Bavarian Nordic A/S - Interim Report for the period 1 January to 30 June 2010

In the first half of 2010 Bavarian Nordic generated revenue of DKK 175 million
and recorded a loss before tax of DKK 179 million. Revenue is primarily derived
from the deliveries of IMVAMUNE® to the U.S. Strategic National Stockpile under
the RFP-3 contract. As of 30 June 2010 the Group's cash preparedness was DKK
219 million. After close of the period, the cash preparedness was significantly
strengthened and amounts to approx. DKK 460 million by the reporting date.

Bavarian Nordic's financial expectations for the full year 2010 were primarily
based on the delivery of 4-5 million doses of IMVAMUNE® to the U.S. In order to
achieve this, the company began upscaling of the production capacity upon the
delivery allowance from the FDA earlier this year. However, technical issues
have caused a temporary postponement in the upscaling, thereby delaying the
planned production volume in 2010. As a consequence, Bavarian Nordic will now
deliver 2 million doses in 2010. Delivery of the remaining 18 million doses
under the RFP-3 contract will occur from 2011 through 2013. The source of the
problem has been identified and Bavarian Nordic has taken corrective actions to
address the issues, whereupon the upscaling will be resumed.

As a consequence, the expectations for the financial result for the full year
2010 have been adjusted. Expected revenues are lowered from DKK 475 million to
the level of DKK 325 million, and the result before tax is lowered from a loss
of DKK 250 million to a loss in the level of DKK 450 million. The cash
preparedness at year-end is expected to be in the level of DKK 250 million,
which is in line with the previously guided range of DKK 225 million to DKK 275
million.

Highlights from the period

  ·    PROSTVAC(TM) regulatory path outlined, Fast Track granted by the FDA
    During first half of 2010, the regulatory path for PROSTVAC(TM) was outlined
as Bavarian Nordic in March concluded the Scientific Advice from the European
Medicines Agency and the End of Phase II meeting with the FDA. In May,
PROSTVAC(TM) was granted Fast Track status by the FDA.

  · IMVAMUNE® deliveries to the U.S. Strategic National Stockpile initiated
    In May, Bavarian Nordic initiated the delivery of IMVAMUNE® smallpox vaccine
to the U.S. Strategic National Stockpile. Under the RFP-3 contract with BARDA,
Bavarian Nordic will deliver 20 million doses of IMVAMUNE®. To date, more than
1.4 million doses have been delivered, of which approximately 1.2 million doses
were delivered and invoiced as of 30 June 2010.


Important events after the period

  · PROSTVAC(TM) Phase III clinical trial protocol submitted to the Special
Protocol Assessment process
    As planned, Bavarian Nordic has submitted the PROSTVAC(TM) Phase III
clinical trial protocol to the Special Protocol Assessment (SPA) process with
the FDA. Feedback is expected in second half of 2010.

  · The PROSTVAC(TM) production process is in place and technology transfer is
being completed
    Release of clinical trial material for the Phase III study is expected to
occur during 2011, and this does not change the overall clinical trial and
regulatory filing timeline.

  · Bavarian Nordic has received milestone payment of USD 25 million under the
RFP-3 contract
    The last milestone payment under the RFP-3 contract was received earlier
than previously expected after completion of certain important milestones
related to the development and deliveries of IMVAMUNE®. The payment of USD 25
million will be recognised as revenue in the financial statements upon
completion of the contract.


  · Cash preparedness significantly strengthened
    Along with the milestone payment of USD 25 million, Bavarian Nordic's cash
preparedness was further strengthened with the obtaining of a credit facility of
DKK 100 million. Additionally, a financial covenant has been eliminated, adding
further to the company's financial flexibility.

Anders Hedegaard, President & CEO commented on the interim report: "The delivery
allowance from the FDA and the subsequent initiation of deliveries of IMVAMUNE®
smallpox vaccine to the U.S. Strategic National Stockpile under the contract
with Biomedical Advanced Research and Development Authority (BARDA) in first
half of 2010 represents a landmark event for Bavarian Nordic. The initiation of
deliveries along with solid progress in the development of IMVAMUNE® triggered
the next milestone payment of USD 25 million under the contract, which was
received earlier than expected.

We also made important advancements in the preparations for Phase III studies
with PROSTVAC(TM), most recently with the submission of the clinical trial
protocol to the Special Protocol Assessment process with the FDA. We see a still
increasing interest for PROSTVAC(TM) amongst healthcare professionals, patients,
investors and potential partners and we are working dedicated towards licensing
of PROSTVAC(TM), which holds the potential to fulfil an unmet medical need for
patients, who are currently left with very limited treatment options."

Conference call
The company will host a conference call today, Tuesday, August 31 at 2. p. m.
CET. President and CEO, Anders Hedegaard will present the interim results
followed by a Q&A session. Also attending are Reiner Laus, Executive Vice
President & CEO of BN ImmunoTherapeutics, Ole Larsen, Executive Vice President &
CFO and Rolf Sass Sørensen, Vice President Investor Relations & Communications.
Dial-in numbers for the conference call are: Denmark: +45 3271 4607, UK: +44
(0)20 7162 0077, US: +1 334 323 6201. The accompanying presentation is available
on the company's website:www.bavarian-nordic.com.

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

Management's review

Pipeline


+-------------------+-------------------------+-----------+--------------------+
|PIPELINE           |Programme                |Status     |Next milestone      |
+-------------------+-------------------------+-----------+--------------------+
|                   |PROSTVAC(TM)             |Phase II   |Phase III (2011)    |
|                   +-------------------------+-----------+--------------------+
|                   |Breast Cancer            |           |Complete enrolment  |
|                   |(MVA-BN(®)-HER2)         |Phase I/II |and initial immune  |
|Cancer             |                         |           |data (2011)         |
|                   +-------------------------+-----------+--------------------+
|                   |Prostate Cancer          |           |Complete treatment  |
|                   |(MVA-BN(®) PRO)          |Phase I/II |period (2010), final|
|                   |                         |           |data (2011)         |
+-------------------+-------------------------+-----------+--------------------+
|                   |Smallpox (IMVAMUNE(®))   |Phase II   |Initiate Phase III  |
|Biodefence         |                         |           |(2010/2011)         |
|                   +-------------------------+-----------+--------------------+
|                   |Anthrax                  |Preclinical|Phase I (2011)      |
+-------------------+-------------------------+-----------+--------------------+
|                   |HIV multiantigen         |Phase I/II |Identify partner for|
|                   |                         |           |full Phase II       |
|Infectious diseases+-------------------------+-----------+--------------------+
|                   |Measles and RSV          |Phase I    |Phase I data (H2,   |
|                   |                         |           |2010)               |
+-------------------+-------------------------+-----------+--------------------+

Cancer

PROSTVAC(TM) - prostate cancer vaccine candidate

Regulatory pathway outlined. SPA submitted to the FDA
During first half of 2010, the regulatory path for PROSTVAC(TM) was outlined as
Bavarian Nordic in March concluded the Scientific Advice from the European
Medicines Agency and the end of Phase II meeting with the FDA for the
PROSTVAC(TM) programme. Both agencies expressed general agreement with the
proposed Phase III clinical programme of PROSTVAC(TM). Based on the consolidated
feedback Bavarian Nordic has assembled a clinical trial protocol which was
recently submitted to the Special Protocol Assessment (SPA) process with the
FDA. Feedback from FDA is expected in second half of 2010.

Bavarian Nordic is planning to achieve marketing approval for PROSTVAC(TM) 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).

PROSTVAC(TM) granted Fast Track status
In May PROSTVAC(TM) was granted Fast Track designation by the FDA for its
proposed use in the treatment of men with asymptomatic or minimally symptomatic
mCRPC.

The FDA determined that PROSTVAC(TM) meets the criteria for Fast Track
designation as it has demonstrated a potential survival benefit and an excellent
safety profile in the intended patient population of men with asymptomatic or
minimally symptomatic mCRPC. The potential of PROSTVAC(TM) to provide a survival
benefit with minimal toxicity was based on results from the double-blind,
randomized, placebo controlled Phase II trial in which 122 men with mCRPC were
enrolled and evaluated.

The Fast Track programme of the FDA is designed to facilitate the development
and expedite the review of new drugs that are intended to treat serious or
life-threatening conditions and that demonstrate the potential to address unmet
medical needs. Under Fast Track, Bavarian Nordic would also be eligible to
submit a biologics license application (BLA) on a rolling basis. This permits
the FDA to review sections of the BLA in advance of receiving the complete
submission.

Phase III preparations
In preparation of phase III, Bavarian Nordic has signed an agreement with the
company Pharmaceutical Product Development, Inc. (PPD), a leading global
contract research organization for the management of the PROSTVAC(TM) Phase III
study. Preparations for the trial are ongoing. Clinical trial centres are now
being selected with first patients expected to be enrolled following final
regulatory approvals and product availability during 2011. Key regulatory
elements such as the SPA are expected to be finalised during 2010 whereas the
final release of clinical trial material for the Phase III study is expected to
occur during 2011. The overall clinical trial and regulatory filing timeline
remains unchanged.

The production process is in place and the transfer of production technology is
about to be finalised. The manufacturing will be based on the same technology
used for production of clinical trial material for the Phase I and Phase II
trials.

Partner for Phase III development and commercialisation
Bavarian Nordic is in ongoing discussions with a number of potential licensing
partners for PROSTVAC(TM) and these are progressing according to plan.

Ongoing PROSTVAC(TM) studies
To date PROSTVAC(TM) has been tested on more than 570 patients in 18 clinical
studies 13 of which have been completed, and 5, which are still in progress. The
ongoing studies, all of which are conducted and sponsored by the National Cancer
Institute, include:

   A Phase II study comparing the radioactive drug samarium with or without
PROSTVAC(TM) therapy in 70 patients with metastatic prostate cancer. Clinical
endpoint: 4 month progression free survival
Enrolment is ongoing, with expected results in 2012.

   A Phase II study comparing antihormone therapy (flutamide) with or without
PROSTVAC(TM) therapy in 70 patients with non-metastatic prostate cancer.
Clinical endpoint: time to progression. Enrolment is ongoing, with expected
results in 2012.

   A Phase II study investigating PROSTVAC(TM) in 50 patients with PSA progress
after local therapy (surgery and/or radiation). Clinical endpoint: PSA
progression at 6 months / PSA velocity. Second stage of trial that combines
PROSTVAC with androgen ablation therapy is ongoing with results expected in the
second half of 2010

   A Phase I dose-escalation, combination study with PROSTVAC(TM) and MDX-010
(CTLA-4 antibody) in 30 patients with metastatic prostate cancer. Clinical
endpoint: Safety, PSA response, CT response.  Enrolment has been completed with
results expected in the second half of 2010.

   Phase I study investigating PROSTVAC(TM) by intra-prostatic injection in 20
patients with progressive or locally recurrent prostate cancer. Clinical
endpoint: Safety, PSA response, immune response Enrolment has been completed
with results expected in the second half of 2010.

MVA-BN®-HER2 breast cancer vaccine candidate
As planned, Bavarian Nordic has initiated a new Phase I/II study in the US with
its breast cancer vaccine candidate, MVA-BN®-HER2. The study, which is currently
recruiting, will evaluate the safety and immunological efficacy of the improved
version of the vaccine in an adjuvant therapy setting in patients with HER2
positive breast cancer. Initial immune data from the study will be available
during 2011.

Biodefence

IMVAMUNE® - smallpox vaccine candidate
To-date, more than 3,200 individuals have been vaccinated with IMVAMUNE®,
demonstrating a favourable safety profile including in individuals with
compromised immune systems who are currently not eligible for conventional
smallpox vaccines.

Deliveries to the U.S. Strategic National Stockpile initiated
In May, Bavarian Nordic initiated the delivery of IMVAMUNE® smallpox vaccine to
the U.S. Strategic National Stockpile under the RFP-3 contract with BARDA to
deliver 20 million doses of IMVAMUNE®. Deliveries were initiated upon
notification from the FDA that all actions taken by the company to address the
observations made during the inspection of the manufacturing facilities in 2009
had been accepted. Approximately 2 million doses of IMVAMUNE® were produced in
advance of the delivery allowance. These were accepted for delivery and will be
delivered during 2010. To date, more than 1.4 million doses have been delivered,
of which approximately 1.2 million doses were delivered and invoiced as of 30
June 2010.

Change in delivery schedule
Upon the delivery allowance, Bavarian Nordic initiated a scale-up of the
production in order to increase the production volume. However, technical issues
in the initial upscaling process caused a temporary postponement in the
production. The source of the problem has been identified and Bavarian Nordic
has taken corrective actions to address the issues, whereupon the upscaling will
be resumed. Additional workforce will be taken on and trained, whereupon the
production volume gradually will increase.

This has caused a delay in the planned production of IMVAMUNE® in 2010, and
Bavarian Nordic will deliver 2 million doses in 2010. As a consequence, the last
deliveries under the base contract will take place in 2013.

The bulk vaccine produced during the initial scale up does not meet all the
predefined specifications. As the vaccine does not qualify for delivery to the
U.S. Strategic National Stockpile, the company has written off the inventory,
amounted to DKK 39 million. The write-off, which has been done after the close
of the period, is included in the adjusted financial guidance.

Performance-based milestone payment of USD 25 million received
The last milestone payment under the RFP-3 contract was received earlier than
previously expected after completion of certain important milestones related to
the development and deliveries of IMVAMUNE®. The payment will be recognised as
revenue in the financial statements upon completion of the contract.

A contract modification which includes additional work has added USD 5 million
to the total contract value, thus totalling USD 505 million of which USD 50
million is due upon licensure of the IMVAMUNE® and USD 150 million were already
received in advance and milestone payments. USD 300 million is being invoiced
pro rata with the vaccine deliveries.

Phase III protocols submitted to the FDA awaiting review
Based on the successful end of Phase II meeting for IMVAMUNE®, Bavarian Nordic
has now, according to plan, submitted the final clinical and preclinical
protocols for Phase III to the FDA. Once the protocols have been reviewed, a
Vaccines Related Biological Product Advisory Committee (VRBPAC) will be
scheduled by the FDA to ratify the license strategy. Upon their ratification,
the Phase III trials can be initiated.

Supportive data published in scientific journals
IMVAMUNE® will be licensed under the animal rule (i.e. animal data to support
the efficacy in humans), which requires investigations into the mechanism of
action of the product. To this end, two papers have been published in 2010 that
provide further data supporting the mechanisms of how IMVAMUNE® induces a
post-exposure protection from a lethal infection with mouse pox (Lauterbach et
al., 2010) and the underlying genetics of the attenuation properties of MVA-BN®
(Meisinger-Henschel et al., 2010). A third manuscript (Baur et al., 2010) that
has recently been published in the Journal of Virology has demonstrated that by
using a new promoter to drive the expression of a gene inserted into MVA-BN®,
this recombinant MVA-BN®-based vaccine could induce stronger immune responses to
the encoded antigen than to MVA itself, following repeated vaccinations with the
vaccine. This has clearly demonstrated that even in the presence of strong
immune responses to MVA a recombinant MVA-BN®-based vaccine can stimulate
stronger immune responses to a encoded gene, which obviously demonstrates the
many advantages and future utility of MVA-BN® based vaccines for infectious
diseases and cancer.

Baur K, Brinkmann K, Schweneker M, Pätzold J, Meisinger-Henschel C, Hermann J,
Steigerwald R, Chaplin P, Suter M, Hausmann J. Immediate-Early Expression of a
Recombinant Antigen by Modified Vaccinia Virus Ankara Breaks the Immunodominance
of Strong Vector-Specific B8R Antigen in Acute and Memory CD8 T-Cell Responses.
J Virol. 2010 84(17):8743-52.

Lauterbach H, Kassub R, Pätzold J, Körner J, Brückel M, Verschoor A, Chaplin P,
Suter M, Hochrein H. Immune requirements of post-exposure immunization with
modified vaccinia Ankara of lethally infected mice. PLoS One.
2010. 11;5(3):e9659.

Meisinger-Henschel C, Späth M, Lukassen S, Wolferstätter M, Kachelrieß H, Baur
K, Dirmeier U, Wagner M, Chaplin P, Suter M, Hausmann J. Introduction of the six
major genomic deletions of modified vaccinia virus Ankara (MVA) into the
parental vaccinia virus is not sufficient to reproduce an MVA-like phenotype in
cell culture and in mice. J Virol. 2010 Jul 28.

MVA-BN® Anthrax
The development of an MVA-BN® based anthrax vaccine is proceeding satisfactorily
with Phase I studies expected to commence in 2011.

Other issues

Bavarian Nordic awards warrants to certain employees
The Board of Directors in Bavarian Nordic A/S has today decided to award
warrants to certain 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 5b of the Articles of Association and the
Company's guidelines regarding incentive programs. The award 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 35,000 warrants are awarded for subscription of up to 35,000 shares
of a nominal value of DKK 10 at an exercise price of DKK 259 per share. The
exercise price is established as 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. However, the exercise price must at least be equal to the
Company's average exchange-listed price today. In the event that the average
exchange-listed price on the Company's shares today exceeds DKK 259 the exercise
price shall be increased accordingly. If this becomes relevant the Company will
make a separate announcement to NASDAQ OMX.

The warrants can be exercised wholly or partly in a period of 14 days commencing
from the day of publication of the Company's Half Year Report for 2013, from the
day of publication of the Company's Annual Report for 2013, from the day of
publication of the Company's Half Year Report for 2014 and/or in a period of 14
days commencing from the day of publication of the Company's Annual Report for
2014.

The value of each warrant equals DKK 76 and is calculated on the Black-Scholes
model with a risk-free interest rate of 0.8 per cent and on the historical
volatility of the shares. The calculation is based on a market value of the
share of DKK 223 per share.

The award of warrants will incur consequential amendments to the Articles of
Association.

Financial statement for the period (1 January - 30 June 2010, un-audited)
The comparison figures for the same period 2009 are stated in parenthesis.

Revenue in the period totalled DKK 175 million (DKK 33 million). The revenue
derives mainly from the sale of IMVAMUNE® under the RFP-3 contract, DKK 116
million; reimbursement of security costs under RFP-3, DKK 29 million; revenue
from the RFP-2 contract, DKK 26 million and revenue from the IMVAMUNE®
freeze-dried contract, DKK 4 million.

The production costs totalled DKK 212 million (DKK 96 million). The production
costs are higher due to cost of goods sold, DKK 67 million (DKK 0 million);
costs due to contract work, DKK 40 million (DKK 23 million) and other production
costs of DKK 105 million (DKK 73 million).

The Group's research and development costs totalled DKK 92 million (DKK 75
million) excluding development costs from the RFP-1, RFP-2 and freeze-dried
contracts of DKK 21 million which are part of the contract work as classified
under production costs.

Distribution costs totalled DKK 14 million (DKK 9 million) and administrative
costs totalled DKK 46 million (DKK 48 million).

Income before tax is a deficit of DKK 179 million (deficit of DKK 188 million).

Net result in the first half of 2010 is a deficit of DKK 148 million (deficit
DKK 149 million).

The IMVAMUNE® inventory totalled DKK 204 million (DKK 135 million). The write
down of inventory as of 30 June 2010 is lower than compared to same period last
year due to change in assessment of write down of stock at year end 2009. The
IMVAMUNE® inventory is reduced by DKK 43 million compared to year end 2009. This
is due to sales of goods, DKK 67 million and production output discarded in
2010, DKK 54 million.

As of 30 June 2010 the Group's cash preparedness is DKK 219 million (DKK 509
million). Cash flow from operations is negative with DKK 246 million (DKK -262
million). Cash flow from investment activities is negative with DKK 16 million
(DKK 28 million) and cash flow from financing activities is DKK 283 million (DKK
‑7 million). The net change in cash and cash equivalents is positive with DKK
21 million (DKK -242 million).

A milestone payment under the RFP-3 contract of USD 25 million was invoiced at
the end of May 2010. As of 30 June 2010 the payment is recognized fully as
prepayments. Payment of the receivable has been received in the beginning of
July.

The Group's equity as of 30 June 2010 is DKK 822 million (DKK 848 million). The
right issue in first quarter 2010 increased the equity by DKK 302 million net
after related costs.

Financial expectations
Due to the timing difference in deliveries under the RFP-3 contract, part of the
expected revenue will be received later. However, the lower revenue in 2010 will
be partly offset by higher revenue from other ongoing contracts.

For the full year 2010, expected revenues are lowered from DKK 475 million to
the level of DKK 325 million, and the result before tax is lowered from a loss
of DKK 250 million to a loss in the level of DKK 450 million. This includes all
discarded batches. Revenue will primarily be generated from the delivery of 2
million doses 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 in line with previous guidance and is
expected to be in the level of DKK 250 million, based on the recently received
milestone payment of USD 25 million and the recent obtaining of a credit
facility of DKK 100 million. Additionally, the financial flexibility has
increased due the elimination of a financial covenant.

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 June
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 30 June 2010 and the results
of the group's activities and cash flows for the period 1 January to 30 June
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, 31 August 2010


Corporate Management:

Anders Hedegaard
President and CEO


Board of Directors:

Asger Aamund, Chaiman of the Board
Claus Bræstrup
Erling Johansen
Gerard van Odijk
Anders Gersel Pedersen
Erik G. Hansen

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.

About Bavarian Nordic
Bavarian Nordic A/S is a leading industrial 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 is focused in
the three areas; cancer, biodefence and infectious diseases, and includes seven
development programmes. Two programmes are under preparation for Phase III:
PROSTVAC(TM), a therapeutic vaccine for advanced prostate cancer is being
developed under a collaboration agreement with the National Cancer Institute and
IMVAMUNE®, a third-generation smallpox vaccine is being developed under a
contract with the US government.

Bavarian Nordic is listed on NASDAQ OMX Copenhagen under the symbol BAVA.
For more information please visit www.bavarian-nordic.com



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