At the Intersection of Innovation and Collaboration
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At the intersection of innovation ANNUAL and collaboration REPORT 2017 Design and layout Kontrapunkt Photographers Carsten Andersen Cover photo: Photo by William Bout on Unsplash Print Dystan & Rosenberg CONTENTS MANAGEMENT FINANCIAL COMMENTARY STATEMENTS INTRODUCTION BUSINESS AND PIPELINE CONSOLIDATED FINANCIAL STATEMENTS Letter from the CEO & chairman ..................... 4 This is Bavarian Nordic ............................. 14 Consolidated income statements ................... 60 Key developments.................................. 7 Partnerships and collaborations .................... 16 Consolidated statements of comprehensive Financial results for 2017 .......................... 10 Existing collaborations ............................. 20 income ........................................... 60 Outlook for 2018 .................................. 10 The fill finish line is in sight ........................ 23 Consolidated statements of cash flow............... 61 Consolidated key figures ........................... 11 Product pipeline................................... 26 Consolidated statements of financial position Anticipated selected news flow .................... 13 Cancer immunotherapy ............................ 30 – assets .......................................... 62 Partnered projects ................................. 38 Consolidated statements of financial position – equity/liabilities ................................ 63 CORPORATE INFORMATION Consolidated statements of changes in equity ....... 64 The Bavarian Nordic share ......................... 43 Notes ............................................ 66 Corporate social responsibility ..................... 46 Corporate governance ............................. 47 FINANCIAL STATEMENTS OF THE PARENT COMPANY Risk management ................................. 48 Income statements .............................. 106 Internal control . 50 Statements of financial position – assets ........... 107 Management of Bavarian Nordic ................... 52 Statements of financial position – equity/liabilities 108 Financial review 2017 ............................. 56 Statements of changes in equity................... 109 Notes ........................................... 110 Statement by management on the annual report ... 121 Independent auditor’s reports ..................... 122 3 Bavarian Nordic Annual Report 2017 Management commentary | Financial statements BUILDING A PROMISING FUTURE ON A SOLID FOUNDATION LETTER FROM THE CEO & CHAIRMAN 2017 was another landmark year for company, with multiple value-creating came out of 2017 with a stronger finan- Brachyury, which are now truly unfold- Bavarian Nordic, comprised of the assets and a platform which helps dif- cial position than ever, which provides ing with the initiation of multiple new achievement of a number of significant ferentiate us from the traditional binary us great flexibility to execute on our combination studies in 2018 that will milestones including new contracts, nature of many biotech companies. The strategy going forward. continue to expand our cancer franchise. expansion of industry partnerships and progress made in 2017, both internally solid progress in the clinical pipeline, but and with our partners, has set the stage The results of the PROSPECT study, while We are working with AstraZeneca, Bris- also the disappointment of PROSTVAC and for numerous opportunities to benefit pa- disappointing to us all, represent a de- tol-Myers Squibb, and Roche in combina- its failure to benefit patients as mono- tients across the globe, and we are proud velopment setback in our steadfast am- tion studies of CV301 and PROSTVAC with therapy. While the Company has made to share that progress with you. bitions to improve treatments for cancer checkpoint inhibitors. Our collaborators tremendous strides from its beginnings, patients. As we put PROSTVAC monother- continue to see the possibilities in our there will always be setbacks, as is the With solid revenues from our core busi- apy behind us, we are optimistic about platform and are supplying us with drugs nature of drug discovery. However, we ness and the recognition of the upfront our clinical strategy for immunotherapy for our combination trials. We are look- have built what we believe to be a robust payment from Bristol-Myers Squibb, we combinations with both CV301 and ing forward to exploring the potential 4 Bavarian Nordic Annual Report 2017 Management commentary | Financial statements The“ progress made in 2017 has set the stage for numerous opportunities to benefit patients across the globe Paul Chaplin Gerard van Odijk President & CEO Chairman of the Board of Directors synergistic effect of CV301 in multiple in- other products. In parallel we are work- to go from strength to strength. With the dates and has shown to induce strong dications working with different partners ing to complete the Biologics License expansion of our collaboration to include and broad immune responses against as part of our strategy to grow a broad Application (BLA) for liquid-frozen IM- two new commercial targets, HIV and RSV in an elderly population. Combined cancer immunotherapy pipeline. VAMUNE for submission to the FDA later Hepatitis B, we now have a total of four with the positive Phase 2 data reported this year with potential approval in 2019 license agreements in place with nearly during the year, we have positioned A new long-term contract for the supply which would represent another signifi- US$ 1 billion in outstanding milestones, ourselves in the forefront of the devel- and final development of freeze-dried cant milestone for our smallpox vaccine in addition to potential future royalties, opment of an RSV vaccine, aiming to IMVAMUNE was awarded, paving the program. Along with the approval of making our relationship with Janssen a fulfil this highly unmet medical need, way for future revenue growth. We have IMVAMUNE, we would be eligible for re- long term value driver for the Company. with infections resulting in hundreds of initiated planning of the expansion of ceipt of a Priority Review Voucher, which Our most advanced commercial program, thousands of hospitalizations and tens our Kvistgaard site with a fill and finish could be used to accelerate the review MVA-BN RSV also made further progress. of thousands of deaths, annually around plant, which will secure the future of a future BLA, and is also transferrable. MVA-BN RSV is highly differentiated the globe. Additional important data manufacturing needs for IMVAMUNE and Our partnership with Janssen continues compared to other RSV vaccine candi- from the Phase 2 study, including data 5 Bavarian Nordic Annual Report 2017 Management commentary | Financial statements With the expansion of our collaboration with Janssen to include two new commercial targets, we now have a total of four license agreements in place with nearly US$ 1 billion in outstanding milestones. from subjects receiving a booster dose President, Strategy, People and Organ- We were also happy to add a new capac- will emerge during 2018. In parallel, we ization. Previously at Coloplast he held ity to our Board; Elizabeth McKee Ander- are exploring the feasibility of a human various management positions focusing son, former worldwide vice president of challenge trial later in 2018, which may on supply chain and production. We also infectious disease and vaccines for the provide important information to the welcomed Dr. Tommi Kainu to Bavarian Janssen Pharmaceutical Companies of design of a Phase 3 field efficacy trial. Nordic as Chief Business Officer with Johnson & Johnson, who was elected at As we progress our pipeline and plat- responsibility for both commercial and the annual general meeting in April. form, our ability and desire to make governmental affairs, as well as business We would like to express our apprecia- innovative therapies grow stronger. By development. tion of the exceptional effort all employ- nature, our technology presents endless ees have contributed throughout the opportunities, but our focus remains Partnerships and collaborations are year. Furthermore we thank all other on diseases with an unmet need in our becoming an even more important stakeholders that collectively have continued endeavor to help improve the part of our business as we progress our trusted and supported the Company. health and quality of life for children pipeline, but also an important factor in and adults. the continued exploration and develop- ment of our platform in areas, we would Operationally, we have strengthened not be able to pursue ourselves. Tommi the executive management team with brings a scientific background and many Paul Chaplin the two senior appointments. Mr. Henrik years of experience at the U.S. National President & CEO Birk was promoted to Executive Vice Institutes of Health and at Boston Con- President, Chief Operating Officer. Since sulting Group, working with major global joining Bavarian Nordic in 2008, Henrik pharmaceutical and biotech companies has served in positions of increasing re- on product launches, portfolio strategy Gerard van Odijk sponsibility, most recently as Senior Vice and business development. Chairman of the Board of Directors 6 Bavarian Nordic Annual Report 2017 Management commentary | Financial statements KEY DEVELOPMENTS 2017/18 IMVAMUNE® MVA-BN RSV The anticipated contract for supply production capacity to secure the future doses, with 100,000 doses remaining Additional clinical data were reported of freeze-dried