KVISTGAARD, Denmark, November 7 /PRNewswire/ -- The Board of Directors of Bavarian Nordic A/S approved the Company's interim report for the period of 1 January to 30 September, 2006, at an ordinary board meeting held today.
During the period 1 January - 30 September, 2006 Bavarian Nordic realised revenues of DKK 142 million (as of 30 September 2005: DKK 206 million) and a loss before tax of DKK 145 million (as of 30 September 2005: loss of DKK 33 million). The company raises its expectations for the full year 2006 result from an expected loss of DKK 280-300 million to an expected loss of around DKK 240 million despite that expected revenues for the full year 2006 is lowered from DKK 220 million to DKK 190 million.
Key Highlights
Smallpox
- More than 1,200 subjects are enrolled in clinical trial program for IMVAMUNE(R)
- Recent data from the HIV vaccine program have demonstrated that IMVAMUNE(R) is safe and immunogenic in HIV infected subjects with an advanced stage of HIV infection
- Bavarian Nordic's animal facility in Munich was granted a Good Laboratory Practice (GLP) status by the European authorities, allowing for pivotal preclinical registration studies to commence
HIV
- Positive results from a clinical Phase II study with MVA nef were presented at the AIDS Vaccine 2006 Conference in Amsterdam, August 2006
- With the initiation of two Phase I/I trials in Europe with MVA-BN(R) polytope, the company now has two HIV vaccine candidates in clinical trials
- Phase II trials with MVA-BN(R) polytope vaccine are under preparation and the company expect to initiate two Phase II studies in the US in first half of 2007
Production
- The Danish Medicines Agency (Laegemiddelstyrelsen) approved Bavarian Nordic's facility in Kvistgaard, Denmark for manufacturing of sterile vaccines for use in clinical trials and emergency use in accordance with EU cGMP requirements. Thus Bavarian Nordic can now produce vaccines for the expected RFP-III contract and other markets for emergency use.
- The Berlin facility released three batches of vaccines for clinical trials; MVA-BN(R) polytope vaccine (for use against HIV), MVA-BN(R)-HER-2 (for use against breast cancer) and MVA-BN(R) Measles vaccine.
Legal Matters
- The Administrative Law Judge at the U.S. International Trade Commission, ITC issued his initial determination concluding Acambis plc's MVA-based smallpox vaccine product (MVA3000) infringes two of Bavarian Nordic's patents on Modified Vaccinia Ankara (MVA), but the judge also concluded that the patents are invalid. The case is proceeding at the ITC
- The United States Patent and Trademark Office (USPTO) issued a patent to Bavarian Nordic strengthening its intellectual property position on MVA
Peter Wulff, President & CEO, Bavarian Nordic said: "We have had progress within several areas of our business this quarter. The initiation of Phase I/II studies with our second HIV vaccine candidate further strengthens our pipeline, enrolment in studies with IMVAMUNE(R) is rapidly proceeding and our Kvistgaard production facility has been approved by the European authorities. The RFP-III process is at its end and the expected award of a contract will further help boost our development programmes."
Report for the period (1 January - 30 September, 2006, un-audited)
Financial review
Revenue for the third quarter of 2006 was DKK 141.8 million (as of 30/09/05: DKK 205.6 million). Revenue was derived from the ongoing contracts with the US government health authorities (the RFP-I and RFP-II contracts).
Result before tax was a loss of DKK 145.2 million (30/09/05: loss of DKK 33.2 million).
The loss compared to the same period in 2005 is attributed to increased production costs and an increase in sales and administration costs due to legal fees in connection with ongoing lawsuits and patents.
Cash flow for investments totalled DKK 282.1 million, of which DKK 63.5 million was tangible and intangible non-current assets for the start-up and optimization of the production process at the Kvistgaard facility. The remaining cash flow for investment was investment of net proceeds from the capital increase earlier this year, which have been invested in securities. Expired securities have been converted to securities with a maturity of more than 3 months.
Net cash and securities totalled DKK 382.3 million of which DKK 115.0 million has been pledged to financial institutions. The company generated net proceeds of DKK 230.7 million from a capital increase in the spring 2006. In the beginning of the fiscal year, the company's net cash and securities totalled DKK 382.5 million.
Expectations for the full year 2006 are revised from revenues of DKK 220 million to revenues of DKK 190 million, due to delays in initiating the Phase II clinical studies under the RFP-II contract that were caused by discussions with the FDA on the requirements for an Emergency Use Authorisation. Three Phase II trials have now been initiated and are progressing as planned. Revenue related to these trials will be realized during 2007.
Despite the decrease in the expected revenues for the full year, the company's full year result for 2006 is revised from an expected loss of DKK 280-300 million to an expected loss of around DKK 240 million. This improvement is primarily due to the realized cost savings, as announced on 30 August 2006.
Cash preparedness is expected to amount to DKK 200 million at the end of 2006.
Clinical Development Programmes
IMVAMUNE(R) Smallpox Vaccine Programme
The Phase II program, consisting of three Phase II trials in healthy subjects, people with atopic dermatitis and HIV-infection is progressing according to plan. More than 1,200 subjects have been vaccinated with IMVAMUNE(R) without any serious or unexpected side-effects. The safety data generated from these studies are a key requirement for an Emergency Use Authorization for IMVAMUNE(R). Bavarian Nordic's IMVAMUNE(R) continues to be the only MVA candidate vaccine that has reported impressive safety data in patient populations, such as people infected with HIV, who cannot safely be given traditional smallpox vaccines. An independent Data Safety Monitoring Board confirmed in an independent review that Bavarian Nordic's studies can safely proceed also in these risk populations.
Another Phase II study in the US with IMVAMUNE(R) in 151 HIV infected subjects has been completed. The company expects to report data from the main study around year-end and follow-up data in mid-2007.
To further support the registration of IMVAMUNE(R), Bavarian Nordic's animal facility has been granted a GLP status by the European authorities, allowing the pivotal preclinical studies to commence.
HIV Vaccine Programme
MVA nef
Interim data from a single-blind, randomized, controlled clinical Phase II trial with MVA nef in 77 HIV-infected subjects undergoing highly active antiretroviral therapy (HAART) was presented at the AIDS Vaccine 2006 Conference in Amsterdam (29 August - 1 September, 2006). The data showed that MVA nef and IMVAMUNE(R) (used in the control group) are safe in HIV-infected subjects with an advanced stage of infection (CD4 >250 cells/microl). A strong vaccinia-specific immunity confirmed the potential of IMVAMUNE(R) as a safe and effective smallpox vaccine in this population. Meanwhile, 37 patients in the trial have interrupted their HAART therapy and are being closely monitored. Analyses are ongoing of HIV-specific immunogenicity and viremia during therapy interruption and will provide valuable information on the vaccine's ability to help control HIV infection. Bavarian Nordic expects to give an update on the programme before year-end 2006. Furthermore the company expects that important proof-of-concept data will be presented at the 14th Conference on Retroviruses and Opportunistic Infections (CROI) in Los Angeles, February 2007.
MVA-BN(R) polytope
After close of the fiscal period, the company has reported on this programme. Further information can be found in the section: "Developments after the close of the fiscal period".
MVA-BN(R) multiantigen
The manufacturing of a cGMP batch of this HIV vaccine candidate for clinical trials is on schedule with an anticipated release during the first half of 2007. Preclinical safety and immunogenicity studies are also on schedule and will support a Phase I trial planned for early 2008.
Other Development Programmes
Breast Cancer Vaccine
Preclinical studies with the MVA-BN(R)-HER-2 vaccine against breast cancer have been concluded. Bavarian Nordic expects to submit an Investigational New Drug application (IND) in the fourth quarter of 2006. Bavarian Nordic plans to initiate two Phase I/II studies; one in 2006 and the other in 2007.
Childhood Vaccines
Measles
The MVA-BN(R) Measles vaccine has been manufactured and released from the Berlin facility according to schedule. Preclinical studies demonstrating the safety and immunogenicity of the vaccine are progressing as planned and the start of a Phase I clinical trial is anticipated during the first-half of 2007.
Respiratory Syncytial Virus (RSV)
Safety and immunogenicity studies for the MVA-BN(R) RSV vaccine candidate are progressing as planned. The vaccine is expected to be released for clinical trials during the first half of 2007.
Immunotherapy Program - IMVABOOST(TM)
Planned studies with IMVABOOST(TM) have been temporarily postponed until Bavarian Nordic is awarded the expected RFP-III order.
Production
Kvistgaard: Manufacturing authorisation and optimization of processes
In August, the Danish Medicines Agency (Laegemiddelstyrelsen) approved Bavarian Nordic's facility in Kvistgaard, Denmark for manufacturing of sterile vaccines for use in clinical trials and for emergency use in accordance with EU cGMP requirements. Bavarian Nordic can now manufacture, release, sell and distribute sterile vaccines for emergency use to EU countries and certain non-EU countries, and is furthermore now capable of fulfilling the expected RFP-III contract.
Optimization of the MVA-BN(R) industrial manufacturing process has been successfully completed. As part of the optimization, the batch yield was further increased. At the current highly efficient process level, Bavarian Nordic has the capacity and manpower needed to manufacture, release and deliver the expected RFP-III order.
The MVA-BN(R) manufacturing process occupies a small fraction of the current total capacity of the Kvistgaard facility. Bavarian Nordic is therefore now in a unique position to also meet the expected demand from other markets.
Berlin: Release of MVA-BN(R) recombinant vaccines
The Berlin facility released three batches of vaccines for clinical trials; MVA-BN(R) polytope vaccine (for use against HIV), MVA-BN(R)-HER-2 (for use against breast cancer) and MVA-BN(R) Measles vaccine.
Capacity at the Berlin facility for manufacturing, testing and releasing clinical trial batches is substantially higher than needed for internal purposes. Bavarian Nordic has decided to actively seek agreements to perform contract manufacturing of MVA-based recombinant vaccines.
Business Development
The RFP-III process
Bavarian Nordic is in regular contact with the US authorities on outstanding elements in the RFP-III process. The exact timing of decision on the award is still unknown, but according to the information the company receive from the US authorities, intensive work to conclude the process is ongoing.
Cutback in organisation
In August the company initiated a cost savings programme resulting in a large staff reduction mostly within the production and quality organisation. As a result of the successful optimization of the MVA-BN(R) production process that has lead to an increase of the batch yield, it is likely that the production capacity can be maintained at the desired level without significant re-hiring of personnel for the production.
Market demand outside the US
Outside the US, Bavarian Nordic is experiencing an increasing interest in safe third-generation smallpox vaccines, such as IMVAMUNE(R). The intense world-wide focus on bird flu and flu the last couple of years has again changed and is now more balanced and re-focused towards other threats, such as smallpox, anthrax and more. Experience from SARS and bird flu proves that there is a need for preparedness in terms of securing primarily first-line responders. Once the threat has been identified, the authorities in several countries experience difficulties acquiring the best available drugs. In very short time the market demand heats up and the very limited global production capacity shows to be inadequate. Added to that, the clinical data package for IMVAMUNE(R) continues to grow, proving that a safe third-generation smallpox vaccine is available. Thus the company will further expand its marketing activities once the expected RFP-III contract is awarded.
Legal Matters
Enforcement of Intellectual Property
Bavarian Nordic has initiated three separate legal actions to enforce its proprietary rights on MVA against Acambis plc and/or Acambis Inc. Two litigations are pending in the U.S. and one in Austria.
Bavarian Nordic filed a patent infringement action against Acambis plc's MVA-based smallpox vaccine products at the U.S. International Trade Commission (ITC) based in Washington DC. Furthermore, Bavarian Nordic filed a patent infringement action against Acambis plc and Acambis Inc. at the Commercial Court in Vienna, Austria. Bavarian Nordic launched these actions alleging infringement of its U.S. and Austrian patent rights, i.e. an unauthorized use of the invention described and claimed without proper license or consent by the patent owner Bavarian Nordic. The asserted patents are U.S. Patent No. 6,761,893 and U.S. Patent No. 6,913,752, and European Patent 1 335 987, respectively.
The third action was filed in the U.S. District Court for the District of Delaware. This law suit does not involve a patent dispute. Rather, this litigation currently involves conversion of biological material, unfair competition and unfair trade acts.
ITC
A hearing in the patent infringement action against Acambis plc's MVA3000 product at the ITC was held on May 8 - 15, 2006. On 7 September 2006 the Administrative Law Judge rendered his Initial Determination concluding that Acambis plc's smallpox vaccine product (MVA3000) infringes two of Bavarian Nordic's patents on Modified Vaccinia Ankara (MVA). In his Initial Determination, the Administrative Law Judge also was of the opinion that the patents in question should be held invalid on grounds which in Bavarian Nordic's opinion are inconsistent and legally and factually clearly erroneous.
The issue of validity turns on a claim construction made by the judge, who in Bavarian Nordic's opinion is incorrect and not supported by the patent claims, the patent description or the prosecution history. If the claim construction is upheld by the full ITC Commission, Bavarian Nordic will appeal the decision and is confident that the appellate court (Court of Appeals for the Federal Circuit) will reverse the decision on validity. On September 18, 2006, Bavarian Nordic filed a petition for appeal with the ITC Commission, requesting it to review the Administrative Law Judge's initial determination.
While Bavarian Nordic is confident that the full ITC Commission or the appellate court will find its patents valid, even a final adverse decision will have no impact on the validity of the patents, since decisions of the ITC or the appellate court are not considered binding on a US Federal Court who ultimately rule on the validity of patents. A final determination of invalidity by the ITC or the appellate court would only mean that Acambis will not be barred from importing the MVA 3000 product to the US.
Delaware
In the lawsuit against Acambis in the Federal District Court in Delaware, Bavarian Nordic alleges conversion of the biological material Acambis has to manufacture the MVA3000 smallpox vaccine product, unfair competition and unfair trade acts.
On August 21 the Judge denied Acambis motion to add several publicly announced counter-claims against Bavarian Nordic. The case is proceeding according to schedule and hearings are expected to be finalized in June 2007. The fact discovery phase has recently been completed and expert discovery is ongoing.
Austria
Bavarian Nordic has filed a patent infringement action against Acambis plc and Acambis Inc. at the Commercial Court in Austria. On September 18, an oral hearing was held on the issue of whether the case should be stayed pending a separate opposition proceeding at the European Patent Office (EPO), or continue at the Austrian court in parallel. The court has not yet decided on this issue. The action was initiated to enforce Bavarian Nordic's Austrian patent that is based on Bavarian Nordic's patent granted by the European Patent Office (EPO) which covers the company's MVA-BN(R) technology.
In connection with the European patent, the nine month opposition period wherein any third party can oppose any patent granted in a European jurisdiction has ended for Bavarian Nordic's European Patent covering the MVA-BN(R) technology, which was granted November 2005. Bavarian Nordic has been informed that seven companies have opposed its patent. The Corporate Management believes that this demonstrates that Bavarian Nordic holds important and dominating intellectual property rights on MVA.
New MVA patent
On August 29, 2006 Bavarian Nordic announced that the United States Patent and Trademark Office (USPTO) issued a patent to the company which further strengthens its intellectual property position on MVA.
The new patent ("Modified Vaccinia virus Ankara for the vaccination of neonates" - US Patent No. 7,097,842) covers use of MVA derived Vaccinia viruses for inducing a general immune stimulation, including the use of MVA-BN(R) used for protection against smallpox in neonates, i.e. young children with an immature immune system according to the patent. The granted claims are directed to inducing a general immune stimulation in neonates and, thus, the patented technology cover the high risk group of the young, particularly young children with an immature immune system.
Developments after the close of the fiscal period (1 October - 7 November, 2006)
MVA-BN polytope against HIV
A Phase I and a Phase I/II clinical study with MVA-BN(R) polytope vaccine have been initiated in Europe. The vaccine was recently released from the Berlin facility for use in clinical trials. The purpose of these studies is to evaluate the safety and immunogenicity of the vaccine in healthy and HIV-infected subjects. Results from both studies are expected in the second half of 2007.
Bavarian Nordic is currently preparing the filing of an Investigational New Drug Application (IND) with the US Food and Drug Administration (FDA). Under this IND two additional Phase II studies with MVA-BN(R) polytope are expected to start in the US in the first half of 2007. Both studies will be funded by the National Institutes of Health (NIH).
MVA-BN(R)-HER-2 against breast cancer
Promising results from Bavarian Nordic's MVA-BN(R)-HER2 breast cancer vaccine program were presented at the 21st Annual Meeting of the International Society for Biological Therapy of Cancer in Los Angeles, California (October 26-29, 2006). In preclinical studies, the MVA-BN(R)-HER2 vaccine showed exceptional and significant efficacy, both in terms of inducing broad immunity as well as anti-tumour activity. In addition, immunization with MVA-BN(R)-HER2 showed to induce an antigen-specific Th 1-type CD4 T-cell response, Her-2 specific CD8 cytotoxic T-lymphocyte response, and antigen-specific B-cell response in the form of anti-Her-2 antibodies.
MVA-BN(R)-HER2 showed activity in both preventive as well as therapeutic settings in multiple animal models with Her-2 expressing tumours. In the most dramatic model (14-day experimental, highly aggressive lung metastasis model), MVA-BN(R)-HER2 nearly eradicated the tumour by the 14-day evaluation point. Equally impressive in this model was that a single injection of MVA-BN(R)-HER2 administered as late as 3 days after the intravenous induction of the experimental lung metastasis, resulted in the same effect - near eradication of an aggressive metastasis. Moreover, MVA-BN(R)-HER2 induced an extremely rapid antigen-specific immune response.
ITC
The U.S. International Trade Commission (ITC) announced a new target date for the Final Determination of no later than 8 January 2007. The Commission has also announced a new date of 22 November 2006 for deciding on whether to review the Initial Determination.
Incentive program for employees in Bavarian Nordic A/S and in Bavarian Nordic GmbH
In accordance with board decision of 11 August 2006 a three year incentive program is introduced in November for all employees in the company and its German subsidiary. The program is a cash bonus program based on so-called phantom shares (bonus program based on the company's shares). This means that each employee in the program will be entitled to exercise a number of phantom shares when the program expires in 2009 and receive a cash bonus calculated from the increase in the company's share price.
With effect from 1 November 2006 every month each employee is awarded up to three phantom shares per month of employment until November 2009 and can during the term of the program receive a maximum of 108 phantom shares. New employees employed after commencement will participate in the program as of the end of his/her trial period, if any. The exercise price has been established to be DKK 422 equivalent to the average share price of the company's shares in October 2006 added 10 per cent. At the time of exercise each employee in the program will receive a cash bonus per phantom share equivalent to DKK 1 per share point the company's share price exceeds the exercise price. The cash bonus is subject to taxation.
The exercise period is a two week period in connection with the company's release of its quarterly report for third quarter in 2009. Exercise of phantom shares is subject to the company's share price exceeding the exercise price by at least 10 per cent at the time of exercise in 2009.
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' third quarterly report for the period 1 January - 30 September, 2006.
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.
Webcast
In connection with the release of the interim report, a pre-recorded webcast presentation will be held. President and CEO Peter Wulff will present. The webcast will be held in English, and can be viewed at: www.bavarian-nordic.com/webcast.
The full statement is available on Bavaria Nordic's website.
About Bavarian Nordic A/S:
Bavarian Nordic (CSE: BAVA) is a leading international biopharmaceutical company developing and producing innoÂvative vaccines to prevent and treat infectious diseases and cancer. With operations in Denmark, Germany, the USA, and Singapore, Bavarian Nordic employs over 200 people.
Bavarian Nordic's patented technology, MVA-BN(R), is as been demonstrated in clinicial studies, one of the world's safest, multivalent vacÂcine vectors for the development of vaccines against various infectious diseases such as smallpox, HIV/AIDS, as well as against breast and prostate cancer. Several MVA-BN(R)-based HIV and smallpox vaccines are in clinical Phase I and Phase II trials.
Bavarian Nordic has ongoing development contracts with the US government to develop IMVAMUNE(R) as a safe third-generation smallpox vaccine. Bavarian Nordic has supplied several other governments with smallpox vaccines.
Bavarian Nordic's partners include GlaxoSmithKline, Pharmexa, Impfstoffwerk Dessau-Tornau (IDT) and Vaccine Solutions in Australia.
For more information please visit www.bavarian-nordic.com
© 2006 PR Newswire
