Today Bavarian Nordic published the company's Annual Report 2007. The
report is available on the company's website. Below is an extract of
the most significant matters in the report as well as events after
the balance sheet date.
Bavarian Nordic's revenue for the year 2007 was DKK 332.1 million
with a loss before tax of of DKK 50.5 million, which was in line with
the Company's latest guidance. For 2008, Bavarian Nordic expects
revenue in the region of DKK 180 million, and a pre-tax loss in the
region of DKK 225 million as the first deliveries of vaccines for the
US government under the RFP-3 contract are not expected to take place
before 2009.
In spring 2008, the Company completed a strategy process, resulting
in a strategy plan, which contains a number of new initiatives and
prioritising of existing activities. Conclusions from the process and
derived initiatives will be implemented during 2008.
2007 outline
The year 2007 was a busy and eventful year, but also a very
successful year. With the award of the RFP-3 contract from the US
authorities Bavarian Nordic fulfilled the most important milestone in
the history of the Company. The contract was awarded after prolonged
negotiations in which the Company succeeded, as the first in the
world, in obtaining advance and milestone payments under Project
BioShield. In addition to the base contract of USD 500 million for
the delivery of 20 million doses of the company's third-generation
smallpox vaccine, IMVAMUNE®, the contract includes an option contract
of USD 1.1 billion for the delivery of an additional 60 million
doses.
After the RFP-3 contract was signed, Bavarian Nordic successfully
fulfilled all the requirements relating to the development of
physical safety, IT security, validation of production and test
processes, etc. underlying the advance payment of USD 50 million and
the two milestone payments of USD 25 million each. These payments
helped make the current financial position the best ever in the
Company's history.
In our pipeline, we have presented important data on IMVAMUNE®. Three
out of five Phase II studies have been completed and show very
promising results. When the HIV Phase II-data package is available -
expected late in 2008 - and has been accepted by the US health
authorities, Bavarian Nordic can begin delivering the vaccine to the
US national stockpile and thus begin invoicing.
In 2007, Bavarian Nordic refocused its HIV strategy. Against a
backdrop of recommendations from international scientific committees,
data from the nef programme has been incorporated into the
multiantigen programme, which thus continues to be our future HIV
project.
Important progress has also been achieved in our cancer research as
Phase I/II studies of the breast cancer vaccine candidate were
commenced.
Financial Review 2007
Unless otherwise stated, the financial review is based on the
consolidated financial information for the year ended 31 December
2007 as included in the Annual Report 2007 with comparative figures
for 2006 in brackets. The accounting policies are unchanged from the
Annual Report for 2006.
A pre-tax loss of DKK 50.5 million (DKK 204.8 million) was recorded
for the year, which was in line with our guidance in the nine-month
interim report published on 6 November 2007.
The increase in revenue and earnings in 2007 was achieved as the
Group completed two milestones of USD 25 million each as part of the
RFP-3 contract awarded in June 2007.
The Group's free net liquidity was strengthened in 2007 and stood at
DKK 833.6 million at the end of the year (DKK 217.7 million). The
improvement was attributable to a rights issue made in March 2007
(net proceeds of DKK 443.5 million), the exercise of warrants by
employees and management (net proceeds of DKK 47.7 million), and
advance and milestone payments received under the RFP-3 contract (USD
100 million). By end of February 2008 the free net liquidity had
increased to DKK 902 million.
Equity was DKK 1,217.7 million at 31 December 2007 (DKK 691.4
million).
Outlook for 2008
For 2008, Bavarian Nordic expects revenue in the region of DKK 180
million, and a pre-tax loss in the region of DKK 225 million.
Revenue is expected to consist of the third milestone payment under
the RFP-3 contract and invoicing in continuation of the RFP-2
contract. Except for the contract with an Asian country for the
delivery of IMVAMUNE® as mentioned below, contracts with other
countries for smallpox vaccines are not included in the guidance for
2008, as this would still be too uncertain due to the long-term
process involved in obtaining each contract.
Research and development costs in 2008 are expected to be
approximately DKK 280 million, including the further development of
IMVAMUNE® under the RFP-3 contract, of which DKK 70 million
expectedly are capitalised in the balance sheet under intangible
assets.
In 2008, the Company's cash resources will be extraordinarily
affected by increased production costs in connection with the
upscaling of production, build-up of vaccine stockpiles under the
RFP-3 and increased costs for Phase II studies of IMVAMUNE®. Thus the
liquidity drain in 2008 will be around DKK 400 million. At the end of
2008 the Company's net free liquidity is expected to amount to around
DKK 500 million.
The forecast above assumes that, as part of the RFP-3 contract,
Bavarian Nordic in late 2008 files the necessary data to the FDA that
has the potential to support the use of IMVAMUNE® in a declared
emergency. Acceptance by the US authorities of this data will be the
trigger to initiate delivery of vaccines to the United States. Since
approval by the authorities is outside the control of the Company,
the budget assumes that approval is not received in time to begin
delivery of IMVAMUNE® in 2008. Bavarian Nordic expects that the 20
million doses of IMVAMUNE® under the RFP-3 contract will be delivered
in 2009 - 2011.
Furthermore, the net profit forecast assumes that Bavarian Nordic
obtains the necessary approvals to continue its preclinical and
clinical trials.
Events after the balance sheet date
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 outside USA for delivery of IMVAMUNE®. 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.
Strategy update
Since the autumn of 2007, when Anders Hedegaard joined Bavarian
Nordic as the new President and CEO, the Company has undergone a
strategy process which was completed in spring 2008. Conclusions from
the process and derived initiatives will be implemented continuously.
In the meantime, the Company is focusing strongly on streamlining its
organisation and on value-generating elements that can cement the
position of Bavarian Nordic as an innovative, globally leading
supplier of vaccines. In the short term, this means that the key
focus will be on:
* Fulfilling the RFP-3 contract
* Changed prioritising and optimisation of pipeline
* Building up market demand for IMVAMUNE®
Fulfilling the RFP-3 contract
With a continuing strong focus on project management, a number of
important milestones forward are expected in the development of
IMVAMUNE® over the next 12-24 months:
* Completion of Phase II studies in HIV and people diagnosed
with Atopic Dermatitis (2008)
* Commencement of Phase III studies (2009)
* Start-up of inventory production of vaccine (2008)
* Start-up of actual delivery of vaccine for the US strategic
national stockpile (2009)
To begin delivering IMVAMUNE® to the United States, Bavarian Nordic
must first fulfil the requirements connected with the potential use
of the vaccine during a declared emergency. Provided that the HIV
patient enrolment in the on-going Phase II study progresses as
planned, the Company expects to be able to complete this study in
late 2008 as previously announced. This Phase II HIV data package
will be sent to the US health authorities as part of the evaluation
of whether IMVAMUNE® could potentially be used in a declared
emergency. Consequently, the first deliveries of vaccines are
expected in 2009. With a view to optimising the use of resources at
the manufacturing facility at Kvistgård, delivery of vaccines is
expected to be distributed more or less evenly over the period
2009-2011.
Changed prioritising and optimisation of pipeline
The Company's pipeline currently includes a total of six development
programmes in the following three areas: biodefense, cancer and
infectious diseases.
+-------------------------------------------------------------------+
| | 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 (H1, |
| | | | 2008) |
|------------+-----------------+-------------+----------------------|
| Infectious | HIV | Preclinical | Phase I/II (H1, |
| diseases | multiantigen | | 2008) |
| |-----------------+-------------+----------------------|
| | Measles and RSV | Phase I | Phase I in children |
| | | | (H2, 2008) |
+-------------------------------------------------------------------+
Biodefense
This is the Company's principal area of business. The strategy for
this area focuses on handling the entire value chain, all the way
from development to production and sale of vaccines.
One goal is to complete the registration of IMVAMUNE®. The vaccine
will then be commercialised via sales to the United States and other
countries.
In addition, the intention is to build up a biodefense portfolio of
projects that can complement IMVAMUNE® and ensure the Company a
sustained and growing business.
As part of building up this 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.
Cancer
In the short term, the goal is to complete the Phase I/II studies of
the vaccine candidate for breast cancer and to initiate Phase I/II
studies of the vaccine candidate for prostate cancer.
As and when positive clinical data are obtained, partnering of the
projects will be considered and the Company will also keep an eye on
potential in-licensing opportunities.
The cancer business area has been given a higher priority and it is
the Company's goal to expand the cancer portfolio. Later in 2008 the
Company expects to annonunce initiatives to strengthen this area.
Infectious diseases
The Company has a number of projects in infectious diseases, all of
which are at an early development stage: HIV, measles and RSV, dengue
fever and Japanese encephalitis. The goal with the first two projects
is to complete early-stage clinical trials. If supported by the data
obtained, the option of placing these projects in external
partnerships will be explored. Alternatively, the Company will seek
other external funding. For the latter two projects, discussions with
a potential external partner on clinical development and funding are
pending.
The programme for measles and RSV will be tested up to and through
clinical Phase I, where it is expected that proof of concept will be
obtained.
As for HIV multiantigen, Phase I/II clinical studies will be
completed, and partnering negotiations will be initiated as and when
the project progresses.
Building market demand for IMVAMUNE®
As part of the process of taking the Bavarian Nordic organisation to
new and professional levels, a new commercial organisation was
established in 2007 in order to strengthen the Company's commercial
activities and build market demand for IMVAMUNE® and future vaccines,
including HIV and cancer vaccines.
Changes in management
During the past year the Executive Management of Bavarian Nordic has
been strengthened with new CEO and an Executive Vice President
Commercial Affairs. To implement the new strategic initiatives, the
Executive Management will be further strengthened with two new people
and the appointment of a new member.
René Djurup, Executive Vice President Technical Operations, has
decided to resign from his position as of 31 May 2008 in order to
dedicate himself to private business activities. The build-up of the
Company's production facility - the world's first MVA production
plant, was a fantastic achievement headed by René, and the Company
wishes to thank him for his great effort and contribution to the
industrial development of Bavarian Nordic.
Anders Gram (48) has been appointed as new Executive Vice President
Technical Operations. Anders holds an M.Sc. degree in cemical
engineering and a Ph.D. in industrial biochemistry. He currently
holds the position as Managing Director and Vice President, Biopharma
Operations in Novozymes. Previously he worked in various management
positions within product supply in the enzyme business area at Novo
Nordisk. He will take up position on 1 June 2008 at the latest.
Furthermore, Bavarian Nordic has appointed a new CFO. Ole Larsen (42)
will join the company as Executive Vice President Finance on 1
October 2008 at the latest. He currently holds the position as
Finance Director and member of the management in Nordisk Film.
Previously amongst others he worked as Finance Director at Berlingske
Tidende.
Reiner Laus, MD., President & CEO of Bavarian Nordic's US subsidiary,
BN ImmunoTherapeutics Inc., will also join the Executive Management.
Reiner Laus was previously Vice President of Research and Development
at Dendreon Corporation in Seattle, Washington where he was
responsible for discovery, pre-clinical and development functions.
Executive Management 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
Annual General Meeting
The annual general meeting, at which the Annual Report 2007 will be
reviewed, will be held on 29 April 2008 at Radisson SAS Scandinavia
Hotel, Amagerboulevard 70, DK-2300 Copenhagen.
Convening notice and agenda will be sent to all registered
shareholders in the Company in the second week of April.
Annual Report
The full 2007 annual report was published today, Monday 31 March 2008
and is available for download on the company's website:
www.bavarian-nordic.com.
Webcast and conference call
A webcast will be held today at 3 p.m. (CET). President and CEO,
Anders Hedegaard will present the annual results. Subsequently there
will be a conference call where Anders Hedegaard, Vice President
Investor Relations Rolf Sass Sørensen and acting CFO Carsten Andersen
will attend.
Dial-in numbers for the conference call are:
UK: +44 (0)20 7162 0025
US. +1 334 323 6201
For additional countries and further details please visit
www.bavarian-nordic.com/webcast.
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' Annual Report for the
period 1 January - 31 December, 2007. The audited Annual Report has
been prepared in accordance with the International Financial
Reporting Standards (IFRS) approved by the EU, as well as additional
Danish reporting requirements for annual reports and publicly-traded
companies.
We consider that the chosen accounting policies is appropriate. It is
our opinion, that the Annual Report gives a true and fair view of the
Group's assets, liabilities, financial position, results, and cash
flow.
Kvistgård, 31 March 2008
Corporate Management:
Anders Hedegaard
President & CEO
Board of Directors:
Asger Aamund
Chairman
Eigil Bjerl Nielsen
Erling Johansen
Flemming Pedersen
Contact:
Anders Hedegaard, President & CEO | +45 33 26 83 83
Group Key Figures 2003-2007
Amounts in DKK
millions.
2007 2006 2005 2004 2003
Income
statements
Revenue
332.1 175.3 247.6 164.8 524.5
Production
costs 64.5
136.3 132.2 70.3 206.5
Research and Development costs 243.6
118.4 114.4 120.4 61.0
Sales expenses and Administrative costs 89.1
124.4 75.4 56.4 43.0
Other operating
expenses -
- 45.4 - -
Income before interest and tax (EBIT)
(65.0) (203.8) (119.8) (82.3) 214.0
Financial items,
net 14.5
(1.0) 3.4 5.6 3.6
Income before company tax
(50.5) (204.8) (116.4) (76.7) 217.6
Net profit for the
year (63.5)
(160.9) (94.7) (53.0) 150.6
Balance sheet
data
Total non-current assets
538.8 568.2 472.4 291.8 71.0
Total current assets
1,193.2 386.2 456.2 310.3 358.2
Total
assets
1,732.1 954.4 928.6 602.1 429.2
Shareholders equity
1,217.7 691.4 630.1 315.4 347.0
Long-term current
liabilities 134.7
150.6 212.2 149.1 2.9
Short-term current
liabilities 379.7
112.4 86.3 137.6 79.3
Cash Flow Statements
Net cash including securities
913.6 332.7 269.0 56.6 198.7
Cash flow from operating activities
163.2 (194.5) (54.9) (71.0) 209.3
Cash flow from investment activities
(16.1) (192.2) (196.9) (224.6) (33.2)
Investment in tangible
assets 5.8 73.9
151.2 190.5 28.9
Cash flow from financing activities
440.4 219.0 464.2 152.8 3.1
Financial Ratios (in
DKK)
Earnings per
share
- basic earnings, per share of DKK 10.00
(8.5) (25.8) (17.6) (11.5) 33.4
- diluted earnings, per share of DKK 10.00
(8.5) (25.8) (17.6) (11.5) 32.9
PE, price/earnings
ratio 155.8
108.4 108.7 68.0 76.9
Share price at the
year-end 293
582 476 539 251
Share price/Net assets value per share
1.9 5.4 4.4 7.9
3.3
Outstanding shares, year-end (thousands) 7,816
6,376 5,797 4,640 4,515
Shareholders' equity
share 70%
72% 67% 52% 81%
Number of employees at the end of the year 264
233 224 145 87
Earnings per share (EPS) are calculated in accordance with IAS 33"Earning per share".
The financial ratios have been calculated in accordance with"Anbefalinger og Nøgletal 2005" (Recommendations and Financial ratios
2005).
