Bavarian Nordic A/S - Interim Report for the period 1

During the first quarter of 2008, Bavarian Nordic completed a
strategy process which resulted in an updated strategy for the
company in the years to come. The company's primary current objective
is the fulfilment of the RFP-3 contract with the U.S. government,
including the production and delivery of 20 million doses of
IMVAMUNE® as well as the further clinical development and licensing
of IMVAMUNE®. The company has reordered the priorities of the other
development programmes in order to expand the biodefense portfolio
and put more focus into the cancer business area.
In the first quarter of 2008 Bavarian Nordic generated revenue of DKK
14 million and recorded a loss before tax of DKK 62 million. As of 31
March 2008 the Group's net free liquidity was DKK 891 million. The
expectations for the financial result for the full year 2008 are
maintained at revenues in the region of DKK 180 million, and a
pre-tax loss in the region of DKK 225 million. The main part of the
revenue comprises of a milestone payment under the RFP-3 contract,
which is expected in the second half of 2008.
Highlights
* Bavarian Nordic has signed contract with Asian country for
the delivery of IMVAMUNE®
Bavarian Nordic has signed a three-year contract with the government
of an Asian country for the delivery of a small order of IMVAMUNE®
for the country's biodefense programme. This contract, which is
considered as an initial order, is Bavarian Nordic's first since the
award of the RFP-3 contract. The extent and value of the contract are
undisclosed. Bavarian Nordic will manufacture and deliver IMVAMUNE®
smallpox vaccines for this country before initiating the delivery of
the 20 million doses of IMVAMUNE® for the U.S. government.
* Anthrax programme strengthens biodefense portfolio
As part of building up its biodefense portfolio, Bavarian Nordic has
initiated a preclinical programme for an anthrax vaccine. The company
sees a number of synergies - both in the development and in market
approach which support the development of such a vaccine. Also, it is
expected that a combined anthrax and smallpox vaccine can be
developed and thus Bavarian Nordic would be able to offer one vaccine
against two of the top biological threats. The anthrax programme is
expected to enter Phase I in 2008.
Research and development
Biodefense
IMVAMUNE® - third generation smallpox vaccine
The company expects to discuss the Phase III study design and data
requirements for a biologic licence application (BLA) with the FDA in
the second half of 2008. Subsequently, the clinical activities to
support Phase III studies are still expected to start in 2009.
Recruitment for the Phase II study in HIV-infected subjects will be
completed in the second quarter of 2008 and the interim safety data
will be reported in the second half of 2008. Subsequently, the data
package will be submitted to the US health authorities. The completed
submission will trigger a milestone payment of USD 25 million under
the RFP-3 contract.
In the second half of 2008 Bavarian Nordic expects to initiate two
Phase II studies. The first study is designed to demonstrate the
effect of IMVAMUNE® as a booster vaccination (re-vaccination of
subjects previously vaccinated with IMVAMUNE®) and the second to
investigate the safety and immunogenicity of IMVAMUNE® in an elderly
population.
Cancer immunotherapy
Breast cancer
Currently patients with Her-2 positive, metastatic breast cancer are
being enrolled in two clinical Phase I/II studies performed in three
countries. The first study is ongoing in California, USA. The second
study is enrolling patients in multiple centers in Serbia and Poland.
In the US study, metastatic cancer patients are vaccinated after they
receive chemotherapy, in the European study chemotherapy and
vaccination are combined. Patients may or may not receive Herceptin®
concurrently. The studies are enrolling patients as planned and no
drug-related severe adverse events have been reported thus far.
Initial data regarding the patients' immune responses are expected in
second quarter of 2008.
Prostate cancer
An Investigational New Drug application (IND) was filed with the US
FDA in December 2007 to start a clinical study in hormone-refractory
prostate cancer patients. This Phase I/II study will be performed in
the US and is currently planned to enroll 18 patients starting in
second quarter 2008.
Infectious diseases
MVA-BN® HIV polytope
Bavarian Nordic has completed one of three ongoing studies with
MVA-BN® HIV polytope. As announced on 6 November 2007 in the interim
report as of 30 September 2007, the company refocused its HIV
strategy in order to incorporate the data generated from the MVA-BN®
HIV polytope and MVA HIV nef programmes into the MVA-BN® multiantigen
programme, which continues as the company's HIV programme.
Preliminary results from the concluded study confirm the company's
previous clinical findings in that MVA-BN® based vaccines appear safe
in immune compromised populations and have the ability to stimulate a
broad T cell response.
MVA-BN® HIV multiantigen
MVA-BN® HIV multiantigen is designed as both a prophylactic and a
therapeutic vaccine candidate and has been designed to incorporate
the knowledge and success of previous MVA-BN® HIV studies.
An IND has been filed with the FDA and a Phase I/II study to
investigate the safety and immunogenicity of the vaccine in 15
HIV-infected subjects will be initiated in second quarter of 2008.
Measles
Bavarian Nordic has previously shown that IMVAMUNE® and MVA-BN® based
vaccines (including the measles vaccine candidate) are safe and
highly immunogenic in new born animals. These findings offer the
opportunity to develop MVA-BN® as a platform vaccine technology for
childhood vaccines that have the potential to stimulate protective
immune responses in children under the age of 1 year.
The first Phase I study that was initiated late in 2007 evaluated the
safety and immunogenicity of the measles vaccine in 30 healthy adult
subjects. The immunogenicity data from this study have revealed that
the vaccine is highly immunogenic. As expected, the majority (93%) of
the enrolled subjects already had measurable antibodies against
measles, due either to prior vaccination or measles infection.
However, following the first vaccination with the MVA-BN® vaccine the
antibody response were significantly boosted in nearly all subjects.
Indeed, the levels of the antibody responses against measles were
approximately 4-fold greater than those previously recorded in adults
boosted with a commercial measles vaccine. These results confirm
animal studies that have also demonstrated that the MVA-BN® vaccine
stimulates significantly higher antibody responses in adult mice
compared to a commercial measles vaccine and these same levels of
immunity are induced in newborn mice by the MVA-BN® measles vaccine.
Following these encouraging results Bavarian Nordic plans to conduct
a Phase I study in children in the second half of 2008.

+-------------------------------------------------------------------+
| PIPELINE | Programme | Status | Next milestone |
|------------+-----------------+-------------+----------------------|
| Biodefense | Smallpox | Phase II | Phase III (2009) |
| | (IMVAMUNE®) | | |
| |-----------------+-------------+----------------------|
| | Anthrax | Preclinical | Phase I (2008) |
|------------+-----------------+-------------+----------------------|
| Cancer | Breast Cancer | Phase I/II | Safety and |
| | | | immunogenicity data |
| | | | (2008) |
| |-----------------+-------------+----------------------|
| | Prostate Cancer | Preclinical | Phase I/II (Q2, |
| | | | 2008) |
|------------+-----------------+-------------+----------------------|
| Infectious | HIV | Preclinical | Phase I/II (Q2, |
| diseases | multiantigen | | 2008) |
| |-----------------+-------------+----------------------|
| | Measles and RSV | Phase I | Phase I in children |
| | | | (H2, 2008) |
+-------------------------------------------------------------------+

Changes in management
As announced on 31 March 2008, Bavarian Nordic has appointed new
members of the Executive Management. Anders Gram will replace René
Djurup, Executive Vice President Technical Operations, who decided to
resign from his position as of 31 May 2008. Ole Larsen has been
appointed as new CFO and will join the Company on 1 October 2008 at
the latest. Reiner Laus, President & CEO of Bavarian Nordic's US
subsidiary, BN ImmunoTherapeutics Inc., will also join the Executive
Management, which hereafter consists of the following:
Anders Hedegaard, President & CEO
Nicolai Buhl Andersen, EVP Commercial Affairs
Paul Chaplin, EVP Research & Development
Reiner Laus, EVP and CEO of BN ImmunoTherapeutics Inc.
Morten Max Rasmussen, EVP Transactions, Legal & IPR
Anders Gram, EVP Technical Operations
Ole Larsen, EVP Finance
Report for the period (1 January - 31 March 2008, un-audited)
The comparison figures for the same period 2007 are stated in
parenthesis.
The revenue was DKK 14 million (DKK 29 million). The revenue derives
from sale of IMVAMUNE® and from the RFP-2 contract with the US health
authorities. The activity of this development contract was very low
in the first quarter, which is the reason for the lower revenue
compared to the same period last year.
Profit before tax was a deficit of DKK 62 million (deficit: DKK 52
million).
The Group's expenses for production increased to DKK 32 million (DKK
18 million). The increase is due to the start up of routine
production at the Kvistgaard facility.
In the first quarter 2008 the Group's research and development
expenses were DKK 37 million, of which DKK 9 million were development
costs from the RFP-3 contract, which are capitalised as intangible
assets in progress.
Sales and administrative expenses were DKK 21 million (DKK 19
million). The increase primarily derived from increase in commercial
activities and IT-expenses.
As of 31 March 2008 the Group's net free liquidity was DKK 891
million (DKK 599 million).
The expectations for the financial result for the full year 2008 is
still a revenue in the region of DKK 180 million, and a pre-tax loss
in the region of DKK 225 million. The main part of the revenue
comprises of a milestone payment under the RFP-3 contract, which is
expected in the second half of 2008.
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 2008.
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 OMX Nordic Exchange in 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
2008 and the results of the group's activities and cash flows for the
period 1 January to 31 March 2008.
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, 29 April 2008
Corporate Management:
Anders Hedegaard
President and CEO
Board of Directors:
Asger Aamund,Chaiman of the Board
Eigil Bjerl Nielsen
Erling Johansen
Flemming Pedersen
Contact: Anders Hedegaard, President & CEO | +45 33 26 83 83

Bavarian Nordic A/S - Interim Report for the period 1 January to 31 March 2008

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