Bavarian Nordic A/S - Interim Report for the period 1 January to 30 June 2007

* In June, the U.S. Department of Health and Human Services (HHS)
    awarded a contract to Bavarian Nordic for the manufacture and
    delivery of 20 million doses of the company's MVA based smallpox
    vaccine, IMVAMUNE®, for the protection of persons considered to
    be at risk for smallpox. The total value of the deal, including
    contractual options, is USD 1.6 billion. The company has hedged
    USD 300 million at at the exchange rate of DKK 5.56.

  * Bavarian Nordic's subsidiary, BN ImmunoTherapeutics, has
    initiated Phase I/II clinical trials with its breast cancer
    vaccine candidate in the U.S. and Europe

  * In April, Anders Hedegaard was appointed new CEO of Bavarian
    Nordic A/S. He took up this position on 1 August 2007. Former
    CEO, Peter Wulff, who wished to step down, will stay on in
    Corporate Management as Head of Business Development including
    existing and new scientific commercial activities and projects.

  * During the first six months of 2007, Bavarian Nordic realised
    revenues of DKK 51.4 million and a loss before tax of DKK 127.8
    million. Based on the planned clinical activities and related
    milestone payments, the expectations for the full year 2007
    result are as previously stated at revenues of DKK 380 million
    and a loss before tax of DKK 50 million.

Key highlights after the close of the fiscal Period (1 July - 9
August 2007)

  * On 25 July 2007, Bavarian Nordic and Acambis reached a global
    settlement ending the legal disputes between the two companies on
    matters relating to smallpox vaccines based on the Modified
    Vaccinia Ankara (MVA) virus. Under the agreement, Bavarian Nordic
    will grant a license to some of its MVA patents in return for
    Acambis making an undisclosed upfront payment. Acambis will also
    make royalty and milestones payments should it develop or
    commercialize certain MVA products in the future.

Commenting on the interim report, Bavarian Nordic's new CEO, Anders
Hedegaard said: "The first half of 2007 has been an exciting and
eventful period for Bavarian Nordic. We were awarded the entire RFP-3
contract for 20 million doses of our MVA based smallpox vaccine, and
with the recent settlement with Acambis on the legal disputes on the
MVA technology, we can now focus on other projects in our pipeline.
Our HIV, cancer and measles programmes are all on track and at
year-end the number of projects in clinical development will have
doubled to six."

Report for the period (1 January - 30 June 2007, un-audited)

Financial review
Revenue was DKK 51.4 million. (as of 30 June 2006: DKK 111.0
million.). Revenue was derived from the ongoing contracts with the
U.S. Government health authorities (RFP-1 and RFP-2 contracts). The
lower revenue compared to 2006 is due to that certain clinical
studies under the RFP-2 contract have been postponed as agreed with
the U.S. health authorities. These studies will be adapted to the
RFP-3 contract awarded to the company in June. The final design of
the studies is ongoing. The majority of the deferred revenue is
expected to be realised during 2008.

Result before tax was a loss of DKK 127.8 million (30 June 2006: loss
of DKK 111.6 million).

Research and development costs totalled DKK 102.3 million (30 June
2006: DKK 54.8 million). This includes costs of DKK 41.4 million
related to the optimisation and testing of the Kvistgård
manufacturing facility. The increase in research and development
costs is attributed to increased activity in the company's
development programmes.

Sales costs and administrative expenses decreased to DKK 44.3 million
(30 June 2006: DKK 77.9 million), which is significantly lower than
same period last year. The decrease is primarily attributed to lower
legal fees in connection with lawsuits and patents.

Financial income increased to DKK 11.0 million (30 June 2006: DKK 5.4
million). This is attributed to the group's improved net liquidity.

During the period from 18 April 2007 until 2 May 2007 warrants
awarded the Board, Management and other employees in 2004 were
exercised. The company's share capital was thereby increased with
164,152 new shares each with a nominal value of DKK 10 and net
proceeds of DKK 47.7 million were generated.

The Group has hedged USD 300 million following the award of the RFP-3
contract by Forward Rate Agreements (FRA). The FRA had a value of DKK
18.1 million as per 30 June 2007 as a consequence of the decline of
the USD exchange rate, which has been added to the equity of the
company. The FRA will be realised according to the payments received
from the RFP-3 contract, and consequently, the adjustments will be
transferred to the Profit and Loss Statement.

Advanced and milestone payments in 2007 and 2008 from the RFP-3
contract amount to approx. USD 125 million. Revenue and result before
tax and the group's net liquidity depend on the upfront and
milestones payment schedule in the RFP-3 contract, which is
determined by the planning and design of clinical trials under the
contract.

Guidance for the full year result is maintained as previously stated
in stock exchange announcement no. 23/2007 of 4 June 2007. Based on
the planned activities and milestone payments, the company expects
revenue of around DKK 380 million and a loss before tax of DKK 50
million.

The group's net liquidity was DKK 573.9 million as per 30 June 2007.
At year-end the company's net liquidity is expected to amount
approximately DKK 900 million.

Business development

U.S. Government awards contract for 20 million doses of IMVAMUNE®
In June, the U.S. Department of Health and Human Services (HHS)
awarded a contract to Bavarian Nordic for the manufacture and
delivery of 20 million doses of the company's MVA based smallpox
vaccine, IMVAMUNE®, for the protection of persons considered to be at
risk for smallpox.

The total value of the deal, including contractual options, is USD
1.6 billion, of which the base contract amounts to USD 500 million.
In addition to the delivery of 20 million doses of IMVAMUNE®, the
base contract will support additional research and development of the
product to fulfil the requirements for the potential use of IMVAMUNE®
during an emergency. In addition, contract support will be used to
fund non-clinical and clinical studies necessary for Bavarian Nordic
to register IMVAMUNE® as a safe and effective smallpox vaccine in
healthy people with the U.S. Food and Drug Administration.

Advanced and milestone payments in the contract amount to USD 150
million of which USD 125 million are paid in 2007 and 2008. This is
the first time a company has received any advanced payments as part
of a contract under the BioShield programme.

The optional part of the contract, with a value of USD 1.1 billion,
includes further clinical studies to extend the licence to include
people infected with HIV, children and the elderly, as well as
procurement of up to an additional 60 million doses of IMVAMUNE®.

Other markets
Bavarian Nordicis currently in negotiations with authorities in a
number of other countries on the manufacture and delivery of
IMVAMUNE® as a safe third-generation smallpox vaccine. The timing and
value of potential contracts is not yet known.

Research and development

IMVAMUNE®- third generation smallpox vaccine
The safety and initial immunogenicity data from the Phase II placebo
controlled study in 745 healthy subjects has been completed. Smallpox
vaccines based on replicating vaccinia viruses have been reported to
be associated with serious heart complication (e.g. myopericarditis)
in every 145 people that are vaccinated. One of the primary
objectives of this Phase II study was to compare the IMVAMUNE®
vaccinated subjects to the placebo group with regard to ECG changes
and cardiac symptoms that have been reported for traditional smallpox
vaccines. No abnormal cardiac symptoms were associated following the
vaccination with IMVAMUNE® and this large amount of safety data has
confirmed the excellent safety and tolerability profile of IMVAMUNE®
and revealed no particular safety concerns in this healthy study
population.

The clinical study report including the initial immunogenicity data
is planned to be submitted to the FDA during third quarter 2007.

The Phase II study in HIV infected patients in a total of 450
subjects is on-going in the US with finalization of enrolment
on-track for the end of 2007. No serious adverse events have been
recorded in this study.

HIV vaccines

MVA HIV nef
The analysis of the T cell responses to Nef from HIV is on-going in
the Phase II study investigating the safety of various doses of MVA
HIV nef in comparison to a control arm receiving IMVAMUNE®.
Immunogenicity data are expected during third quarter 2007.

MVA-BN® HIV polytope
The first Phase I study in 36 healthy subjects is progressing as
planned with the completion of enrolment and all vaccinations. All
vaccinations were well tolerated and the first immunogenicity data
from this novel vaccine concept are expected during fourth quarter
2007.

The second Phase I study is in 30 HIV infected subjects and is also
progressing on schedule. Enrolment has been completed with the
majority of subjects having already been vaccinated twice with the
vaccine against HIV.

A third Phase I study that is sponsored by NIH as part of a joint RFP
together with Epimmune-Pharmexa was initiated in second quarter 2007.
This study will evaluate the MVA-BN® HIV polytope vaccine in
conjugation with a DNA vaccine in healthy subjects.

Measles vaccine
A Phase I clinical trial in adults evaluating the safety and
immunogenicity of the measles vaccine is progressing with a planned
initiation during third quarter 2007.

Cancer Immunotherapy
As planned, Bavarian Nordic's subsidiary, BN ImmunoTherapeutics has
initiated Phase I/II clinical studies with the MVA-BN®-HER2 vaccine
against breast cancer. Enrolment of patients for two studies in the
U.S. and Europe is ongoing and proceeding according to schedule.

The company's programme for a prostate cancer vaccine is also
proceeding as planned and clinical studies are expected to be
initiated around the turn of 2007/2008.

Organisational development
Anders Hedegaardtook up the position as CEO on 1 August 2007. He
comes from a position as member of ALK-Abelló's Corporate Management
in charge of Business Operations. Anders Hedegaard holds a M.Sc.
degree in chemical engineering specialising in molecular biology. His
management career includes executive positions with Aga, Foss and
Novo Nordisk.

After the award of the RFP-3 contract, Anders Hedegaard has initiated
a comprehensive strategy process in order to formulate a long-term
strategy.

Legal matters

Bavarian Nordic and Acambis settle all legal disputes on MVA
On 25 July 2007, Bavarian Nordic and Acambis reached a global
settlement ending the legal disputes between the two companies on
matters relating to smallpox vaccines based on the Modified Vaccinia
Ankara (MVA) virus. The settlement involves the patent disputes at
the U.S. International Trade Commission (ITC) and the Commercial
Court in Vienna, Austria, as well as the conversion, unfair trade
acts and unfair competition action at the U.S. Federal District Court
of the District of Delaware. Under the settlement, the terms of which
are confidential, all pending litigation and further appeals will
cease.

The legal actions were originally filed in connection with the RFP-3
process to ensure Bavarian Nordic the contract in part or in whole.
Subsequently Bavarian Nordic was awarded the contract as sole
provider, thus making the legal actions insignificant.

Under the agreement, Bavarian Nordic will grant a license to some of
its MVA patents in return for Acambis making an undisclosed upfront
payment. Acambis will also make royalty and milestones payments
should it develop or commercialize certain MVA products in the
future.

Strengthening of the MVA patent position
In July, the European Patent Office (EPO) granted a new patent to
Bavarian Nordic which further strengthens its intellectual property
position on MVA in Europe.

The United States Patent and Trademark Office (USPTO) has issued a
notice of allowance on one of Bavarian Nordic's patent applications
which will further strengthen the coverage of IMVAMUNE®, the
company's MVA-BN® based smallpox vaccine. The notice of allowance is
significant because it was issued after the Examiner in charge of
reviewing the merits of the application was provided with the
arguments of invalidity and inequitable conduct made against the U.S.
patents in the case filed by Bavarian Nordic at the U.S.
International Trade Commission (ITC). The case has now settled.

These recent events underpin Bavarian Nordic's ownership of its MVA
technology and should furthermore demonstrate a successful business
approach towards other companies to enter into appropriate licence
agreements with Bavarian Nordic in order to use its technology.

Warrant programmes
During the period from 18 April 2007 until 2 May 2007 the Board,
Management and other employees exercised warrants awarded in 2004.
The warrantholders subscribed for a total of 164,152 new shares of a
nominal value of DKK 10. The program is hereafter expired and
fulfilled.

Based on the exercise of warrants the company's share capital has
been increased with 164,152 shares of a nominal value of DKK 10. The
proceeds for the company amounted to DKK 47,771,562. The company's
share capital amount to DKK 78,155,680, divided into shares in the
denomination of DKK 10 and multiples thereof. The subscription of new
shares has been made without pre-emptive rights for existing
shareholders.

Outstanding warrants as per 30 June 2007 amount to:

+-------------------------------------------------------------------+
| Programme                                    | 2006               |
|----------------------------------------------+--------------------|
| Exercise Price (DKK)                         | 542                |
|----------------------------------------------+--------------------|
| Exercise Period                              | 2 weeks in Q4-2009 |
|                                              | and/or Q2-2010     |
|----------------------------------------------+--------------------|
| Board of Directors (Warrants)                | 21,116             |
|----------------------------------------------+--------------------|
| Corporate Management (Warrants)              | 15,838             |
|----------------------------------------------+--------------------|
| Other management and employees (warrants)    | 145,703            |
|----------------------------------------------+--------------------|
| Terminated employees/board members           | 2,111              |
| (warrants)                                   |                    |
|----------------------------------------------+--------------------|
| Total                                        | 184,768            |
+-------------------------------------------------------------------+

Bavarian NordicA/S awards warrants
The Board of Directors in Bavarian Nordic A/S has decided to award
warrants to management, certain members of management in the Company
and in subsidiaries and the Board of Directors. 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.
The award is made by the Board of Directors and exercise is limited
by and governed by the Danish Act on Options for Employees (the Stock
Option Act/aktieoptionsloven) regarding termination of employment
prior to exercise of warrants.

A total of 190,000 warrants are awarded for subscription of up to
190,000 shares of a nominal value of DKK 10 at a price of DKK 549.
The exercise price is established as the average share price for the
Company's share in July 2007 added a 15% premium. The warrants can be
exercised wholly or partly in a period of 14 days commencing from the
day of publication of the Company's Quarterly Report for the third
quarter in the year of 2010 and/or in a period of 14 days commencing
from the day of publication of the Company's Annual Results for 2010
(spring 2011).

Under this program the Board of Directors will receive a total of
20,000 warrants, CEO & President 30,000 warrants and Managerial Staff
a total of 140,000 warrants.

The value of each warrant equals DKK 65.18 and is calculated on the
Black-Scholes model with a risk-free interest rate of 4 per cent and
on the historical volatility of the shares. The calculation is based
on a market value of the share of DKK 436.5 per share (as of 7 August
2007).

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

Referring to the Danish Securities Act, Section 28a it is announced
that the following people, obliged to notify the Company of
transactions involving Bavarian Nordic securities, are awarded
warrants:

Chairman of the Board Asger Aamund (5,000 warrants), Other members of
the Board of Directors Eigil Bjerl Nielsen (5,000 warrants), Erling
Johansen (5,000 warrants) and Flemming Pedersen (5,000 warrants), CEO
and President Anders Hedegaard (30,000 warrants), members of
corporate management Morten Max Rasmussen (15,000 warrants), René
Djurup (15,000 warrants), Hans Christian Teisen (15,000 warrants),
Paul Chaplin (15,000 warrants) and Peter Wulff (15,000 warrants).

Ordinary and Extraordinary General Meeting
Extraordinary General Meeting was held on 15 May 2007. The following
proposals, all approved on the ordinary general meeting, were
adopted:

§ 4 of the Articles of Association (stock split), § 5a of the
Articles of Association (Authorisation for Increase of the Company's
Share Capital), § 5b of the Articles of Association (Authorisation
for issuing Warrants for Employees), § 8 of the Articles of
Association (Keeper of Stock Register) and § 10, sub-section 6 of the
Articles of Association (Distribution of printed information).

Environmental matters

Green Account 2006
As required by Danish law, Bavarian Nordic published its Green
Account 2006 regarding the Kvistgård manufacturing facility in April.
The report provides information on the site and the company's
management of environmental matters and can be downloaded on the
company's website www.bavarian-nordic.com/green_account.

Statement from the Board of Directors and Corporate Management
The Board of Directors and Corporate Management have, as of today,
reviewed and approved Bavarian Nordic A/S' interim report for the
period 1 January - 30 June, 2007.

The interim report, which is un-audited, is prepared in accordance
with the provisions on recognition and agreement set aside in the
International Finance Reporting Standards (IFRS) as approved by the
EU, and the additional Danish requirements for submission of interim
reports for companies listed on the Copenhagen Stock Exchange.

We consider that the chosen accounting policies applied are
appropriate. It is our opinion, that the interim report gives a true
and fair view of the group's assets, liabilities, financial position,
results, and cash flow.

Corporate Management:

Anders Hedegaard
President and CEO

Board of Directors:

Asger Aamund, Chairman of the Board
Eigil Bjerl Nielsen
Erling Johansen
Flemming Pedersen

Bavarian Nordic issues stock exchange announcements in both Danish
and English, however in case of doubt the Danish version is the
legally-binding document.

Webcast
In connection with the release of the interim report, a pre-recorded
webcast presentation will be held.

President and CEO Anders Hedegaard will present. The webcast will be
held in English, and can be viewed at:
www.bavarian-nordic.com/webcast.