Interim / Quarterly Report • Aug 25, 2017
Interim / Quarterly Report
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for the Period January 1 to June 30, 2017
Bavarian Nordic A/S Hejreskovvej 10A DK-3490 Kvistgaard Denmark CVR-No. DK 16 27 11 87
| Management Commentary 2 | |
|---|---|
| Financial Statement for the Period January 1 – June 30, 2017 2 | |
| Product Pipeline 4 | |
| Other Developments 10 | |
| Share Information 11 | |
| Statement from the Board of Directors and Corporate Management 12 | |
| Financial Statements 13 |
Financial statements are un-audited. Comparison figures for the same period 2016 are stated in parentheses.
Revenue generated for the six months ending June 30, 2017 was DKK 595 million (DKK 139 million). Revenue was composed of DKK 522 million (DKK 0 million) from the sale of IMVAMUNE bulk drug substance to U.S. Government, DKK 31 million (DKK 13 million) from the sale of IMVAMUNE final drug product to other customers and DKK 42 million (DKK 45 million) from contract work. In 2016 the company received the remaining IMVAMUNE holdback of DKK 81 million. Revenue reported for the three months ended June 30, 2017 was DKK 397 million (DKK 117 million).
The production costs totaled DKK 177 million (DKK 47 million). Costs related directly to revenue amounted to DKK 160 million (DKK 29 million). Other production costs totaled DKK 17 million (DKK 18 million). In the second quarter of 2017, production costs were DKK 127 million (DKK 28 million).
Research and development costs totaled DKK 212 million (DKK 193 million), of which expensing of prior-year IMVAMUNE development costs amounted to DKK 43 million (DKK 0 million). As per June 30, 2017 the IMVAMUNE development project asset stood at DKK 22 million (DKK 114 million).
Distribution costs totaled DKK 20 million (DKK 19 million) and administrative costs totaled DKK 87 million (DKK 87 million).
The income before interest and tax (EBIT) was a gain of DKK 99 million (loss of DKK 207 million).
Financial items totaled a net expense of DKK 47 million (net income of DKK 2 million). Net income from securities amounted to DKK 3 million (DKK 13 million), interest expenses on debt amounted to DKK 2 million (DKK 1 million), net gains on derivative financial instruments amounted to DKK 13 million (DKK 0 million) and negative exchange rate adjustments amounted to DKK 61 million (DKK 10 million).
Income before company tax was a gain of DKK 52 million (loss of DKK 204 million).
Tax on income was DKK 12 million (income of DKK 50 million), corresponding to an effective tax rate of 23%.
For the first six months of 2017, Bavarian Nordic reported a net profit of DKK 40 million (net loss of DKK 155 million), which is in line with the expectations.
Trade receivables amounted to DKK 4 million as of June 30, 2017 as the IMVAMUNE bulk drug substance sale to U.S. Government has been prepaid.
Securities, cash and cash equivalents increased by DKK 413 million compared to December 31, 2016. During the first six month of 2017 the company received prepayments of DKK 637 million under the second supply order from U.S. Government in concurrence with initiation of each IMVAMUNE batch production. As per June 30, 2017 DKK 307 million was still recognized as prepayments. The revenue will be recognized during the third quarter.
As of June 30, 2017 the Group's cash preparedness was DKK 2,704 million (DKK 1,894 million), including unutilized credit lines of DKK 392 million (DKK 392 million). Cash flow contribution from operating activities was DKK 468 million (spend DKK 144 million), mainly driven by payments of trade receivables and prepayments. Cash flow spend on investment activities was DKK 933 million (DKK 399 million). Net investment in securities amounted to DKK 913 million (DKK 352 million). Cash flow from financing activities contributed with DKK 4 million (DKK 630 million) related to warrant exercise. In 2016 a private placement contributed with a net of DKK 626 million. The net change in cash and cash equivalents was DKK -460 million (DKK 87 million). Adjusted for investment in securities the net change in cash and cash equivalents was positive by DKK 453 million (DKK 439 million).
The Group's equity as of June 30, 2017 stood at DKK 2,123 million (DKK 1,804 million).
The Company maintains its 2017 full-year financial expectations as announced July 27, 2017 with revenue of approximately DKK 1,300 million and a profit before interest and tax (EBIT) of approximately DKK 350 million. The revenue is partly composed by recognition of the PROSTVAC upfront payment as revenue which is based upon the assumption that we provide Bristol-Myers Squibb with top-line PROSPECT (Phase 3) data in the second half of 2017. The cash preparedness at year-end is expected to be approximately DKK 2,600 million and was raised from DKK 2,400 million on July 27, 2017 after entering a new license and share purchase agreement with Janssen. Cash preparedness includes cash, cash equivalents, investment in securities and the aggregate amount of undrawn credit lines. This includes a EUR 50 million unsecured loan from the European Investment Bank, which the Company anticipates drawing on during second half of 2017.
Total research and development costs of approximately DKK 425 million are expected, primarily related to the conclusion of the PROSPECT study, the ongoing RSV Phase 2 study, finalization of the IMVAMUNE liquid-frozen Phase 3 study, and the ongoing CV301 proof of concept study in lung cancer.
| DKK million | |
|---|---|
| Research and development costs to occur | 425 |
| Of which: | |
| Contract costs recognized as production costs | (45) |
| Capitalized development costs | (10) |
| 370 | |
| Expensing (amortization) of prior-year costs attributable to the IMVAMUNE development project | 70 |
| Research and development costs to be recognized in the income statement | 440 |
Bavarian Nordic faces a number of risks and uncertainties, common for the biotech industry. These relate to operations, research and development, manufacturing, commercial and financial activities. For further information about risks and uncertainties which Bavarian Nordic faces, refer to page 41 "Risk Management" in the 2016 annual report.
Since the publication of the 2016 annual report, the overall risk profile of the Company remains unchanged.
"Our pipeline is a reflection of our dedicated employees and collaborators who share a common goal: To develop innovative and safe therapies against cancer and infectious diseases to improve the health and quality of life for children and adults."
Our pipeline comprises multiple product candidates which are subject to more than 20 ongoing clinical studies in infectious diseases and cancer. Many of our programs are supported by external funding through either private or governmental partnerships.
In addition, we have ongoing contracts with the U.S. Government for the preclinical and clinical evaluation of recombinant MVA-BN vaccine candidates for selected biological threats (e.g. filoviruses, foot-and-mouth disease virus, Burkholderia, and Yellow Fever).
Detailed information on our pipeline programs is available in Bavarian Nordic's annual report or on the Company's website: www.bavarian-nordic.com.
| Clinical pipeline | |||
|---|---|---|---|
| Product | Indication | Status | Commercial Rights |
| INFECTIOUS DISEASES | |||
| IMVAMUNE liquid-frozen | Smallpox | Approved/Phase 3 * | Bavarian Nordic |
| IMVAMUNE freeze-dried | Smallpox | Phase 2 | Bavarian Nordic |
| MVA-BN Filo monovalent | Ebola | Phase 3** | Janssen |
| MVA-BN Filo multivalent | Ebola/Marburg | Phase 1 | Janssen |
| MVA-BN RSV | Respiratory Syncytial Virus | Phase 2 | Bavarian Nordic |
| CANCER IMMUNOTHERAPY | |||
| PROSTVAC monotherapy | Prostate cancer (mCRPC) | Phase 3 | Bristol-Myers Squibb |
| PROSTVAC combinations | Prostate cancer (localized and metastatic) | Phase 2*** | Bristol-Myers Squibb |
| CV301 + pembrolizumab | Lung cancer (NSCLC) | Phase 2 | Bavarian Nordic |
| MVA-BN Brachyury | Solid Tumors | Phase 1 | Bavarian Nordic |
* Approved in Canada and the European Union (marketed as IMVANEX® in the EU). Phase 3 ongoing in the U.S.
** Multiple Janssen-sponsored Phase 1, 2 and 3 clinical studies ongoing
*** Multiple investigator-sponsored Phase 2 clinical studies ongoing
| Collaborations | |||
|---|---|---|---|
| Product | Indication | Collaborator | Commercial Rights |
| INFECTIOUS DISEASES | |||
| MVA-BN HPV + AdVac | Chronic HPV infection | Janssen | Janssen |
| MVA-BN HIV + AdVac | HIV-1 | Janssen | Janssen |
| MVA-BN HBV + AdVac | Hepatitis BHPV infection | Janssen | Janssen |
| CANCER IMMUNOTHERAPY | |||
| CV301 + atezolizumab | Bladder cancer | Roche | Bavarian Nordic |
IMVAMUNE is the only non-replicating smallpox vaccine approved in Europe for use in the general adult population (marketed under the trade name IMVANEX® ). It has furthermore been approved in Canada for use in a public health emergency for adults who are contraindicated to replicating smallpox vaccines. The vaccine is available for governments for use under national emergency rules. Although not yet approved in the United States, IMVAMUNE is currently stockpiled by the U.S. Government for emergency use in people for whom replicating smallpox vaccines are contraindicated (e.g. people, children, pregnant and nursing mothers with HIV and atopic dermatitis). Registration studies are underway to support FDA approval for use of the vaccine in the entire population.
The development of IMVAMUNE has been funded by the U.S. Government since 2003, through contracts with the National Institute of Allergy and Infectious Diseases (NIAID) of the National Institutes of Health (NIH) and Biomedical Advanced Research and Development Authority (BARDA), a division of the U.S. Department of Health and Human Services (HHS). Contracts awarded to date for the development and supply of the vaccine exceed USD 1.2 billion, including awards to advance MVA-BN as a broad technology platform for the development of medical countermeasures against other potential biological threats.
The initial award to supply 20 million doses of liquid-frozen IMVAMUNE to the U.S. Strategic National Stockpile (SNS) was completed in 2013. To maintain this aging stockpile, an additional 8 million doses was awarded in 2013 with deliveries completed in 2015.
The U.S. Government has a long-term stated goal for stockpiling of sufficient non-replicating smallpox vaccine to protect 66 million people, representing 132 million doses of IMVAMUNE.
As part of this strategy, we were awarded a USD 95 million contract in 2009 to develop a freeze-dried formulation of IMVAMUNE, which was the first step by the U.S. Government to develop an improved formulation of IMVAMUNE to replace the liquid-frozen formulation currently stockpiled in the SNS. The freezedried formulation has a potential shelf life of 5+ years and would also simplify the storage and shipping logistics.
As part of the transition to freeze-dried IMVAMUNE, BARDA has ordered bulk supplies of IMVAMUNE in 2015 and 2016 at a total value of USD 233 million, which is being produced and recognized as revenue over the course of 2016 and 2017. A tender process for the delivery of freeze-dried IMVAMUNE as a final drug product was initiated in June 2017. Pending final negotiations, a contract is anticipated before year-end.
"RSV represents one of the most broadly underserved diseases we know today. With a death rate similar to that of influenza and no vaccines approved, our vaccine has been designed to protect individuals for the course of an entire RSV season."
MVA-BN RSV is our product candidate in clinical development for the prevention of RSV. The vaccine has been specifically designed to target 5 different RSV proteins to ensure a broad immune response against both RSV subtypes (A & B). Extensive preclinical and clinical studies have shown that MVA-BN RSV induces a dual action immune response comprised of both antibodies and T cells, in a similar fashion to the natural response to an RSV infection.
MVA-BN RSV was investigated in a Phase 1 study in 63 healthy adults, aged 18-65. Subsequently, in October 2016, a randomized, placebo-controlled Phase 2 dose finding study was initiated in 421 subjects aged 55 and older. These subjects were enrolled into four active arms of the study, which examined the effects of both a high (5x108 ) and low (1x108 ) dose, administered as either one or two vaccinations (day 0, 28) and compared to a placebo arm.
Top-line results from this study were reported in June 2017, showing that both dose levels investigated were well tolerated and immunogenic, and confirmed the hypothesis that MVA-BN RSV is the first vaccine candidate designed to induce a broad and robust immune response against five distinct RSV proteins following a single shot or booster vaccination.
A single vaccination induced the highest booster responses in both antibodies and T cells against RSV compared to a prime-boost regime. Compared to the subjects receiving placebo, a significant boost (2-4 fold) in antibodies was observed 2 weeks post the single booster vaccination. This included neutralizing and total antibodies (IgG) against RSV, as well as IgA antibodies, which are associated with mucosal responses and are thought to play an important role in protection against RSV. Significant T cell responses (5-10 fold) to all five RSV proteins were observed in the majority of subjects 1 week post the single booster vaccination.
At the 3 month time point post vaccination the immune responses induced by the two active doses investigated demonstrated significant boosts over placebo. Immune responses were seen to be similar across all active doses, potentially confirming the results seen with the 1x108 dose tested in a Phase 1 which also demonstrated durable antibody responses 6 months post vaccination.
Subjects that received a single vaccination with either dose will be given an additional booster later this year and followed for another RSV season, to help establish the immune responses 1 year post vaccination and the effect of another booster vaccination.
In June, positive top-line results from a Phase 2 dose-ranging study in 421 subjects were announced.
MVA-BN Filo is a filovirus vaccine candidate, initially developed by Bavarian Nordic in collaboration with the NIAID. MVA-BN Filo contains the gene of the glycoproteins of Ebola Zaire, Ebola Sudan and Marburg virus, and therefore is designed to provide protection against the three most common causes of viral hemorrhagic fever.
MVA-BN Filo is licensed to Janssen for use in a prime-boost Ebola vaccine regimen in which a dose of Janssen's Ad26.ZEBOV is first given to prime the immune system, and then a dose of MVA-BN Filo is given at a later date to boost the immune response, with the goal of creating a stronger and longer-lasting immunity.
Together with an array of consortium partners, Janssen is conducting multiple clinical Phase 1, 2 and 3 trials in healthy adults, children, elderly and immunocompromised populations across Europe, USA and Africa with the goal of ultimately registering the vaccine.
In April, a large Phase 2 clinical trial was initiated in West Africa to evaluate the rapidity, intensity and duration of the immune responses generated by three different Ebola vaccination strategies, as well as their safety and tolerability, particularly in children. The Janssen/Bavarian Nordic Ebola vaccine candidate is one of the three strategies being evaluated. The trial is led by the Partnership for Research on Ebola VACcination (PREVAC) - an international collaboration led by Inserm, the French National Institute of Health and Medical Research; the NIAID of the NIH in the U.S.; and the London School of Hygiene & Tropical Medicine.
Finalize clinical development of prime-boost Ebola vaccine regimen with Janssen
PROSTVAC is a prostate specific antigen (PSA)-targeted immunotherapy candidate designed to enhance or stimulate the body's immune response, specifically T cells that will home to and kill prostate cancer cells, altering the course of the disease and improving overall survival of patients with prostate cancer. PROSTVAC employs two poxviruses (vaccinia and fowlpox) in a prime-boost vaccine regimen. A robust data package has been established that includes 19 ongoing or completed clinical studies, comprising more than 2,000 patients, the majority of which have been actively treated with PROSTVAC, which has been generally well-tolerated.
PROSTVAC is being developed under a cooperative research and development agreement (CRADA) with the U.S. National Cancer Institute (NCI). An agreement was entered with Bristol-Myers Squibb in March 2015, providing them an exclusive worldwide option to license and commercialize PROSTVAC, a deal worth up to USD 975 million.
PROSTVAC is currently the subject of a global randomized, double-blind, placebo-controlled Phase 3 trial (PROSPECT) in 1,297 patients with asymptomatic or minimally symptomatic metastatic castration-resistant prostate cancer (mCRPC).
The primary objective of the trial is to determine whether the overall survival (OS) of patients receiving PROSTVAC in either of the treatment arms, with or without the addition of granulocyte macrophage colonystimulating factor (GM-CSF), is superior to that of patients receiving placebo. While the prior placebocontrolled Phase 2 trial included the use of GM-CSF, additional clinical work has shown that it may not be required, and therefore the PROSPECT trial has been designed to potentially rule out the need for GM-CSF.
The study was fully enrolled in January 2015. The recruitment of patients occurred primarily between 2012 and 2014. It is worth noting that the recruitment rate was higher toward the latter half of the study, as is common.
The PROSPECT trial is designed to detect a difference in survival between active treatment and placebo at final analysis, which will occur at 534 events (deaths) in each comparison of the two treatment arms versus placebo. However, three pre-specified interim analyses of data (at 214, 321 and 427 events) have been integrated into the statistical plan to evaluate whether the trial should continue as planned, or potentially be stopped early for efficacy or futility. The efficacy and futility hurdles for these interim analysis are, what the Company considers to be, high, and it is the Company's continued belief that the study will continue to the final overall survival (OS) analysis. The first two interim analyses confirmed that the study should continue without modification as recommended by the independent Data Monitoring Committee (DMC). The DMC plans to convene for the third interim analysis in September 2017. Final results are expected in the fourth quarter of 2017. The company remains blinded to all data.
To leverage the full potential of PROSTVAC, Bavarian Nordic and its partners are conducting exploratory combination studies of PROSTVAC with or without agents from Bristol-Myers Squibb's immuno-oncology portfolio, including ipilimumab (YERVOY® ) and nivolumab (OPDIVO® ). These studies will investigate the potential synergies of combining PROSTVAC with one or more checkpoint inhibitors in early stages of prostate cancer. In addition to a series of planned, ongoing and completed NCI-sponsored studies of PROSTVAC as single or combination therapy, these studies will add to the clinical experience, thus potentially broadening the future commercial value of PROSTVAC.
Unless otherwise indicated, studies are sponsored by the NCI.
| Therapy | Indication | Details | Status |
|---|---|---|---|
| PROSTVAC | Localized prostate cancer Patients undergoing active surveillance |
Phase 2 150 patients |
Enrolling |
| PROSTVAC | Localized prostate cancer, neoadjuvant Patients undergoing radical prostatectomy |
Phase 2 27 patients |
Fully enrolled |
| PROSTVAC + ipilimumab * |
Localized prostate cancer, neoadjuvant Patients undergoing radical prostatectomy |
Phase 2 75 patients |
Enrolling |
| PROSTVAC + ipilimumab + nivolumab |
Localized prostate cancer, neoadjuvant Patients undergoing radical prostatectomy |
Phase 2 65 patients |
Enrolling |
| PROSTVAC ** | Patients at risk of relapse after radical prostatectomy | Phase 2 44 patients |
Enrolling |
| PROSTVAC + flutamide |
Non-metastatic prostate cancer | Phase 2 53 patients |
Fully enrolled |
| PROSTVAC | Non-metastatic castration-sensitive prostate cancer | Phase 2 80 patients |
Enrolling |
| PROSTVAC + enzalutamide |
Non-metastatic castration-sensitive prostate cancer | Phase 2 38 patients |
Fully enrolled |
| PROSTVAC + docetaxel + ADT |
Metastatic castration-sensitive prostate cancer | Phase 2 74 patients |
Enrolling |
| PROSTVAC + enzalutamide |
Metastatic castration-resistant prostate cancer | Phase 2 57 patients |
Fully enrolled |
| PROSTVAC *** | Metastatic castration-resistant prostate cancer | Phase 3 1,297 patients |
Fully enrolled |
* Sponsor: University of California, San Francisco
** Sponsor: Medical University of South Carolina
*** Sponsor: Bavarian Nordic
In April, a Phase 2 combination study of PROSTVAC, ipilimumab and nivolumab was initiated at the NCI.
http://www.bavarian-nordic.com/pipeline/prostvac
"The broad potential of CV301 to attack many different solid tumors, especially in those tumors where we know checkpoint inhibitors to be showing an effect, gives us great confidence that we can help enhance the response rate of these patients, and cure even more patients."
CV301 is a novel immunotherapy candidate that targets two tumor-associated antigens, CEA and MUC-1, which are overexpressed in major cancer types. Similar to PROSTVAC, CV301 uses a prime/boost dosing schedule albeit using MVA-BN as a primer, followed by multiple fowlpox boosts, and encodes the TRICOM costimulatory molecules.
The development of CV301 focuses on combination treatments with other immune-modulating agents such as checkpoint inhibitors. The options for modulation of the immune system for cancer treatment are increasing and the development of CV301 will also evolve to take advantage of these options. Preclinical data has shown that CV301 has the potential to be highly synergistic with checkpoint inhibitors, as CV301 induces an anti-tumor T cell response, while checkpoint inhibitors make this T cell response more effective. The T cells induced by CV301 secrete interferon gamma and other type 1 cytokines when stimulated by their target antigens, which causes upregulation or expression of PDL-1 on the tumor cells, a predictive marker of clinical activity when present in tumor samples prior to treatment with checkpoint inhibitors in a number of cancer indications like non-small cell lung cancer.
Bavarian Nordic is sponsoring an ongoing proof of concept study (MAGNI-lung-01) of CV301 in non-small cell lung cancer patients. In this study, the original design was to investigate the combination treatment of CV301 and OPDIVO® (nivolumab) in patients who had failed a prior platinum-containing chemotherapy. However, based upon current regulatory approvals and emerging standards of care, the decision has been made to transition the CV301 NSCLC program into the first line maintenance setting, where checkpoint inhibitors are now approved and broadly available. After discussions with regulators, a randomized Phase 2 study will enroll 176 patients who will receive either KEYTRUDA (pembrolizumab) monotherapy, as standard of care, or a combination of CV301 and standard of care. A small Phase 1b study will investigate the safety of combining CV301 and KEYTRUDA before initiation of the Phase 2.
While the primary endpoint of the study is overall survival, numerous important secondary endpoints including objective response rate, progression free survival and duration of response will be evaluated and offer the potential for an early efficacy signal, prior to an overall survival endpoint.
The initial safety phase of the MAGNI-lung-01 trial which investigated both CV301 alone and in combination with OPDIVO has been completed and analysis is underway.
Bavarian Nordic has entered into a collaboration with Roche to evaluate the combination of CV301 and Tecentriq® (atezolizumab), Roche's FDA-approved PD-L1 inhibitor, in bladder cancer. Roche will provide the drug for the study, which is expected to be initiated around the end of 2017.
MVA-BN Brachyury is a novel cancer immunotherapy candidate, designed to induce a robust T-cell response against brachyury, a tumor-associated antigen that is overexpressed in major solid tumor indications, as well as several rare, ultra-orphan cancer indications. Brachyury is reported to play a key role in the metastasis and progression of tumors. Tumors that overexpress brachyury are believed to be highly resistant to current therapies and are associated with decreased survival rates.
The clinical development is sponsored by the NCI with whom we continue to work to evaluate the product candidate. Clinical Phase 2 studies are expected to be initiated in 2017.
Initiation of NCI-sponsored Phase 2 trials of MVA-BN Brachyury (2017)
http://www.bavarian-nordic.com/pipeline/mva-bn-brachyury
In July, Bavarian Nordic and Janssen expanded their partnership with an additional worldwide license and collaboration agreement which grants Janssen the exclusive rights to Bavarian Nordic's MVA-BN technology for two additional programs, targeting vaccines against hepatitis B virus (HBV) and the human immunodeficiency virus (HIV-1). This deal builds on the ongoing collaboration to develop vaccines for Human Papillomavirus (HPV) and Ebola, and the companies are now collaborating on four product development programs combining Bavarian Nordic's MVA-BN technology with Janssen's AdVac® technology platform. Similar to prior agreements, Janssen will be responsible for all clinical development, while manufacturing of MVA-BN is retained by Bavarian Nordic.
The total potential value of the new agreement is up to USD 879 million including an upfront payment of USD 10 million, USD 33 million in an equity investment by subscription of new Bavarian Nordic shares and up to USD 836 million in milestone payments based upon the achievement of specified development, regulatory and sales milestones, in addition to tiered royalties on future sales.
Significant progress has been made in the global battle against HIV/AIDS, including the development of critical antiretroviral treatments and HIV prevention tools, yet the disease remains one of the greatest global health threats of our time. An estimated 37 million people are currently living with HIV-1 globally, and nearly 2 million people become newly infected each year.
Chronic hepatitis B virus (HBV) causes approximately 650,000 deaths worldwide from cirrhosis and liver cancer, with approximately 60 percent of hepatocellular carcinoma attributed to hepatitis B infection. Current recommended therapies are unable to cure the infection, requiring most people to continue treatment for life.
MVA-BN HPV is a new vaccine candidate, designed for Janssen as part of the development of a prime-boost vaccine regimen with Janssen's AdVac technology. The prime-boost vaccine is targeting HPV and represents a novel approach for early treatment and interception of HPV-induced cancers. The long-term goal is to develop a vaccine to treat chronic HPV infections as well as prevent precancerous stages of HPV-induced cancer.
A Phase 1 clinical study of the vaccine candidate is planned for initiation in 2017.
In May, Bavarian Nordic announced the expansion of its Executive Management team with the addition of Tommi Kainu, MD, PhD, as Executive Vice President and Chief Business Officer, effective July 1, 2017. In this newly created position, Dr. Kainu will be responsible for both commercial and governmental affairs, as well as business development. Dr. Kainu joins Bavarian Nordic after nearly two decades at the Boston Consulting Group (BCG) serving as a Partner and Managing Director since 2011. Prior to BCG, Dr. Kainu worked at the National Institutes of Health (USA) in the Cancer Genetics Branch of the National Human Genome Research Institute.
In connection with his commencement of employment, Tommi Kainu was granted 26,955 warrants, which entitle him to subscribe for up to 26,955 shares in total with a nominal value of DKK 10 each at an exercise price of DKK 430.4 per share. The warrants may be exercised wholly or partly during eight fixed subscription periods during 2020, 2021 and 2022.
In June, the Company consolidated its activities at the manufacturing plant in Denmark in order to streamline the Company's operations for future plans and opportunities. As result of several optimizations and changes in the Company's mode of operation, the workforce was reduced in manufacturing and related activities at Bavarian Nordics site in Denmark.
Bavarian Nordic will host a capital markets day for investors and analysts on Thursday, September 21, 2017 in New York City, where the management of Bavarian Nordic, collaborators from the National Cancer Institute and key opinion leaders within the field of oncology and infectious diseases will give presentations on the Company's business and future plans and opportunities.
For registration and more information, see www.bavarian-nordic.com/cmd.
Bavarian Nordic is listed on the Nasdaq Copenhagen exchange under the symbol BAVA. Furthermore, Bavarian Nordic has established a sponsored Level 1 American Depositary Receipt (ADR) program in the U.S. Bavarian Nordic ADRs are available for trading in the U.S. over-the-counter (OTC) market under the symbol BVNRY. Three ADRs represent one Bavarian Nordic share.
In May, the Company issued 45,667 new shares as a result of warrant exercise by employees. Hence, at June 30, 2017, the Company's share capital was DKK 314,692,130, comprising 31,469,213 shares with a nominal value of DKK 10 each. Each share carries one vote. There were 1,334,474 outstanding warrants, which entitle warrant holders to subscribe for 1,334,474 shares of DKK 10 each. Thus the fully diluted share capital amounted to DKK 328,036,870 at June 30, 2017.
Issue of shares to Johnson & Johnson Innovation – JJDC, Inc.
As part of the license agreement entered with Janssen in July, a share purchase agreement was entered with Johnson & Johnson Innovation – JJDC, Inc. (JJDC), according to which JJDC has subscribed for USD 33,000,000 (DKK 207,482,135) of new shares in Bavarian Nordic in a private placement. The subscription price for the new shares was determined as DKK 405.16 per share of DKK 10, which was calculated based on the simple average of the volume weighted average price of the Company's shares on Nasdaq Copenhagen (Bloomberg VWAP for BAVA.DC) during a period of ten consecutive individual trading days starting on July 27, 2017 and ending on August 9, 2017. Consequently in August, upon closing of the transaction with Janssen, Bavarian Nordic issued 512,102 new shares of DKK 10 each after which the share capital amounts to DKK 319,813,150, which is made up of 31,981,315 shares of a nominal value of DKK 10 each,
Subsequently, JJDC informed Bavarian Nordic that they hold 1,844,086 shares in Bavarian Nordic, corresponding to 5.77 % of the share capital and voting rights in Bavarian Nordic.
In May, the Company launched and completed a share buy-back program under which 12,156 shares were repurchased with the purpose of fulfilling the Company's obligations arising from the share-based incentive program for the Board of Directors and Executive Management. Subsequently, the Company owns a total of 23,300 own shares, corresponding to 0.07 % of the share capital.
November 8, 2017 Third quarterly report (Q3) for the nine-month period ended 30 September 2017
March 12, 2018 2017 Annual Report
April 17, 2018 Annual General Meeting Shareholders who wish to submit a request for proposals for consideration at the annual general meeting must lodge this with the Company no later than Wednesday, March 7, 2018.
May 24, 2018 First quarterly report (Q1) for the three-month period ended 31 March 2018
August 16, 2018 Half-year report (Q2) for the six-month period ended 30 June 2018
November 9, 2018 Third quarterly report (Q3) for the nine-month period ended 30 September 2018
The Board of Directors and Corporate Management have, today reviewed and approved the Bavarian Nordic A/S interim report for the period January 1 to June 30, 2017.
The interim report has been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU and additional Danish disclosure requirements for interim reports of listed companies, including those of Nasdaq Copenhagen.
In our opinion, the interim report gives a true and fair view of the group's assets and liabilities and financial position as of June 30, 2017 and the results of the group's activities and cash flows for the period January 1 to June 30, 2017.
In our opinion, the management's review provides a true and fair description of the development in the group's activities and financial affairs, 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.
Kvistgaard, August 25, 2017
Corporate Management:
Paul John Chaplin Ole Larsen
President and CEO Executive Vice President & CFO
Board of Directors:
Chairman of the Board Deputy Chairman
Gerard W.M. van Odijk Anders Gersel Pedersen Claus T. Bræstrup
Erik Gregers Hansen Peter H. Kürstein-Jensen Frank A.G.M. Verwiel
Elizabeth McKee Anderson
| Consolidated Key Figures (unaudited) | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| DKK thousand | 1/4 - 30/6 2017 1/4 - 30/6 2016 1/1 - 30/6 2017 1/1 - 30/6 2016 1/1-31/12 2016 | ||||||||
| Income statements | |||||||||
| Revenue | 397,276 | 116,557 | 594,972 | 139,115 | 1,006,742 | ||||
| Production costs | 127,072 | 28,310 | 177,207 | 47,207 | 297,793 | ||||
| Research and development costs | 111,578 | 89,126 | 211,877 | 193,436 | 463,169 | ||||
| Distribution costs | 11,220 | 11,738 | 19,906 | 18,697 | 38,560 | ||||
| Administrative costs | 45,057 | 41,425 | 86,752 | 86,562 | 174,213 | ||||
| Income before interest and taxes (EBIT) | 102,349 | (54,042) | 99,230 | (206,787) | 33,007 | ||||
| Financial items, net | (43,855) | 18,869 | (46,988) | 2,380 | 6,542 | ||||
| Income before company tax | 58,494 | (35,173) | 52,242 | (204,407) | 39,549 | ||||
| Net profit for the period | 46,293 | (25,782) | 40,242 | (154,535) | 30,600 | ||||
| Balance sheet | |||||||||
| Total non-current assets | 508,209 | 636,508 | 541,131 | ||||||
| Total current assets | 2,559,990 | 1,845,206 | 2,282,567 | ||||||
| Total assets | 3,068,199 | 2,481,714 | 2,823,698 | ||||||
| Equity | 2,122,605 | 1,804,481 | 2,017,237 | ||||||
| Non-current liabilities | 53,599 | 55,521 | 54,663 | ||||||
| Current liabilities | 891,995 | 621,712 | 751,798 | ||||||
| Cash flow statements | |||||||||
| Securities, cash and cash equivalents | 2,312,465 | 1,502,036 | 1,899,897 | ||||||
| Cash flow from operating activities | 468,275 | (144,444) | 267,601 | ||||||
| Cash flow from investment activities | (933,058) | (398,506) | (448,183) | ||||||
| - Investment in intangible assets | (11,296) | (24,818) | (43,709) | ||||||
| - Investment in property, plant and equipment | (8,103) | (21,691) | (47,810) | ||||||
| - Net investment in securities | (913,489) | (351,841) | (358,254) | ||||||
| Cash flow from financing activities | 4,460 | 629,947 | 657,199 | ||||||
| Financial Ratios (DKK) 1) | |||||||||
| Earnings (basic) per share of DKK 10 | 1.3 | (5.3) | 1.0 | ||||||
| Net asset value per share | 67.5 | 58.3 | 64.3 | ||||||
| Share price at period-end | 384 | 233 | 249 | ||||||
| Share price/Net asset value per share | 5.7 | 4.0 | 3.9 | ||||||
| Number of outstanding shares at period-end | 31,469 | 30,928 | 31,354 | ||||||
| Equity share | 69% | 73% | 71% | ||||||
| Number of employees, converted to full-time, at period-end | 445 | 427 | 437 | ||||||
| 1) Earnings per share (EPS) is calculated in accordance with IAS 33 "Earning per share". The financial ratios have been | |||||||||
| calculated in accordance with "Anbefalinger og Nøgletal 2015" (Recommendations and Financial ratios 2015). | |||||||||
| Notes | |||||||||
| (stated in the end of this document): | |||||||||
| 1. Significant accounting policies | |||||||||
| 2. Significant accounting estimates, assumptions and uncertainties 3. Revenue |
|||||||||
| 4. Production costs | |||||||||
| 5. Research and development costs | |||||||||
| 6. Financial income 7. Financial expenses |
|||||||||
| 8. Inventories | |||||||||
| 9. Other receivables | |||||||||
| 10. Prepayment from customers 11. Other liabilities |
|||||||||
| 12. Financial instruments | |||||||||
| 13. Incentive plans | |||||||||
| 14. Significant changes in contingent liabilities and other contractual obligations | |||||||||
| 15. Significant events after the balance sheet date 16. Approval of the unaudited condensed consolidated interim financial statements |
| DKK thousand | Note | 1/4 - 30/6 2017 1/4 - 30/6 2016 1/1 - 30/6 2017 1/1 - 30/6 2016 1/1-31/12 2016 | ||||
|---|---|---|---|---|---|---|
| Revenue | 3 | 397,276 | 116,557 | 594,972 | 139,115 | 1,006,742 |
| Production costs | 4 | 127,072 | 28,310 | 177,207 | 47,207 | 297,793 |
| Gross profit | 270,204 | 88,247 | 417,765 | 91,908 | 708,949 | |
| Research and development costs | 5 | 111,578 | 89,126 | 211,877 | 193,436 | 463,169 |
| Distribution costs | 11,220 | 11,738 | 19,906 | 18,697 | 38,560 | |
| Administrative costs | 45,057 | 41,425 | 86,752 | 86,562 | 174,213 | |
| Total operating costs | 167,855 | 142,289 | 318,535 | 298,695 | 675,942 | |
| Income before interest and tax (EBIT) | 102,349 | (54,042) | 99,230 | (206,787) | 33,007 | |
| Financial income | 6 | 7,746 | 8,140 | 21,923 | 13,942 | 37,877 |
| Financial expenses | 7 | 51,601 | (10,729) | 68,911 | 11,562 | 31,335 |
| Income before company tax | 58,494 | (35,173) | 52,242 | (204,407) | 39,549 | |
| Tax on income for the period | 12,201 | (9,391) | 12,000 | (49,872) | 8,949 | |
| Net profit for the period | 46,293 | (25,782) | 40,242 | (154,535) | 30,600 | |
| Earnings per share (EPS) - DKK | ||||||
| Basic earnings per share of DKK 10 | 1.5 | (0.9) | 1.3 | (5.3) | 1.0 | |
| Diluted earnings per share of DKK 10 | 1.5 | (0.9) | 1.3 | (5.3) | 1.0 |
| DKK thousand | 1/4 - 30/6 2017 1/4 - 30/6 2016 1/1 - 30/6 2017 1/1 - 30/6 2016 1/1-31/12 2016 | ||||
|---|---|---|---|---|---|
| Net profit for the period | 46,293 | (25,782) | 40,242 | (154,535) | 30,600 |
| Items that might be reclassified to the income statement: Exchange rate adjustments on translating foreign operations |
26,309 | (7,735) | 32,020 | 6,049 | (14,842) |
| Fair value of financial instruments entered into to hedge future cash flows |
370 | (5,367) | (259) | ||
| Tax on other comprehensive income | (41) | 1,181 | (81) | 1,181 | 57 |
| Other comprehensive income after tax | 26,268 | (6,554) | 32,309 | 1,863 | (15,044) |
| Total comprehensive income | 72,561 | (32,336) | 72,551 | (152,672) | 15,556 |
| DKK thousand | Note | 30/6 2017 | 30/6 2016 | 31/12 2016 |
|---|---|---|---|---|
| Assets | ||||
| Software | 8,433 | 5,170 | 5,165 | |
| IMVAMUNE development project | 21,842 | 114,476 | 60,951 | |
| Intangible assets in progress | 19,625 | 12,052 | 16,903 | |
| Intangible assets | 49,900 | 131,698 | 83,019 | |
| Land and buildings | 201,153 | 210,512 | 202,804 | |
| Leasehold improvements | 1,197 | 835 | 678 | |
| Plant and machinery | 54,607 | 62,169 | 54,903 | |
| Fixtures and fittings, other plant and equipment | 22,280 | 17,601 | 19,057 | |
| Assets under construction | 35,436 | 35,720 | 48,894 | |
| Property, plant and equipment | 314,673 | 326,837 | 326,336 | |
| Other receivables | 1,473 | 1,070 | 1,303 | |
| Financial assets | 1,473 | 1,070 | 1,303 | |
| Deferred tax assets | 142,163 | 176,903 | 130,473 | |
| Total non-current assets | 508,209 | 636,508 | 541,131 | |
| Development projects for sale | 70,069 | 70,069 | 70,069 | |
| Inventories | 8 | 152,632 | 192,676 | 146,983 |
| Trade receivables | 4,411 | 56,154 | 130,391 | |
| Tax receivables | - | 5,424 | 2,506 | |
| Other receivables | 9 | 15,421 | 12,916 | 25,396 |
| Prepayments | 4,992 | 5,931 | 7,325 | |
| Receivables | 24,824 | 80,425 | 165,618 | |
| Securities | 1,954,331 | 1,042,816 | 1,046,301 | |
| Cash and cash equivalents | 358,134 | 459,220 | 853,596 | |
| Securites, cash and cash equivalents | 2,312,465 | 1,502,036 | 1,899,897 | |
| Total current assets | 2,559,990 | 1,845,206 | 2,282,567 | |
| Total assets | 3,068,199 | 2,481,714 | 2,823,698 |
| DKK thousand | Note | 30/6 2017 | 30/6 2016 | 31/12 2016 |
|---|---|---|---|---|
| Equity and liabilities | ||||
| Share capital | 314,693 | 309,282 | 313,539 | |
| Treasury shares | (233) | (111) | (111) | |
| Retained earnings | 1,778,833 | 1,515,960 | 1,731,898 | |
| Other reserves | 29,312 | (20,650) | (28,089) | |
| Equity | 2,122,605 | 1,804,481 | 2,017,237 | |
| Provisions | 24,949 | 25,226 | 24,949 | |
| Debt to credit institutions | 28,650 | 30,295 | 29,714 | |
| Non-current liabilities | 53,599 | 55,521 | 54,663 | |
| Debt to credit institutions | 2,136 | 2,024 | 2,136 | |
| Prepayment from customers | 10 | 736,194 | 466,960 | 530,645 |
| Trade payables | 34,322 | 56,397 | 71,958 | |
| Company tax | 2,723 | 468 | 72 | |
| Other liabilities | 11 | 116,620 | 95,863 | 146,987 |
| Current liabilities | 891,995 | 621,712 | 751,798 | |
| Total liabilities | 945,594 | 677,233 | 806,461 | |
| Total equity and liabilities | 3,068,199 | 2,481,714 | 2,823,698 |
| DKK thousand | 1/1 - 30/6 2017 1/1 - 30/6 2016 1/1-31/12 2016 | ||
|---|---|---|---|
| Net profit for the period | 40,242 | (154,535) | 30,600 |
| Adjustment for non-cash items: | |||
| Financial income | (21,923) | (13,942) | (37,877) |
| Financial expenses | 68,911 | 11,562 | 31,335 |
| Tax on income for the period | 12,000 | (49,872) | 8,949 |
| Depreciation, amortization and impairment losses | 19,841 | 21,696 | 45,364 |
| Expensing (amortization) of IMVAMUNE development project | 43,255 | 181 | 68,785 |
| Share-based payment | 29,246 | 3,266 | 18,186 |
| Adjustment for other non-cash items | - | - | 2,825 |
| Changes in inventories | (5,649) | (101,674) | (55,981) |
| Changes in receivables | 134,403 | 108,339 | 20,711 |
| Changes in provisions | - | (570) | (570) |
| Changes in current liabilities | 167,126 | 44,944 | 126,237 |
| Cash flow from operations (operating activities) | 487,452 | (130,605) | 258,564 |
| Received financial income | 9,852 | 4,900 | 21,311 |
| Paid financial expenses | (24,797) | (15,062) | (3,515) |
| Paid company taxes | (4,232) | (3,677) | (8,759) |
| Cash flow from operating activities | 468,275 | (144,444) | 267,601 |
| Investments in and additions to intangible assets | (11,296) | (24,818) | (43,709) |
| Investments in property, plant and equipment | (8,103) | (21,691) | (47,810) |
| Disposal of property, plant and equipment | - | - | 1,979 |
| Investments in/disposal of financial assets | (170) | (156) | (389) |
| Investments in securities | (1,154,058) | (487,186) | (784,230) |
| Disposal of securities | 240,569 | 135,345 | 425,976 |
| Cash flow from investment activities | (933,058) | (398,506) | (448,183) |
| Payment on mortgage and construction loan | (1,064) | (974) | (34,363) |
| Proceeds from mortgage loan | - | - | 32,389 |
| Proceeds from warrant programs exercised | 9,838 | 7,943 | 37,305 |
| Proceeds from private placement | - | 664,800 | 664,800 |
| Cost related to issue of new shares | (60) | (38,973) | (40,083) |
| Purchase of treasury shares | (4,254) | (2,849) | (2,849) |
| Cash flow from financing activities | 4,460 | 629,947 | 657,199 |
| Cash flow of the period | (460,323) | 86,997 | 476,617 |
| Cash as of 1 January | 853,596 | 374,063 | 374,063 |
| Currency adjustments 1 January | (35,139) | (1,840) | 2,916 |
| Cash end of period | 358,134 | 459,220 | 853,596 |
| Reserves for | |||||||
|---|---|---|---|---|---|---|---|
| Reserves for | fair value of | ||||||
| Share | Treasury | Retained | currency | financial | Share-based | ||
| DKK thousand | capital | shares | earnings | adjustment | instruments | payment | Equity |
| Equity as of January 1, 2017 | 313.539 | (111) 1.731.898 | (88.398) | (202) | 60.511 | 2.017.237 | |
| Comprehensive income for the period |
|||||||
| Net profit | - | - | 40.242 | - | - | - | 40.242 |
| Other comprehensive income | |||||||
| Exchange rate adjustments on | |||||||
| translating foreign operations | - | - | - | 32.020 | - | - | 32.020 |
| Fair value of financial instruments | - | - | - | - | 289 | - | 289 |
| Total comprehensive income for | |||||||
| the period | - | - | 40.242 | 32.020 | 289 | - | 72.551 |
| Transactions with owners | |||||||
| Share-based payment | - | - | - | - | - | 13.394 | 13.394 |
| Warrant program exercised | 1.154 | - | 10.565 | - | - | (1.881) | 9.838 |
| Warrant program expired | - | - | 320 | - | - | (320) | - |
| Cost related to issue of new shares | - | - | (60) | - | - | - | (60) |
| Purchase of treasury shares | - | (122) | (4.132) | - | - | - | (4.254) |
| Tax related to items recognized | |||||||
| directly in equity | - | - | - | - | - | 13.899 | 13.899 |
| Total transactions with owners | 1.154 | (122) | 6.693 | - | - | 25.092 | 32.817 |
| Equity as of June 30, 2017 | 314.693 | (233) 1.778.833 | (56.378) | 8 7 |
85.603 | 2.122.605 |
In May 2017, the Company initiated a new share buy-back program, under which the Company bought back 12,156 of its own shares. The purpose of the share buy-back program was to meet the Company's obligations arising from the share-based incentive programs for the Board of Directors and Executive Management, in accordance with the Company's remuneration policy and the general guidelines for incentive remuneration. This share buy-back brought the total number of own shares to a total of 23,300 shares, representing 0.07% of the total share capital.
| Reserves for | |||||||
|---|---|---|---|---|---|---|---|
| Reserves for | fair value of | ||||||
| Share | Treasury | Retained | currency | financial | Share-based | ||
| DKK thousand | capital | shares | earnings | adjustment | instruments | payment | Equity |
| Equity as of January 1, 2016 | 280.197 | - | 1.066.558 | (73.556) | - | 69.280 | 1.342.479 |
| Comprehensive income for the period |
|||||||
| Net profit | - | - | (154.535) | - | - | - | (154.535) |
| Other comprehensive income | |||||||
| Exchange rate adjustments on | |||||||
| translating foreign operations | - | - | - | 6.049 | - | - | 6.049 |
| Fair value of financial instruments | - | - | - | - | (4.186) | - | (4.186) |
| Total comprehensive income for | |||||||
| the period | - | - | (154.535) | 6.049 | (4.186) | - | (152.672) |
| Transactions with owners | |||||||
| Share-based payment | - | - | - | - | - | 10.325 | 10.325 |
| Warrant program exercised | 1.385 | - | 8.428 | - | - | (1.870) | 7.943 |
| Warrant program expired | - | - | 120 | - | - | (120) | - |
| Capital increase through private | |||||||
| placement | 27.700 | - | 637.100 | - | - | - | 664.800 |
| Cost related to issue of new shares | - | - | (38.973) | - | - | - | (38.973) |
| Purchase of treasury shares | - | (111) | (2.738) | - | - | - | (2.849) |
| Tax related to items recognized | |||||||
| directly in equity | - | - | - | - | - | (26.572) | (26.572) |
| Total transactions with owners | 29.085 | (111) | 603.937 | - | - | (18.237) | 614.674 |
| Equity as of June 30, 2016 | 309.282 | (111) 1.515.960 | (67.507) | (4.186) | 51.043 | 1.804.481 |
The interim financial statements are prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by EU and the additional Danish requirements for submission of interim reports for companies listed on Nasdaq Copenhagen. The interim report has not been audited or reviewed by the company's auditors.
The interim financial statements are presented in Danish Kroner (DKK), which is considered the primary currency of the Group's activities and the functional currency of the parent company.
The accounting policies used in the interim financial statements are consistent with those used in the consolidated financial statements for 2016 and in accordance with the recognition and measurement policies in the International Financial Reporting Standards (IFRS) as adopted by EU.
In the preparation of the interim financial statements according to IAS 34, Interim Financial Reporting, as adopted by the EU, Management is required to make certain estimates as many financial statement items cannot be reliably measured, but must be estimated. Such estimates comprise judgments made on the basis of the most recent information available at the reporting date. It may be necessary to change previous estimates as a result of changes to the assumptions on which the estimates were based or due to supplementary information, additional experience or subsequent events.
Similarly, the value of assets and liabilities often depends on future events that are somewhat uncertain. In that connection, it is necessary to set out e.g. a course of events that reflects Management's assessment of the most probable course of events.
Further to the significant accounting estimates, assumptions and uncertainties, which are stated in the Annual Report 2016, the Management has not changed significant estimates and judgments regarding recognition and measurement.
| DKK thousand | 1/4 - 30/6 2017 1/4 - 30/6 2016 1/1 - 30/6 2017 1/1 - 30/6 2016 1/1-31/12 2016 | ||||
|---|---|---|---|---|---|
| 3. Revenue | |||||
| IMVAMUNE sale | 368,042 | 4,939 | 553,391 | 12,783 | 831,783 |
| Sale of goods | 368,042 | 4,939 | 553,391 | 12,783 | 831,783 |
| IMVAMUNE sale, development results | - | 80,746 | - | 80,746 | 80,746 |
| Contract work | 29,234 | 30,872 | 41,581 | 45,586 | 94,213 |
| Sale of services | 29,234 | 111,618 | 41,581 | 126,332 | 174,959 |
| Revenue | 397,276 | 116,557 | 594,972 | 139,115 | 1,006,742 |
| Total revenue includes: | |||||
| Fair value adjustment concerning financial | |||||
| instruments entered into to hedge revenue | - | - | - | - | (11,979) |
| 4. Production costs | |||||
| Cost of goods sold, IMVAMUNE sale | 93,742 | 168 | 136,253 | 1,801 | 171,517 |
| Contract costs | 17,229 | 18,146 | 24,016 | 27,317 | 52,747 |
| Other production costs | 16,101 | 9,996 | 16,938 | 18,089 | 73,529 |
| Production costs | 127,072 | 28,310 | 177,207 | 47,207 | 297,793 |
| 5. Research and development costs | |||||
| Research and development costs occured in | |||||
| the period | 103,035 | 114,213 | 196,784 | 234,728 | 476,367 |
| Of which: | |||||
| Contract costs recognized as production | |||||
| costs | (17,229) | (18,146) | (24,016) | (27,317) | (52,747) |
| Capitalized development costs | (2,429) | (6,960) | (4,146) | (14,156) | (29,236) |
| 83,377 | 89,107 | 168,622 | 193,255 | 394,384 | |
| Expensing (amortization) of prior-year | |||||
| costs attributable to the IMVAMUNE | |||||
| development project | 28,201 | 19 | 43,255 | 181 | 68,785 |
| Research and development costs | 111,578 | 89,126 | 211,877 | 193,436 | 463,169 |
| 6. Financial income | |||||
| Interest income Interest income from financial assets not |
24 | 252 | 53 | 252 | 272 |
| measured at fair value in the income | |||||
| statement | 24 | 252 | 53 | 252 | 272 |
| Financial income from securities | 4,883 | 3,752 | 9,150 | 7,014 | 15,640 |
| Fair value adjustments on securities | - | 4,136 | - | 6,676 | 3,542 |
| Net gains on derivative financial | |||||
| instruments at fair value in the income | |||||
| statement | 2,839 | - | 12,720 | - | - |
| Net foreign exchange gains | - | - | - | - | 18,423 |
| Financial income | 7,746 | 8,140 | 21,923 | 13,942 | 37,877 |
| DKK thousand | 1/4 - 30/6 2017 1/4 - 30/6 2016 1/1 - 30/6 2017 1/1 - 30/6 2016 1/1-31/12 2016 | ||||
|---|---|---|---|---|---|
| 7. Financial expenses | |||||
| Interest expenses on debt | 887 | 754 | 1,707 | 1,308 | 3,678 |
| Interest expenses on financial liabilities not | |||||
| measured at fair value in the income | |||||
| statement | 887 | 754 | 1,707 | 1,308 | 3,678 |
| Fair value adjustments on securities | 3,480 | - | 5,723 | - | - |
| Adjustment of net present value of | |||||
| provisions | - | - | - | - | 3,386 |
| Net loss on derivative financial instruments | |||||
| at fair value in the income statement | - | - | - | - | 24,271 |
| Net foreign exchange losses | 47,234 | (11,483) | 61,481 | 10,254 | - |
| Financial expenses | 51,601 | (10,729) | 68,911 | 11,562 | 31,335 |
| DKK thousand | 30/6 2017 | 30/6 2016 | 31/12 2016 | ||
| 8. Inventories | |||||
| Raw materials and supply materials | 32,695 | 34,691 | 38,887 | ||
| Work in progress | 250,651 | 245,867 | 206,943 | ||
| Manufactured goods and commodities | 10,477 | 10,925 | 11,850 | ||
| Write-down on inventory | (141,191) | (98,807) | (110,697) | ||
| Inventories | 152,632 | 192,676 | 146,983 | ||
| Write-down on inventory 1 January | (110,697) | (89,889) | (89,889) | ||
| Write-down during the period | (30,494) | (9,122) | (21,012) | ||
| Use of write-down | - | - | - | ||
| Reversal of write-down | - | 204 | 204 | ||
| Write-down end of period | (141,191) | (98,807) | (110,697) | ||
| 9. Other receivables | |||||
| Receivable VAT and duties | 3,986 | 7,011 | 14,947 | ||
| Financial instruments at fair value | 112 | - | - | ||
| Accrued interest | 11,323 | 5,905 | 10,449 | ||
| Other receivables | 15,421 | 12,916 | 25,396 | ||
| 10. Prepayment from customers | |||||
| Prepayments from customers as of January 1 | 530,645 | 405,789 | 405,789 | ||
| Prepayments received during the period | 637,566 | 64,871 | 142,655 | ||
| Recognized as income during the period | (432,017) | (3,700) | (17,799) | ||
| Prepayments from customers end of period | 736,194 | 466,960 | 530,645 | ||
| 11. Other liabilities | |||||
| Financial instruments at fair value | - | 5,367 | 36,509 | ||
| Liability relating to phantom shares | 18,107 | 13,366 | 18,047 | ||
| Payable salaries, holiday accrual etc. | 55,442 | 50,556 | 60,698 | ||
| Other accrued costs | 43,071 | 26,574 | 31,733 | ||
| Other liabilities | 116,620 | 95,863 | 146,987 |
The Group has financial instruments measured at fair value at level 1 and level 2.
The portfolio of publicly traded government bonds and publicly traded mortgage bonds is valued at listed prices and price quotas.
Currency forward contracts, currency option contracts and currency swap contracts are valued according to generally accepted valuation methods based on relevant observable swap curves and exchange rates.
Fair value hierarchy for financial instruments measured at fair value
| DKK thousand | Level 1 | Level 2 | Total |
|---|---|---|---|
| Securities | 1,954,331 | - | 1,954,331 |
| Financial assets measured at fair value through the income statement | 1,954,331 | - | 1,954,331 |
| Derivative financial instruments to hedge future cash flow (interest) | - | 112 | 112 |
| Financial assets/liabilities used as hedging instruments | - | 112 | 112 |
| DKK thousand | Level 1 | Level 2 | Total |
|---|---|---|---|
| Securities | 1,046,301 | - | 1,046,301 |
| Financial assets measured at fair value through the income statement | 1,046,301 | - | 1,046,301 |
| Derivative financial instruments to hedge future cash flow (interest) | - | (259) | (259) |
| Financial assets/liabilities used as hedging instruments | - | (259) | (259) |
| Derivative financial instruments at fair value through the income statement | |||
| (currency) | - | (36,250) | (36,250) |
| Financial liabilities measured at fair value through the income statement | - | (36,250) | (36,250) |
Outstanding warrants as of June 30, 2017
| Outstanding | Addition | Outstanding | |||||
|---|---|---|---|---|---|---|---|
| as of | during | Options | Trans | as of June | |||
| January 1 | the period | exercised | Annulled Terminated | ferred | 30 | ||
| Board of Directors | 35,000 | - | (10,000) | - | - | - | 25,000 |
| Corporate Management | 318,702 | - | - | - | - | 44,600 | 363,302 |
| Other employees | 887,073 | - | (11,667) | (11,800) | (1,500) | (85,706) | 776,400 |
| Retired employees | 243,777 | - | (93,700) | - | (21,411) | 41,106 | 169,772 |
| Total | 1,484,552 | - | (115,367) | (11,800) | (22,911) | - | 1,334,474 |
| Weighted average exercise | |||||||
| price | 211 | - | 8 5 |
324 | 5 6 |
- | 223 |
| Weighted average share price | |||||||
| at exercise | - | - | 349 | - | - | - | - |
| Numbers of warrants which can be exercised as of June 30, 2017 | 124,650 | ||||||
| at a weighted average exercise price of DKK | 74 |
The total recognized cost of the warrant programs was DKK 10.1 million in the first six months of 2017 (DKK 8.2 million).
| Aug | Aug | Dec | Dec | ||
|---|---|---|---|---|---|
| DKK | 2013 | 2013 | 2014 | 2015 | 2016 |
| Average share price | 68.00 | 82.00 | 117.50 | 334.00 | 222.50 |
| Average exercise price at grant | 73.90 | 96.50 | 131.40 | 366.85 | 260.20 |
| Expected volatility rate | 36.4% | 35.4% | 39.7% | 53.8% | 44.6% |
| Expected life (years) | 3.3 | 3.3 | 3.3 | 3.3 | 3.0 |
| Expected dividend per share | - | - | - | - | - |
| Risk-free interest rate p.a. | 0.78% | 0.74% | 0.63% | 0.25% | -0.48% |
| Fair value at grant 1 ) |
16 | 17 | 29 | 115 | 54 |
The expected volatility is based on the historical volatility.
1 ) Fair value of each warrant at grant applying the Black-Scholes model
No significant changes in contingent liabilities and other contractual obligations have occurred since December 31, 2016.
On July 27, 2017 the company announced an additional worldwide exclusive license and collaboration agreement with Janssen Pharmaceuticals, Inc., part of the Janssen Pharmaceutical Companies of Johnson & Johnson (Janssen). This new collaboration grants Janssen the exclusive rights to Bavarian Nordic's MVA-BN® technology for two additional programs, targeting vaccines against hepatitis B virus (HBV) and the human immunodeficiency virus (HIV-1).
Under the terms of the agreement, Janssen will provide an upfront payment of USD 10 million, and Johnson & Johnson Innovation - JJDC, Inc. will provide USD 33 million in an equity investment by subscription of new Bavarian Nordic shares. Additionally, Bavarian Nordic will be eligible to receive milestone payments based upon the achievement of specified development, regulatory and sales milestones up to a total of USD 836 million, in addition to tiered royalties on future sales.
The unaudited condensed consolidated interim financial statements were approved by the Board of Directors and Corporate Management and authorized for issue on August 25, 2017.
This interim report contains forward looking statements. The words "believe", "expect", "anticipate", "intend" and "plan" and similar expressions identify forward looking statements. Actual results or performance may differ materially from any future results or performance expressed or implied by such statements. The important factors that could cause our actual results or performance to differ materially include, among others, risks associated with product discovery and development, uncertainties related to the outcome and conduct of clinical trials including unforeseen safety issues, uncertainties related to product manufacturing, the lack of market acceptance of our products, our inability to manage growth, the competitive environment in relation to our business area and markets, our inability to attract and retain suitably qualified personnel, the unenforceability or lack of protection of our patents and proprietary rights, our relationships with affiliated entities, changes and developments in technology which may render our products obsolete, and other factors. For a further discussion of these risks, please refer to the section "Risk Management" in this interim report. Bavarian Nordic does not undertake any obligation to update or revise forward looking statements in this interim report nor to confirm such statements in relation to actual results, unless required by law.
IMVAMUNE® , IMVANEX® , MVA-BN® and PROSTVAC® are registered trade marks owned by Bavarian Nordic.
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