Magazine 2013 A YEAR OF Bavarian Nordic CELEBRATIONS CEO and President Anders Hedegaard looks back on a year with several landmark events for the company.

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PROSTVAC PAGE Approved! IMVAMUNE Europe and Canada are the FIRST 20 MILLION Interim analysis first regions to approve the DOSES NOW DELIVERED The option to look early 08 company’s smallpox vaccine

PAGE10 PAGE14 04 A year of

celebrations CEO and President Anders Hedegaard looks back on a year that presented several landmark events for the company.

06 Our company

A brief overview of our business areas. 08

approvED The company’s first product approval became reality as IMVANEX smallpox vaccine received marketing au- thorization in the European Union in August. Canada 10 followed suit in November. First 20 miLLION 11 doses delivered The deliveries of smallpox vaccines to the U.S. Strategic National Stockpile continue with a new order after the completion of the base contract. From California to Capitol Hill

U.S. Congresswoman Anna Eshoo visited Bavarian Nor- dic’s offices in California to talk about the importance of 12 legislation that has supported the necessary government funding for the company’s development programs. From biotech to business

Bavarian Nordic’s twenty years in retrospect.

Design and graphic production: Meyer & Bukdahl as 13 The chairman

disembarks Founding Chairman Asger Aamund leaves a company in great shape. 14 earlier results 15 may take us through

Interim analyses of the Phase 3 trial of PROSTVAC may ac- A hello celerate time to data. from Frank

82 years and still going strong; Frank had an unusu- ally good response from repeated vaccinations in clinical trials with PROSTVAC. Now, his case has been scientifically reviewed.

18 16 PROSTVAC - Next in production line

The Danish manufacturing site is expanding to Same technology, meet the future requirements for commercial production of PROSTVAC and other products.

new opportunities

The company’s CV-301 immunotherapy product candidate shares the positive features of PROSTVAC, but with an opportunity to target other cancers.

20 Strong share price 22 development

The share price has enjoyed a good momentum in Outlook 2012 and 2013 driven by strong business performance Major milestones were met in 2013 and even more to and investor activities. come in the years ahead. Bavarian Nordic Magazine 2013

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A year of celebrations

At the time of publication, the year has not yet come year-end we have opened the trial in most of the to an end. However it is with great satisfaction that I planned countries and sites. In April, we announced look back on what we have accomplished at Bavarian that interim analyses of data would be performed Nordic in 2013 – a year that presented several land- during the trial to see if the outcome of the study mark events for the company. could be determined sooner than anticipated.

2013 was the year of our first product approval. In PROSTVAC represents a unique opportunity for Bavar- August, the IMVANEX smallpox vaccine received Euro- ian Nordic, and we have focused our resources to pean marketing authorization for use in the general ensure a successful completion of the Phase 3 trial. As part of the pre-launch activi- ties for PROSTVAC, we decided to “In August, the IMVANEX smallpox vaccine consolidate our manufacturing received European marketing authorization activities at our production facility for use in the general population ” in Denmark, where we are now constructing a new unit for the future commercial production of population and later also received approval in Canada PROSTVAC. This gives us not only great flexibility and for people with weakened immune systems for use in independency, but also allows for better utilization of a public health emergency. our resources and expertise in manufacturing.

In November, we completed the delivery of the first 2013 is also the last “teenage-year” for Bavarian Nor- 20 million doses of smallpox vaccines to the U.S. dic since we will celebrate our 20th birthday in 2014. Strategic National Stockpile. We will continue to make Although we are still considered young and dynamic - deliveries as the partnership with the U.S. was further and we feel so too - I think we can say, that we have strengthened in April through the award of a new really grown up as a company and today we can pres- delivery contract valued at up to USD 228 million. ent ourselves among key players in the biodefense industry with unlocked potential to also be a game This was also the year where the PROSPECT study changer in the cancer immunotherapy universe. – our Phase 3 trial of PROSTVAC went global and by

Anders Hedegaard President & CEO Bavarian Nordic Magazine 2013

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A LETTER FROM THE CEO Bavarian Nordic Magazine 2013

06 Our company

Cancer immunotherapy Cancer immunotherapy treatments use the patient’s own immune system to help fight cancer. The objective is to stimulate the body’s immune response to attack the malignant tumor cells that are responsible for the disease. KEY Facts

Targeted immunotherapy candidates for the treatment of cancer are part of a growing field in cancer research, which • Research and development center located in holds great promise by harnessing the natural power of the Mountain View, California, USA immune system to fight disease. By eliciting a strong immune response, immunotherapies may slow the progress of the • Employs approximately 80 people disease and increase overall survival - all with an improved • The lead program is PROSTVAC, a targeted safety profile compared to many traditional chemotherapies. immunotherapy candidate for advanced prostate cancer that is the subject of an Learn more about cancer immunotherapy and our product ongoing pivotal global Phase 3 trial candidates on http://ci.bavarian-nordic.com

Pipeline»

cancer immunotherapy Preclinical Phase 1 Phase 1/2 Phase 2 Phase 3 Market Prostate cancer PROSTVAC® •

Colorectal cancer CV-301 colon •

Breast cancer CV-301 breast •

Prostate cancer MVA-BN® PRO •

Breast cancer MVA-BN® HER2 • Bavarian Nordic Magazine 2013

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Infectious diseases Our development of vaccines against infectious diseases is primarily based on a portfolio of fully funded contracts with the U.S. government to develop and manufacture vaccines KEY Facts for biological threats to national security such as smallpox.

To date, Bavarian Nordic has secured research and supply contracts for its biodefense programs totaling more than USD • Research and development center located in 1 billion. The majority of these funds have supported the Martinsried, near Munich in Germany development of a non-replicating smallpox vaccine which • Commercial-scale manufacturing facility in has been approved in EU (trade name IMVANEX) and Canada Kvistgaard, Denmark (trade name IMVAMUNE). • More than 20 million smallpox vaccine doses produced and delivered to the U.S. Strategic Learn more about our programs on National Stockpile by year-end 2013 http://id.bavarian-nordic.com • Employs approximately 340 people • Smallpox vaccine approved in EU and Canada

Pipeline»

biodefense Preclinical Phase 1 Phase 1/2 Phase 2 Phase 3 Market Smallpox IMVANEX® / IMVAMUNE® • Approved*

Smallpox IMVAMUNE® • Supplied**

Smallpox IMVAMUNE® freeze-dried •

Anthrax MVA-BN® Anthrax •

Filoviruses MVA-BN® Filo •

Foot-and-mouth disease MVA-BN® FMDV •

commercial

RSV MVA-BN® RSV •

® ® * Approved in the EU under the trade name IMVANEX and in Canada under the trade name IMVAMUNE ** Sold to government stockpiles under national emergency rules. Bavarian Nordic Magazine 2013

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IMVANEX APPROVAL Bavarian Nordic Magazine 2013

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Approved

In August 2013, the company received its first product approval when its smallpox vaccine was granted ­marketing authorization in the European Union.

As Anders Hedegaard, President and CEO of Bavarian Nordic explains, "this marks a significant mile- stone for our company and our MVA-BN vaccine technology platform, which we have taken from early research through regulatory approval, and now serves as the foundation for multiple candidates in our development pipeline."

IMVANEX was approved for active vaccination of adults, including those with weakened immune systems who are not recommended to receive traditional smallpox vaccines. The approval allows IMVANEX to be sold in any of the 28 European Union member states, as well as Iceland, Liechtenstein and Norway.

Then in November, Canada followed suit, granting approval for IMVAMUNE (Canadian trade name) for active immunization against smallpox in a public health emergency for adults contraindicated to replicating smallpox vaccines.

Important validation of MVA-BN IMVANEX is based on Bavarian Nordic’s MVA-BN platform technology, developed in partnership with the U.S. Government. The approval of MVA-BN as a stand- alone product validates this platform and allows future vaccines based on MVA-BN to reference an established safety record, which could help stream- line their development. Bavarian Nordic has now tested MVA-BN in over 7,000 individuals across a variety of populations. APPROVED Smallpox Vaccine® IMVANEX Bavarian Nordic Magazine 2013

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FIRST 20 Million Doses Delivered In November 2013, Bavarian The completion was the result of a support the continued supply of Nordic completed the final decade-long­ research and development IMVAMUNE and maintain the national delivery of 20 million ­doses partner­ship with the U.S. government, stockpile. The first USD 110 million of successfully­ fulfilling the delivery part the new order is secured, and the re- of IMVAMUNE to the U.S. of the original contract awarded in maining portion will be secured based Strategic National Stockpile. 2007, valued at USD 549 million. on availability of funds in 2014.

Importantly, in April 2013, the U.S. ­government exercised an option on this IMVAMUNE contract for the production and delivery­ Highlights of additional up to 8 million ­doses valued at up to USD 228 million to be for 2013 delivered in 2013 and 2014 in order to • 20 million doses delivered • Additional USD 228 million order • Approval in EU and Canada IMVAMUNE • U.S. Phase 3 program underway NEW ORDER Bavarian Nordic Magazine 2013

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From California to Capitol Hill

In February 2013, Bavarian Nordic hosted U.S. Congresswoman Anna Eshoo at its Mountain View, CA facility. The visit focused on the positive impact of federal legislation, as well as the benefits of innovative public-private partnerships in biodefense and cancer. Congresswoman Eshoo was a lead sponsor of important pieces of legislation, which help support the necessary govern- ment funding for the company’s development programs.

“I know firsthand that stockpiling vaccines is critical to our public health. I recently visited a company in my district, Bavarian Nordic. It is a company which clearly demonstrates that technical expertise and investment in this area must be backed by the government’s commitment to preparedness.”

- Congresswoman Eshoo in her speech to the U.S. House of Representatives in support of the Pandemic and All-Hazards Preparedness Reauthorization Act.

Freeze-Dried Formulation: The Next Generation of the Smallpox Franchise Bavarian Nordic is currently supplying IMVAMUNE to the U.S. Strategic National Stockpile in liquid-frozen form. However, the company is also working with the U.S. government to develop an enhanced freeze dried version of IMVAMUNE, and initiated a Phase 2 study of this formulation in May of 2013. The advantages of a freeze dried formulation include ­improved storage lifetime, reduced storage costs, as well as less demanding handling requirements that greatly improve convenience. Bavarian Nordic Magazine 2013

12 From biotech to business Bavarian Nordic’s twenty years in retrospect

1994 2003 2005 The company was First research Cancer research facility established with Asger contract with the U.S. established in the U.S. Aamund as founding government to develop chairman an MVA-BN-based smallpox vaccine

1998 2003 2007 Listed on the Acquired the Contract for the Copenhagen Stock manufacturing facility delivery of 20 million Exchange in Denmark doses of IMVAMUNE smallpox vaccine awarded by the U.S. government Bavarian Nordic Magazine 2013

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The chairman disembarks After serving as chairman of the board revenue-generating company that has of Bavarian Nordic for almost 20 years, achieved significant results over time Asger Aamund announced in November and is well-­positioned for future success. 2013 that he will not seek re-election at the General Meeting in 2014. This marks The board of directors intends, if re- the end of an era for the company which elected, to nominate Dr. Gerard van was founded and has been chaired by Odijk as the new chairman of the board. Mr. Aamund from its inception. Dr. van Odijk has served as member of the board since 2008. Dr. van Odijk Mr. Aamund, known as a sharp, knowl- is a Dutch national, born in 1957. He edgeable and well-spoken character in is former President and CEO of Teva the public debate, has pioneered the Pharmaceuticals Europe B.V. and has Danish biotech industry as the founder previously held various senior positions of several biotech companies, with in GlaxoSmithKline. He currently serves Bavarian Nordic as one of the most suc- as an independent advisor and board cessful to-date. The company has trans- member for several international com- formed into a fully-integrated, panies. He holds a medical degree from the State University of Utrecht.

2008 2011 2013 In-licensing of rights In-licensing of rights The company’s to PROSTVAC cancer to CV-301 cancer smallpox vaccine immunotherapy immunotherapy approved in the EU and Canada

2010 2012 Delivery of first doses Award of the first of IMVAMUNE to the larger contract for U.S. after receiving developing the approval for emergency MVA-BN technology use for other purpose Bavarian Nordic Magazine 2013

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Earlier results may take us through Interim analyses of the Phase 3 trial of PROSTVAC may accelerate time to data

In April 2013, Bavarian Nordic reached an agreement with the Patients overall survival benefit determines the outcome FDA on an updated statistical analysis plan for the ongoing The patients enrolling into the PROSTVAC trial all have Phase 3 trial of PROSTVAC. The plan includes pre-specified non-symptomatic metastatic prostate cancer. They rely interim analyses to determine if the overall survival of on treatments that can extend their lives. This is where patients receiving PROSTVAC is significantly improved over PROSTVAC comes into play. An earlier randomized Phase 2 the placebo arm. This would give the company the ability to trial demonstrated a median overall survival of 25.1 months end the trial early if the data achieve the criteria for success for patients receiving PROSTVAC, compared to 16.6 months during an interim analysis. for patients receiving placebo. These results demonstrated the most pronounced survival to date in advanced prostate “We are excited about the opportunity to get results from the cancer. In addition, PROSTVAC was generally well tolerated, trial along the way,” says President & CEO Anders Hedegaard. whereby the most common observed side effects included Although it is far from certain that we will see significant injection site reactions, fever, fatigue and nausea. results before the trial is completed, if positive results are achieved during an interim analysis we have the potential to shorten the development time of PROSTVAC and file for approval earlier than anticipated.” Bavarian Nordic Magazine 2013

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A hello from Frank Frank, a prostate cancer survivor who successfully participated in two earlier clinical trials with PROSTVAC has now turned 82. He is still enjoying an active life playing golf and tennis in Florida.

Since diagnosed with prostate cancer more than 20 years ago, Frank has regularly had his PSA levels checked. Although his PSA levels climbed during the early years after participating in the PROSTVAC trials, they did so at a lower rate than would normally be expected. In later years, his PSA level declined and recently has been at the same level as it was almost 15 years ago.

Franks story in scientific review

In June 2013, Frank’s case was reviewed in the scientific journal Clinical Genitourinary Cancer. In conclusion, the article suggests that some patients may benefit from multiple courses of vac- cination. Further studies are warranted to see if results can be duplicated.

Rojan A, et al.: Dramatic and Prolonged PSA Response After Retreatment With a PSA Vaccine. Clin Genitourin Cancer. 2013. Bavarian Nordic Magazine 2013

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Same technology, new opportunities

Bavarian Nordic is applying the same scientific approach Colorectal cancer (also known as bowel cancer), one of the behind PROSTVAC to develop treatments for other major “four major cancers”, is one of the most commonly diagnosed cancers. The company’s second cancer immunotherapy can- cancer types in both men and women. According to the most didate, CV-301, supports the immune system to recognize, recent edition of the American Cancer Society’s Global Cancer attack and kill tumor cells of breast and colorectal cancer, Facts & Figures (2008), there were 1.2 million new cases of by using specific cancer “antigens”. Preliminary studies have colorectal cancer diagnosed and more than 600,000 deaths supported advancement of CV-301 into later stage clinical from the disease reported worldwide that year. These figures trials and shown promise in a variety of possible cancer in- suggest an important unmet medical need and the impact a dications, requiring the company to determine how to best promising new therapy could have in this disease. prioritize these opportunities. Fortunately, encouraging new data published in May 2013 from a Phase 2 study at Duke Currently, treatment of colorectal cancer depends on the University helped make that decision easier. stage of the disease. Though highly treatable through sur- gery if discovered early, chemotherapy and radiation therapy In that study, 74 colorectal cancer patients who had me- are often used in combination with surgery if the cancer has tastases surgically removed and received chemotherapy spread to the surrounding area. However, when the disease were then treated with CV-301. These patients experienced progresses beyond these options, patients currently have significantly longer survival when compared to a similar few treatment alternatives. group of patients at the same center who received surgery and chemotherapy but not CV-301. Based on these promis- ing findings, Bavarian Nordic has chosen colorectal cancer as the prioritized clinical development program for CV-301. Additional applications in breast, ovarian and lung cancer ­remain important future CV-301 development opportunities for the company, a partner or a collaborator such as the National Cancer Institute.

COLORECTAL CANCER Bavarian Nordic Magazine 2013

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"With few treatment options available for patients with advanced co- lon cancer following complete surgical resection of metastases, there is a clear unmet medical need for better treatments. We believe that the encouraging data from this Phase 2 study support a late stage pivotal clinical trial of CV-301 in this patient population."

- Michael Morse, MD, an oncologist with the Duke University Medical Center and lead author on the Phase 2 study Bavarian Nordic Magazine 2013

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PROSTVAC Next in production line

After years of large-scale production of smallpox vaccines, the company’s ­manufacturing facility in Denmark is now expanding to meet the requirements for production of the company’s next commercial product.

The facility is turning into a multi-purpose facility, allowing the company a more flexible ap- proach in the planning and execution of manufacturing campaigns in the future. It reduces dependence on subcontractors, thus providing the company greater control of pre-launch manu- facturing activities for the prostate cancer immunotherapy candidate PROSTVAC.

PROSTVAC is currently in pivotal Phase 3 trials and thus not ready yet for production. But the facility in Denmark has already assumed the role as a multi-purpose facility. During 2013, the company transferred its production of clinical trial material to the site.

“A lot has happened at the site since 2004, when we acquired the facility,” says Anders Hedegaard, President & CEO. “We have added an in-house process development lab, expanded our quality control labs and office space, and so the infrastructure is well geared for expanding the activities. Most importantly, we have succeeded in optimizing our processes significantly and, by consolidating our manufacturing activities here, we will utilize our resources even better which should enable us to further improve the profitability over time.“

The people at Bavarian Nordic know the drill Although the production team is still young, it has proven its skills and expertise. 20 million doses of the smallpox vaccine have been produced and delivered to the U.S. over the past three years and the next large smallpox vaccine order is already in production.

The establishment of PROSTVAC production is a huge project. However, this doesn’t scare off the skilled and experienced people at Bavarian Nordic. They have teamed up with engineering specialists for the design and construction of the new production unit that is expected to be finalized in 2014 after which the PROSTVAC production process will be transferred, validated and tested before actual production begins, which is anticipated in 2015.

The preparations for commercial manufacturing of PROSTVAC at the facility will require initial investments at the level of DKK 75 million in total over three years. This cost will be offset by savings of the same level. Bavarian Nordic Magazine 2013

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In June 2013, ground was broken for the new pro- duction unit in Kvistgaard, Denmark. Danish Minister for Trade and Investment Pia Olsen Dyhr joined Bavarian Nordic to turn the first sod. Bavarian Nordic Magazine 2013

20 Strong share price development Driven by investor activities

2013 has been a year of strong progress and operational This year the company hosted another educational satel- achievements for Bavarian Nordic. Despite the European bio- lite symposium during the American Society of Clinical tech market suffering from the remains of the financial and Oncology’s (ASCO) Annual Meeting in Chicago (largest U.S. economic crisis, prompting investors to be very reluctant and cancer conference) where they provided an update on its cautious regarding risk investments, Bavarian Nordic’s share cancer portfolio to the financial community. Similarly, the price reached a turning point in the beginning of 2012 as company takes part in a number of international banking and important milestones were met. The stock regained positive investor conferences, as well as frequent shareholder fairs momentum and provided a noticeable increase in the price, and meetings for private investors. strongly outperforming the underlying indices in both 2012 and in 2013. The key topics for investors during the year were the status of the PROSPECT trial, the new studies combining PROSTVAC Broadening the investor base with the recently approved hormone enzalutamide (Xtandi®) Bavarian Nordic makes a comprehensive effort to present the as well as new combinations with checkpoint inhibitors. company to institutional investors, financial analysts and me- Obviously the approval of IMVANEX – the company’s first dia. The company has intensified its efforts towards the pro- product approval - was also driving interest, as well as the fessional investor segment in the U.S. by the recent hiring of new large order of IMVAMUNE from the U.S. government. a local IR professional, based on the East Coast. Additionally, the company launched a sponsored Level 1 ADR program in 2013 to allow for U.S. investors to trade the Bavarian Nordic stock in local currency.

BAVARIAN NORDIC’S SHARE Bavarian Nordic Magazine 2013

21 Share price development»

125% 100% 2012 2013 75%

50%

25%

0% jan feb mar apr may jun jul aug sep oct nov dec jan feb mar apr may jun jul aug sep oct nov

Share information

Number of shares 26,094,361

Shareholders Approx. 21,000

Registered capital 90%

Large shareholders ATP, Denmark (> 10%) A.J. Aamund A/S, Denmark (> 5%)

Distribution of share capital Geographic distribution of shareholders by shareholder category in percentage of registered share capital

10% 13% Non-registered Other countries

9% Great Britain 31% 59% 68% Private Instutional 10% Denmark USA Bavarian Nordic Magazine 2013

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Outlook

Bavarian Nordic’s annual report for 2013, which is scheduled Initiate the final Phase 3 trial of IMVAMUNE to be published on March 19, 2014, will provide a more de- The first Phase 3 trial of IMVAMUNE was initiated and enroll- tailed outlook for the company as well as financial expecta- ment of all 4,000 subjects was completed during 2013. Data tions for the year 2014. Below are some of the most signifi- from this trial is expected in 2015. A second Phase 3 trial of cant anticipated events in 2014 and beyond. 440 subjects is planned for initiation in the fourth quarter 2013. Complete enrollment in the PROSPECT Phase 3 trial of PROSTVAC Report data from other clinical trials of PROSTVAC Enrollment of the PROSPECT Phase 3 trial remains a top prior- PROSTVAC is currently the subject of four NCI-sponsored ity for the company. By year-end 2013, practically all planned clinical studies in different settings, evaluating the targeted countries and sites have been opened and enrollment is ex- immunotherapy candidate in combination with other thera- pected to be completed in the first half of 2014. pies. Two of these studies, both initiated in 2013, combine PROSTVAC with the recently approved hormone therapy Continue deliveries of IMVAMUNE to the U.S. Xtandi®. In November 2013, Bavarian Nordic completed the delivery of the 20 million doses of IMVAMUNE under the base contract Prepare the Kvistgaard facility for commercial awarded by the U.S. government. At the same time, deliver- manufacturing of PROSTVAC ies began under the option that the U.S. government exer- Construction of a new production unit began in the summer cised in April 2013 to procure up to 8 million additional doses. of 2013. The unit is planned to be completed during the sum- Deliveries are expected to run through 2014. mer of 2014 after which validation and commissioning will begin followed by test runs of PROSTVAC production.

Selected events in 2014

January 13-16, 2014 May 14, 2014 JP Morgan Healthcare First quarterly report (Q1) Conference, San Francisco August 28, 2014 March 19, 2014 Half-year report (Q2) 2013 Annual Report November 13, 2014 April 24, 2014 Third quarterly report (Q3) Annual General Meeting Bavarian Nordic Magazine 2013

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Financials

Revenues from the delivery of IMVAMUNE smallpox vaccine to the U.S. that started in 2010 combined with improved manu- facturing efficiency have contributed to a positive development in the financial results for the company over the past years, despite higher costs related to the Phase 3 trial of PROSTVAC.

Development in revenues and result before tax 2009-2013 DKK million

1200 2013 figures are based on the

900 financial expectations set forth in March 2013. 600

300

0

-300

-600 2009 2010 2011 2012 2013E

75 x 35 Financial expectations for 2013

Revenue DKK 1,100 million

Income before tax DKK 0 million

Cash preparedness at year-end DKK 600 million

The above expectations are based on the assumption that the company will deliver and recognize the delivery of 7 million doses of IMVAMUNE to the U.S. Strategic National Stockpile.

The Infectious Diseases division is expected to generate an EBIT of approximately DKK 360 million, which will be offset by total costs of DKK 325 million in the Cancer Immunotherapy division, primarily relating to the global Phase 3 study of PROSTVAC. The Group’s cash preparedness at year-end is expected to be approximately DKK 600 million.

Learn more Bavarian Nordic’s annual reports, quarterly reports and CSR reports can be downloaded from the company’s website: www.bavarian-nordic.com Bavarian Nordic A/S Phone: +45 3326 8383 Hejreskovvej 10A Fax: +45 3326 8380 DK-3490 Kvistgaard Denmark CVR no: 16 27 11 87 www.bavarian-nordic.com [email protected]

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