II study |
| | | | (2009/2010) |
| |------------------+-------------+---------------------|
| | Prostate Cancer | Phase I/II | Phase I/II data |
| | (MVA-BN® PRO) | | update (Q4,2009) |
|------------+------------------+-------------+---------------------|
| | HIV multiantigen | Phase I/II | Identify partner |
| | | | for full Phase II |
| Infectious |------------------+-------------+---------------------|
| diseases | | | Complete |
| | Measles and RSV | Phase I | recruitment (Q4, |
| | | | 2009) |
+-------------------------------------------------------------------+
Biodefence
IMVAMUNE® - third generation smallpox vaccine candidate
Deliveries under the RFP-3 contract
Following the U.S. Food and Drug Administration's (FDA) inspection of
the IMVAMUNE® manufacturing facilities in May, Bavarian Nordic has
made progress in the implementation of the corrective actions as
required due to observations made by the FDA. The company expects to
finalise its responses to the FDA no later than in the beginning of
December and subsequently will be awaiting the FDA review and
acceptance hereof. Consequently, the company maintains its
expectations to initiate delivery of IMVAMUNE® to the US government
before the end of second quarter of 2010.
Once deliveries of the 20 million doses of IMVAMUNE® to the US begin,
Bavarian Nordic will start invoicing the remainder of the RFP-3
contract, including payments of USD 375 million.
Delivery of IMVAMUNE® to Canada completed
As planned, Bavarian Nordic has delivered 20,000 doses of IMVAMUNE®
to the Canadian government. A pre-New Drug Submission (NDS) meeting
with Health Canada (National Regulatory Authority) was held in
October 2009 to discuss the potential to file an NDS in 2010 for
IMVAMUNE® as a safer smallpox vaccine under a Notice of Compliance
with Conditions (NOC/C). Conclusions from the meeting have not yet
been finalised,
Bavarian Nordic delivers a small quantity of IMVAMUNE® to Switzerland
Bavarian Nordic has delivered a small quantity of IMVAMUNE® to the
Swiss authorities with the purpose of vaccinating key personnel,
including lab workers and potentially also WHO inspectors. The
authorities have issued a Special Use Authorization, which allows for
IMVAMUNE® to be used although the vaccine is still in development.
Switzerland has stockpiled the old replicating smallpox vaccine, but
has requested IMVAMUNE® as a safer vaccine for key personnel.
Bavarian Nordic in negotiations with the US authorities for the
further development of IMVAMUNE®
Bavarian Nordic is currently in late-stage negotiations with the US
authorities for a new contract to develop a freeze-dried version of
the IMVAMUNE® smallpox vaccine. This potential new project will have
no influence on the ongoing RFP-3 contract for the procurement of 20
million doses of IMVAMUNE® and the licensure of the current
liquid-frozen formulation, but represents an additional business
opportunity of major strategic importance. The company expects that
the prospective contract will constitute the gateway towards securing
additional contracts with the US Government and outside the US as
well.
A freeze-dried formulation of IMVAMUNE® offers various new advantages
in terms of increased shelf-life and improved stability of the
vaccine compared to the current liquid-frozen formulation.
Additionally, this will improve the cold-chain shipping logistics and
storage. These are all important criteria for governments around the
world that prioritise their bio terror preparedness.
The new technology for freeze-drying the vaccine will also be
applicable for other MVA-BN® based vaccines.
Ongoing studies
Bavarian Nordic has a number of ongoing clinical studies, all of
which are funded under the ongoing RFP-2 contract with the US
government. These include:
* A Phase II study of patients diagnosed with atopic
dermatitis (AD)
* A Phase II study to demonstrate the effect of IMVAMUNE®
when administered as a booster dose
* A Phase I study in subjects between 56 and 80 years to
generate data on safety and immunogenicity of IMVAMUNE® in an
elderly population
Cancer
PROSTVAC(TM) - therapeutic prostate cancer vaccine candidate
Throughout the first nine months of 2009, further confirmatory data
on PROSTVAC(TM) were presented at several international cancer
congresses. In February, data indicating that PROSTVAC(TM) can be
used in earlier disease settings and thus in a larger patient
population were presented at the 2009 Genitourinary Cancers
Symposium. In May, headline data from the Phase II study with
PROSTVAC(TM) were confirmed at the ASCO Annual Meeting and in
September, the company participated in the ECCO 15 - 34th ESMO
Congress in Berlin, where data indicating the potential for a broader
therapeutic use of PROSTVAC(TM) in metastatic prostate cancer were
presented. Also in September, the company attended the 16th Annual
Prostate Cancer Foundation Scientific Retreat at Lake Tahoe, Nevada,
where a PROSTVAC(TM) poster was presented.
Furthermore, PROSTVAC(TM) abstracts and reviews have been accepted
for publication in a number of scientific journals. In July 2009, a
review on PROSTVAC(TM) from key investigators from the National
Cancer Institute (NCI) was published in the publication "Expert
Opinion on Investigational Drugs", Volume 18, Issue 7 2009. This is
the most comprehensive and updated review on PROSTVAC(TM) so far.
The strong data reported further supports Bavarian Nordics decision
to initiate Phase III trials with the vaccine. The company expects
that an end of phase II meeting with the FDA will take place during
January 2010, leading to the expected initiation of Phase III trials
in late 2010. Meanwhile, the transfer and validation of the
PROSTVAC(TM) production process to Bavarian Nordic's manufacturing
facility in Berlin is proceeding as planned.
The company is in continued discussions with potential partners on
the Phase III development and commercialisation of PROSTVAC(TM).
However, Bavarian Nordic is considering initiating Phase III trials
independently.
Ongoing PROSTVAC(TM) studies
There are a number of ongoing clinical studies with PROSTVAC(TM) in
both early and late stage prostate cancer, all of which are funded
and conducted by NCI under the ongoing collaboration with Bavarian
Nordic.
Ongoing studies with active patient enrolling:
* Phase II study comparing the radioactive drug, samarium
with or without PROSTVAC(TM) therapy in men with metastatic
prostate cancer
* Phase II study comparing antihormone therapy (flutamide)
with or without PROSTVAC(TM) therapy in men with non-metastatic
prostate cancer
Ongoing studies with enrolment completed:
* Phase II study investigating PROSTVAC(TM) in men with PSA
progress after local therapy (surgery and/or radiation)
* Phase I dose-escalation, combination study with
PROSTVAC(TM) and MDX-010 (CTL4-antibody) in men with metastatic
prostate cancer
* Phase I study investigating PROSTVAC(TM) by intraprostatic
injection in patients with progressive or locally recurrent
prostate cancer
MVA-BN®-HER2 - breast cancer
A new, single-site Phase I/II study in the US will be initiated by
the turn of the year 2009/2010 and evaluate 24 patients in both
metastatic breast cancer as well as in an adjuvant therapy of breast
cancer setting.
Infectious diseases
MVA-BN® HIV multiantigen
Bavarian Nordic has completed the analysis of the Phase I/II studies
with MVA-BN® HIV multiantigen, a prophylactic and therapeutic HIV
vaccine candidate expressing eight whole or truncated antigens from
HIV. The final safety and immunogenicity data confirms the
preliminary data that were previously reported, demonstrating that
MVA-BN®-HIV multiantigen induces a broad T cell response in HIV
infected subjects.
The safety and immunogenicity results from this Phase I/II study in
15 HIV infected individuals were presented at the international
conference, AIDS Vaccine 2009, in Paris. The vaccine was well
tolerated and no serious adverse events were recorded, following the
three vaccinations with MVA-BN® HIV multiantigen, confirming the
favourable safety profile of MVA-BN®-based vaccines in this immune
compromised population. Following the vaccination course with MVA-BN®
HIV multiantigen; the majority (87%) of the HIV infected subjects
generated a T cell response to HIV. This cell mediated response was
demonstrated to be broad as 67% of the subjects had responses to at
least two HIV antigens, while approximately 50% had generated
response to at least three HIV antigens. This study confirms the
proof of concept studies performed with MVA HIV nef, as an MVA based
HIV vaccine has again shown to be well tolerated and able to induce a
broad T cell response to multiple HIV proteins in HIV infected
subjects.
The high number of responders to the vaccine is encouraging and
warrant further studies. Thus, in line with its strategy, Bavarian
Nordic is now looking for a partner in order to secure the continued
development of MVA-BN® HIV multiantigen in a full Phase II.
MVA-BN® Measles
The first paediatric clinical trial evaluating the safety and
immunogenicity of MVA-BN® Measles was initiated as planned in the
second quarter of 2009. Ninety children between the ages on 6 months
to 6 years will be vaccinated in this Phase I study. The first
children have been vaccinated, without any reported safety concerns
and enrolment is on track to be completed during this year.
Tropical diseases
The two preclinical projects in tropical diseases; dengue fever and
Japanese encephalitis are currently not in development. In line with
the strategy, no resources will be spent on these projects. However,
the further development may be reassumed with a potential external
partner, but currently no discussions are ongoing.
Legal matters
Bavarian Nordic rejects claim from Helmholtz Zentrum München
In August, Bavarian Nordic was notified by the ICC International
Court of Arbitration that a request for arbitration has been received
from Helmholtz Zentrum München, Deutsches Forschungszentrum für
Gesundheit und Umwelt GmbH (formerly also known as GSF).
The arbitration request is based on two old agreements with Bavarian
Nordic from 1994 and 1997 regarding a collaboration on certain
recombinant vaccines, which was formally terminated in 2001. The
agreements do not encompass the MVA-BN® patents but provide Bavarian
Nordic with exclusive royalty bearing license to specific patents on
recombinant vaccines and include clauses dealing with transfer of
know how pertaining thereto. Nevertheless, Helmholtz Zentrum München
now in 2009 claims rights to royalties on Bavarian Nordic's MVA-BN®
based vaccines, including IMVAMUNE®.
Bavarian Nordic views this claim based on the old agreements as being
baseless and without merit.
Patent infringement suit against Oxford BioMedica
The patent infringement suit filed by Bavarian Nordic against Oxford
BioMedica in the United States in 2008 continues. Instead of denying
infringement, Oxford Biomedica had made a second attempt to dismiss
the suit arguing that it was premature because TroVax® was still
evaluated in clinical trials. However, in May 2009, the court ruled
against Oxford Biomedica and the case will thus continue, based on
the substance of the patents. Oxford BioMedica made yet another
unsuccessful attempt to get the case dismissed that was struck down
by the court in June 2009. Discovery is ongoing and a jury trial is
scheduled to commence on December 7, 2010.
Bavarian Nordic owns several United States patents relating to an
attenuated strain of the company's core technology, MVA-BN®, which is
the basis for its smallpox vaccine, IMVAMUNE®. MVA-BN® also holds
promise as a vector for delivering recombinant vaccines. Bavarian
Nordic has asserted four US patents as a basis for its infringement
action. The claim in this case is that Oxford BioMedica has infringed
Bavarian Nordic's patents by commercializing the patented technology
in ways that have yielded large payments from Sanofi-Aventis under
the agreement between them for the development and commercialization
of TroVax®.
Financial statement for the period (1 January - 30 September 2009,
un-audited)
The comparison figures for the same period 2008 are stated in
parenthesis.
The revenue totalled DKK 20 million (DKK 22 million) in the third
quarter. Year to date revenue is DKK 53 million (DKK 45 million). The
revenue derives primarily from sale under the RFP-2 contract with the
U.S. health authorities.
Production costs totalled DKK 29 million (DKK 62 million) in the
third quarter. Year to date the production costs are DKK 126 million
(DKK 101 million). The production costs are higher due to higher
batch production at the Kvistgaard facility.
The Group's research and development costs totalled DKK 39 million
(DKK 26 million) in the third quarter. Year to date research and
development costs are DKK 114 million (DKK 98 million). The increase
in research and development costs is primarily due to increased
activities in the cancer business area and costs related to expansion
of the QA department. Furthermore, development costs from the RFP-3
contract totalled DKK 33 million, of which DKK 24 million are
capitalised as intangible assets under construction.
Sales costs totalled DKK 4 million (DKK 6 million) in the third
quarter. Year to date the sales costs are DKK 14 million (DKK 16
million).
Administrative costs totalled DKK 22 million (DKK 18 million) in the
third quarter. Year to date the administration costs are DKK 69
million (DKK 54 million). The increase is partly due to the
implementation of new IT systems, partly to personnel costs connected
to an increase in the number of employees and partly to legal fees.
Income before tax is a deficit of DKK 74 million (deficit of DKK 76
million) in the third period. Year to date income before tax is a
deficit of DKK 261 million (deficit of DKK 195 million).
Net result in the third quarter is a deficit of DKK 63 million
(deficit DKK 60 million). Year to date the result is a deficit of DKK
212 million (deficit of DKK 155 million).
The IMVAMUNE® inventory totalled DKK 156 million (DKK 36 million).
The company expects that already produced IMVAMUNE® will be delivered
to existing and future customers, including its main customer; the US
government, upon the acceptance from the FDA.
As of 30 September 2009 the Group's net free liquidity was DKK 304
million (DKK 782 million). Cash flow from operations is negative with
DKK -416 million (DKK -66 million). Cash flow from investment
activities is DKK 1 million (DKK -55 million) and cash flow from
financing activities is DKK -11 million (DKK -11 million). The net
change in cash and cash equivalents is negative with DKK -428 million
(DKK -133 million).
The Group's equity as of 30 September 2009 was DKK 793 million (DKK
1,027 million). The decrease flows from retained earnings.
Financial expectations
As the company is awaiting the exact timing of the FDA review and
final acceptance, the timing of the actual initiation of delivery is
at present uncertain. In order to reflect this, the expectations for
the financial result for the full year 2009 are at present indicated
as a range.
Depending on the timing for initiation of delivery, the revenue is
expected to be in the range of DKK 100-300 million, based on a
maximum delivery of 1.5 million doses. The difference of approx. DKK
200 million contain the postponed delivery of doses to the US
government under the RFP-3 contract, a pro rata revenue recognition
of the up front payment of USD 50 million received in 2007 currently
booked in the balance sheet as pre-payment from customer and
reimbursable costs related to the first delivery.
The result before tax is expected to be a loss between DKK 275-325
million. The difference of approx. DKK 50 million contain the Cost of
Goods Sold related to the postponed delivery partly reduced by some
of the write downs on inventory made in 2008. A prerequisite for
maintaining the high end of the guidance is that the company will
receive delivery allowance from the US authorities no later than
beginning of December 2009.
The net free liquidity at year-end is expected to be approximately
DKK 175 million as a potential delivery to the US Government by late
2009 will not have a cash effect in 2009. In order for Bavarian
Nordic to gain the independence to execute its short and long term
activities within biodefence and cancer, the company is exploring
available options for securing an optimum financial position.
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 30 September 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 30
September 2009 and the results of the group's activities and cash
flows for the period 1 January to 30 September 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, 11 November 2009
Corporate Management:
Anders Hedegaard
President and CEO
Board of Directors:
Asger Aamund
Chairman of the Board
Claus Bræstrup
Erling Johansen
Gerard van Odijk
Flemming Pedersen
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