Bavarian Nordic in transformative acquisition of two commercial vaccines from GlaxoSmithKline Forward-looking statements
This presentation includes forward-looking statements that involve risks, uncertainties and other factors, many of which are outside of our control that could cause actual results to differ materially from the results discussed in the forward-looking statements. Forward-looking statements include statements regarding our short-term objectives and opportunities, financial expectations for the full year and financial preparedness as of year end, as well as statements concerning our plans, objectives, goals, future events, performance and/or other information that is not historical information. All such forward-looking statements are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward- looking statements. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law.
2 Transformative transaction that will establish a leading infectious disease franchise and accelerate Bavarian Nordic’s pathway to profitability
Accelerates our vision by 3 years to become a leading and profitable vaccine company
Exploits significant manufacturing synergies between highly complementary technologies and builds on our expertise
Strong cash flow generation allows us to continue progressing our promising innovative pipeline
Executing on our strategy to create a strong commercial independent vaccine company by acquiring an established product portfolio
3 Acceleration of our strategy to become a leading and profitable vaccine company!
Our 2019 vision & strategy By 2023 we aspire to be a leading and profitable biotech company that through harnessing the power of the immune system will develop, manufacture and commercialize products for infectious disease and cancer
MAINTAIN global EXPAND and rapidly ESTABLISH a broad EXPAND the leadership of our ADVANCE the pipeline and deep cancer commercial footprint smallpox vaccine of infectious disease immunotherapy and capabilities business programs portfolio on track
4 Products & Pipeline
Rabipur/Rabavert® Rabies
Marketed Encepur® Tick-borne encephalitis (TBE) vaccines
JYNNEOS™ / IMVANEX® / IMVAMUNE® Smallpox, Monkeypox (liquid-frozen)
MVA-BN® Filo Ebola (with Janssen) Mid/late-stage MVA-BN® Smallpox (freeze-dried) development MVA-BN® RSV Respiratory Syncytial Virus (RSV)
BN-Brachyury/CV301 Chordoma and solid tumors
Early-stage MVA-BN® HPV HPV development MVA-BN® HIV HIV-1
Partnered programs MVA-BN® HBV HBV (Janssen, USG) MVA-BN WEV Equine encephalitis
5 Creating a leading infectious disease franchise - Acquired vaccines providing a strong complementary and strategic fit
Addition of proven and established, market leading commercial products…
• Rabipur/Rabavert and Encepur are two highly effective vaccines with strong, • Vaccine against rabies established revenue streams and market positions and attractive margins
• Rabies and TBE incidence is expanding as a result of deforestation and climate change
• Vaccine against TBE • Opportunity to establish a dedicated and focused commercial organization managed by senior and experienced leadership being …to existing infectious disease portfolio recruited now
• Smallpox • Sales & Marketing efforts will outmatch • Monkeypox recent historical levels • Ebola (together with Janssen) • Significant synergies in manufacturing as Rabipur/Rabavert and Encepur utilize the same live virus manufacturing technology as MVA-BN Thereby creating a leading infectious disease franchise with significant synergies
6 Purchase price & structure - Payments follow the gradual transition from GSK to Bavarian Nordic
1 Up-front payment: • Payment of approx. EUR 301m upon closing. Includes an adjustment for estimated inventory at closing. The amount will be adjusted after closing with any difference to actual inventory value.
2 Future conditional milestones: • Up to EUR 495m in total, related to successful transfer of marketing authorizations in local markets, transferring of manufacturing and commercial performance. Payments expected to occur in the period 2020 to 2025 with the majority expected from 2022.
3 Transition agreements: • GSK supporting a staged takeover of sales & marketing, distribution and manufacturing
Payments EUR million
1 Up-front payment at closing, expected Dec 31, 2019 approx. 301
2 Future conditional milestone payments up to 495
Total purchase price up to approx. 7961
Note: (1) To be adjusted for possible variance between estimated and actual inventory upon closing
7 Near-term financing - Maintaining a solid cash position throughout transition period
Acquisition finance secured by: Robust capital structure: • Cash available, bridge facility, rights issue and • The financing will provide a sound capital structure cash contribution from new business for the long-term support of ongoing R&D activities and successful commercial launch of new products Fully underwritten rights issue: • Funding for future investments secured • Rights issue is fully underwritten by Citi and Nordea
Financing type EUR million
From current cash position 150
Bridge facility 270
Rights issue (fully underwritten) – 1H 2020 approx. 350
8 Timeline
21 October 2019 Signing and announcement
November 2019 Extraordinary general meeting
31 December 2019 Expected closing
1st half 2020 Rights issue
9 Key opportunities from strong strategic fit - We have a clear strategy to unlock the full potential of the Rabies and TBE vaccines
Key opportunities Execution strategy Additional benefits
• Optimize utilization of vaccine • Gradual transfer of technology • Enables us to become a fully bulk production at BN from GSK multiproduct facility • Improve capacity utilization of • Completion of fill-and-finish • Potential for future reduction new fill and finish facility at BN facility in COGS • Expand manufacturing foot- • Investment into new • Expand commercial portfolio
print to allow the introduction independent manufacturing through future product Manufacturing of new technologies suite launches and acquisitions
• Capture untapped market • Controlled and phased • Commercial platform allowing potential through an increase establishment of commercial for future expansion of in focus and attention infrastructure commercial portfolio • Perfect strategic and
commercial fit Sales &Marketing Sales
Positive cash flows generated from new business will enable continued investment in innovative pipeline
10 Controlled and staged transition plan - Supported by GSK during transition period
Sales & Marketing
• Bavarian Nordic assumes responsibility for sales & marketing of the products from day 1 after closing • Key personnel will be in place in selected markets from the start • Experienced Chief Commercial Officer (CCO) with proven vaccine expertise will drive commercial activities • Bavarian Nordic will establish presence in selected key markets
Distribution
• Bavarian Nordic will establish own distribution network with logistic partners until then the products will be distributed via GSK’s distribution network • Distribution tasks will be transferred market by market when new network is in place • Transfer of distribution expected to be complete during 2021
Manufacturing
• All manufacturing processes will be transferred to Bavarian Nordic • The transfer is a very regulated process and is expected to be complete by end of 2024 • The transfer will be staged starting with packaging then filling and ending with the transfer of bulk manufacturing • Until complete transfer GSK will be a supplier to Bavarian Nordic
11 Rabies Rabies, a major public health threat - Vaccination is highly successful in preventing the disease if administered promptly
Key disease and vaccination facts Markets targeted by Bavarian Nordic
Rabies is a deadly infection that is nearly always Targeted markets 1 fatal following the onset of clinical symptoms
Caused by the lyssavirus, rabies spreads by 2 animal bites (dogs, bats, raccoons, etc.)1
Approximately 59,000 annual deaths caused by 3 rabies, predominantly in the developing world2
Vaccine is nearly 100% effective, even post- 4 exposure3
In the US, every 10 minutes a person starts post- 5 exposure rabies vaccinations after a suspicious animal bite4
Pre-exposure vaccination continues to be 6 underutilized particularly in travelers to endemic regions
Sources: (1) https://www.cdc.gov/rabies/about.html (2) https://www.cdc.gov/rabies/location/world/index.html (3) https://www.fda.gov/media/83874/download (4) https://www.cdc.gov/vitalsigns/rabies/index.html
12 Rabies Key commercial overview for Rabipur/RabAvert - Market leading vaccine with strong and stable market dynamics
Key highlights of Rabipur/RabAvert Market dynamics • Sterile, freeze dried vaccine indicated for both pre- • Market growth is primarily driven by volume as exposure and post-exposure prophylaxis in all age groups price increases in the US have recently • Pre- and postexposure vaccination consists of 3 and 5 doses stabilized respectively of 1.0 mL given intramuscularly • Rabipur/Rabavert is a leader in large markets • Focused on major Western regulated with steady growth in market share markets and traveler population • Limited competition in major Western markets • First launched in 1985
Market leading position in major growth markets
Best estimate on 2019 annual sales for US and Germany are the key markets (~80% revenue) Rabipur/RabAvert
~4% CAGR 2016 – 2019
Other US Other
Germany ~105 Rabipur UK 92% EURm Rabavert 2019E Other ~89 58% ~28 EURm EURm 2018A 1 2018A 1
Note: (1) BN assessment based on available market data US GermanyGermany
13 TBE Tick-borne encephalitis - A growing threat spreading across Europe
Key disease and vaccination facts Incidence overview for TBE Average annual incidence rate per 100,000 inhabitants in the EU/EFTA at country level TBE incidence rate
TBE is a viral infectious disease, involving the 0 1 central nervous system and often manifests as > 0.0 – 0.5 meningitis or encephalitis > 0.5 – 4.0 > 4.0 – 8.5
> 8.5 – 18.5 Endemic area spreading from Central Europe to Data not available 2 other parts of Germany, Baltics and Nordic No surveillance countries1 Not included
Areas harboring ticks expanding due to climate 3 change amongst other factors
Reimbursement coverage increasing in regions 4 such as Germany and Switzerland
Opportunities for growth based on increasing 5 awareness, particularly for the dangers to children, and to increased compliance Infection statistics2
~10-20% ~1-2% experience paralysis deaths occur in European TBE
Sources: (1) https://www.ecdc.europa.eu/sites/portal/files/media/en/publications/Publications/TBE-in-EU-EFTA.pdf (2012) (2) https://www.cdc.gov/vhf/tbe/pdf/factsheet.pdf
14 TBE Key commercial overview for Encepur - #2 position in high growth market
Key highlights of Encepur Market dynamics • Vaccine against TBE. Administered in a three dose • Market growth driven by increase in endemic regimen over a one year or one month period area, coverage and reimbursement • Booster doses required after 3 years and then every 5 • Encepur has an established market presence years - limited historical marketing efforts • Available in adult and children version provides attractive upside potential • Commercialized in major European markets • Encepur holds a #2 position in most major EU markets • Product launched in 1991
Strong competitive position in markets with high underlying growth
Best estimate on 2019 annual sales for Encepur Germany and Sweden are the key markets (~76% revenue)
~15% CAGR 2016 – 2019 Germany Sweden Austria Other Other ~70 Switzerland Other EURm 2019E ~136 ~24 Encepur EURm EURm Encepur 32% 2018A 1 2018A 1 26%
Note: (1) BN assessment based on available market data GermanyGER SwedenSWE
15 Contribution from the acquired products and long-term outlook - A pathway to sustainable profitability and positive cash flows for Bavarian Nordic
Annual sales of acquired products Financial ambitions for acquired products
Transition years Post full transition 2020-2024 2025
US Sales Rabipur/RabAvert (Rabies) – low to mid single digit growth Encepur (TBE) – mid to high single digit Germany ~105 >50% EURm UK 30-40% 2019E Other EBITDA- Even higher, excluding 1 2020 impacted by non- Rabipur/RabAvert margin existing indirect recurring transition cost production overheads (5-10 points) (5-8 points)
Germany • Short term margin improvements are driven by Sweden transferring of services from GSK to BN and end of ~70 Austria non-recurring transition costs EURm Switzerland Encepur 2019E • Medium/longer term improvements are driven by final Other transfer of manufacturing
It is Bavarian Nordic’s financial ambition to remain a profitable company post transition
Note: (1) Amortization of intangible assets created by the acquisition not included in EBITDA
16 Transaction summary - Transformative acquisition of two established commercial vaccines
• Two established commercial vaccines from GSK with leading positions in attractive infectious disease segments - Rabipur/RabAvert for rabies Products - Encepur for tick-borne encephalitis (“TBE”) • Combined estimated annual 2019 revenue of EUR 175m
• Acceleration of our strategy to become a leading and profitable vaccine company • Providing sustained profitability through the addition of commercially proven products Strategy • Strong cash generation with margin uplift upon full transition of manufacturing and improved capacity utilization • Controlled and phased establishment of commercial infrastructure creating a platform for continued growth • Highly complementary with our technical expertise and know-how
• Acquisition price of up to approx. EUR 796m Price - Upfront payment at closing of approx. EUR 301m - Future conditional milestone payments of up to EUR 495m
• Transaction to be funded via existing cash on balance sheet and new bridge loan facility Financing • Fully underwritten rights issue of approximately EUR 350m to repay the bridge loan facility post closing
• EGM to approve the rights issue to be held in November 2019 • Closing expected by 31 Dec. 2019 – only pending antitrust approval and shareholders approval of rights issue Next steps • Rights issue H1 2020 • Transition processes during 2020 to 2024/25
17 2019 outlook
Maintains revenue and operating result – revises year end cash position
• The transaction does not affect the Company’s revenue and operating result for 2019
• Cash preparedness at year-end revised as the upfront cash payment to GSK will draw on existing cash, thus lowering the expected cash preparedness at year-end from DKK 1,600 million (EUR 214m) to approximately DKK 1,000 million (EUR 134m)
DKKm EURm FY2019E FY2019E FY2019E FY 2019E (old) (new) (old) (new) Revenue 600 600 80 80 EBIT (360) (360) (48) (48) Cash preparedness 1,600 1,000 214 134
Cash preparedness includes cash, cash equivalents, investments in securities Guidance denominated in DKK converted to and the aggregate amount of undrawn credit lines. EUR equivalent amount at DKKEUR rate of 0.1339 as of October 18, 2019
18 Transformative transaction that will establish a leading infectious disease franchise and accelerate Bavarian Nordic’s pathway to profitability
Accelerates our vision by 3 years to become a leading and profitable vaccine company
Exploits significant manufacturing synergies between highly complementary technologies and builds on our expertise
Strong cash flow generation allows us to continue progressing our promising innovative pipeline
Executing on our strategy to create a strong commercial independent vaccine company by acquiring an established product portfolio
19 Transformative transaction that will establish a leading infectious disease franchise and accelerate Bavarian Nordic’s pathway to profitability
Q&A
Executing on our strategy to create a strong commercial independent vaccine company by acquiring an established product portfolio
20