Smallpox :: U.S. HHS awards contract to Bavarian Nordic for Imvamune smallpox vaccine

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

Total contract value: USD 1.6 billion

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

Advanced and and milestone payments: USD 150 million

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

Contractual options worth USD 1.1 billion

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

Contribution margin from the base contract is approx. DKK 1.5 billion.

The delivery of the 20 million dosesof IMVAMUNE?
The delivery of the 20 million doses to the Strategic National Stockpile (SNS) will occur in stages once Bavarian Nordic has fulfilled the requirements for the potential use of IMVAMUNE? during an emergency.

2007 Financial guidance raised

Based on milestone payments in 2007 Bavarian Nordic raises its financial guidance for the full year results from revenue of DKK 130 million to DKK 380 million and result before tax from a loss of DKK 350 million to a loss of DKK 50 million.

Peter Wulff, President & CEO of Bavarian Nordic said:

?We are proud and delighted that we now can deliver the world?s first safe and effective smallpox vaccine for the protection of U.S. citizens against bioterrorism using smallpox virus. From the very first presentation of IMVAMUNE? for the U.S. government in 2001, we have had a constructive and trusting collaboration with the U.S. authorities. Therefore we do not consider this contract to be a single transaction, but rather the beginning of a long-term partnership with the U.S government.

It is encouraging that the U.S. authorities through the recently-established Biomedical Advanced Research and Development Authority (BARDA), has enabled larger milestone payments in among others contracts like ours. This ensures a positive cash flow in the contract throughout the executing period.?

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