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Bavarian Nordic A/S - Interim Report for the period 1 January to 30
June 2009

ID: 1003709
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(Thomson Reuters ONE) - In the first half of 2009 Bavarian Nordic generated revenue of DKK 33million and recorded a loss before tax of DKK 188 million. As of 30June 2009 the Group's net free liquidity was DKK 489 million.Bavarian Nordic's new prostate cancer vaccine - PROSTVAC(TM) has beenfurther validated and show blockbuster potential. Bavarian Nordic isprogressing the development and Phase III preparations ofPROSTVAC(TM):- End of phase II meeting with the FDA in Q4, 2009 and expectedinitiation of Phase III in 2010- Five ongoing clinical Phase I and II studies in different patientpopulations- Preparing the production for Phase III studies- Scientific publication of data- Ongoing discussions with prospective licensing partnersThe U.S. Food and Drug Administration (FDA) has performed a GMPinspection of the IMVAMUNE® manufacturing facilities. These GMPinspections occurred at both Bavarian Nordic's Kvistgaard facilityand at IDT in May 2009. The management of Bavarian Nordic considerthese inspections to be successfully completed, and the correctiveactions triggered by the inspections will be implemented within shorttime, causing no further investments. Bavarian Nordic has an ongoingand positive dialogue with FDA which confirms the expectations tostart deliveries of IMVAMUNE® under the RFP-3 contract following thesatisfactory implementation of the corrective actions. On thisbackground the company expects delivery of IMVAMUNE® to the USgovernment to be initiated during the period between fourth quarterof 2009 and the end of second quarter 2010.As the company is awaiting the exact timing of the FDA review andfinal acceptance the timing of the actual initiation of delivery isat present uncertain. In order to reflect this, the expectations forthe financial result for the full year 2009 are at present indicatedas a range. The expected revenue of DKK 375 million was based on thedelivery of 2 million doses of IMVAMUNE® in 2009. Depending on thetiming for initiation of delivery, the revenue is now expected to bein the range of DKK 100-300 million, based on a maximum delivery of1.5 million doses. The result before tax is expected to be a lossbetween DKK 275-325 million (previously DKK 225 million). The netfree liquidity at year-end is expected to be in the range between DKK175-350 million (previously DKK 400 million). Bavarian Nordicmaintains its long-term expectations to the net free liquidity to bearound DKK 800 million by year-end 2012.In order for the company to maintain a solid cash position, thecompany has implemented a number of operational activities, thuspostponing certain costs and investments until deliveries under RFP-3can begin.Highlights from the periodPROSTVAC(TM) data presented at international cancer congressesIn May 2009 detailed PROSTVAC(TM) data were presented at the 2009ASCO Annual Meeting in Orlando, Florida. The more detailed analysissupports the headline data that were reported in October 2008. In thePhase 2 double-blind, prospective randomized placebo-controlled studyof 125 patients with advanced prostate cancer, patients in thePROSTVAC(TM) group had a significantly longer median overall survivalby 8.5 months compared to the control group. PROSTVAC(TM)immunotherapy was well tolerated.In February 2009, PROSTVAC(TM) was presented at the 2009Genitourinary Cancers Symposium in Orlando, Florida. The data fromthree different studies once again confirm the excellent safety andefficacy results previously reported, and they support the furtherinvestigation of the vaccine in patients suffering from advancedprostate cancer. The data also indicates that PROSTVAC(TM) may beused in earlier disease settings and thus in a larger patientpopulation.Important events after the periodPROSTVAC(TM) abstract accepted for an oral presentation at the ECCOCongressA PROSTVAC(TM) abstract has been accepted for an presentation at theEuropean CanCer Organisation (ECCO), ECCO 15 - 34th ESMO Congress,taking place in Berlin September 20-24 2009.Negotiations with the US authorities for the further development ofIMVAMUNE®The US authorities have initiated negotiations with Bavarian Nordicfor a new contract to develop a freeze-dried version of the IMVAMUNE®smallpox vaccine. This potential new project will have no influenceon the ongoing RFP-3 contract for the procurement of 20 million dosesof IMVAMUNE® and the licensure of the current liquid-frozenformulation, but represents an additional business opportunity.ContactAnders Hedegaard, President & CEO. Phone +45 23 20 30 64Conference callA conference call will be held today at 10.30 a.m. (CEST). Presidentand CEO, Anders Hedegaard will present the interim results followedby a Q&A session. Also attending are Ole Larsen, CFO. Dial-in numbersfor the conference call are: Denmark: +45 3271 4611, UK: +44 (0)207162 0077. The accompanying presentation is available on thecompany's website: www.bavarian-nordic.com.Management's reviewDeliveries under the RFP-3 contractIn order to initiate the delivery of the 20 million doses ofIMVAMUNE® to the US under the RFP-3 contract, Bavarian Nordic has tofulfil certain requirements set by the U.S. Food and DrugAdministration (FDA) to potentially support the use of IMVAMUNE®following a declared emergency. These requirements include animalefficacy data, clinical safety data and the demonstration that themanufacturing of IMVAMUNE® is in accordance with industry standardsassociated with a marketed product.Bavarian Nordic has successfully completed a number of datasubmissions to the FDA in this regard the latest in November 2008.Bavarian Nordic's published timelines for initiating delivery in 2009was based on an assumption of the timely review and acceptance ofBavarian Nordic's last summary data submission made in November 2008.This data submission triggered a USD 25 million milestone payment andrepresented the successful completion of a major milestone of theRFP-3 contract. The completion of the milestone from BARDA followedby an FDA review of the data was expected to be the last hurdlebefore deliveries under the RFP-3 contract could start. However, bythe spring this year, the FDA responded to this submission with thenotice that, as a final step before deliveries, they would perform aGood Manufacturing Practice (GMP) inspection of the IMVAMUNE®manufacturing facilities. These GMP inspections were carried out atboth Bavarian Nordic's Kvistgaard facility and IDT (the company'scontract filling partner, already GMP approved by the Europeanauthorities) in May 2009.While the FDA did not raise any concerns regarding the facilities orthe IMVAMUNE® validated manufacturing process, a number ofobservations were noted, requiring corrective actions. This is usualfollowing an inspection by regulatory authorities. The company hasalready initiated its responses to these observations but thecorrective actions and FDA review and acceptance will take additionalmonths. Implementation of the corrective actions will cause nofurther investments.While this represents a delay in the planned delivery of IMVAMUNE®,following review of the data, the FDA have not raised any concernsregarding the animal, clinical or manufacturing data that has beensubmitted to support the use of IMVAMUNE® in a declared emergency.Thus satisfactory implementation of the corrective actions followingthe FDA inspection should trigger the start of IMVAMUNE® delivery.Therefore the company expects delivery of IMVAMUNE® to the USgovernment to be initiated during the period between fourth quarterof 2009 and before the end of second quarter 2010.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 | Phase I/II | Initiate new Phase || Cancer | (MVA-BN®-HER2) | | I/II study (2009) || |------------------+-------------+---------------------|| | Prostate Cancer | Phase I/II | Phase I/II data || | (MVA-BN® PRO) | | update (Q4,2009) ||------------+------------------+-------------+---------------------|| | HIV multiantigen | Phase I/II | Final report (H2, || | | | 2009) || Infectious |------------------+-------------+---------------------|| diseases | | | Complete || | Measles and RSV | Phase I | recruitment (H1, || | | | 2010) |+-------------------------------------------------------------------+BiodefenceIMVAMUNE® - third generation smallpox vaccine candidateFollowing the completion of the Phase II clinical development ofIMVAMUNE®, Bavarian Nordic held an end of Phase II meeting with theFDA in the beginning of 2009 to discuss the Phase III development.The animal efficacy models and phase III protocol were essentiallyagreed with the agency - outlining a clear path for licensure ofIMVAMUNE®. Once all protocols have been agreed with the FDA, aVaccines Related Biological Product Advisory Committee (VRBPAC) willbe scheduled to ratify the license strategy. This exceptional reviewpath means that Phase III studies will be initiated in 2010.Bavarian Nordic in negotiations with the US authorities for thefurther development of IMVAMUNE®The US authorities have initiated negotiations with Bavarian Nordicfor a new contract to develop a freeze-dried version of the IMVAMUNE®smallpox vaccine. This potential new project will have no influenceon the ongoing RFP-3 contract for the procurement of 20 million dosesof IMVAMUNE® and the licensure of the current liquid-frozenformulation, but represents an additional business opportunity.Earlier this year BARDA published a Broad Agency Announcement (BAA)soliciting proposals for the advanced development of medicalcountermeasures against chemical, biological, radiological andnuclear (CBERN) threats. In June, Bavarian Nordic submitted aproposal for the development of a freeze-dried formulation of theMVA-based smallpox vaccine, IMVAMUNE®. The proposal included thevalidation of the production process and the preclinical and clinicaldevelopment to support the use of the new freeze-dried formulation ofIMVAMUNE® following a declared emergency.A freeze-dried formulation of IMVAMUNE® offers various new advantagesin terms of increased shelf-life and improved stability of thevaccine compared to the current liquid-frozen formulation.Additionally, this will improve the cold-chain shipping logistics andstorage. These are all important criteria for governments around theworld that prioritise their bio terror preparedness.The new technology for freeze-drying the vaccine will also beapplicable for other MVA-BN® based vaccines.Preliminary immunogenicity data from large Phase II study indicatecomparable antibody responses in HIV infected and healthy subjectsThe Phase II study compared the safety and immunogenicity ofIMVAMUNE® in HIV infected subjects (CD4 200 to 750 ul) with healthysubjects. The safety report including data from over 300 HIV infectedand 86 healthy vaccinia-naïve subjects was submitted to the FDA aspart of the "socalled EUA data package" in November 2008. Presentdata indicate the antibody responses induced by IMVAMUNE® werecomparable in HIV infected subjects, even those with the lowest CD4 Tcell counts (200-350 ul) compared to the healthy subjects. Theanalysis is continuing, with a final report expected to be reportedin first half of 2010.Ongoing studiesBavarian Nordic has a number of ongoing clinical studies, all ofwhich are funded under the ongoing RFP-2 contract with the USgovernment. These include:- A Phase II study of patients diagnosed with atopic dermatitis (AD)- A Phase II study to demonstrate the effect of IMVAMUNE® whenadministered as a booster dose- A Phase I study in subjects between 56 and 80 years to generatedata on safety and immunogenicity of IMVAMUNE® in an elderlypopulationThe Phase II study to evaluate IMVAMUNE® in subjects with mild tomoderate AD is still ongoing. Recruitment was completed in March 2009and reached enrolment of the targeted 560 subjects, of which morethan 300 are individuals diagnosed with AD. Use of IMVAMUNE® in thispopulation has so far been shown to be safe and well tolerated,confirming the results of a previously performed Phase I study. Thefinal report from this trial, including a 6 month follow-up forsafety and the complete immunogenicity data set is expected in secondhalf of 2010.As planned, Bavarian Nordic has initiated a randomized, double-blind,placebo-controlled Phase II study to generate data on safety andimmunogenicity of IMVAMUNE® in an elderly population (56-80 year oldsubjects). Enrolment was recently initiated in the US and is expectedto be completed by end of 2009. The clinical study report is plannedto be available in second half of 2010.IMVAMUNE® in scientific publicationsThrough various publications, Bavarian Nordic continues to build thescientific profile of MVA-BN® and IMVAMUNE®. In June an article onthe efficacy of IMVAMUNE® in animal models - "Evaluation of theefficacy of modified vaccinia Ankara (MVA)/IMVAMUNE® againstaerosolized rabbitpox virus in a rabbit model" - was published in thepeer-reviewed journal Vaccine.Another article published in Vaccine concerns the positivecharacteristics of MVA-BN® compared to other versions of the MVA. Thearticle supports the characteristics that are key to the strongpatent position of the company.CancerPROSTVAC(TM) - therapeutic prostate cancer vaccine candidateBavarian Nordic's new prostate cancer vaccine - PROSTVAC(TM) has beenfurther validated and show blockbuster potential.Bavarian Nordic expects that an end of phase II meeting with the FDAwill take place during fourth quarter of 2009 in order to agree onthe study design of Phase III.The company is currently in preparations for initiating the Phase IIItrials with PROSTVAC(TM). Transfer and validation of the PROSTVAC(TM)production process to Bavarian Nordic's manufacturing facility inBerlin is ongoing in order to produce vaccines for the clinicaltrials.Throughout the first half of 2009, additional detailed data onPROSTVAC(TM) were presented at several international cancerconferences. Furthermore, PROSTVAC(TM) abstracts and reviews havebeen accepted for publication in a number of scientific journals.- In February 2009 PROSTVAC(TM) data were presented at the 2009Genitourinary Cancers Symposium in Orlando, Florida.The data, collected from three different studies confirm theexcellent safety and efficacy results previously reported, and theysupport the further investigation in patients suffering from advancedprostate cancer. Also, the data indicate that PROSTVAC(TM) can beused in earlier disease settings and thus in a larger patientpopulation.- In May 2009 detailed PROSTVAC(TM) data were presented at the 2009ASCO Annual Meeting in Orlando, Florida. The presentation was made byPhilip Kantoff MD, Professor of Medicine, Harvard Medical School, andthe Dana-Farber Cancer Institute who is also the principalinvestigator of the study.The more detailed analysis supports the headline data that werereported in October 2008. In the Phase 2 double-blind, prospectiverandomized placebo-controlled study of 125 patients with metastaticprostate cancer, patients in the PROSTVAC(TM) group had asignificantly longer median overall survival by 8.5 months comparedto the control group. The hazard ratio estimate for overall survivalfrom the study is 0.56 (95% CI 0.37-0.85).The statistical significance in the final data set is (p=0.006).These data were improved compared to the headline data presented inthe fall in connection with the first announcement.PROSTVAC(TM) immunotherapy was well tolerated, with some patientshaving injection site reactions (40-60%), and brief systemic symptomsof fatigue, fevers, and chills (10-30%) reported.- In July 2009, a review on PROSTVAC(TM) from key investigators fromthe 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) sofar.Quote from the article: "Preliminary clinical trials have indicatednegligible toxicity, and Phase II trials have suggested a survivalbenefit after treatment with PROSTVAC(TM), especially in patientswith indolent disease characteristics."- A PROSTVAC(TM) abstract has been accepted for an oral presentationat the European CanCer Organisation (ECCO), ECCO 15 - 34th ESMOCongress, taking place in Berlin September 20-24 2009.Ongoing PROSTVAC(TM) studiesThere are a number of ongoing clinical studies with PROSTVAC(TM) inboth early and late stage prostate cancer, all of which are fundedand conducted by NCI under the ongoing collaboration with BavarianNordic.Ongoing studies with active patient enrolling:- Phase II study comparing the radioactive drug, samarium with orwithout PROSTVAC(TM) therapy in men with metastatic prostate cancer- Phase II study comparing antihormone therapy (flutamide) with orwithout PROSTVAC(TM) therapy in men with non-metastatic prostatecancerOngoing studies with enrolment completed:- Phase II study investigating PROSTVAC(TM) in men with PSA progressafter local therapy (surgery and/or radiation)- Phase I dose-escalation, combination study with PROSTVAC(TM) andMDX-010 (CTL4-antibody) in men with metastatic prostate cancer- Phase I study investigating PROSTVAC(TM) by intraprostaticinjection in patients with progressive or locally recurrent prostatecancerAbout PROSTVAC(TM)PROSTVAC(TM) is a therapeutic vaccine moving into Phase III clinicaldevelopment that has the potential to extend the lives of people withadvanced prostate cancer. Administered subcutaneously, it induces aspecific, targeted immune response that attacks prostate cancercells. Conventional chemotherapy currently used to treat prostatecancer has limited survival rates and is often associated withnumerous side effects. In contrast, PROSTVAC(TM) has the potential toextend survival with improved quality of life. PROSTVAC(TM) is beingdeveloped in collaboration with the National Cancer Institute under aCooperative Research and Development Agreement with Bavarian Nordic'sU.S.-based subsidiary, BN ImmunoTherapeutics. In clinical trials todate PROSTVAC(TM) and related PSA containing poxviral vaccines havebeen investigated in more than 500 patients for 10 years.MVA-BN®-HER2 - breast cancerIn February 2009, Bavarian Nordic reported data from its clinicalPhase I/II studies with its breast cancer vaccine, MVA-BN®-HER2, indevelopment as therapy of metastatic breast cancer patients. Thestudy met its primary endpoint with regards to safety and by showingan immune response.Additionally Bavarian Nordic has completed preclinical studies withan improved version of the MVA-BN®-HER2 vaccine. In those studies,the new vaccine induced up to 20-fold higher T-cell immune responseas compared to the original version. Furthermore, it proved to beefficacious in additional tumour immunotherapy models in HER2transgenic mice. The immunological situation regarding HER2 in thosemice strongly resembles the situation in humans.Based on those encouraging data from both clinical and preclinicalstudies Bavarian Nordic decided to advance the clinical developmentof MVA-BN®-HER2 in further clinical studies with the new and improvedvaccine. Specifically, a new, single-site Phase I/II study in the USwill be initiated by 2009 and evaluate 24 patients in both metastaticbreast cancer as well as in an adjuvant therapy of breast cancersetting.Infectious diseasesMVA-BN® HIV multiantigenPreliminary immune data from the Phase I/II trial indicate thatMVA-BN®-HIV multiantigen induces a broad T cell response in HIVinfected subjectsThe first Phase I trial for this MVA-BN®-based prophylactic andtherapeutic HIV vaccine candidate vaccine completed enrolment in2008. MVA-BN® HIV multiantigen candidate expresses eight whole ortruncated antigens from HIV and was administered to 15 HIV infectedindividuals. As previously reported the vaccine was well toleratedand no serious adverse events were reported. Preliminaryimmunogenicity data are just becoming available and indicate that theHIV vaccine candidate was able to induce a broad T-cell response (tomultiple HIV proteins). A final study report is expected in thesecond half of 2009.MVA-BN® MeaslesThe first paediatric clinical trial evaluating the safety andimmunogenicity of MVA-BN® Measles was initiated as planned in thesecond quarter of 2009. Ninety children between the ages on 6 monthsto 6 years will be vaccinated in this Phase I study performed inSouth Africa. The first children have been vaccinated, without anyreported safety concerns.Legal mattersPatent infringement suit against Oxford BioMedicaThe patent infringement suit filed by Bavarian Nordic against OxfordBioMedica in the United States in 2008 continues. Instead of denyinginfringement, Oxford Biomedica had made a second attempt to dismissthe suit arguing that it was premature because TroVax® was stillevaluated in clinical trials. However, in May 2009, the court ruledagainst Oxford Biomedica and the case will thus continue, based onthe substance of the patents. Oxford BioMedica made yet anotherunsuccessful attempt to get the case dismissed that was struck downby the court in June 2008.Bavarian Nordic owns several United States patents relating to anattenuated strain of the company's core technology, MVA-BN®, which isthe basis for its smallpox vaccine, IMVAMUNE®. MVA-BN® also holdspromise as a vector for delivering recombinant vaccines. BavarianNordic has asserted four US patents as a basis for its infringementaction. The claim in this case is that Oxford BioMedica has infringedBavarian Nordic's patents by commercializing the patented technologyin ways that have yielded large payments from Sanofi-Aventis underthe agreement between them for the development and commercializationof TroVax®.Financial statement for the period (1 January - 30 June 2009,un-audited)The comparison figures for the same period 2008 are stated inparenthesis.The revenue totalled DKK 33 million (DKK 23 million). The revenuederives from sale under the RFP-2 contract with the U.S. healthauthorities.Production costs totalled DKK 96 million (DKK 39 million). Theproduction costs are higher due to higher batch production at theKvistgaard facility.The Group's research and development costs totalled DKK 75 million(DKK 72 million) excluding development costs from the RFP-3 contractof DKK 23 million, of which DKK 18 million are capitalised asintangible assets under construction.Sales costs totalled DKK 9 million (DKK 10 million).Administrative costs totalled DKK 48 million (DKK 37 million).Income before tax is a deficit of DKK 188 million (deficit of DKK 119million).Net result was a deficit of DKK 149 million (deficit of DKK 96million).As of 30 June 2009 the Group's net free liquidity was DKK 489 million(DKK 882 million). Cash flow from operations is negative with DKK-262 million (DKK 12 million). Cash flow from investment activitiesis DKK 28 million (DKK -33 million) and cash flow from financingactivities is DKK -7 million (DKK -8 million). The net change in cashand cash equivalents is negative with DKK -242 million (DKK 28million).The outstanding foreign exchange contracts have during second quarterbeen reduced. The reduction has been executed in order to eliminatethe adverse effect on the liquidity a rise in USD will have. Thetransaction itself has not Income Statement impact and theaccumulated loss is according to the company's accounting policyrecognised directly in equity.The Group's equity as of 30 June 2009 was DKK 848 million (DKK 1,150million). The decrease flows from retained earnings.Financial expectationsAs the company is awaiting the exact timing of the FDA review andfinal acceptance, the timing of the actual initiation of delivery isat present uncertain. In order to reflect this, the expectations forthe financial result for the full year 2009 are at present indicatedas a range.The expected revenue of DKK 375 million was based on the delivery of2 million doses of IMVAMUNE® in 2009. Depending on the timing forinitiation of delivery, the revenue is now expected to be in therange of DKK 100-300 million, based on a maximum delivery of 1.5million doses. The difference of approx. DKK 200 million contain thepostponed delivery of doses to the US government under the RFP-3contract, a pro rata revenue recognition of the up front payment ofUSD 50 million received in 2007 currently booked in the balance sheetas pre-payment from customer and reimbursable costs related to thefirst delivery.The result before tax is expected to be a loss between DKK 275-325million. The difference of approx. DKK 50 million contain the Cost ofGoods Sold related to the postponed delivery partly reduced by someof the write downs on Inventory made in 2008. The net free liquidityat year-end is expected to be in the range between DKK 175-350million.This change in the outlook for 2009 will have no impact on thecompany's long term expectations to the net free liquidity to bearound DKK 800 million by year-end 2012.In order for the company to maintain a solid cash position, thecompany has implemented a number of operational activities, thuspostponing certain costs and investments until deliveries under RFP-3can begin.Statement from the Board of Directors and Corporate ManagementThe Board of Directors and Corporate Management have, today reviewedand approved Bavarian Nordic A/S' interim report for the period 1January to 30 June 2009.The interim report has been prepared in accordance with IAS 34"Presentation of interim reports" as adopted by the EU and additionalDanish disclosure requirements for interim reports of listedcompanies, including those of NASDAQ OMX Copenhagen. The interimreport has not been audited or reviewed by the Company's auditors.In our opinion, the interim report gives a true and fair view of thegroup's assets and liabilities and financial position as of 30 June2009 and the results of the group's activities and cash flows for theperiod 1 January to 30 June 2009.In our opinion, the management's review provides a true and fairdescription of the development in the group's activities andfinancial affair, the results for the period and the group'sfinancial position as a whole as well as a description of the mostimportant risks and uncertainty factors faced by the group.Kvistgård, 28 August 2009Corporate Management:Anders HedegaardPresident and CEOBoard of Directors:Asger AamundChaiman of the BoardClaus BræstrupErling JohansenGerard van OdijkFlemming Pedersenhttp://hugin.info/100065/R/1337798/318922.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.



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Date: 08/28/2009 - 08:02
Language: English
News-ID 1003709
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