ANNUAL
REPORT
2020
Spreading hope,
pioneering vaccines
MANAGEMENT
COMMENTARY
Introduction
4 From research to real-life value
6 Our vaccines
10 2020 achievements
12 Letter to the stakeholders
14 Group Key Figures 2016–2020
15 Outlook for 2021
18 Sales performance and market trends
Our strategy and business
22 Our strategy
24 Built on science, driven by people
28 Developing innovative life-saving
vaccines
34 Driven by commercial excellence
38 Best in class vaccine manufacturing
Corporate information
42 The Bavarian Nordic share
44 Sustainability
46 Corporate governance
48 Risk management
52 Management of Bavarian Nordic
58 Financial review 2020
FINANCIAL
STATEMENTS
Consolidated financial statements
67 Consolidated Income Statements
67 Consolidated Statements of Comprehensive Income
68 Consolidated Statements of Cash Flow
69 Consolidated Statements of Financial Position – Assets
70 Consolidated Statements of Financial Position
– Equity and Liabilities
71 Consolidated Statements of Changes in Equity
73 Notes
Financial statements of the parent company
120 Income Statements
121 Statements of Financial Position – Assets
122 Statements of Financial Position – Equity and Liabilities
123 Statements of Changes in Equity
124 Notes
139 Statement by Management on the Annual Report
141 Independent Auditor’s Reports
CONTENTS
FROM RESEARCH
TO REAL-LIFE VALUE
DRIVEN BY
COMMERCIAL
EXCELLENCE
PIONEERING
RESEARCH AND
DEVELOPMENT
BEST IN
CLASS VACCINE
MANUFACTURING
We have a strong heritage in vaccine
development and with a proven technology,
we continue to make innovations to help
fight existing and emerging diseases.
We are experts in live virus vaccine
manufacturing and with the recent addition
of fill and finish capabilities we have enabled
end-to-end commercial-scale manufacturing.
We have established a commercial
infrastructure with presence in key markets in
Europe and the USA to drive profitable growth
of our expanding portfolio of vaccines.
We are committed to developing and
manufacturing life-saving vaccines
Lowering the
risk of infectious
disease for the
greater good of our
global community
Annual Report 2020
4
OUR
VACCINES
The ongoing COVID-19 pandemic is an unfortunate reminder of
the vulnerability of our population, despite major scientific and
medical advances over the past century. While new treatments
have significantly improved our lives, the prevention of infectious
diseases remains a complex matter in an ever more globalized
society, particularly as the reservoir for these diseases are often
animals, which we are poorly able to control, and mutations
of the viruses present continuous challenges in our efforts to
minimize the impact of emerging diseases.
Annual Report 2020
6
Our vaccines are yet a small contribution to improving public health
around the globe, but our commitment to saving and improving lives
by unlocking the power of the immune system is strong, and our
accomplishments in 2020 clearly demonstrate our ability to transform
our knowledge, expertise and capabilities into life-saving vaccines.
Rabies
Left untreated, rabies is almost invariably fatal and causes nearly
60,000 deaths worldwide every year. While most of these incidents
occur in developing countries, rabies remains a threat in the wildlife
in Western countries and may be transmitted to humans via bites or
scratches mainly from bats, raccoons, skunks, and foxes. Rabies is
100% preventable with post-exposure prophylaxis, i.e. wound care
and vaccination as soon as possible after being bitten and before the
onset of symptoms. It is estimated that every 10 minutes, a person
in the US is vaccinated after potential exposure to rabies. Pre-ex-
posure prophylaxis are often recommended for travelers visiting
countries and regions with high incidence of rabies and to animal
handlers in some Western countries.
Tick-borne encephalitis
Tick-borne encephalitis (TBE) is a viral infectious disease transmitted
to humans by the bite of an infected tick. Although rare, TBE is a
serious condition affecting the central nervous system that can lead
to death or long-term neurological sequelae after recovery from
infection. TBE is prevalent in central, eastern and northern Europe
and the geographic range of the virus appears to have expanded
to new areas, likely due to a complex combination of changes in
diagnosis and surveillance, human activities and socioeconomic
factors, and ecology and climate. TBE is a preventable disease and
vaccination is recommended for people who live in TBE risk areas or
who frequently visit forests and grasslands in TBE risk areas.
Annual Report 2020
7
Smallpox / Monkeypox
While smallpox was eradicated worldwide by 1980 as a result of
an unprecedented global immunization campaign, it remains one
of most dangerous infectious diseases in the history of mankind,
having killed an estimated 300 million people in the 20th centu-
ry. Smallpox has been investigated as a biological weapon and in
combination with fears over the risk of reoccurrence of the disease,
either via synthesis or natural mutations, the US, as well as other
countries have prioritized countermeasures against the virus and
maintain a stockpile of smallpox vaccines. Our vaccine has been de-
veloped to mitigate the risks associated with the traditional, replicat-
ing vaccines that were used during the eradication of smallpox, and
which are not recommended for people with compromised immune
systems.
Monkeypox is a viral zoonosis (a virus transmitted to humans from
animals) occurring in Central and West Africa with symptoms similar
to those seen in the past in smallpox patients, although it is clini-
cally less severe. With the eradication of smallpox and subsequent
cessation of smallpox vaccination, it has emerged as the most
important orthopoxvirus and is considered the deadliest existing
orthopoxvirus in humans with a mortality rate estimated at up to
10%. The FDA approval of our smallpox vaccine in 2019 also in-
cluded approval for monkeypox and offers a new opportunity for
the protection of those at high risk for exposure to this emerging
infectious disease.
Ebola
Ebola virus disease causes severe hemorrhagic fever in humans,
often leading to death. In average, the mortality rate is around 50%,
although mortality rates in historical outbreaks have ranged from
25% to 90%. The virus is transmitted to people from wild animals
and then spreads in the human population through direct contact
with the bodily fluids of infected people. Sporadic outbreaks have
occurred in West Africa since the virus was discovered in the 1970’s,
but it was not until the large outbreak in 2014-2016, which killed
more than 11,000 people, that the development of an effective
vaccine was expedited, leading to an unprecedented global effort
by governments and the pharmaceutical industry. Bavarian Nor-
dic’s MVA-BN-based Ebola vaccine candidate, which was originally
developed in collaboration with the US government, was licensed by
Janssen in 2014 for use in a prime-boost vaccine regimen together
with their adenovirus–based vaccine candidate. Following an exten-
sive development program, the vaccine regimen was approved by
the European Commission in 2020.
Annual Report 2020
8
2020
ACHIEVEMENTS
2020 marked year
one in the commercial
transformation of
Bavarian Nordic and the
accomplishment of several
important milestones
during the year were
pivotal in the continued
journey to become one of
the world’s largest pure
play vaccines companies.
COMMERCIAL
INTEGRATION
MOVING FORWARD
Following the acquisition of Rabipur/RabAvert and Encepur from GSK,
a full global commercial organization has been established to support
the integration of the products.
Local core sales and marketing teams have been organized in Europe
and the US, ensuring comprehensive commercial presence and infra-
structure. The transfer of marketing and distribution of the acquired
products were completed in several countries, including key markets
such as Germany and the US. Building on these important advances
in the commercial transformation of Bavarian Nordic, the remaining
markets will be taken over during 2021.
Annual Report 2020
10
EXPANSION
OF SMALLPOX
VACCINE CONTRACT
WITH THE US
GOVERNMENT
Our longstanding partnership with the US government was again
confirmed with the award of a new smallpox vaccine contract. The
USD 202 million contract not only covers the supply of up to 1.4
million doses of the FDA-approved liquid-frozen JYNNEOS, which
will ensure the availability of the vaccine in the U.S. Strategic
National Stockpile for potential use by first-line responders, but also
the manufacturing of additional bulk vaccine for future supply of an
improved, freeze-dried version of the vaccine.
CONTINUED
ADVANCES IN
VACCINE
MANUFACTURING
SECOND
MVA-BN-BASED
VACCINE TO OBTAIN
REGULATORY
APPROVAL
After successful completion of the construction of our new fill
and finish facility, the comprehensive work with validation and
qualification of the equipment has proceeded with the aim to
commence commercial manufacturing later in 2021. In parallel, the
expansion of our bulk manufacturing has been initiated to increase
the capacity and flexibility of the facility to support the technology
transfer of the acquired vaccines and other future products. This
expansion will create a center of excellence for manufacturing of
live virus vaccines.
In July, the European Commission granted
marketing authorization for MVABEA
®
for the
prevention of Ebola. The approval, which was
the second EU approval of a product based
on our MVA-BN platform technology, marks
a significant advance in the fight against
Ebola and an important milestone in our
partnership with Janssen, who has licensed
the commercial rights to the vaccine. In
connection with the approval, Bavarian Nordic
received a milestone payment of USD 10
million from Janssen.
Annual Report 2020
11
While we have both seen some remarkable achievements during our
tenures at Bavarian Nordic, 2020 was an exceptional year with many
firsts and achievements that will set new standards for our company.
At the beginning of the year we embarked on a commercial transition
to generate a new portfolio of products, including two vaccines
acquired from GSK. While this transition for a company with no
historical commercial presence was seen as a challenge by some, we
remained confident in our employees who also shared our vision to
create one of the largest pure play vaccine companies by 2025.
This transition has so far been a great success with the establishment
of a highly experienced and talented international commercial
organization. The transfer of marketing and distribution of Rabipur
®
/
RabAvert
®
and Encepur
®
from GSK has already been completed in
several countries, including establishing our own sales force in key
markets such as Germany and the US. At the time of publication of this
SETTING A NEW
COURSE – BUILDING
A NEW COMPANY
LETTER TO THE STAKEHOLDERS
We
successfully
conducted a
rights issue
during the
worldwide
pandemic.
report, we have already transferred 18 markets representing at least
90% of the revenues and the remaining markets will be completed
during 2021.
Despite the worldwide challenges for the travel vaccine sector during
last year we have maintained or increased our market shares during
our first year as a fully integrated commercial company. This sign of
strong execution also supports our business model that a higher focus
on supply and marketing will provide a better service for healthcare
professionals and improve annual growth for both Rabipur/RabAvert
and Encepur beyond historical levels while providing more life-saving
vaccines to patients.
To support our strategy, we successfully closed a share rights offering –
the largest in Bavarian Nordic history. Despite difficult markets created
by the first COVID-19 lockdown, investors bought into the new business
case of an innovative, profitable vaccine company, with a more
predictable revenue stream. Therefore a special thanks is extended to
all new and existing shareholders for their support, which has created
a new platform for future growth.
We have also seen a solid progression of our pipeline assets with
the second MVA-based vaccine approval in the EU, as part of our
partnership with Janssen to develop a vaccine to protect against Ebola
– a deadly disease that kills between 25-90% of infected people.
Positive clinical readouts for both JYNNEOS
®
and MVA-BN
®
WEV, a
vaccine against an emerging deadly disease spread by mosquitos, has
seen these programs progress and again support the safety and broad
potential application of our MVA vaccine platform. While we postponed
Annual Report 2020
12
Gerard van Odijk
Chairman of the Board of Directors
if there was ever a need to change the dynamics, it would be now
during a worldwide pandemic that has caught the world unprepared.
Our own private-public partnership on JYNNEOS continues to grow from
a position of strength with new orders securing millions of doses to
protect the US population against smallpox. We continue to invest in
one of our key capabilities for vaccine manufacturing and completed
the construction of a state-of-the-art fill and finish facility, designed for
the production of life-saving vaccines. We have also initiated a further
expansion of our existing vaccine bulk facility that will together create
a center of excellence for the simultaneous manufacturing of multiple
vaccines. Our capabilities now go beyond our own products and could
be used for the production of other life-saving vaccines, or as part of
a larger manufacturing infrastructure preparing nations against future
pandemics or bioterrorism events.
These are extremely exciting times for the company, and we have
created a platform for future growth and opportunities to supply
vaccines to protect millions of people each year against some of the
deadliest diseases. However, none of this would be possible without
our amazing employees and key stakeholders who have joined us in
this endeavor. So, a great thanks to all of you that have supported the
remarkable achievements during 2020.
Paul Chaplin
President & CEO
the initiation of the planned Phase 3 for our leading vaccine against
RSV due to COVID-19, we have initiated a human challenge study with
pivotal results expected later this year.
The year however will probably always be remembered for COVID-19
and the devastating impact this worldwide pandemic has had on
our lives. However, due to the resilience and high dedication of our
employees the business impact was managed, and we were able
to maintain our financial guidance and report improved EBITDA and
cash position by year-end. To help in the fight against COVID-19 we
licensed a vaccine candidate from AdaptVac, based on an exciting
vaccine platform technology that holds the potential to create a durable
and highly protective response against this disease, and which can
rapidly be adapted to new potentially more deadly variants. With
strong preclinical efficacy data, the program has entered Phase 1 in
March 2021, supported under a Horizon 2020 EU grant. Based upon
promising data and the belief that there will be a market for COVID-19
vaccines post the pandemic we have decided to kick-start the further
development of the program by funding a larger regulatory Phase 1/2
study and scale-up of manufacturing to accommodate potential future
clinical development to support licensure of the vaccine.
Preparing a nation against the unthinkable requires vision, strength
and sustained investments, all at a time before an emergency, such
as a pandemic or bioterrorism event, has occurred. While the US
government has led the way for years in establishing private-public
partnerships in developing and stockpiling biological countermeasures,
this model is lacking in other parts of the world. We hope that other
governments will have learned from this pandemic and think that
Annual Report 2020
13
Paul Chaplin
Gerard van Odijk
Annual Report 2020
14
Group Key Figures 2016–2020
DKK million 2020 2019 2018 2017 2016
Income statement
Revenue 1,852.4 662.5 500.6 1,370.2 1,006.7
Production costs 1,195.1 354.8 255.1 290.6 297.8
Sales and distribution costs 285.8 53.5 33.7 39.9 38.6
Research and development costs 341.4 409.3 386.3 518.4 463.2
Administrative costs 278.1 173.4 180.0 168.0 174.2
Income before interest and tax (EBIT) 379.6 (328.4) (354.5) 353.2 33.0
Financial items, net (97.6) (16.3) (2.2) (50.9) 6.5
Income before company tax 282.0 (344.7) (356.6) 302.3 39.5
Net profit for the year 277.5 (346.8) (361.9) 181.3 30.6
Balance sheet
Total non-current assets 6,378.0 6,392.2 552.7 382.2 541.1
Total current assets 2,381.0 654.9 2,508.3 2,770.5 2,282.6
Total assets 8,759.1 7,047.1 3,060.9 3,152.7 2,823.7
Equity 4,894.4 1,865.5 2,180.6 2,506.3 2,017.2
Non-current liabilities 2,912.4 3,134.4 397.6 399.8 54.7
Current liabilities 952.3 2,047.2 482.7 246.6 751.8
Cash Flow Statement
Securities, cash and cash equivalents 1,669.6 472.4 2,317.2 2,583.7 1,899.9
Cash flow from operating activities 571.9 (275.9) (288.5) 216.1 267.6
Cash flow from investment activities (1,911.5) (809.9) 17.1 (1,345.2) (448.2)
– Investment in intangible assets (501.9) (2,310.9) (10.2) (22.3) (43.7)
– Investment in property, plant and equipment (204.8) (360.1) (201.8) (56.4) (47.8)
– Net investment in securities (1,202.1) 1,861.1 229.2 (1,266.6) (358.3)
Cash flow from financing activities 1,334.9 1,114.7 245.8 613.4 657.2
DKK million 2020 2019 2018 2017 2016
Financial Ratios
1)
EBITDA 739.8 (271.4) (312.9) 390.7 78.4
Earnings (basic) per share of DKK 10 5.1 (10.7) (11.2) 5.7 1.0
Net asset value per share 83.7 57.6 67.5 77.7 64.3
Share price at year-end 187 171 127 224 249
Share price/Net asset value per share 2.2 3.0 1.9 2.9 3.9
Number of outstanding shares at year-end (thousand units) 58,450 32,389 32,311 32,245 31,354
Equity share 56% 26% 71% 79% 71%
Number of employees, converted to full-time, at year-end 690 491 419 420 437
1)
Earnings per share (EPS) is calculated in accordance with IAS 33 “Earning per share”. Other financial ratios have been
calculated in accordance with the guidelines from the Danish Society of Financial Analysts.
Reconciliation of EBITDA
Income before interest and tax (EBIT) 379.6 (328.4) (354.5) 353.2 33.0
Depreciation and amortization (note 9) 344.1 57.0 41.6 37.5 45.4
Impairment losses (note 9) 16.1 - - - -
EBITDA 739.8 (271.4) (312.9) 390.7 78.4
In 2021, Bavarian Nordic expects revenue between
DKK 1,900 million and DKK 2,200 million and an EBITDA
between DKK 100 million and DKK 250 million. Cash and
cash equivalents at year-end are expected to between
DKK 1,400 million and DKK 1,600 million.
Revenue EBITDA
Cash and cash equivalents
Due to the uncertainty created by COVID-19, the outlook for 2021 will be less specific than usual and until there is more visibility in the market.
Between 1,900 and 2,200 (mDKK) Between 100 and 250 (mDKK)
Between 1,400 and 1,600 (mDKK)
16
Annual Report 2020
Mid- to long-term financial goals
While the commercial market for JYNNEOS
is still in the establishing phase, Rabipur/
RabAvert and Encepur are mature
products with established markets,
which, post the COVID-19 pandemic, are
expected to deliver at least low- to mid-
single-digit annual sales growth and mid-
to high-single-digit annual sales growth,
respectively.
From 2025, Bavarian Nordic targets, on a
normalized basis, to deliver strong cash
generation and profitability in line with
the relevant vaccine peer group average.
OUTLOOK 2021 – KEY ASSUMPTIONS
Revenue
The low end of the revenue range reflects a scenario where a
lockdown due to COVID-19 continues beyond Q1 in key markets like
the US and Germany. The higher end of the revenue range reflects a
scenario where a gradual reopening will happen in key markets during
Q2 and where travel starts picking up again in Q3 and Q4 of 2021.
The smallpox and Ebola business are not expected to be impacted by
COVID-19.
Research and development costs
Research and development costs of approximately DKK 750 million
are expected for 2021 with the largest single project being RSV.
Manufacturing of phase 3 material as well as cost for the announced
Human Challenge Trial are included. For the COVID-19 program, up to
approximately DKK 200 million are expected for a phase 2 trial and
scale-up of manufacturing in preparation for a phase 3 trial. These costs
are being capitalized and hence the research and development costs
expensed through the P&L is expected to be approximately DKK 550
million.
Cash position
Expected payment of approximately DKK 375 million in milestones
to GSK relating to the tech-transfer process for Rabipur/RabAvert and
Encepur. Working capital changes of approximately DKK 300 million,
primarily driven by increased inventory levels of Encepur and Rabipur/
RabAvert products.Investments of approximately DKK 650 million with
the vast majority of the investment linked directly to the acquired
vaccines Rabipur/RabAvert and Encepur and relates to the upgrade
of the bulk facility and capitalized tech transfer costs. Draw-down of
existing DKK 244 million loan facility with the European Investment
Bank. Investments in COVID-19 program of up to approximately DKK
200 million (capitalized R&D costs). Net proceeds of approximately
DKK 1,100 million from private placement included.
Investments
Approximately half of the total 2021 investments relate to the new
facility. The design of the facility has been revised to achieve a higher
degree of flexibility enabling parallel manufacturing of Bavarian Nordic
developed products and allowing space for specific Encepur and
Rabipur/RabAvert equipment. The re-designed facility will require a
total expected investment of approximately DKK 650 million and the
re-build is expected to be finalized in 2022. Capitalization of tech-
transfer costs in 2021 is expected to reach approximately DKK 150-200
million. Beyond 2022 and with current plans,, annual investments are
expected to decline to a level of DKK 50 - 100 million.
The outlook is based on the following assumptions on currency
exchange rates of DKK 6.10 per 1 USD and DKK 7.45 per 1 EUR.
Annual Report 2020
17
300
250
200
150
100
50
0
2019
2020
Q1 Q2 Q3 Q4
SALES PERFORMANCE
AND MARKET TRENDS
Rabipur/RabAvert
Encepur
Smallpox vaccine
Contract work
Milestone, Janssen
Rabipur/RabAvert
Rabipur/RabAvert revenue amounted to DKK 628 million (DKK 960 million) for
the full year. The 35% decrease versus prior year was caused by COVID-19 and an
extraordinarily strong Q4 2019.
The US rabies market declined by approximately 25% in 2020, however RabAvert
compensated for a significant portion of the market decline by a significant mar-
ket share gain. For the full year, the US market share was 77%, significantly above
the level prior to COVID-19 and the competitive stockout situation. In Germany, the
travel segment continued to be hit hard by COVID-19 during the quarter leading to
a decline of nearly 95% in the rabies market vs prior year.
For the fourth quarter revenue amounted to DKK 80 million (DKK 269 million), i.e.
a 70% decline explained by COVID-19, return of competition and an extraordinarily
strong Q4 2019.
Revenue 2020
DKK million
Sales figures from 2019
have been provided by
GSK and are presented for
comparison only.
Rabipur/RabAvert sales by quarter
mDKK
628
455
541
162
67
Annual Report 2020
18
300
200
150
100
50
0
2018 2019 2020
Q1 Q2 Q3 Q4
Encepur
Encepur revenue amounted to DKK 455 million (DKK 527 million) for the full year,
i.e. a decrease of 14% versus prior year.
For the full year, the Encepur market share in key markets were largely
unchanged and the year-over-year decline in sales was caused by inventory
movements explained in the Q1 Interim Report and by COVID-19. This trend is
in contrast to the historical market share loss that Encepur has suffered.
For the fourth quarter, revenue amounted to DKK 49 million (DKK 44 million)
corresponding to an increase of 12%. This quarterly growth is primarily driven
by market share gain compared with the same period in prior year.
The largest single market, Germany, showed a decline in the fourth quarter versus
prior year of approximately 7% due to tightened COVID-19 measures.
Jynneos
Revenue from the sale of JYNNEOS for the full year was DKK 541 million (DKK 324
million) and DKK 60 million (DKK 193 million) for the fourth quarter. The revenue
was all related to sales invoiced under the US government order awarded in April
2020.
Other income
Revenue from milestone payments for the full year was DKK 67 million (DKK 0
million), which was related to the award of the European marketing authorization
of the Ebola vaccine in July 2020. This revenue was included in the Q3 2020
Interim Report.
Revenue from contract work was DKK 162 million (DKK 338 million), mainly
related to qualification and validation activities relating to the new fill-and-finish
plant and the Phase 3 trial of the freeze-dried version of the smallpox vaccine,
both under contracts with the US government. Contract work revenue for the
fourth quarter amounted to DKK 39 million (DKK 97 million).
The sale of a Priority Review Voucher was completed in first quarter 2020,
generating DKK 628 million in other operating income.
Sales figures from
2018 and 2019 have
been provided by GSK
and are presented for
comparison only.
Encepur sales by quarter
mDKK
Annual Report 2020
19
Q4 sales
mDKK Q4 2020 Q4 2019 Growth
Rabipur/RabAvert 80 269
1
-70%
Encepur 49 44
1
12%
JYNNEOS 60 193 -69%
Milestone payments 0 0
Contract work 39 97 -59%
Total 229 603
FY sales
mDKK FY 2020 FY 2019 Growth
Rabipur/RabAvert 628 960
1
-35%
Encepur 455 527
1
-14%
JYNNEOS 541 324 67%
Milestone payments 67 -
Contract work 162 338 -52%
Total 1,852 662
1
2019 numbers provided by GSK for comparison only
10-YEAR
CONTRACT
10-year contract framework
with the US government
As part of Bavarian Nordic’s contract framework with the US
government, a freeze-dried version of the vaccine is under
development. Due to an anticipated longer shelf life than
the current liquid-frozen version, Bavarian Nordic believes
that its freeze-dried formulation is well positioned to fulfil
the US government's long-term stockpiling requirements
for a smallpox vaccine to cover 66 million U.S. citizens.
The initial contract for development of the freeze-dried
version was awarded in 2009, and in 2017 Bavarian Nordic
was awarded a USD 539 million order for the supply of
freeze-dried MVA-BN to the SNS to replace the current
stockpile of liquid-frozen vaccines, which has expired.
The base contract of USD 100 million relates to the
manufacturing of bulk vaccine, which was revenue
recognized in 2018 and 2019, in addition to bulk vaccine
worth USD 233 million manufactured under previous
contracts. The contract further includes options of up to USD
140 million related to the clinical development, regulatory
commitments and validation and subsequent approval of
the fill and finish facilities. The remaining USD 299 million
under the contract relates to the future supply of freeze-
dried vaccine doses. The 10-year contract also contains
agreed pricing for additional bulk and final doses of both
liquid-frozen and freeze-dried formulation of the vaccine.
SALES PERFORMANCE AND MARKET TRENDS
Annual Report 2020
20
OUR
STRATEGY
Bavarian Nordic’s fundamental mission is to save and improve
lives by unlocking the power of the immune system and in the
medium term we have established a bold vision and aspiration
to become one of the largest pure play vaccine companies.
A company driven
by commercial
excellence
Best in
class vaccine
manufacturer
Our vision
is carried by
three strategic
pillars
Develop
innovative life-
saving vaccines
Annual Report 2020
22
Bavarian Nordic sees the continued progression of the devel-
opment pipeline as of strategic importance with the aim to
develop lifesaving vaccines. Key pipeline priorities are develop-
ment and approval of the freeze-dried version of the smallpox
vaccine, development and approval of an RSV vaccine, and to
advance other infectious diseases and immunotherapy projects.
Key strategic activities and milestones in 2021
• Initiate and complete a Phase 2 human challenge trial in RSV
• Continue preparations for initiation of the Phase 3 trial of
MVA-BN RSV in older adults in 2022
• Advance the development of the COVID-19 vaccine candidate,
ABNCoV2 into Phase 2 and scale-up of manufacturing to
phase 3 volume levels
• Advance the development of smallpox MVA-BN freeze-dried
formulation
• Further explore intravenous administration of brachyury
containing construct within immunotherapy.
The mid- to long term goals are to: (i) secure approval of two
vaccines: the freeze-dried version of the smallpox vaccine and
the RSV vaccine, to be launched together with a partner, (ii) se-
cure proof-of-concept of new immunotherapy approaches, (iii)
introduction of at least one more infectious disease pipeline
project, and (iv) preserve and grow the value of ABNCoV2 by
building on the positive momentum in clinical development,
despite not yet having secured third-party funding.
During 2020, Bavarian Nordic established a full commercial
infrastructure responsible for the commercialization of Rabipur/
RabAvert, Encepur and JYNNEOS. The work now continues to
grow our sales and to establish Bavarian Nordic as the pre-
ferred partner to health care professionals operating within our
field.
Key strategic activities and milestones in 2021
• Drive profitable growth for Rabipur/RabAvert and
• Take over physical distribution for Rabipur/RabAvert and
Encepur in remaining markets
• Improve awareness and image of Bavarian Nordic with key
stakeholders
The mid- to long term goals are to: (i) drive profitable growth
of the commercial business, (ii) establish JYNNEOS/IMVANEX/
IMVAMUNE as the global leader for the prevention of smallpox
and for JYNNEOS also with respect to monkeypox, (iii) become
a preferred partner to healthcare professionals for the pre-
vention and treatment of rabies and prevention of tick-borne
encephalitis, smallpox and monkeypox and (iv) further expand
the portfolio of commercial stage products either organically or
through acquisitions.
Bavarian Nordic wants to further leverage its expertise within
manufacturing of live virus vaccines. This involves completing
the manufacturing footprint to encompass the full value chain
from bulk manufacturing to fill and finish, as well as increasing
bulk capacity and introducing the flexibility to manufacture
different bulk vaccines in parallel. All of this with the strategic
aim to be a best-in-class vaccine manufacturer.
Key strategic activities and milestones in 2021
• Filling of first commercial vaccine doses in the newly built
fill and finish facility
• Completion of construction of new/amended drug
substance facility
• Progress the manufacturing technology transfer of Rabipur/
RabAvert and Encepur according to plan, including completing
qualification of packaging performed at a selected contract
manufacturer
The mid- to long term goals are to: (i) establish Bavarian
Nordic capabilities to fill and finish liquid and freeze-dried
products, (ii) expand bulk manufacturing to introduce new
technologies and manufacture multiple products in parallel, and
(iii) to successfully complete the transfer of the manufacturing
of Rabipur/RabAvert and Encepur from GSK, in order to deliver
on the anticipated synergies of the transaction.
BEST IN CLASS
VACCINE MANUFACTURER
A COMPANY DRIVEN
BY COMMERCIAL EXCELLENCE
DEVELOP INNOVATIVE
LIFE-SAVING VACCINES
Annual Report 2020
23
Anu Helena Kerns joined Bavarian Nordic as Chief People Officer in No-
vember 2020. Anu brings more than 15 years of leadership experience
driving human resource and communication strategies. In the newly
established role and as a part of the executive management team she
will drive the organizational development through the ongoing com-
mercial transformation of Bavarian Nordic.
Anu: I am incredibly excited to be joining Bavarian Nordic at
this transformative stage of its development. Throughout the
organization, a strong purpose of delivering life-saving vaccines
is present and I am thrilled to take part in this by shaping
a people and organization agenda that will unfold Bavarian
Nordic’s vision for the future.
Since the acquisition of Encepur and Rabipur, Bavarian Nordic has had
a laser-like focus on establishing a commercial structure with presence
in new markets and expanding manufacturing capacity in anticipation
of new vaccines. The organization has seen significant growth with a
large number of new employees offering their competencies to the
organization.
Anu: We have transformed into a full-blown vaccine company
in a very short time growing in size and scope. Now we must
do the legwork and align people, processes and platforms to
the new reality. This involves making our workflows simple
and scalable, but more importantly to bring everyone along on
the journey fostering collaboration and communication across
functions and locations.
This task has, naturally, been impacted by the COVID-19 pandemic. With
around 300 new people in the organization, many have never had the
chance to meet close colleagues face to face. Ultimately, these unprec-
edented times have taught us that being out of sight does not mean
being out of touch. Even under new and unanticipated pressures, we
have succeeded, and important milestones have been achieved. We
owe a big thanks to the Bavarian Nordic people who yet again demon-
strated their flexibility and adaptability.
Anu: Since joining Bavarian Nordic, the capability of our
organization has repeatedly amazed me. I regard the strong
knowledge base coupled with human factors like a widespread
can-do attitude, willingness to go the extra mile and the
ability to quickly adjust to changes and challenges as the true
foundation of our success and something we should continue to
nurture.
Throughout the
organization,
a strong
purpose of
delivering life-
saving vaccines
is present
Annual Report 2020
25
A future of flexible work and sustainable engagement
Based on the learning we have from the COVID-19 lockdown period,
Bavarian Nordic wants to offer more flexibility to our employees as we
define our future way of working. This initiative is part of an overall
objective to offer a healthy, safe and engaging working environment.
Over the years, Bavarian Nordic has been able to achieve a steady re-
duction in accidents, sick leave and turnover. The ambition is to monitor
and keep these key figures at their current low levels. In the coming
year, pulse surveys will be done to check the temperature of the moti-
vation and commitment in the organization.
Anu: I want to keep a good reading on the pulse of
the organization to understand, how we fuel sustainable
engagement going forward. I can only imagine that under
the current circumstances there can be some fatigue in the
organization, and if that is the case, I want all leaders to get
involved in addressing it. So far, I have only experienced a very
open, friendly and energetic workforce. As leaders we need to
stay close and in tune with the people in the organization and
make sure they feel seen, heard and developed.
Innovation catalyzed by diversity and mobility
Diversity and equal opportunity have entered the agenda of top
management in Bavarian Nordic. More than half of all leader positions
in the Company are female and there is female representation at all
levels in the organization, including on the Board of Directors. Howev-
er, diversity relates to more than gender - it also involves inclusion of
different age groups and backgrounds. Driven out of a need to attract
people with various backgrounds and specialty for manifold functions
in different locations, the workforce in Bavarian Nordic quite naturally
becomes diverse.
As new CPO, Anu sees especially diversity as a catalyst for innovation:
Anu: From my experience, having a diverse workforce works in
our favor as a dynamic company dependent on innovation. We
need people that bring along a fresh perspective and challenge
the status quo. While we have a decent level of diversity in
terms of gender, educational backgrounds and nationality, I
personally believe we can benefit from engaging students,
interns and fresh graduates who can offer new theory and
different perspectives on technology and media.
Anu: We all learn most from interacting with different people
and getting out of our comfort zone. Bavarian Nordic has a
unique opportunity to offer personal growth and development
just by virtue of our continuous expansion. In my career, I have
been fortunate to experience great jumps in my learning curve
by changing role and location and working with people from
different functions and cultures. I would like to see, how we can
facilitate more internal mobility in Bavarian Nordic in the future
We all learn
most from
interacting
with different
people
and getting
out of our
comfort zone
Annual Report 2020
26
Anu Helena Kerns
Joined Bavarian Nordic in November 2020 from Novo
Nordisk where she held various leadership roles with in-
creasing responsibilities, including five years abroad where
she was responsible for establishing a new regional or-
ganizational structure and driving the HR development and
communication strategy. Prior to Novo Nordisk she worked
for 8 years in the financial sector with employer branding,
reputation management and change communication.
Annual Report 2020
27
2021
FOCUS
AREAS
While Bavarian Nordic’s focus in 2020 has predominantly been on the
commercial transformation, innovation remains a cornerstone for the
Company. The development of a strong pipeline is an integral part of
our growth ambitions, and not least our desire to deliver lifesaving
promises to patients where there is a medical need.
On the back of two recent product approvals; the liquid-frozen small-
pox vaccine and the Ebola vaccine, we are working diligently towards
securing additional approvals in the coming years. A key asset in the
pipeline is MVA-BN RSV, an advanced, broad-spectrum vaccine can-
didate for respiratory syncytial virus, which represents a blockbuster
potential. While the planned Phase 3 program of the vaccine has been
postponed until 2022, a human challenge trial will be conducted in
2021, providing important efficacy data later this year.
We have also prioritized the development of ABNCoV2, our COVID-19
vaccine candidate in-licensed from AdaptVac, which we believe has
potential as a next-generation vaccine that has potential to provide a
broad and durable response, while also mitigating the challenges from
new, and potentially more deadly variants of the virus.
Another expected near-term approval is the freeze-dried smallpox
vaccine, which has concluded Phase 3 development, and will be an
important trigger for our future vaccine sales to the US government.
We also remain committed to the development of novel therapies
to fight cancer with a refocused strategy, involving more advanced
vaccine constructs and new administration routes.
RSV
Initiate and complete a Phase 2 human
challenge trial in RSV
Continue preparations for initiation of the
Phase 3 trial of MVA-BN RSV in the elderly
in 2022
COVID-19
Advance the development of the COVID-19
vaccine candidate, ABNCoV2 into Phase 2
and scale-up of manufacturing to phase 3
volume levels
Smallpox
Advance the development of smallpox
MVA-BN freeze-dried formulation
Immuno-oncology
Further explore intravenous administration
of brachyury containing construct within
immunotherapy
Innovation
remains a
cornerstone
for Bavarian
Nordic
Lastly, we are exploring other vaccine platforms in our efforts to
expand the infectious disease pipeline over the next years.
Annual Report 2020
29
Laurence De Moerlooze
Joined Bavarian Nordic in April 2020 from Takeda Vaccines,
where she served as Vice President and Global Program
Lead for vaccines against Zika virus and Norovirus. Prior
to Takeda she worked at GSK for 17 years, holding vari-
ous leading roles in regulatory affairs, medical affairs and
vaccine development working with numerous life-saving
vaccines including Rabipur/RabAvert and Encepur.
Two regulatory approvals over the past two years have demonstrated
the success of Bavarian Nordic’s research and development team and
its efforts to transform science into new, life-saving vaccines. How-
ever, the successful completion of several pipeline projects combined
with a shift in the immune-oncology focus has left room in the clinical
pipeline for new projects. To refuel the growth, Bavarian Nordic ap-
pointed Laurence De Moerlooze as Chief Medical Officer in 2020. With a
strong background in the vaccine industry, Laurence brings a wealth of
knowledge and will add important and valuable R&D and commercial
experience to the Company.
While an important focus for her is to expand and advance the clinical
pipeline, she is equally mindful about the increased responsibilities that
comes along having expanded the portfolio of marketed vaccines.
Laurence: My objective as Chief Medical Officer is twofold:
first to expand and advance a portfolio of pipeline projects
and second to build a Medical Affairs, Pharmacovigilance and
Regulatory organization fit to support our commercial vaccines
within a governance framework aligned with industry standards.
These three functions are key for Bavarian Nordic’s commercial
transformation journey and success.
MORE THAN A
PIPELINE TO BUILD
Annual Report 2020
30
New technologies, new opportunities
Bavarian Nordic is recognized for its work on the MVA technology, and
the Company’s endeavors in the field has led to regulatory approvals
of vaccines against smallpox and Ebola, highlighting the strength and
versatility of proprietary MVA-BN technology on which both vaccines
are based.
In addition, to the wealth of experience with MVA-BN, Bavarian Nordic
has a strong expertise with several other platforms being tested with
model antigens in non-clinical studies. Furthermore, the Company has
licensed a COVID-19 vaccine candidate based on a unique virus-like
particle display technology that offers alternative features to be added
to the list of potential platforms for future vaccines.
Laurence: Based on the data obtained with these various
platforms in pre-clinical and clinical studies, we are committed
to select the right platform to advance at least one vaccine
candidate with a high medical need in our future development
pipeline of infectious diseases.
Immuno-oncology remains a priority
While the successes made in infectious diseases have yet to be demon-
strated in the immuno-oncology space, Bavarian Nordic has continued
to make advances in its research, which not only is a matter of picking
the right candidate, but also how it is being administered to the pa-
tients. Intravenous administration of the cancer vaccines is a promising
approach designed to utilize broader aspects of the immune response,
which is being further explored in 2021.
Bavarian Nordic
has licensed
a COVID-19
vaccine
candidate
based on a
unique virus-like
particle display
technology
Laurence: We have recently initiated a clinical study with
TAEK-VAC, a fully in-house developed candidate generated from
the MVA-BN platform to target HER2- and brachyury expressing
cancers. This improved vaccine candidate leverages our extensive
experience in immuno-oncology and as a new feature, utilizes
intravenous administration which may enhance its efficacy.
At the forefront of RSV development
On a global scale, COVID-19 has become a top priority for vaccine
development, also for Bavarian Nordic. However, RSV remains an
equally important target, as no vaccines are available against the virus,
which causes equally as many deaths worldwide, as influenza. RSV is
a key focus for Bavarian Nordic and the Company has one of the most
advanced vaccine candidates.
Laurence: RSV remains a high priority in our vaccine devel-
opment and we are confident that our multivalent candidate is
a serious player in the competitive RSV vaccine development
landscape. Therefore, in order not to lose momentum, we are
planning to conduct a human RSV challenge trial in 2021. Data
from this trial is expected already during the second half of 2021
and will provide the first insights into the protective efficacy of
the vaccine candidate and further de-risk the Phase 3 efficacy
trial that should commence in 2022.
Annual Report 2020
31
Respiratory Syncytial Virus (RSV)
Bavarian Nordic remains at the forefront of the development
of a vaccine against RSV, and has generated highly promising
Phase 2 results with its candidate, MVA-BN RSV, confirming a
broad immune response that persists at least 6 months and
can be boosted, without significant safety findings, in the
older-adult target population. The broad immune response
elicited by the vaccine suggests that it may activate various
adaptive immune responses against RSV, which are expected
to contribute to different pathways of protection.
A Phase 3 program for the vaccine has been developed and
was originally planned to start in 2021. Due to the impact of
COVID-19 measures taken globally, the prevalence of other res-
piratory viruses, including RSV, has been reduced. The planned
efficacy study could be adversely affected by the uncertainties
associated with potentially low rates of RSV incidence in the
2021/22 season. To maintain the momentum of the program
despite the challenges faced by COVID-19, Bavarian Nordic
plans to conduct a Phase 2 human challenge trial in 2021,
while also postponing the recruitment into the Phase 3 study
until 2022. The human challenge trial will generate the first
efficacy data against RSV during 2021 and potentially further
de-risk the Phase 3 efficacy trial.
OUR R&D PROGRAMS
COVID-19
In July 2020, Bavarian Nordic licensed a capsid virus like
particle (cVLP) COVID-19 vaccine candidate from AdaptVac.
The vaccine candidate, ABNCoV2 has shown to be highly
immunogenic in relevant pre-clinical models inducing durable
responses equivalent to high convalescent sera from patients
that have recovered from COVID-19. These responses have
led to the demonstration of a durable and highly protective
response from a COVID-19 challenge. Coupled with the ease of
production and the ability to rapidly adapt the vaccine platform
to new potentially more deadly variants, ABNCoV2 looks like a
highly promising candidate.
Supported by a Horizon 2020 EU grant, AdaptVac has initiated
the first-in-human study of the vaccine candidate in March
2021, and Bavarian Nordic has decided to move the ABNCoV2
project forward by investing in a phase 1/2 clinical trial
and to scale up manufacturing to phase 3 volume levels in
preparation for further clinical development towards licensure.
The Phase 1/2 study will investigate the ability of ABNCoV2 to
boost existing immunity through prior infection or vaccination,
to create a more durable immune response that could protect
against the current circulating variants of COVID-19. In parallel
the Company will continue to seek funding to further progress
the candidate towards licensure.
Smallpox
As part of Bavarian Nordic’s contract framework with the U.S.
Government on the development and supply of a non-replicating
smallpox vaccine, an improved, freeze-dried formulation of the
MVA-BN
®
smallpox vaccine is being developed.
During 2020, positive topline results from a Phase 3 lot-consist-
ency trial of the freeze-dried formulation of MVA-BN were re-
ported. A prior Phase 2 study showed equivalence between the
freeze-dried and liquid-frozen formulations of MVA-BN, and the
lot-consistency trial was agreed with the FDA as the only Phase
3 study required to support licensure of the freeze-dried formu-
lation. The Phase 3 study evaluated the immunogenicity and
safety of three consecutive vaccine lots in 1,129 vaccinia-naïve
persons. The three lots induced equivalent antibody responses,
meeting the primary endpoint of the study, while the favorable
safety profile was in line with the cumulative safety experience
of the approved liquid-frozen formulation. Upon successful com-
pletion of the current study, expected in 2021, the Company
plans to submit a supplement to the BLA to extend the approv-
al for both formulations of MVA-BN, anticipated in 2022.
Equine encephalitis
Under a contract with the U.S. Government, awarded in 2018,
Bavarian Nordic has developed MVA-BN WEV, a vaccine against
equine encephalitis virus, an emerging mosquito-borne virus
which can result in the rare condition of encephalitis and death.
In June 2020, topline results from the first-in-human trial of
MVA-BN WEV were reported. The study enrolled 45 healthy
adults in three treatment groups receiving different doses of
the vaccine. All subjects were revaccinated after four weeks.
Annual Report 2020
32
A detailed description of the programs, including results from clinical
trials, are disclosed in company announcements and in the pipeline
section on the Company’s website: www.bavarian-nordic.com.
PIPELINE
Vaccine Indication Phase 1 Phase 2 Phase 3 Status / milestone
MVA-BN
(freeze-dried)
Smallpox Phase 3 – lot-consistency study ongoing with
anticipated completion in 2021
MVA-BN RSV RSV Human challenge study planned for 2021,
followed by Phase 3 in 2022
ABNCoV2 SARS-CoV-2 Phase 1/2 study ongoing
TAEK-VAC Cancer Phase 1/2 study ongoing
MVA-BN WEV Equine encephalitis Phase 1 dose finding study completed
Data from the study showed that the vaccine was well
tolerated and immunogenic across all dose groups. Neutralizing
antibody responses were observed in all dose groups, with
peak levels reached after the second vaccination. Responses
were detected as early as 2 weeks after the first vaccination
in the highest dose group, in which 100% seroconversion was
observed for all subjects after the second vaccination. The most
common vaccine-related adverse event was injection site pain.
These clinically meaningful Phase 1 data warrant further
clinical investigation, and Bavarian Nordic is seeking additional
funding for the further clinical advancement of the vaccine
candidate
Immuno-oncology
Results from a Phase 2 clinical study of BN-Brachyury in
chordoma were reported during 2020. While the study failed
to meet its primary endpoint, it provided signs of clinical
activity, supporting brachyury as a potentially important
immunotherapy target, particularly for chordoma. These
intriguing signs of clinical efficacy are also supported by results
in chordoma patients following the intravenous administration
of BN-Brachyury in a separate trial.
A tumor antibody enhanced therapeutic vaccine (TAEK-VAC)
targeting HER2 and brachyury has been generated from the
MVA-BN platform. A Phase 1/2 open label trial of intravenous
administration of the vaccine, was initiated in early 2021 in pa-
tients with advanced HER2- and brachyury-expressing cancers.
Annual Report 2020
33
2020 represented year one in the commercial transformation
of Bavarian Nordic, and a key priority for the Company was the
establishment of a full commercial infrastructure to support the new
business. Adding this completely new discipline to the Company’s
list of key competencies was a huge task that we have managed to
implement according to plan.
Based in the new Global Commercial Headquarter set up in Zug,
Switzerland, the commercial leadership team was established from the
beginning of the year, and quickly expanded to include core sales and
marketing teams in Europe and the US to cover the key markets. We
have built a dedicated sales force in our priority markets as this is one
of the key levers to drive market share gain and sales growth.
The primary objective for the new organization is to secure profitable
growth of the commercial business which will be driven by a continued
focus on retaining and gaining market shares for the established
products, Rabipur/RabAvert and Encepur, while also working to
establish JYNNEOS/IMVANEX/IMVAMUNE as the global leader for
the prevention of smallpox and for JYNNEOS also with respect to the
monkeypox indication.
We wish to be recognized for our commercial excellence and aim to
become a preferred partner to healthcare professionals, initially for
the prevention and treatment of rabies and prevention of tick-borne
encephalitis, smallpox and monkeypox. A key success factor to achieve
this will be to improve the awareness and image of Bavarian Nordic
among key stakeholders.
To achieve our long-term ambition to become one of the largest pure
play vaccine companies, we continue to explore opportunities to further
expand our portfolio of commercial stage products either organically or
through acquisitions.
Complete market takeovers
Take over physical distribution for Rabipur/
RabAvert and Encepur in remaining
markets.
Increase awareness
Improve awareness and image of Bavarian
Nordic with key stakeholders.
Profitability
Drive profitable growth for Rabipur/
RabAvert and Encepur.
Annual Report 2020
35
2021
FOCUS
AREAS
2020 2021 2022 2023 2024
Strong execution continues into 2021
with the commercial infrastructure successfully and timely in place in
2020, the transfer of marketing and distribution of Rabipur/RabAvert
and Encepur from GSK was completed during the year in several
countries, including key markets, such as U.S. and Germany. By year-
end, more than 80% of the expected product revenue was covered by
Bavarian Nordic’s own distribution or by its partner Valneva, who will
manage the marketing and distribution of Bavarian Nordic’s products
in selected European markets and Canada as part of a commercial
partnership, entered in 2020.
Under the partnership with Valneva, Bavarian Nordic will leverage its
own commercial infrastructure in the marketing and distribution of
Valneva’s vaccines for Japanese Encephalitis and cholera in Germany
and Switzerland. This is expected to happen at the beginning of 2022.
By March 2021, marketing and distribution in a total of 18 countries
were transferred, corresponding to more than 90% of the total product
revenue from Rabipur/RabAvert and Encepur, and the Company
remains on track to complete the market transfers in 2021.
The five-year transition of Rabipur/RabAvert
and Encepur is a process involving all parts
of Bavarian Nordic’s organization, gradually
transferring the responsibilities for the different
tasks from GSK to Bavarian Nordic while also
gradually improving the profitability of these
products for Bavarian Nordic.
In 2020, a full commercial infrastructure was
established and by 2021, the Company will
have assumed marketing and distribution of the
products in all markets.
Transfer of manufacturing will occur stepwise
with initial take-over of packing in 2021, fill and
finish of vaccines in 2023 and production of the
drug substance in 2024. To enable the latter,
construction work to expand Bavarian Nordic’s
facility was initiated in 2020.
The five-year transition of Rabipur/RabAvert and Encepur
Manufacturing
Distribution
Commercial
infrastructure
Annual Report 2020
36
Driving awareness for future success
While the recent establishment of the commercial organization and
the infrastructure to support the new business has been a success, the
commercial presence is still in its very early days for Bavarian Nordic.
Although diverse and sound industry experience and deep market
knowledge are common denominators for the strong sales and market-
ing teams that have been hired, the recognition of the Bavarian Nordic
brand among relevant stakeholders is still low, as expected. Having
established products like Rabipur/RabAvert and Encepur in the portfolio
is an important driver for improving the awareness. In addition, the
Company has focused its efforts on activities to support this goal when-
ever new markets have been taken over, and improvements have been
observed over the year.
Future growth drivers
While brand awareness, a dedicated salesforce, product availability
and commercial excellence are important factors in securing continued
profitable growth of the current commercial portfolio, the long-term
ambition to become one of the largest pure play vaccine companies
will require a broader portfolio of vaccines. The successful track history
of bringing our own products to the market is expected to continue,
but also the opportunity to expand our portfolio through acquisitions is
being explored.
Annual Report 2020
37
2021
FOCUS
AREAS
BEST IN
CLASS VACCINE
MANUFACTURING
One of the important features that provides Bavarian Nordic with a
unique profile is the strong in-house vaccine manufacturing capabil-
ities and capacity built over many years. We want to strengthen this
expertise and are currently expanding our manufacturing footprint to
encompass the full value chain from bulk manufacturing to fill and fin-
ish of both liquid and freeze-dried vaccines, as well as increasing bulk
capacity and introducing the flexibility to manufacture different bulk
vaccines in parallel. The aim is to be a best-in-class vaccine manufac-
turer with flexibility to support both current and future requirements.
Despite COVID-19, the existing bulk manufacturing continued its
operations uninterrupted during 2020 with production of bulk vaccine
for several customers according to plan. Likewise, all activities to
support commissioning of the new fill and finish facility continued
successfully to enable commercial manufacturing of the first product in
2021. Additionally, the work to expand the bulk facility to support the
transfer of the manufacturing of Rabipur/RabAvert and Encepur has
progressed according to plan.
Kvistgaard site – a center of excellence for
vaccine manufacturing
Our manufacturing site in Kvistgaard, north of Copenhagen, has always
been an important asset for the Company and has played a pivotal role
in reaching our strategic goals.
The site has been operating for more than a decade, manufacturing
bulk vaccine for the Company’s smallpox vaccine contracts with the U.S.
Fill and finish
Filling of first commercial vaccine doses
in the newly built fill and finish facility
Facility expansion
Completion of construction of new/
amended drug substance facility
Tech transfer of Rabipur/
RabAvert and Encepur
Progress the manufacturing technology
transfer of Rabipur/RabAvert and Encepur
according to plan, including completing
qualification of packaging performed at
a selected contract manufacturer
Government. To fulfil other manufacturing needs, the site has been
expanded over time, most recently with the addition of a commercial-
scale fill and finish facility, which is being put into operations in 2021.
Together with the existing manufacturing capabilities, this will enable
Bavarian Nordic to control the entire value chain of the manufacturing
process from raw materials to final product and distribution.
Annual Report 2020
39
Fill and finish commencing in 2021
The fill and finish facility is designed to support concurrent aseptic
manufacturing of up to three different products in the formulation and
filling area at the same time within separated closed systems, so that
one drug substance can be formulated while a second is filled and a
third is being freeze-dried.
The facility construction was completed in 2019, and during 2020, vali-
dation and qualification activities were completed in order to bring the
first commercial product on the line in 2021, which will be JYNNEOS/
IMVANEX/IMVAMUNE smallpox vaccine in the liquid-frozen formulation.
The freeze-dried formulation will be transferred to the line, once the
process has been validated and approved by the US in connection with
the FDA approval of this improved formulation.
Expanding the facility to support acquired and future products
The significant investment in the two vaccines from GSK also entails
additional investments in the manufacturing infrastructure to increase
the capacity and flexibility of the current facility.
Therefore, in 2020, we initiated the expansion of our drug substance
manufacturing unit, which will enable us to run two different products
(viruses) at the same time. This will allow us to transfer the manufac-
turing of Rabipur/RabAvert and Encepur into a dedicated production
unit, while also offering the potential to bring in new technologies for
new products.
Rabipur/RabAvert and Encepur are currently manufactured by GSK
and the basis of the technology transfer to Bavarian Nordic is an as-is
transfer of the current manufacturing process. This transfer will be a
staged process, starting with packaging then filling and ending with the
transfer of bulk manufacturing. The tight regulation of pharmaceutical
technology transfers together with Bavarian Nordic and GSK’s com-
mitment to ensure supply to the market makes it a five-year process
before final completion. During this time, GSK will continue to manufac-
ture and supply Rabipur/RabAvert and Encepur.
While the current expansion of the facility is expected to be able to ful-
ly cover Bavarian Nordic’s manufacturing needs in a foreseeable future,
the Company last year acquired an adjacent property, securing land for
potential future expansions of its the manufacturing footprint.
Annual Report 2020
40
Facility expansion provides
a number of strategic
advantages
With the expansion of our drug
substance facility and the comple-
tion of the fill and finish facility
we will:
• Gain more control of our
manufacturing value chain
• Increase our overall capacity and
enable manufacturing of multi-
ple products at the same time
• Establish a dedicated production
unit for Rabipur/RabAvert
and Encepur that will ensure
sufficient capacity and stable
supply to the market
• Enable ourselves to bring in
new products and technologies
to the site
A future-proof asset
Chief Operating Officer Henrik Birk has been with
Bavarian Nordic since 2008, a period where the Company’s
manufacturing infrastructure has significantly expanded
to fulfil the increasing demands for vaccines.
“Our manufacturing journey continues as we in 2021
will put our new fill and finish facility into operations
and have also begun the construction to expand our bulk
manufacturing capacity to meet the future requirements
in our vaccine production.”
Annual Report 2020
41
THE BAVARIAN
NORDIC SHARE
Bavarian Nordic is listed on the Nasdaq Copenhagen exchange under
the symbol BAVA. The Company’s share capital was DKK 584,501,120
by year-end 2020, comprising 58,450,112 shares with a nominal value
of DKK 10 each. Each share carries one vote.
In March 2020, Bavarian Nordic performed a rights issue with pre-
emptive rights for its existing shareholders. 25,911,252 new shares
with a nominal value of DKK 10 each were subscribed for, raising gross
proceeds to of DKK 2,824 million. In addition, 149,795 new shares were
issued as a result of warrant exercise by employees during the year.
By December 31, 2020, there were 3,392,989 outstanding warrants,
which entitle warrant holders to subscribe for 3,392,989 shares of
DKK 10 each. Thus, the fully diluted share capital amounted to DKK
618,431,010 at year-end.
In March 2021, Bavarian Nordic completed a private placement
5,150,000 new shares with a nominal value of DKK 10 each, raising
gross proceeds of DKK 1,148 million. At the time of publication of the
annual report, the new share capital had not yet been registered with
the Danish Business Authority.
Ownership
As of December 31, 2020, Bavarian Nordic had 69,640 registered
shareholders owning 54,555,418 shares. The following shareholders
had publicly informed Bavarian Nordic that they own five per cent or
more of the Company’s shares:
ATP Group, Hillerød, Denmark, 10.11%
Invesco Ltd., Atlanta, GA, USA, 5% (as of November 13, 2020)
Bavarian Nordic held 107,646 own shares as treasury shares,
corresponding to 0.18% of the share capital. The shares have been
repurchased to hedge obligations under incentive schemes for the
Company's Board and Executive Management. See note 30 in the
consolidated financial statements.
170
150
130
110
90
70
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Share price development compared to indices
Bavarian Nordic
OMX Copenhagen C25
NASDAQ BIOTECH
Dec
Annual Report 2020
42
Contact
Our investor relations team
can be contacted on
investor@bavarian-nordic.com.
American Depositary Receipts (ADR)
Bavarian Nordic has established a sponsored Level 1 American De-
positary Receipt (ADR) program with Deutsche Bank Trust Company
Americas. An ADR is a receipt issued by a depositary bank representing
ownership of a company’s underlying shares. ADR programs are created
to enable U.S. investors to hold shares in non-U.S. companies and trade
them in the same way as U.S. securities. Bavarian Nordic ADRs are
available for trading in the US over-the-counter (OTC) market, where
three ADRs represent one Bavarian Nordic share.
Annual General Meeting
The annual general meeting will be held on Tuesday, April 20, 2021.
Additional information will become available at: www.bavarian-nordic.
com/agm no later than 3 weeks before the annual general meeting.
Shareholders who have requested so will receive a notification via e-mail.
Investor relations
Bavarian Nordic maintains an active dialogue with shareholders,
analysts, prospective investors and other stakeholders by providing
relevant, timely and correct communication about relevant strategic,
economic, financial, operational and scientific affairs of the Company.
Management and Investor Relations are widely available to existing as
well as potential shareholders via participation in investor conferences,
roadshows, investor meetings and conference calls. A list of the current
analysts covering Bavarian Nordic can be found at our website along
with financial reports, company announcements, investor presentations,
and more: www.bavarian-nordic.com/investor.
Are you a shareholder?
Registered shareholders are offered a range of electronic information
services through the shareholder portal, which can be accessed from
the Company’s website. The portal also offers the opportunity to
request admission cards and/or vote by proxy for the general meetings.
Shareholders are encouraged to have their shares registered with the
Company; registration must be through the holder’s custodian bank.
Shareholders are also encouraged to sign-up for receiving company
announcements via e-mail from the Company:
www.bavarian-nordic.com/investor.
Financial calendar 2021
April 20, 2021
Annual General Meeting
May 27, 2021
Three-month interim report (Q1)
August 25, 2021
Half-year interim report (Q2)
November 12, 2021
Nine-month interim report (Q3)
Denmark
North America
Europe
Non-registered
Distribution of
share capital
67%
14%
7%
13%
Annual Report 2020
43
SUSTAINABILITY
Our impact on global health
No other health intervention touches so many lives as vaccines. The
development of new vaccines and increased vaccination efforts, par-
ticularly in developing countries, have helped to significantly reduce
the incidence of major communicable, life-threatening diseases. It is
estimated that vaccines have reduced these diseases by more than
90% over the past three centuries
1
.
Vaccines work, and they contribute to the U.N. sustainable develop-
ment goal
2
(SDG) number 3, “Good health and well-being” all around
the world. However, according to Gavi
3
, immunization positively
impacts, directly or indirectly, 14 of the 17 SDGs that support the 2030
Agenda for Sustainable Development.
Our contribution, as a vaccine company, may seem small in the global
perspective, but we are here to help achieve the goal for securing
good health and well-being of all humans.
Growing responsibly
While pursuing our vision to become one of the largest pure play
vaccines companies, improving and saving lives by excelling in R&D
1
www.who.int/immunization/monitoring_surveillance/data/gs_gloprofile.pdf
2
www.un.org/sustainabledevelopment/sustainable-development-goals/
3
www.gavi.org/about/ghd/sdg/
SDG 3
Ensure healthy lives and promote
well-being for all at all ages
SDG 5
Achieve gender equality
and empower all women
and girls
SDG 12
Ensure sustainable consumption
and production patterns
SDG 16
Promote peaceful and inclusive
societies for sustainable
development, provide access to
SDG 4
Ensure inclusive and equitable
quality education and promote
lifelong learning opportunities
for all
SDG 8
Promote sustained, inclusive and
sustainable economic growth,
full and productive employment
and decent work for all
SDG 13
Take urgent action to combat
climate change and its impact
justice for all and build effective,
accountable and inclusive
institutions at all levels
Annual Report 2020
44
innovation, manufacturing and commercialization, we recognize the
importance of protecting and taking care of the world around us, act
responsibly in all matters, particularly focusing on minimizing the
environmental impact from our production, but also on the safety and
well-being of our employees, as well as other areas of relevance to our
business.
We seek to communicate openly and transparently about our CSR
efforts in our annual CSR report which constitutes an independent part
of the annual report and covers sections 99a, 99b and 107d of the
Danish Financial Statements Act.
Download the full CSR report at www.bavarian-nordic.com/csr
ESG key figures
Key figures for selected environmental social and governance areas
are provided in accordance with the recommendations set out in “ESG
key figures in the annual report”, June 2019 (revised December 2020)
from the Danish Finance Society / CFA Society Denmark, FSR – Danish
Auditors, and Nasdaq Copenhagen. For the sections regarding environ-
mental and social data in the table below, the data has been subject to
an independent auditor’s review in the form of limited assurance. The
Independent Auditor’s Assurance Report can be found in our CSR-report.
Unit 2020 2019 2018 2017 2016
Environmental data
1
CO
2
e, scope 1 Metric tons 1,381 909 964 992 1,135
CO
2
e, scope 2 Metric tons 1,175 1,178 1,398 1,686 1,519
Energy Consumption GJ 45,110 34,137 32,527 32,099 34,567
Water Consumption m
3
19,170 14,770 11,610 10,877 12,479
Social data
1
Full-Time Workforce FTE 607 465 421 439 446
Gender Diversity
2
% 61 N/A N/A N/A N/A
Gender Diversity, Management % 56 51 50 49 52
Employee Turnover Ratio % 9 10 13 18 15
Sickness Absence
3
Days per FTE 6 6 6 8 8
Governance data
4
Gender Diversity, Board % 28 28 14 14 0
Board Meeting Attendance Rate
5
% 97 98 97 N/A N/A
CEO Pay Ratio Times 15 N/A N/A N/A N/A
1
Data derived from the Company’s CSR reports 2016-2020.
2
Data not collected before 2020.
3
Sickness absence does not include offices in the USA.
4
Data derived from the Company’s annual reports 2016-2020, except for CEO pay ratio, which is presented in the 2020 remuneration report.
5
Data not collected before 2018.
Annual Report 2020
45
CORPORATE
GOVERNANCE
Bavarian Nordic remains focused on good corporate governance, having
implemented the recommendations from the Committee of Corporate
Governance (Komitéen for god selskabsledelse) for companies listed on
the Nasdaq Copenhagen exchange.
Management believes that the Company is operated in compliance with
guidelines and recommendations that support the Company’s business
model and can create value for Bavarian Nordic’s stakeholders. Regularly
and at least once a year, Management monitors adherence to the recom-
mendations on corporate governance in order to ensure the best possible
utilization of and compliance with the recommendations and legislation.
In accordance with Section 107 b of the Danish Financial Statements
Act, Bavarian Nordic has published a statutory report on Corporate
Governance for the financial year 2020 on the Company’s website:
www.bavarian-nordic.com/corporategovernance.
The Board of Directors
The Board of Directors (“the Board”) is responsible for the overall stra-
tegic management and the financial and managerial supervision of
Bavarian Nordic, as well as for regular evaluation of the work of the
Corporate Management. In addition, the Board supervises the Company
in a general sense and ensures that it is managed in an adequate man-
ner and in accordance with applicable law and the Company’s articles
of association. The Board discharges its duties in accordance with the
rules of procedure of the Board, which are reviewed and updated by all
members of the Board..
Diversity in the Board
The Board of Directors currently has a representation of two female
members elected by the shareholders, corresponding to 28%, which
is above the current target of 15%. The target is being reassessed in
2021.
Evaluation of the Board
The Board and its subcommittees conduct every year a self-evaluation
of the Board's and subcommittee’s work, accomplishments and com-
position. The Chairman heads the annual evaluation, which is conduct-
ed at least every third year by an external consultant. The process,
whether it is facilitated internally or by external consultants, evaluates
Annual Report 2020
46
topics such as board dynamics, board agenda, quality of the materi-
al that is submitted to the Board, discussions at the Board meetings,
the chairman’s leadership of the Board, strategy, Board composition
and Board competencies. Typically, the process is further facilitated by
each Board member filling out a detailed questionnaire, and the Board
members are asked to score to which extent they agree to the indi-
vidual questions. The results of the questionnaire are then discussed at
a subsequent Board meeting, and the individual comments submitted
are used in the planning and handling of future Board meetings. The
2020 self-evaluation was facilitated by an external consultant and, in
general, key conclusions were positive with a continued satisfaction
with the Board’s work as well as the work in the committees. Organiza-
tional development and continued optimization of Board efficiency will
also be a focus area in 2021.
For more details on the work and composition of the Board and its
committees, reference is made to the statutory report on Corporate
Governance on the Company’s website: www.bavarian-nordic.com/
corporategovernance.
Tax policy
A tax policy describing our governing principles by which we manage
our tax affairs was approved by the Board in November 2020 and
is available on the Company’s website: www.bavarian-nordic.com/
about/corporate-governance/tax-policy.aspx.
Remuneration policy and report
The remuneration of the Board and the Executive Management is
governed by the Company’s remuneration policy which was updated
in 2020 and subsequently approved by the shareholders at the annual
general meeting in June 2020.
In accordance with section 139 b in the Danish Companies Act,
Bavarian Nordic has prepared a report on the remuneration of the
individual members of the Board and Executive Management in 2020,
The report is available on the Company’s website: www.bavarian-
nordic.com/corporategovernance.
Annual Report 2020
47
At Bavarian Nordic risk management is an integrated part of the
Company’s operations. A formal process ensures both bottom-up and
top-down identification and handling of risks. In this process key risks
are first identified through a bottom-up process including description of
the risks and mitigating actions taken to reduce either the likelihood of
occurrence or the potential impact. Residual risk after agreed mitigat-
ing actions is further mitigated by insurance where this is relevant and
possible.
Risk area Risks Mitigating actions
Development The development of a product can be delayed or even abandoned.
The process involves pre-clinical and clinical tests as well as regulatory
approval and even approval of manufacturing facilities in some cases.
All steps through development are associated with risks and can fail.
Competitors can develop more promising product candidates, potentially
reducing the value of Bavarian Nordic’s pipeline and products. Some
development projects require funding from third parties and if this is
not available it can result in delays or even termination of the project.
• Close dialogue with authorities (e.g. FDA) to secure optimal
path to approval and compliance with GMP etc.
• Strong quality system in place to ensure compliance with
standards agreed with and required by authorities.
• Use of adaptive trial designs to minimize financial risk and
impact of failure.
• Maintain good dialogue and relations with key existing or
potential sponsors of development (see partnering further
below).
On a quarterly basis major risks are reported to the Finance, Risk &
Audit Committee (FRAC) and discussed at these meetings. During the
year specific risks are selected for more in-depth discussions with
FRAC involving the operational owner of the specific risk. The Board of
Directors receives regular risk updates from FRAC which then form part
of the Board’s overall decisions about the Company’s strategy. The table
below summarizes some of the key risks that are important to Bavarian
Nordic’s business including examples of mitigating actions.
→
RISK
MANAGEMENT
Annual Report 2020
48
Risk area Risks Mitigating actions
Laws and regulations Not complying with laws and regulations could damage the Company’s
reputation, result in significant fines and impede the Company’s ability
to operate.
• Internal legal resources available.
• Monitor development in relevant laws and regulations.
• Allocation of internal resources to secure adaptation of new rules
and regulations.
• Establish internal compliance structure and governance related
to commercial operations.
Financing Lack of funds could eventually make it difficult for the company
to pursue the strategy involving among others investments in
development and manufacturing facilities.
• Ensure good financial visibility by forecasting.
• Secure optimal timing of income from partner agreements.
• Maintain working capital at appropriate levels to free liquidity.
• Keep spending and investment level at appropriate levels to
stretch liquidity runway.
• Secure constant knowledge about financing options available
in the market.
• Secure access to bank financing if/when needed.
Cybersecurity Disruptions to IT systems, e.g. caused by a virus attack or hacking, may
happen and could have significant impact on the company’s ability to
operate effectively.
• Internal procedures and resources for continuous security
monitoring and vulnerability assessment.
• Continuous development of preventative measures.
• Continuous internal IT security training to build awareness.
• Involvement of a third-party cyber security specialist to ensure
a constant overview of threats and preventative measures
available.
• Perform annual security penetration tests and audits by
third party.
Annual Report 2020
49
Risk area Risks Mitigating actions
Supply and
manufacturing
Disruptions to the supply chain caused by break-downs in facilities,
third party supply and/or manufacturing issues or similar could have
a significant impact on the ability to supply products and could impact
both customer relations and financial performance. Issues potentially
causing delay in the transfer of manufacturing of Rabipur/RabAvert and
Encepur from GSK to Bavarian Nordic could negatively impact expected
future margins.
• Internal quality audits, including mock inspections.
• Secure adequate inventory and supply chain strategy including
dual sourcing.
• Shelf-life extension initiatives.
• Disaster recovery plans and back-up strategies.
• Dedicated and competent organization focusing on the transfer
of manufacturing from GSK to Bavarian Nordic.
• Dedicated and competent organization responsible for
manufacturing planning.
Commercialization Bavarian Nordic is facing market competition from companies that are
significantly larger in size and resources available than Bavarian Nordic.
If Bavarian Nordic cannot effectively compete in these markets it will
have a negative effect on future revenue and profit. Geopolitical or
macroeconomic changes or health crisis, e.g. pandemics, could impact
demand, pricing and access to vaccinations.
• Secure a very engaged and competent sales, marketing
and medical affairs organization.
• Leverage focus rather than size vis-a-vis competition.
• Look for and leverage differentiation.
• Build strong relations through dedication and focus to achieve
preferred supplier status.
Partnering Partnering with other companies and government bodies in the industry
is a central element of the Company’s strategy. Loss of partnerships,
e.g. due to collaboration issues, failed projects or similar, could have a
significant impact on the Company’s reputation and future performance.
• Frequent interactions with partners to build and maintain
common understanding.
• Processes in place to resolve potential issues.
Annual Report 2020
50
Risk area Risks Mitigating actions
Attraction and
retention of talent
Not being able to attract and retain sufficient and right talents could
impact the Company’s ability to perform at high standards and compete
against other companies.
• Perform employer branding.
• Provide training and development.
• Offer competitive remuneration package.
• Identifying and working with key talents.
Intellectual
property rights (IP)
The validity of patents is crucial for the company to secure future
revenues and return on the investments made in development. Patents
might be challenged by competitors.
• Dedicated and experienced resources involved in the filing of
patent applications to minimize vulnerability to future invalidity
actions, and with ability to defend patents if such actions are filed.
Currency exposure and
tax disputes
Currency risks and additional financial
risks are further explained in note 24 in
the consolidated financial statements.
Significant fluctuations in the DKK/USD and DKK/EUR exchange rates will
impact financial statements and potential disputes with tax authorities
could result in additional tax payments.
• Aim to create natural hedges by matching income and expenses
in USD and EUR.
• Material net USD exposure is hedged using FX contracts or options.
Material net EUR exposure can also be hedged using FX contracts.
• Taxes are paid where the Company operates, and intercompany
transactions are priced and governed by agreements in
compliance with OECD’s transfer pricing guidelines.
• Proactive work with tax authorities to ensure alignment on tax
situation and avoidance of negative surprises.
Annual Report 2020
51
BOARD OF
DIRECTORS
The Board consists of seven external members elected by the share-
holders at the annual general meeting for terms of one year; retiring
members are eligible for re-election. The Board elects a chairman from
among its members. Currently the Board has no employee-elected
members. However, upon request from the employees, a yes/no vote
took place in 2020, resulting in a decision to elect employee represent-
atives to the Board. This election will take place in 2021.
Gerard van Odijk
Anders Gersel Pedersen
Elizabeth McKee Anderson
Anne Louise Eberhard
MANAGEMENT OF BAVARIAN NORDIC
Annual Report 2020
52
Frank Verwiel
Erik Gregers Hansen
Peter Kürstein
Board Committees
To support the Board in its duties, the Board has established three
subcommittees that are charged with reviewing issues pertaining to
their respective fields that are due to be considered at board meetings.
Written charters specifying the tasks and responsibilities for each of the
committees are available on the Company’s website. In addition to the
Finance, Risk and Audit Committee and the Nomination and Compensa-
tion Committee, a Science, Technology and Investment Committee was
established during 2020.
Gerard van Odijk, MD Anders Gersel Pedersen, MD, PhD Erik Gregers Hansen, MSc Peter Kürstein, MBA
Former president and chief executive officer of Teva
Pharmaceuticals Europe B.V.
Former Executive Vice President of Research &
Development of H. Lundbeck A/S.
Professional board member. Former president and chief executive officer of
Radiometer Medical ApS.
Member of the board since 2008 and chairman since
2014. Chairman of the Nomination and Compensation
Committee since 2015 and member of the Science,
Technology and Investment Committee since 2020.
Current term expires in 2021.
Member of the board since 2010 and deputy chairman
since 2014. Member of the Nomination and Compensation
Committee and the Science, Technology and Investment
Committee since 2020. Current term expires in 2021.
Member of the board since 2010. Member of the Finance,
Risk and Audit Committee since 2015 and the Science,
Technology and Investment Committee since 2020.
Current term expires in 2021.
Member of the board since 2012. Member of the Nomi-
nation and Compensation Committee since 2015 and the
Finance, Risk and Audit Committee since 2020. Current
term expires in 2021.
Not independent
Nationality: Dutch
Born in: 1957
Independent
Nationality: Danish
Born in: 1951
Independent
Nationality: Danish
Born in: 1952
Independent
Nationality: Danish
Born in: 1956
Chairman of the supervisory board of Hubrecht Organoid
Technology. Member of the supervisory board of Centre for
Human Drug Research.
Member of the board of Genmab A/S, Hansa Biopharma
AB and Bond Avillion 2, an entity of Avillion LLP. Chairman
of the board of Aelis Farma.
Chairman of the board of Polaris Management A/S, TTiT
A/S, TTiT Ejendomme A/S, TTiT Landbrug A/S and Sirius
Holding ApS. Deputy chairman of the board of Lauritzen
Fonden, Okono A/S, Bagger-Sørensen Fonden and Bag-
ger-Sørensen & Co. A/S and four of its five subsidiaries.
Member of the board of Saga Private Equity ApS, Lesanco
ApS, Ecco Sko A/S, Farumgade 2B Holding ApS and its
subsidiary and Wide Invest ApS. Member of the executive
board of Rigas Holding ApS and its 3 subsidiaries, Sirius
Holding ApS, Tresor Asset Advisers ApS, Polaris Invest II
ApS and EGH Gentofte ApS.
Chairman of the board of Radiometer Medical ApS and
Ferrosan Medical Devices Holding A/S. Deputy Chairman
of the board of FOSS A/S, Experimentarium and American
Chamber of Commerce. Member of the board of N. Foss &
Co. A/S and Den Erhvervsdrivende Fond Gl. Strand, Dansk
BørneAstma Center and Art Agenda 2030. Member of the
executive board of Mijamax ApS.
Medical qualifications and extensive executive background
within publicly traded and private companies in the
international healthcare industry.
Scientific knowledge and large drug development
experience within neuroscience and oncology. Extensive
board and management experience from publicly traded,
international pharmaceutical and biotech companies.
Training and experience in and thorough understanding of
managing finance operations and experience with publicly
traded companies.
Extensive board and management experience from
publicly traded, international healthcare companies.
Board of Directors 14/15
Nomination and Compensation Committee 8/8
Science, Technology and Investment Committee* 2/2
Board of Directors 15/15
Finance, Risk and Audit Committee 3/3
Nomination and Compensation Committee 3/3
Science, Technology and Investment Committee* 2/2
Board of Directors 15/15
Finance, Risk and Audit Committee 6/6
Science, Technology and Investment Committee* 2/2
Board of Directors 15/15
Finance, Risk and Audit Committee 3/3
Nomination and Compensation Committee 8/8
Meeting
Attendance
Special
competences
Current
positions
Annual Report 2020
54
Frank Verwiel, MD, MBA Elizabeth McKee Anderson, MBA Anne Louise Eberhard, MSc. Law.
Former president and chief executive officer of Aptalis
Pharma, Inc.
Former worldwide vice president, Global Strategic
Marketing and Market Access, Infectious Diseases and
Vaccines for Johnson&Johnson.
Former Senior Executive Vice President of Danske Bank A/S.
Member of the board since 2016. Member of the Finance,
Risk and Audit Committee since 2016 and the Nomination
and Compensation Committee since 2020. Current term
expires in 2021.
Member of the board since 2017. Chairman of the Science,
Technology and Investment Committee since 2020.
Current term expires in 2021.
Member of the board since 2019. Member of the Finance,
Risk and Audit Committee since 2019 and Chairman since
2020. Current term expires in 2021.
Independent
Nationality: Dutch, now resident of the United States
Born in: 1962
Independent
Nationality: American
Born in: 1957
Independent
Nationality: Danish
Born in: 1963
Chairman of the board of ObsEva SA and member of the
board of Intellia Therapeutics, Inc.
Member of the board of Revolution Medicines Inc., BioM-
arin Pharmaceutical Inc., Insmed Inc., Aro Biotherapeutics
Company and a member of the advisory Board of NAXION,
Inc. Trustee of The Wistar Institute and principal of Pure-
Sight Advisory, LLC.
Member of the board of FLSmidth & Co. A/S and its sub-
sidiary FLSmidth A/S, Topdanmark A/S and its subsidiary
Topdanmark Forsikring A/S, Knud Højgaards Fond and two
of its three subsidiaries and VL 52 ApS. Chairman of the
board of Moneyflow Group A/S and its subsidiary Mon-
eyflow 1 A/S. Deputy Chairman of the board of Finansiel
Stabilitet SOV. CEO of EA Advice ApS. Faculty Member at
Copenhagen Business School, Board Educations.
Extensive strategic, operational and international
experience within the pharmaceutical industry.
Extensive strategic, operational and international
experience within the pharmaceutical industry.
Extensive strategic, finance and risk management
experience as well as board experience from publicly
listed companies.
Board of Directors 15/15
Finance, Risk and Audit Committee 6/6
Nomination and Compensation Committee 3/3
Board of Directors 14/15
Nomination and Compensation Committee 5/5
Science, Technology and Investment Committee* 2/2
Board of Directors 14/15
Finance, Risk and Audit Committee 6/6
Meeting
Attendance
Special
competences
Current
positions
Annual Report 2020
55
Paul Chaplin
Henrik Juuel
Henrik Birk
Tommi Kainu
Paul Chaplin
President and Chief Executive Officer
Paul Chaplin, PhD is a British national, born in 1967.
He joined Bavarian Nordic in 1999 as director of
immunology. Prior to joining the Company, Mr. Chaplin
worked for several years both in the UK and Australia
developing vaccines against infectious diseases. He
was appointed vice president in 2004, and president
and chief executive officer in 2014.
Henrik Juuel
Executive Vice President, Chief Financial Officer
Henrik Juuel, MSc is a Danish national, born in 1965.
He joined Bavarian Nordic in November 2018 from
Orexo AB. Prior to Orexo Mr. Juuel has held senior
positions at several large and diverse organizations
including Group CFO of Virgin Mobile (Central and East-
ern Europe), CFO of GN ReSound and NNE Pharmaplan,
as well as several senior finance positions at Novo
Nordisk
EXECUTIVE
MANAGEMENT
Henrik Birk
Executive Vice President, Chief Operating Officer
Henrik Birk, MBA is a Danish National, born in 1974.
He joined Bavarian Nordic in 2008 from Coloplast and
has since served in various management positions
of increasing responsibility, most recently as Senior
Vice President, Strategy, People and Organization. Mr.
Birk was appointed executive vice president and chief
operating officer in 2017.
Positions: Member of the board of Kompagniet.nu
ApS and VIRKSOMHEDSCENTER-KBH ApS.
Tommi Kainu
Executive Vice President, Chief Business Officer
Tommi Kainu, MD, PhD is a Finnish national, born
in 1972. He joined Bavarian Nordic in 2017 from
Boston Consulting Group (BCG) where he served for
almost two decades, most recently as a partner and
managing director. 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.
Annual Report 2020
56
Jean-Christophe May
Laurence De Moerlooze
Anu Helena Kerns
Jean-Christophe May
Executive Vice President, Chief Commercial Officer
Jean-Christophe (JC) May, PharmD, MBA is a French
national, born in 1967. He joined Bavarian in January
2020 from GlaxoSmithKline (GSK), where he served as
vice president and global vaccines commercialization
leader and was responsible for global strategic lead-
ership and performance of several lifesaving vaccines,
including Rabipur/RabAvert and Encepur, which
Bavarian Nordic acquired from GSK in 2019.
Laurence De Moerlooze
Executive Vice President, Chief Medical Officer
Laurence De Moerlooze, PhD is a Belgian national,
born in 1964. She joined Bavarian in April 2020 from
Takeda Vaccines, where she served as Vice President
and Global Program Lead for vaccines against Zika
virus and Norovirus. Prior to Takeda she worked at GSK
for more than 15 years, holding various leading roles
in medical affairs and vaccine development working
with numerous life-saving vaccines including Rabipur/
RabAvert and Encepur.
Anu Helena Kerns
Executive Vice President, People and Organization
Anu Helena Kerns, MSc is a Danish national, born
in 1972. She joined Bavarian Nordic in November
2020 from Novo Nordisk, where she served for 11
years holding various leadership roles with increasing
responsibilities, including 5 years abroad where she
was responsible for establishing a new regional or-
ganizational structure and driving the HR development
and communication strategy. Prior to Novo Nordisk,
Ms. Kerns worked for 8 years in the financial sector
with employer branding, reputation management and
change communication.
FINANCIAL
REVIEW 2020
The financial review is based on the Group’s consolidated financial
information for the year ended December 31, 2020, with comparative
2019 figures for the Group in brackets. There is no significant difference
in the development of the Group and the Parent Company (except if
noted specifically below).
In 2020, the Company generated revenues of DKK 1,852 million (DKK 662
million) compared to a guidance of DKK 1,900 million. The income before
interest and taxes (EBIT) was DKK 380 million (loss of DKK 328 million)
and EBITDA was an income of DKK 740 million (loss of DKK 271 million)
compared to a guided income of DKK 725 million. EBITDA came in slightly
better than guided due to continued tight focus on cost and profitability.
Securities, cash and cash equivalents as of December 31, 2020 amounted
to DKK 1,670 million (DKK 472 million) compared to a guidance of DKK
1,600 million. The year-end cash position exceeded guidance due to
phasing of ongoing investments and working capital movements. This
was achieved without draw-down of existing credit facilities of DKK 244
million. Due to the strong cash position the draw-down was deferred
to 2021.
INCOME STATEMENT
Revenue
Revenue for the year was DKK 1,852 million (DKK 662 million).
Revenue in 2020 significantly increased over 2019 as a result of the
commercial transformation of Bavarian Nordic following the acquisition
of two commercial vaccines, Rabipur/RabAvert and Encepur. COVID-19
negative impact on Rabipur/RabAvert and Encepur revenue was limited
to approximately DKK 200 million by strong brand performance in key
markets and largely offset by better than originally expected JYNNEOS
revenue. A USD weakening against DKK had some negative impact on
RabAvert revenue in the last two months of 2020.
Revenue from product sales was DKK 1,623 million (DKK 324 million)
composed of sale of Rabipur/RabAvert of DKK 628 million (DKK 0
million), Encepur of DKK 455 million (DKK 0 million) and sale of
smallpox bulk drug substance batches and liquid frozen vials to the
U.S. Government of DKK 541 million (DKK 324 million).
Annual Report 2020
58
Revenue from ongoing contract work amounted to DKK 162 million
(DKK 338 million) mostly related to revenue from the U.S. Biomedical
Advanced Research and Development Authority (BARDA) for running
the Phase 3 study for the freeze-dried smallpox vaccine and the fund-
ing to support qualification of the new fill and finish facility as well as
the transfer and validation of the freeze-drying production process.
During 2020 the Company received a milestone payment of DKK
67 million (DKK 0 million) from Janssen following the European
Commission’s grant of the marketing authorization for Janssen’s Ebola
vaccine regimen.
In the Parent Company revenue was DKK 31 million higher than in the
Group due to internal sales related to RabAvert sales in the US.
Production costs
Production costs amounted to DKK 1,195 million (DKK 355 million).
Costs related directly to revenue amounted to DKK 689 million (DKK
307 million) of which cost of goods sold totaled DKK 585 million
(DKK 87 million).
Other production costs totaled DKK 233 million (DKK 48 million)
and includes an accrual for write-down of obsolete products related
to the distribution switch of Rabipur/RabAvert and Encepur from
GlaxoSmithKline. Write-down on other inventory amounted to net
DKK 25 million (DKK 4 million).
The product rights to Rabipur/RabAvert and Encepur are amortized
over 20 years with an annual amortization of DKK 273 million and
recognized as production costs.
Sales and distribution costs
The sales and distribution costs amounted to DKK 286 million (DKK 53
million) split between costs for distribution of products DKK 113 million
(DKK 0 million) and costs for running the commercial organization and
activities DKK 173 million (DKK 53 million).
Research and development costs
The total research and development spending were DKK 446 million
(DKK 628 million). The amount included research and development
spend for funded contract costs of DKK 104 million (DKK 219 million).
These costs are recognized as production costs in the income state-
ment. The amount shown as research and development costs in the
income statement totaled DKK 341 million (DKK 409 million), see
note 6.
The higher research and development costs in 2019 were primarily
explained by costs associated with formulation work on RSV. Following
the Company’s decision not to invest further in the development of
CV301, the CV301 intangible asset was fully written down in 2019. The
write-down of DKK 22 million was recognized as research and develop-
ment costs in the consolidated financial statements for 2019.
Administrative costs
Administrative costs totaled DKK 278 million (DKK 173 million), an
increase of DKK 105 million compared to last year. The increase follows
the acquisition of Rabipur/RabAvert and Encepur and include e.g.
project management for the ongoing transfer project, service fee to
GlaxoSmithKline for their contribution to the project, and increased IT
costs for implementation of new systems required to run a full-scale
commercial business.
Annual Report 2020
59
Non-recurring costs
The integration and transfer of Rabipur/RabAvert and Encepur from
GlaxoSmithKline necessitates expenses that by nature are no-longer
needed after a full transition. Examples are use of consultants to
establish distribution infrastructures, program management resources,
implementation of new IT systems, recruitment costs etc. Some of
these costs are one-off for 2020 and some will remain until the transfer
is complete. The non-recurring costs amounted to approximately DKK 75
million in 2020.
Other operating income
Other operating income totaled DKK 628 million (DKK 0 million)
and regards the sale of the Priority Review Voucher, granted to the
Company by the FDA in connection with the approval of JYNNEOS in
2019. The sale of the Priority Review Voucher was concluded in the
first quarter of 2020.
EBIT/EBITDA
Income before interest and tax (EBIT) was positive with DKK 380
million (loss of DKK 328 million).
EBITDA was an income of DKK 740 million (loss of DKK 271 million).
Amortization of product rights related to Rabipur/RabAvert and Encepur
amounted to DKK 273 million (DKK 0 million) whereas depreciation and
impairment losses on other fixed assets amounted to DKK 87 million
(DKK 57 million).
Financial income and financial expenses
Financial income was DKK 98 million (DKK 23 million) and consisted of
adjustment of deferred consideration to GlaxoSmithKline due to change
in estimated timing of payments, DKK 68 million (DKK 0 million),
currency adjustments on deferred consideration due to decreased EUR/
DKK rate during 2020, DKK 12 million (DKK 0 million), interest income
on securities of DKK 9 million (DKK 16 million), fair value adjustments
on securities of DKK 7 million (net loss of 15 million) and net gains on
derivative financial instruments of DKK 2 million (DKK 6 million).
Financial expenses were DKK 196 million (DKK 39 million) and consist-
ed of unwinding
1
of the discount related to deferred consideration, DKK
145 million (DKK 0 million), interest expense on debt of DKK 32 million
(DKK 18 million) and a net foreign exchange loss of DKK 19 million
(DKK 5 million).
The net value adjustment of deferred consideration to GSK was
an expense of DKK 65 million, consisting of the three components
described above.
In the Parent financial statements, the financial income was DKK 120
million (DKK 50 million) and included interests on receivables from
subsidiaries of DKK 22 million (DKK 24 million). The financial expenses
were DKK 275 million (DKK 95 million) and included write-down of
receivables from subsidiaries of DKK 34 million (DKK 61 million).
Income before company tax was positive with DKK 282 million
(loss of DKK 345 million).
Tax on income for the year
Tax on the income for the year was an expense of DKK 4 million in
1
The deferred consideration for product rights is measured
at net present value and the difference between the net
present value and the amounts due is recognized in the
income statement as a financial expense over the period
until expected payment date using the effective interest
method.
Annual Report 2020
60
Bavarian Nordic GmbH (DKK 2 million), corresponding to an effective
tax rate for the Group of 1.6% (negative 0.6%). The effective tax
rate for 2020 was low due to significant tax-deductible amortization
on the acquired product rights creating a deferred tax liability which
was offset by a reduction in non-recognized deferred tax assets. The
new Danish tax scheme allowing 30% 'step-up' deduction for costs
related to research and development activities paid by Danish entities
also reduced the effective tax rate as this is a non-incurred expense
deductible for tax purposes. The tax scheme has a tax value for the
Company of DKK 13 million. The effective tax rate for 2019 was
impacted by the increase in non-recognized tax asset.
The parent company’s taxable income for the full year of 2020 was
zeroed out by utilization of taxable amortization on the acquired
product rights. No tax loss carry forwards were utilized. The deferred
tax asset on the balance sheet remains at DKK 0 million. The Company
retains the right to use the tax losses carried forward that was written
down in prior years.
Net profit
The Group reported a net profit for the year of DKK 278 million
(net loss of DKK 347 million).
Liquidity and capital resources
As of December 31, 2020, the Company had cash and cash equivalents
of DKK 285 million (DKK 297 million) and held investments in securities
of DKK 1,384 million (DKK 175 million). The Company also maintained
unutilized credit lines of DKK 244 million (DKK 244 million) as of such
date.
Cash flows
Net cash flow from operating activities totaled DKK 572 million
(net spend of DKK 276 million), with a significant contribution from
the sale of the Priority Review Voucher.
Cash flow spend on investment activities totaled DKK 1,912 million
(DKK 810 million) following net investments in securities of DKK
1,202 million (net sale of DKK 1,861 million) after sale of the Priority
Review Voucher and the completion of the rights issue. Cash flow from
investment activities also included DKK 394 million (DKK 0 million) in
milestone payments to GlaxoSmithKline, DKK 205 million (DKK 360
million) of investments in property, plant and equipment related to
finalization of the fill-and-finish plant and the ongoing expansion
of the bulk facility for future production of Rabipur/RabAvert and
Encepur. Investment in other intangible assets amounted to DKK 108
million (DKK 3 million) and included the ongoing Rabipur/RabAvert
and Encepur technology transfer project, IT system investments and
milestone payments under the license agreement with AdaptVac.
Cash flow from financing activities was a contribution of DKK 1,335 mil-
lion (DKK 1,115 million), following the rights issue with a net proceed
of DKK 2,721 million partly offset by repayment of the bridge loan by
DKK 1,373 million.
The net cash flow for 2020 was negative by DKK 5 million (DKK 29
million positive).
Annual Report 2020
61
BALANCE SHEET
The balance sheet total was DKK 8,759 million as of December 31,
2020 (DKK 7,047 million).
Assets
Intangible assets stood at DKK 5,291 million (DKK 5,484 million) with
the main asset being the product rights to Rabipur/RabAvert and
Encepur of DKK 5,186 million (DKK 5,459 million). The product rights
are amortized on a straight-line basis over their expected useful lives
of 20 years with an annual amortization of DKK 273 million.
In July 2020, the Company concluded a license and collaboration agree-
ment with AdaptVac. The license agreement provides Bavarian Nordic
the global commercialization rights to a COVID-19 vaccine candidate
based on AdaptVac’s technology. Under the terms of the agreement,
Bavarian Nordic made an upfront payment of EUR 4 million to Adapt-
Vac. The upfront payment has been capitalized and recognized as
acquired patents and licenses.
Property, plant and equipment stood at DKK 1,011 million (DKK 846 mil-
lion) and included asset under construction of DKK 213 million (DKK 618
million). Assets under construction relates mainly to the fill and finish
manufacturing facility in Kvistgaard and the ongoing expansion of the
bulk facility for future production of Rabipur/RabAvert and Encepur. As
per December 31, 2020 investments in the fill and finish building, the
installations and the freezedryer, filing and packaging line were trans-
ferred to the relevant asset groups, whereas other production equip-
ment was still recognized as asset under construction. The depreciation
of the fill and finish building and equipment will start in 2021.
Inventories stood at DKK 521 million (DKK 101 million), of which the
inventory of Rabipur/RabAvert and Encepur products amounted to DKK
308 million (DKK 0 million) as per December 31, 2020.
Receivables stood at DKK 190 million (DKK 82 million), of which trade
receivables amounted to DKK 139 million (DKK 43 million) mainly
related to sale of Rabipur/RabAvert and Encepur products.
As of December 31, 2020, cash and securities stood at DKK 1,670
million (DKK 472 million). The increase in the cash position follows the
sale of the Priority Review Voucher and the rights issue partly offset by
the repayment of the bridge loan.
Bavarian Nordic’s cash and cash equivalents are primarily invested
in deposit accounts with highly rated banks and in short-term Danish
government and mortgage bonds.
Equity
After the transfer of the profit for the year, equity stood at DKK 4,894
million (DKK 1,865 million). Net proceeds from the rights issue in
March 2020 amounted to DKK 2,721 million.
Liabilities
The present value of the future milestone payments to GlaxoSmithKline
for the acquisition of the product rights has been recognized as
deferred consideration. Deferred consideration amounted to DKK
2,823 million (DKK 3,151 million), a decrease of DKK 329 million
compared to December 31, 2019. Two milestone payments were
paid to GlaxoSmithKline during 2020 following the transfer of the
Annual Report 2020
62
marketing authorizations for the main markets. In 2020, the Company
also paid an adjustment to the upfront consideration. Total payment
to GlaxoSmithKline amounted to DKK 394 million. The adjustment of
the net present value of the deferred consideration, both in terms
of change in assumed timing of the future milestone payments and
unwinding of the discount, amounted to DKK 65 million.
The deferred consideration does not include the sales milestone
of EUR 25 million included in the asset purchase agreement with
GlaxoSmithKline as the Company does not assess the sales milestone
to be probable as of December 31, 2020.
As of December 31, 2020, debt to credit institutions amounted to DKK
395 million (DKK 1,771 million) and included the European Investment
Bank loan of DKK 372 million (DKK 372 million) and a mortgage loan
of DKK 23 million (DKK 25 million). In December 2019, the Company
utilized the obtained bridge loan facility to partly fund the upfront
payment to GlaxoSmithKline. The bridge loan was repaid end March
2020 when the rights issue was completed.
Annual Report 2020
63
FINANCIAL
STATEMENTS – GROUP
Consolidated Financial Statements
Group Key Figures 2016-2020 66
Consolidated Income Statements 67
Consolidated Statements of
Comprehensive Income 67
Consolidated Statements of Cash Flow 68
Consolidated Statements of
Financial Position – Assets 69
Consolidated Statements of Financial
Position – Equity and Liabilities 70
Consolidated Statements of
Changes in Equity 71
NOTES
1 Significant accounting policies 73
2 Significant accounting estimates
and judgments 74
3 Revenue 75
4 Production costs 78
5 Sales and distribution costs 78
6 Research and development costs 79
7 Adminstrative costs 79
8 Staff costs 80
9 Depreciation, amortization and
impairment losses 81
10 Fees to auditor appointed at the
annual general meeting 82
11 Other operating income 82
12 Financial income 83
13 Financial expenses 83
14 Tax for the year 84
15 Earnings per share (EPS) 86
16 Intangible assets 87
17 Property, plant and equipment 90
18 Right-of-use-assets 93
66 73
CONTENTS
19 Inventories 94
20 Trade receivables 95
21 Other receivables 96
22 Prepayments 96
23 Other liabilities 97
24 Financial risks and financial
instruments 98
25 Deferred consideration
for product rights 104
26 Debt to credit institutions 105
27 Lease liabilities 106
28 Prepayment from customers 107
29 Related party transactions 107
30 Share-based payment 108
31 Contingent liabilities and
other contractual obligations 117
32 Significant events after the
balance sheet date 118
33 Approval of the consolidated
financial statements 118
Annual Report 2020
65
Group Key Figures 2016–2020
DKK million 2020 2019 2018 2017 2016
Income statement
Revenue 1,852.4 662.5 500.6 1,370.2 1,006.7
Production costs 1,195.1 354.8 255.1 290.6 297.8
Sales and distribution costs 285.8 53.5 33.7 39.9 38.6
Research and development costs 341.4 409.3 386.3 518.4 463.2
Administrative costs 278.1 173.4 180.0 168.0 174.2
Income before interest and tax (EBIT) 379.6 (328.4) (354.5) 353.2 33.0
Financial items, net (97.6) (16.3) (2.2) (50.9) 6.5
Income before company tax 282.0 (344.7) (356.6) 302.3 39.5
Net profit for the year 277.5 (346.8) (361.9) 181.3 30.6
Balance sheet
Total non-current assets 6,378.0 6,392.2 552.7 382.2 541.1
Total current assets 2,381.0 654.9 2,508.3 2,770.5 2,282.6
Total assets 8,759.1 7,047.1 3,060.9 3,152.7 2,823.7
Equity 4,894.4 1,865.5 2,180.6 2,506.3 2,017.2
Non-current liabilities 2,912.4 3,134.4 397.6 399.8 54.7
Current liabilities 952.3 2,047.2 482.7 246.6 751.8
Cash Flow Statement
Securities, cash and cash equivalents 1,669.6 472.4 2,317.2 2,583.7 1,899.9
Cash flow from operating activities 571.9 (275.9) (288.5) 216.1 267.6
Cash flow from investment activities (1,911.5) (809.9) 17.1 (1,345.2) (448.2)
– Investment in intangible assets (501.9) (2,310.9) (10.2) (22.3) (43.7)
– Investment in property, plant and equipment (204.8) (360.1) (201.8) (56.4) (47.8)
– Net investment in securities (1,202.1) 1,861.1 229.2 (1,266.6) (358.3)
Cash flow from financing activities 1,334.9 1,114.7 245.8 613.4 657.2
DKK million 2020 2019 2018 2017 2016
Financial Ratios
1)
EBITDA 739.8 (271.4) (312.9) 390.7 78.4
Earnings (basic) per share of DKK 10 5.1 (10.7) (11.2) 5.7 1.0
Net asset value per share 83.7 57.6 67.5 77.7 64.3
Share price at year-end 187 171 127 224 249
Share price/Net asset value per share 2.2 3.0 1.9 2.9 3.9
Number of outstanding shares at year-end (thousand units) 58,450 32,389 32,311 32,245 31,354
Equity share 56% 26% 71% 79% 71%
Number of employees, converted to full-time, at year-end 690 491 419 420 437
1)
Earnings per share (EPS) is calculated in accordance with IAS 33 “Earning per share”. Other financial ratios have been
calculated in accordance with the guidelines from the Danish Society of Financial Analysts.
Reconciliation of EBITDA
Income before interest and tax (EBIT) 379.6 (328.4) (354.5) 353.2 33.0
Depreciation and amortization (note 9) 344.1 57.0 41.6 37.5 45.4
Impairment losses (note 9) 16.1 - - - -
EBITDA 739.8 (271.4) (312.9) 390.7 78.4
Annual Report 2020
66
Consolidated Statements of Comprehensive Income
For the years ended December 31, 2020 and 2019
DKK thousand Note 2020 2019
Net profit for the year 277,521 (346,777 )
Items that may subsequently be reclassified to the income statement:
Exchange rate adjustments on translating foreign operations (3,082 ) (149 )
Change in fair value of financial instruments entered into to hedge future cash flows (3,096 ) 2,644
Other comprehensive income after tax (6,178 ) 2,495
Total comprehensive income 271,343 (344,282 )
Consolidated Income Statements
For the years ended December 31, 2020 and 2019
DKK thousand Note 2020 2019
Revenue 3 1,852,383 662,488
Production costs 4,8,9 1,195,094 354,757
Gross profit 657,289 307,731
Sales and distribution costs 5,8 285,783 53,476
Research and development costs 6,8,9 341,420 409,284
Administrative costs 7,8,9,10 278,145 173,417
Total operating costs 905,348 636,177
Other operating income 11 627,647 –
Income before interest and tax (EBIT) 379,588 (328,446 )
Financial income 12 97,922 22,540
Financial expenses 13 195,534 38,843
Income before company tax 281,976 (344,749 )
Tax on income for the year 14 4,455 2,028
Net profit for the year 277,521 (346,777 )
Earnings per share (EPS) – DKK
Basic earnings per share of DKK 10 15 5.1 (10.7 )
Diluted earnings per share of DKK 10 15 5.1 (10.7 )
Annual Report 2020
67
Consolidated Statements of Cash Flow
For the years ended December 31, 2020 and 2019
DKK thousand Note 2020 2019
Net profit for the year 277,521 (346,777 )
Adjustment for non-cash items:
Financial income (97,922 ) (22,540 )
Financial expenses 195,534 38,843
Tax on income for the year 4,455 2,028
Depreciation, amortization and impairment losses 9 360,147 57,045
Share-based payment 30 32,998 26,449
Adjustment for other non-cash items - 22,200
Changes in inventories (420,320 ) (22,074 )
Changes in receivables (88,094 ) 15,763
Changes in current liabilities 345,723 (51,229 )
Cash flow from operations (operating activities) 610,042 (280,292 )
Received financial income 5,847 27,052
Paid financial expenses (40,034 ) (19,457 )
Paid company taxes (3,944 ) (3,213 )
Cash flow from operating activities 571,911 (275,910 )
DKK thousand Note 2020 2019
Investments in product rights 16,25 (393,992 ) (2,307,570 )
Investments in other intangible assets 16 (107,885 ) (3,338 )
Investments in property, plant and equipment 17 (204,833 ) (360,102 )
Investments in financial assets (2,677 ) (73 )
Investments in securities (2,343,828 ) (1,239,097 )
Disposal of securities 1,141,683 3,100,240
Cash flow from investment activities (1,911,532 ) (809,940 )
Payment on loans 26 (1,375,598 ) (248,884 )
Proceeds from loans 26 - 1,372,953
Repayment of lease liabilities 27 (17,799 ) (12,923 )
Proceeds from warrant programs exercised 15,564 10,315
Proceeds from rights issue 2,824,326 -
Costs related to issue of new shares (103,184 ) (2,219 )
Sale of preemptive rights - treasury shares 2,664 -
Purchase of treasury shares (11,099 ) (4,576 )
Cash flow from financing activities 1,334,874 1,114,666
Cash flow of the year (4,747 ) 28,816
Cash and cash equivalents as of January 1 297,545 266,658
Currency adjustments (7,311 ) 2,071
Cash and cash equivalents as of December 31 285,487 297,545
Annual Report 2020
68
Consolidated Statements of Financial Position – Assets
December 31, 2020 and 2019
DKK thousand Note 2020 2019
Non-current assets
Product rights 5,185,765 5,458,700
Acquired patents and licenses 29,813 -
Software 17,631 22,512
Intangible assets in progress 57,543 3,043
Intangible assets 16 5,290,752 5,484,255
Land and buildings 366,232 162,327
Leasehold improvements 3,713 843
Plant and machinery 204,664 44,265
Fixtures and fittings, other plant and equipment 223,238 20,368
Assets under construction 213,309 618,101
Property, plant and equipment 17 1,011,156 845,904
Right-of-use assets 18 71,987 60,590
Other receivables 21 4,122 1,445
Financial assets 4,122 1,445
Total non-current assets 6,378,017 6,392,194
DKK thousand Note 2020 2019
Current assets
Inventories 19 521,082 100,762
Trade receivables 20 139,292 43,405
Tax receivables - 767
Other receivables 21 37,334 28,387
Prepayments 22 13,732 9,189
Receivables 190,358 81,748
Securities 24 1,384,120 174,819
Cash and cash equivalents 285,487 297,545
Securities, cash and cash equivalents 1,669,607 472,364
Total current assets 2,381,047 654,874
Total assets 8,759,064 7,047,068
Annual Report 2020
69
DKK thousand Note 2020 2019
Equity
Share capital 584,501 323,891
Treasury shares (1,077 ) (684 )
Retained earnings 4,246,359 1,460,007
Other reserves 64,570 82,241
Equity 4,894,353 1,865,455
Liabilities
Deferred consideration for product rights 25 2,464,932 2,691,400
Debt to credit institutions 26 393,268 395,443
Lease liabilities 27 54,201 47,549
Non-current liabilities 2,912,401 3,134,392
Deferred consideration for product rights 25 357,736 459,730
Debt to credit institutions 26 2,174 1,375,116
Lease liabilities 27 20,422 13,851
Prepayment from customers 28 74,347 6,631
Trade payables 345,320 112,088
Company tax 497 -
Other liabilities 23 151,814 79,805
Current liabilities 952,310 2,047,221
Total liabilities 3,864,711 5,181,613
Total equity and liabilities 8,759,064 7,047,068
Note
Significant accounting policies 1
Significant accounting estimates and judgments 2
Financial risks and financial instruments 24
Related party transactions 29
Share-based payment 30
Contingent liabilities and other contractual obligations 31
Significant events after the balance sheet date 32
Approval of the consolidated financial statements 33
Consolidated Statements of Financial Position – Equity and Liabilities
December 31, 2020 and 2019
Annual Report 2020
70
Consolidated Statements of Changes in Equity
December 31, 2020
DKK thousand
Share
capital
Treasury
shares
Retained
earnings
Reserves for
currency
adjustment
Reserves for fair
value of financial
instruments
Share-based
payment Equity
Equity as of January 1, 2020 323,891 (684 ) 1,460,007 (37,558 ) 2,287 117,512 1,865,455
Comprehensive income for the year
Net profit for the year - - 277,521 - - - 277,521
Other comprehensive income
Exchange rate adjustments on translating foreign operations - - - (3,082 ) - - (3,082 )
Change in fair value of financial instruments entered into to hedge
future cash flows - - - - (3,096 ) - (3,096 )
Total comprehensive income for the year - - 277,521 (3,082 ) (3,096 ) - 271,343
Transactions with owners
Share-based payment - - - - - 29,284 29,284
Warrant programs exercised 1,498 - 17,514 - - (3,448 ) 15,564
Warrant programs expired - - 33,563 - - (33,563 ) -
Capital increase through rights issue 259,112 - 2,565,214 - - - 2,824,326
Costs related to issue of new shares - - (103,184 ) - - - (103,184 )
Purchase of treasury shares - (524 ) (10,575 ) - - - (11,099 )
Transfer regarding restricted stock units - 131 3,635 - - (3,766 ) -
Sale of preemptive rights - treasury shares - - 2,664 - - - 2,664
Total transactions with owners 260,610 (393 ) 2,508,831 - - (11,493 ) 2,757,555
Equity as of December 31, 2020 584,501 (1,077 ) 4,246,359 (40,640 ) (809 ) 106,019 4,894,353
The share capital comprises a total of 58,450,112 shares of
DKK 10 as of December 31, 2020 (32,389,065 shares). The
shares are not divided into share classes, and each share
carries one vote.
Treasury shares
In August 2020, the Board of Directors decided to launch a
share buy-back program, under which the Company bought
back 52,397 of its own shares (28,849 shares in 2019).
The purpose of the share buy-back program was to meet
the Company’s obligations arising from the share-based
incentive program for the Executive Management and
the Board of Directors. Under the share-based incentive
program, payment of half of the achieved bonus for 2019
for members of the Executive Management are converted
to restricted stock units for a value corresponding to half
of the achieved bonus. The restricted stock units will be
released to the Executive Management 3 years after grant.
This to further increase the long-term shared interests
between the Executive Management and the Company’s
shareholders. The Board of Directors is granted restricted
stock units corresponding to 50% of the annual fee (excl.
committee fee). The vesting period for those restricted
stock units is also 3 years.
Treasury shares represent 0.18% (0.21%) of the total share
capital.
For further information about share based payment see
note 30.
Annual Report 2020
71
Consolidated Statements of Changes in Equity
December 31, 2019
DKK thousand
Share
capital
Treasury
shares
Retained
earnings
Reserves for
currency
adjustment
Reserves for fair
value of financial
instruments
Share-based
payment Equity
Equity as of January 1, 2019 323,106 (507 ) 1,797,122 (37,409 ) (357 ) 98,673 2,180,628
Comprehensive income for the year
Net profit for the year - - (346,777 ) - - - (346,777 )
Other comprehensive income
Exchange rate adjustments on translating foreign operations - - - (149 ) - - (149 )
Change in fair value of financial instruments entered into to hedge
future cash flows - - - - 2,644 - 2,644
Total comprehensive income for the year - - (346,777 ) (149 ) 2,644 - (344,282 )
Transactions with owners
Share-based payment - - - - - 25,589 25,589
Warrant programs exercised 785 - 11,814 - - (2,284 ) 10,315
Warrant programs expired - - 1,455 - - (1,455 ) -
Costs related to issue of new shares - - (2,219 ) - - - (2,219 )
Purchase of treasury shares - (288 ) (4,288 ) - - - (4,576 )
Transfer regarding restricted stock units - 111 2,900 - - (3,011 ) -
Total transactions with owners 785 (177 ) 9,662 - - 18,839 29,109
Equity as of December 31, 2019 323,891 (684 ) 1,460,007 (37,558 ) 2,287 117,512 1,865,455
Transactions on the share capital
DKK thousand 2020 2019 2018 2017 2016
Share capital as of January 1 323,891 323,106 322,451 313,539 280,197
Issue of new shares 260,610 785 655 8,912 33,342
Share capital as of December 31 584,501 323,891 323,106 322,451 313,539
The share capital comprises a total of 32,389,065
shares of DKK 10 as of December 31, 2019 (32,310,565
shares). The shares are not divided into share classes,
and each share carries one vote.
Rules on changing Articles of Association
Changing the Articles of Association requires that the
resolution passes by at least 2/3 of the votes as well as
2/3 of the voting capital represented.
Annual Report 2020
72
Note 1
Significant accounting policies
Basis of preparation
The consolidated financial statements for Bavarian Nordic
have been prepared in accordance with the International
Financial Reporting Standards (IFRS) as adopted by the EU
and Danish disclosure requirements for the consolidated
financial statements of listed companies. Danish disclosure
requirements for the presentation of consolidated financial
statements are imposed by the Statutory Order on Adoption
of IFRS issued under the Danish Financial Statements Act.
The accounting policies are unchanged from last year
except for changes due to implementation of new and
revised standards that were effective January 1, 2020.
The consolidated financial statements are presented in
Danish kroner (DKK), which is the functional currency of the
parent company.
The consolidated financial statements are presented on a
historical cost basis, apart from derivative financial instru-
ments, securities and liability relating to phantom shares,
which are measured at fair value.
The accounting policies have been consistently applied for
the financial year and for the comparative figures except
for implementation of new standards and amendments,
see further below.
In the narrative sections of the consolidated financial state-
ments comparative figures for 2019 are shown in brackets.
Implementation of new and revised standards and
interpretations
The International Accounting Standards Board (IASB) has is-
sued new standards and revisions to existing standards (IFRS)
and new interpretations (IFRIC) which are mandatory for
accounting periods commencing on or after January 1, 2020.
The Group has adopted the following revised standards and
interpretations:
• Amendments to IFRS 3, definition of a business
• Amendments to IAS 1 and IAS 8, definition of materiality
• Amendments to IFRS 9, IAS 39 and IFRS 7, IBOR reform
• Amendments to IFRS 16, covid-19-related rent
concessions
The implementation of new or revised standards and
interpretations that are effective from January 1, 2020 has
not had a material impact on the consolidated financial
statements in 2020. Furthermore, Management does not
anticipate any significant impact on future periods from the
adoption of these new amendments.
Standards and interpretations not yet in force
At the date of publication of the consolidated financial
statements, a number of new and amended standards and
interpretations have not yet entered into force or have not
yet been adopted by the EU. Therefore, they are not incor-
porated in the consolidated financial statements.
None of the new or amended standards and interpretations
are expected to have a material impact on the consolidated
financial statements.
Applying materiality
The consolidated financial statements are a result of
processing large numbers of transactions and aggregating
those transactions into classes according to their nature
or function. The transactions are presented in classes of
similar items in the consolidated financial statements. If a
line item is not individually material, it is aggregated with
other items of a similar nature in the consolidated financial
statements or in the notes.
The specific disclosures required by IFRS are provided in
the consolidated financial statements unless the informa-
tion is considered immaterial to the users of the financial
statements.
Accounting policies
The accounting policies for specific line items are described
in the notes to the financial statements. Set out below
is a description of the accounting policies for the basis of
consolidation, foreign currency translation and the cash
flow statement.
Recognition and measurement
Income is recognized in the income statement when gen-
erated. Assets and liabilities are recognized in the balance
sheet when it is probable that any future economic benefit
will flow to or from the Group and the value can be reliably
measured. On initial recognition, assets and liabilities are
measured at cost. Subsequently, assets and liabilities are
measured as described in the description of the accounting
policies in the respective notes to the financial statements.
Basis of consolidation
The consolidated financial statements include Bavarian Nor-
dic A/S and the subsidiaries in which the Group holds more
than 50% of the voting rights or otherwise has control.
Principles of consolidation
The consolidated financial statements are prepared on the
basis of the financial statements of the parent company
and the individual subsidiaries, and these are prepared in
accordance with the Group’s accounting policies and for the
same accounting period.
Intra-group income and expenses together with all in-
tra-group profits, receivables and payables are eliminated
on consolidation. In the preparation of the consolidated
financial statements, the book value of shares in subsidiar-
ies held by the parent company is set off against the equity
of the subsidiaries.
Foreign currency translation
On initial recognition, transactions denominated in curren-
cies other than the Group’s functional currency are translat-
ed at the exchange rate ruling at the transaction date.
Receivables, payables and other monetary items denom-
inated in foreign currencies that have not been settled at
the balance sheet date are translated at the exchange rates
at the balance sheet date.
Exchange differences between the exchange rate at the
date of the transaction and the exchange rate at the date
of payment or the balance sheet date, respectively, are rec-
ognized in the income statement under financials. Property,
plant and equipment and intangible assets, inventories
and other nonmonetary assets acquired in foreign currency
and measured based on historical cost are translated at the
exchange rates at the transaction date.
On recognition in the consolidated financial statements of
subsidiaries whose financial statements are presented in
a functional currency other than Danish kroner (DKK), the
income statements are translated at the average exchange
rates of the respective months.
Balance sheet items are translated at the exchange rates at
the balance sheet date. Exchange differences arising on the
translation of foreign subsidiaries’ opening balance sheet
items to the exchange rates at the balance sheet date and
on the translation of the income statements from average
exchange rates of the respective months to exchange rates
at the balance sheet date are recognized as other compre-
hensive income.
Annual Report 2020
73
Segment reporting
The Group does not prepare segment reporting inter-
nally and therefore only reports one operating segment
externally.
Geographic spilt of revenue and revenue from major cus-
tomers is disclosed in note 3 to the consolidated financial
statements. Geographic location of noncurrent assets is
disclosed in note 16 and 17 to the consolidated financial
statements.
Cash flow statement
The cash flow statement is prepared in accordance with
the indirect method on the basis of the Group’s net profit
for the year. The statement shows the Group’s cash flows
broken down into operating, investing and financing activi-
ties, cash and cash equivalents at year end and the impact
of the calculated cash flows on the Group’s cash and cash
equivalents.
Cash flows in foreign currencies are translated into Danish
kroner (DKK) at the exchange rate on the transaction date.
In the cash flows from operating activities, net profit for the
year is adjusted for non-cash operating items and changes
in working capital.
Cash flows from investing activities include cash flows from
the purchase and sale of intangible assets, property, plant
and equipment, investments and securities.
Cash flows from financing activities include cash flows from
the raising and payment of loans and capital increases.
Additionally, cash flows from assets held under finance
leases are recognized by way of lease payments made.
Net asset value per share:
Equity
Number of shares at year-end
Share price/Net asset value per share:
Market price per share
Net asset value per share
Equity share, %:
Equity x 100
Total assets
Earnings per share and diluted earnings per share are
calculated in accordance with IAS 33 “Earnings per share”
and specified in note 15.
Note 1
Significant accounting policies – continued
Note 2
Significant accounting estimates and judgments
Significant accounting estimates
In the preparation of the consolidated financial
statements, Management makes a number of accounting
estimates, which form the basis for the presentation,
recognition and measurement of the Group’s assets and
liabilities.
The recognition and measurement of assets and liabilities
often depend on future events that are somewhat uncer-
tain. In that connection, it is necessary to assume a course
of events that reflects Management’s assessment of the
most probable course of events.
The significant accounting estimates identified are those
that have a significant risk of resulting in a material
adjustment to the measurement of assets and liabilities
in the following reporting period. Management bases
its estimates on historical experience and various other
assumptions that are held to be reasonable under the cir-
cumstances. The estimates and underlying assumptions are
reviewed on an ongoing basis. If necessary, changes are
recognised in the period in which the estimate is revised.
Management considers the key accounting estimates to be
reasonable and appropriate based on currently available
information. The actual amounts may differ from the
amounts estimated as more detailed information becomes
available.
Management has made the following accounting estimates
which significantly affect the amounts recognized in the
consolidated financial statements:
Accounting policy Significant accounting estimates and judgements Note
Revenue Estimate of US sales deductions and provisions for sales rebates 3
Intangible assets Estimate regarding impairment of assets; assessment whether future sales milestone
have become probably; and judgement of whether a transaction is an asset
acquisition or a business combination
16
Inventories Estimate of indirect production costs capitalized and inventory write-down 19
Annual Report 2020
74
Note 3
Revenue
Accounting policies
Sale of goods
Revenue from sale of goods is recognized when the Com-
pany has transferred control of products sold to the buyer
and it is probable that the Company will collect the consid-
eration to which it is entitled for transferring the products.
Control of the products is transferred at a point in time,
typically on delivery. The amount of sales to be recognized
is based on the consideration the Company expects to re-
ceive in exchange for its goods. When sales are recognized,
the Company also records estimates for a variety of sales
deductions, including product returns as well as rebates and
discounts to government agencies, wholesalers, health in-
surance companies, managed healthcare organisations and
retail customers. Revenue is measured net of value added
tax, duties, etc. collected on behalf of a third party.
Where contracts contain customer acceptance criteria, the
Company recognizes sales when the acceptance criteria are
satisfied.
Where absolute amounts are known, the rebates are
recognized as other liabilities. Wholesaler charge-backs are
netted against trade receivable balances.
The pricing mechanisms in the US market and the different
kind of rebates are described below.
Pricing mechanisms in the US market
In the US, sales rebates are paid in connection with govern-
ment and commercial programmes. Key customers in the
US include private payers, Group Purchasing Organizations
(GPOs) and government payers. GPOs play a role in
negotiating price concessions with drug manufacturers for
the commercial channels, and determine which drugs are
offered as preferred options on their drug lists.
US wholesaler charge-backs
Wholesaler charge-backs relate to contractual arrangements
between the Company and indirect customers in the US
whereby products are sold at contract prices lower than the
list price originally charged to wholesalers. A wholesaler
charge-back represents the difference between the invoice
price to the wholesaler and the indirect customer’s contract
price. Accruals are calculated for estimated charge-backs
using a combination of factors such as historical experience,
current wholesaler inventory levels, contract terms and the
value of claims received but not yet processed.
US Medicaid & Medicare rebates
Medicaid & Medicare are government insurance pro-
grammes. Medicaid and Medicare rebates have been
estimated using a combination of historical experience,
product and population growth, price increases, and the
impact of contracting strategies. The calculation also
involves interpretation of relevant regulations that are sub-
ject to changes in interpretative guidance from government
authorities. The Company adjusts the provision periodically
to reflect actual sales performance.
Other US discounts and sales returns
Other discounts are provided to wholesalers, hospitals,
pharmacies, etc. They are usually linked to sales volume or
provided as cash discounts. Accruals are calculated based
on historical data and recorded as a reduction in gross sales
at the time the related sales are recorded. Estimated sales
returns are related to damaged or expired products.
Sale of services and licenses
Furthermore, revenue comprises the fair value of the con-
sideration received or receivable for income derived from
development services where revenue is measured at the
expected net sales price.
Sales of licenses that transfer the rights associated with
ownership of an intangible asset are recognized at a point
in time when control is transferred. Revenue from develop-
ment services and licenses that do not transfer the right of
ownership to an intangible asset are recognized over time
in line with the execution and delivery of the work.
Agreements with commercial partners generally include
non-refundable upfront license and collaboration fees,
milestone payments, the receipt of which is dependent
upon the achievement of certain clinical, regulatory or
commercial milestones, as well as royalties on product
sales of licensed products, if and when such product sales
occur, and revenue from the supply of products. For these
agreements that include multiple elements, total contract
consideration is attributed to separately identifiable
components on a reliable basis that reasonably reflects
the selling prices that might be expected to be achieved in
stand-alone transactions provided that each component has
value to the partner on a stand-alone basis. The allocated
consideration is recognized as revenue in accordance with
the principles described above. Further details regard-
ing recognition of revenue on the main contracts with
Biomedical Advanced Research and Development Authority
(BARDA) and Janssen Vaccines & Prevention B.V. are
described below.
Significant accounting estimates
Provisions for sales deductions
Sales discounts and rebates are predominantly issued
in the US in connection with the US Federal and State
Government Healthcare programs, namely Medicare and
Medicaid, and commercial rebates.
The estimate of sales discounts and rebates is based on
a calculation which includes a combination of historical
utilization data, combined with expectations in relation
to the development in sales and utilization. Furthermore,
specific circumstances regarding the different programs
are considered. The obligations concerning sales discounts
and rebates are incurred at the time the sale is recorded.
However, the actual discount or rebate related to a specific
sale may be invoiced later.
The Company considers the provisions established for sales
discounts and rebates to be reasonable and appropriate
based on currently available information. However, the
actual amount of discounts and rebates may differ from the
amounts estimated as more detailed information becomes
available.
Partner contracts
Whether a component of a multiple element contract has
value to the partner on a stand-alone basis is based on
an assessment of specific facts and circumstances and is
associated with judgement. This applies also to the assess-
ment of whether a license transfers rights associated with
ownership of an intangible asset. Furthermore, allocation
of the total consideration of a contract to separately iden-
tifiable components requires considerable estimates and
judgement to be made by Management.
Annual Report 2020
75
Significant accounting estimates, continued
At inception and throughout the life of a contract Man-
agement is performing an analysis of the agreement with
its partners based on available facts and circumstances at
each assessment date such as historical experience and
knowledge from the market to the extent obtainable. This
includes also an understanding of the purpose of the deliv-
erables under the contract and the negotiation taken place
prior to concluding the contract.
Note 3
Revenue – continued
DKK thousand ´ 2020 2019
MVA-BN smallpox vaccine sale 540,769 324,258
Rabipur/RabAvert 627,699 -
Encepur 455,012 -
Sale of goods 1,623,480 324,258
Milestone payments 66,553 -
Contract work 162,350 338,230
Sale of services 228,903 338,230
Revenue 1,852,383 662,488
Total revenue includes:
Fair value adjustment concerning financial instruments entered into to hedge revenue 13,146 (13,006)
Geographic split of revenue:
USA 1,139,080 611,876
Germany 356,826 272
The Netherlands 96,029 49,768
Sweden 47,240 235
Switzerland 36,138 -
Austria 31,235 -
United Kingdom 23,069 -
Japan 21,060 -
Other geographic markets 101,706 337
Revenue 1,852,383 662,488
In 2020 revenue achieved on the Danish market amounted
to DKK 4.4 million (DKK 0 million).
Revenue for the following customer represent more than
10% of total revenue:
• Biomedical Advanced Research and Development
Authority (BARDA), USA, DKK 666.8 million
(DKK 539.4 million).
Annual Report 2020
76
Note 3
Revenue – continued
Accounting for contract with Biomedical Advanced
Research and Development Authority (BARDA)
In September 2017 the Company secured a contract award
from Biomedical Advanced Research and Development
Authority (BARDA) for supply of freeze-dried smallpox
vaccine. The potential value of the initial base and optional
awards is in excess of USD 539 million. Initial base award
secures additional smallpox bulk contract of USD 100 mil-
lion and initial options valued at USD 439 million. The initial
options are divided between two distinct areas, the first
of which is the filling and freeze-drying of smallpox bulk
products, with total potential value of USD 299 million. The
second part of the contract contains provisions for clinical
development, regulatory commitments, and parts of the
establishment and validation of fill and finish activities,
with potential value of up to USD 140 million. The award
also contains options to acquire additional vaccine bulk
and/or doses of smallpox vaccine in the future.
The initial bulk procurement contract of USD 100 million
for delivery of 40 bulk drug substance (BDS) batches of
smallpox vaccine was revenue recognized during 2018 and
2019. Recognition of revenue occured in concurrence with
release of the BDS batches.
In April 2020 BARDA placed a new order under the con-
tract, awarded in 2017, for the manufacturing and supply
of JYNNEOS (Smallpox and Monkeypox Vaccine), at a total
value of USD 202 million. The contract expansion covers
two years of performance and includes the manufacturing
of additional bulk vaccine (30 bulk drug substance (BDS)
batches in 2020 and 35 batches in 2021) and the supply
of up to 1.4 million doses of liquid frozen JYNNEOS. The
first USD 106 million of the award was exercised in April
2020, whereas the second part was exercised in December
2020, where BARDA committed to an additional USD 83
million for the procurement of more bulk smallpox vaccine,
which will be manufactured and invoiced in 2021. During
2020, 30 bulk drug substance (BDS) batches have been
recognized as revenue in concurrence with release of the
BDS batches.
The BDS products remain in the Company’s physical
possession as the procurement contract includes filling and
freeze-drying of the BDS batches (a bill-and-hold arrange-
ment). The Company is paid for the custodial service as
part of the contract. The filling activities are going to take
place in Kvistgaard in 2021-2023 when the new fill and
finish manufacturing facility is operational.
Payment is due within 30 days after invoicing.
The Company has also been awarded funding for de-
velopment work related to “Clinical activities to support
licensure” of the freeze-dried version of smallpox vaccine.
The contract is funded based on cost incurred plus a fixed
margin. Recognition of revenue follows the timing of cost
incurred. Payment is due within 30 days after invoicing.
A new award was obtained in January 2019 to cover quali-
fication of the new fill and finish facility, as well as transfer
and validation of the freeze-drying process (contract option
valued at USD 33 million). In 2020 DKK 76 million (DKK 128
million) was recognized as revenue. The remaining funds
will be recognized as revenue in 2021. The contract is fund-
ed based on cost occurred plus a fixed margin. Recognition
of revenue follows the timing of cost incurred. Payment is
due within 30 days after invoicing. The award also included
USD 11 million for storage of bulk drug substance until
filling and future shipments of final products (total award
of USD 44 million). DKK 9 million has been recognized in
revenue for storage during 2020. The remaining revenue
will be recognized over the coming years.
Accounting for license and collaboration agreements
with Janssen Vaccines & Prevention B.V.
The Company has concluded three license and collaboration
agreements with Janssen Vaccines & Prevention B.V. for
development of vaccines against cancers induced by hu-
man papillomavirus (HPV), hepatitis B virus (HBV) and the
human immunodeficiency virus (HIV). All three contracts
contains an upfront payment and subsequent milestone
payments following the progress in the clinical develop-
ment program.
Each contract has two performance obligations, both paid
for by the upfront and milestone payments in the contracts:
1) Conduct development work according to the develop-
ment plan and 2) Grant of a license for use of MVA-BN
®
vector. Revenue for the development work is recognized
over time using the “expected cost plus a margin ap-
proach”, i.e. recognized over time based on cost incurred
plus a margin. Allocation of revenue for the license grant
is calculated using the “residual approach” by estimating
the stand-alone selling price by reference to the total trans-
action price less the sum of the revenue allocated to the
development work. When assessing residual value avail-
able for allocation to the license grant, expected costs for
future development work are taken into consideration to
ensure enough revenue is deferred to ensure an appropri-
ate margin on the development work over the period until
the next milestone payment event. The residual value is
calculated and recognized as revenue for the license grant
when a milestone payment is received. Revenue related to
the license grant will increase over time if and when the
next clinical milestone is reached, reflecting that the value
of the license is expected in concurrence with the progress
in the clinical development program.
Janssen Vaccines & Prevention B.V. obtains control of the
development work in concurrence with work performed
and therefore the recognition of revenue follows the timing
of cost incurred.
As of December 31, 2020 all the initial prepayments under
the contracts have been recognized as revenue. Under the
HPV contract a new prepayment of USD 2.5 million was
recevied in February 2020 related to production of a new
Master Seed Virus. The full prepayment is recognized in the
balance sheet, cf. note 28.
Annual Report 2020
77
Note 4
Production costs
Note 5
Sales and distribution costs
The clinical activities to support licensure of the freeze-
dried version of smallpox vaccine and qualification of the
new fill and finish facility including transfer and validation
of the freeze-drying process was higher during 2019 com-
pared to 2020, therefore the decrease in contract costs.
Other production costs amounted to DKK 233.2 million
(DKK 48.3 million), of which net write-downs of inventory
totaled DKK 25.2 million (DKK 4.0 million). Development
in write-downs is further described in note 19. Other
production costs also includes an accrual for write-downs
of obsolete products related to the distribution switch of
Rabipur/RabAvert and Encepur from GlaxoSmithKline. This
was disclosed as a contigent liability in the Q3 2020 Interim
Report.
The product rights to Rabipur/RabAvert and Encepur are
amortized over 20 years with an annual amortization of
DKK 273 million.
Accounting policies
Production costs consist of costs incurred in generat-
ing the revenue for the year. Costs for raw materials, con-
sumables, production staff and a proportion of production
overheads, including maintenance, amortization, depre-
ciation and impairment of intangible and tangible assets
used in production as well as operation, administration and
management of the production facility are recognized as
production costs. Amortization of acquired product rights
are recognized as production costs. In addition, the costs
related to excess capacity and write-down to net realisable
value of goods on stock are recognized as other production
costs.
Accounting policies
Sales and distribution costs comprise costs incurred
for the sale and distribution of products sold during the
year. This includes costs incurred for sales campaigns,
training and administration of the sales force and for direct
distribution, marketing and promotion. Also included are
salaries and other costs for the sales, distribution and mar-
keting functions, loss allowance for expected credit losses,
amortization, depreciation and other indirect costs.
DKK thousand 2020 2019
Cost of goods sold 584,574 87,272
Contract costs 104,409 219,200
Other production costs 233,176 48,285
Amortization of product rights 272,935 -
Production costs 1,195,094 354,757
Annual Report 2020
78
Note 6
Research and development costs
Note 7
Adminstrative costs
Accounting policies
Administrative costs include costs of Group Manage-
ment, staff functions, administrative personnel, office costs,
rent, short-term lease payments and depreciation not relat-
ing specifically to production, research and development or
sales and distribution.
Research and development costs include expenses for ex-
ternal clinical research organizations, or CRO’s, of DKK 121.3
million (DKK 140.6 million).
In October 2019, the Company announced that the stage 1
of the Phase 2 study evaluating the combination therapy of
CV301 for the treatment of patients with bladder cancer did
not meet the efficacy threshold to progress into stage 2 with
expanded enrollment. Following this decision the CV301
development project was expensed by DKK 22.2 million.
Accounting policies
Research and development costs include salaries
and costs directly attributable to the Group’s research and
development projects, less government grants. Further-
more, salaries and costs supporting direct research and
development, including costs of patents, rent, leasing
and depreciation attributable to laboratories, and external
scientific consultancy services, are recognized under
research and development costs. No indirect or general
overhead costs that are not directly attributable to research
and development activities are included in the disclosure
of research and development expenses recognized in the
income statement.
Research costs are expensed in the year they occur.
Development costs are generally expensed in the year
they occur. In line with industry custom, capitalization
of development costs does not begin until it is deemed
realistic that the product can be completed and marketed
and it is highly likely that a marketing authorization will be
received. In addition, there must be sufficient certainty that
the future earnings to the Group will cover not only produc-
tion costs, direct distribution and administrative costs, but
also the development costs.
Contract research and development costs incurred to
achieve revenue are included in “Research and develop-
ment costs incurred this year” and then transferred under
“Contract costs recognized as production costs” to be
recognized as production costs.
Grants that compensate the Group for research and devel-
opment expenses incurred, which are recognized directly
in the income statement, are set off against the costs of
research and development at the time when a final and
binding right to the grant has been obtained.
DKK thousand 2020 2019
Research and development costs incurred this year 445,829 628,484
Of which:
Contract costs recognized as production costs (note 4) (104,409) (219,200)
Research and development costs recognized in the income statement 341,420 409,284
Annual Report 2020
79
Note 8
Staff costs
DKK thousand 2020 2019
Wages and salaries 434,710 312,020
Contribution based pension 34,993 24,927
Social security expenses 17,686 13,760
Other staff expenses 31,645 28,174
Share-based payment, see specification in note 30 32,998 26,449
Staff costs 552,032 405,330
Staff expenses are distributed as follows:
Production costs 213,676 162,986
Sales and distribution costs 51,243 20,630
Research and development costs 150,675 130,365
Administrative costs 115,360 91,349
Capitalized salaries, see tech transfer costs in note 16 21,078 -
Staff costs 552,032 405,330
Average number of employees converted to full-time 607 465
Number of employees as of December 31 converted to full-time 690 491
DKK thousand 2020 2019
Staff costs include the following costs:
Board of Directors:
Remuneration 3,825 3,883
Share-based payment 1,350 1,350
Remuneration to Board of Directors 5,175 5,233
Executive Management:
Salary 5,186 5,061
Paid bonus 2,540 869
Other employee benefits 576 649
Share-based payment 4,011 5,483
Corporate Management 12,313 12,062
Salary 13,996 8,126
Paid bonus 3,359 960
Other employee benefits 1,523 484
Contribution based pension 1,674 827
Share-based payment 10,591 6,316
Other Executive Management 31,143 16,713
Remuneration to Executive Management 43,456 28,775
Total management remuneration 48,631 34,008
The Group only has defined contribution plans and pays
regular fixed contributions to independent pension funds
and insurance companies.
Annual Report 2020
80
DKK thousand 2020 2019
Depreciation and amortization included in:
Production costs 311,456 31,411
Research and development costs 2,965 2,529
Administrative costs 29,660 23,105
Depreciation and amortization 344,081 57,045
Hereof loss from disposed fixed assets 3,149 -
Impairment losses included in:
Production costs 16,066 -
Impairment losses 16,066 -
CEO and President of the Company Paul Chaplin consti-
tuted the Corporate Management in the Parent Company
in 2020. As from February 2021, CFO Henrik Juuel also
constitutes part of the Corporate Management.
For 2020 CFO Henrik Juuel, COO Henrik Birk, CPO Anu Kerns,
CCO JC May, CMO Laurence De Moerlooze and CBO Tommi
Kainu constituted the Other Executive Management.
The Executive Management was expanded during 2020
with JC May joining January 1, 2020, Laurence De Moerloo-
ze joining May 1, 2020 and Anu Kerns joining November
1, 2020.
Restricted stock units
In March 2020 Corporate Management was granted 0 re-
stricted stock units (excl. matching shares) (6,043 restricted
stock units at a value of DKK 0.9 million) as it was agreed
with the Board of Directors that the full bonus amount
could be paid out in cash. Other Executive Management
was granted 8,705 restricted stock units (excl. matching
shares) (6,679 restricted stock units) corresponding to a
value of DKK 2.1 million (DKK 1.0 million at grant). In May
2020 the new CMO was granted a sign-on bonus of 8,651
restricted stock units (excl. matching shares) corresponding
to a value of DKK 1.3 million at grant.
In June 2020, the members of the Board of Directors were
granted in total 7,111 restricted stock units (9,765 restrict-
ed stock units) corresponding to 50% of their fixed fee
amounting to DKK 1.4 million (DKK 1.4 million).
For further description of restricted stock units see note 30.
Warrants
In November 2020 Corporate Management was granted
123,645 warrants (78.201 warrants) with a fair value of
DKK 5.1 million (DKK 3.6 million). Other Executive Manage-
ment was granted 294,675 warrants (105,161 warrants)
with a fair value of DKK 12.1 million (DKK 4.8 million).
In January 2020 the new CCO was granted a sign-on bonus
of 23,763 warrants with a fair value of DKK 1.2 million.
Fair value calculated based on Black-Scholes, cf. note 30.
Incentive programs for the Executive Management and
other employees are disclosed in note 30.
Members of the Executive Management have contracts of
employment containing standard terms for members of the
Executive Management of Danish listed companies, includ-
ing the periods of notice that both parties are required to
give and competition clauses. If a contract of employment
of a member of the Executive Management is terminated
by the Company without misconduct on the part of such
member, the member of the Executive Management is
entitled to compensation, which, depending on the cir-
cumstances, may amount to a maximum of 8-18 months’
remuneration. In the event of a change of control the
compensation can amount to 24 months’ remuneration.
Note 9
Depreciation, amortization and impairment losses
The product rights to Rabipur/RabAvert and Encepur are
amortized over 20 years with an annual amortization of
DKK 273 million. The amortization is recognized as part of
cost of goods sold under production costs.
The product rights was acquired from GlaxoSmithKline as
per December 31, 2019. See further description in note 16.
Following the current rebuild of the production facility
in Kvistgaard to accommodate a new production line
for Rabipur/RabAvert and Encepur products, part of the
existing building components and equipment has been
written-down in 2020, amounting to DKK 16.1 million.
Note 8
Staff costs – continued
Annual Report 2020
81
Note 10
Fees to auditor appointed at the annual general meeting
Note 11
Other operating income
DKK thousand 2020 2019
Audit of financials statements 1,500 1,300
Other assurance services 1,144 421
Tax advisory 411 877
Other services 182 231
Fees 3,237 2,829
The fee for non-audit services provided to the Group by
Deloitte Statsautoriseret Revisionspartnerselskab, Denmark,
amounted to DKK 1.4 million (DKK 0.9 million) and consist-
ed of assurance work related to the rights issue, assistance
with compliance reviews, and other accounting and tax
advisory services.
Assurance fees related to the rights issue process amount
to DKK 1.1 million (DKK 0.3 million). In 2019 the tax adviso-
ry included assistance related to the transfer pricing audit
regarding PROSTVAC development cost.
Sale of the Priority Review Voucher, granted to the Compa-
ny by the FDA in connection with the approval of JYNNEOS,
was announced in December 2019 and final closing of the
transaction occurred in January 2020 when the antitrust
clearance was received. Upon completion, the Company
received a cash consideration of USD 95 million.
Annual Report 2020
82
Note 12
Financial income
Note 13
Financial expenses
DKK thousand 2020 2019
Financial income from bank and deposit contracts 193 602
Interest income from financial assets measured at amortized cost 193 602
Financial income from securities 8,756 16,435
Fair value adjustments on securities 6,783 -
Adjustment of deferred consideration due to change in estimated timing of payments 67,719 -
Currency adjustment deferred consideration 11,900 -
Net gains on derivative financial instruments at fair value through the income statement 2,571 5,503
Financial income 97,922 22,540
DKK thousand 2020 2019
Interest expenses on debt 31,853 18,490
Interest expenses on financial liabilities measured at amortized cost 31,853 18,490
Fair value adjustments on securities - 15,330
Unwinding of the discount related to deferred consideration 145,149 -
Net foreign exchange losses 18,532 5,023
Financial expenses 195,534 38,843
Accounting policies
Interest income is recognized in the income state-
ment at the amounts relating to the financial year. Financial
income also includes adjustment of deferred considera-
tion due to change in estimated timing of payments, net
positive value adjustments of financial instruments and
securities and net currency gains.
Accounting policies
Interest expenses are recognized in the income
statement at the amounts relating to the financial year.
Financial expenses also include unwinding of the discount
related to the deferred consideration, cf. note 25, negative
value adjustments of financial instruments and securities
and net currency losses.
The deferred consideration for product rights is measured
at net present value and the difference between the net
present value and the amounts due is recognized in the
income statement as a financial expense over the period
until expected payment date using the effective interest
method.
Annual Report 2020
83
Note 14
Tax for the year
Tax on income is an expense of DKK 4.5 million recognized
in Bavarian Nordic GmbH (DKK 2.0 million), corresponding
to an effective tax rate of 1.6% for the Group (negative
0.6%). The effective tax rate for 2020 is positively impact-
ed by the new Danish tax scheme allowing 30% ‘step-up’
deduction for costs related to research and development
activities paid by Danish entities (reduces tax for the year
by DKK 13 million). The reduction in not recognized de-
ferred tax asset (DKK 54 million) also reduces the effective
tax rate. The effective tax rate for 2019 was impacted by
write-down of the tax asset and the change in non-recog-
nized tax asset related to write-down of CV301.
Accounting policies
Income tax for the year comprises current tax and
deferred tax for the year. The part relating to the profit for
the year is recognized in the income statement, and the
part attributable to items in the comprehensive income is
recognized in the comprehensive income statement.
The tax effect of costs that have been recognized directly in
equity is recognized in equity under the relevant items.
Current tax receivable is recognized in the balance sheet
under current asset.
Current tax payable is recognized in the balance sheet
under current liabilities.
Deferred tax is measured using the balance sheet liability
method on all temporary differences between accounting
values and tax values. Deferred tax liabilities arising from
temporary tax differences are recognized in the balance
sheet as a liability.
Deferred tax assets arising from temporary deductible
differences and tax losses carried forward are recognized
when it is probable that they can be realized by offsetting
them against taxable temporary differences or future
taxable profits. At each balance sheet date, it is assessed
whether it is probable that there will be sufficient future
taxable income for the deferred tax asset to be utilized.
Deferred income tax is provided on temporary taxable dif-
ferences arising on investments in subsidiaries, unless the
parent company is able to control the timing when the de-
ferred tax is to be realized and it is likely that the deferred
tax will not be realized within the foreseeable future.
Deferred tax is calculated at the tax rates applicable on the
balance sheet date for the income years in which the tax
asset is expected to be utilized.
DKK thousand 2020 2019
Tax recognized in the income statement
Current tax on profit for the year 5,217 3,121
Adjustments to current tax for previous years (762) (1,093)
Current tax 4,455 2,028
Deferred tax - -
Tax for the year recognized in the income statement 4,455 2,028
Tax on income for the year is explained as follows:
Income before company tax 281,976 (344,749)
Calculated tax (22.0%) on income before company tax 62,035 (75,845)
Tax effect on:
Different tax percentage in foreign subsidiaries (349) (1,321)
Non-recognized deferred tax asset on current year losses in foreign subsidiaries 18,421 5,458
Income ()/expenses that are not taxable/deductible for tax purposes (20,412) 1,755
Non-recognized deferred tax asset on write-down of development project for sale - (10,139)
Change in non-recognized deferred tax asset (54,478) 83,213
Adjustments to current tax for previous years (762) (1,093)
Tax on income for the year 4,455 2,028
Tax recognized in other comprehensive income - -
Tax recognized in equity - -
Annual Report 2020
84
Note 14
Tax for the year – continued
2020
DKK thousand
January
1, 2020
Recognized
in the income
statement
Recognized
in equity
December
31, 2020
Product rights - (94,360) - (94,360)
Other intangible assets 2,040 (1,663) - 377
Property, plant and equipment 22,593 15,749 - 38,342
Right-of-use assets 55 318 - 373
Development projects for sale 32,446 - - 32,446
Accrued project costs (790) 609 - (181)
Receivables - 18 - 18
Provisions - 17,930 - 17,930
Financial instruments (503) - 681 178
Share-based payment 8,573 6,824 - 15,397
Tax losses carried forward 362,112 97 - 362,209
Not recognized tax asset (426,526) 54,478 (681) (372,729)
Recognized deferred tax assets - - - -
2019
DKK thousand
January
1, 2019
Recognized
in the income
statement
Recognized
in equity
December
31, 2019
Intangible assets 3,703 (1,663) - 2,040
Property, plant and equipment 15,515 7,078 - 22,593
Right-of-use assets - 55 - 55
Development projects for sale 17,420 15,026 - 32,446
Accrued project costs (7,335) 6,545 - (790)
Financial instruments 78 - (581) (503)
Share-based payment 4,154 4,419 - 8,573
Tax losses carried forward 310,359 51,753 - 362,112
Not recognized tax asset (343,894) (83,213) 581 (426,526)
Recognized deferred tax assets - - - -
Deferred tax
Recognized deferred tax assets relate to temporary
differences between the tax base and accounting carrying
amount and tax losses carried forward.
Deferred tax assets arising from temporary deductible
differences and tax losses carried forward are recognized
to the extent they are expected to be offset against future
taxable income.
Recognized tax losses carried forward relate to Bavarian
Nordic A/S and the two Danish subsidiaries Aktieselskabet
af 1. juni 2011 I and Aktieselskabet af 1. juni 2011 II.
The tax value of non-recognized tax losses carried forward
in Bavarian Nordic A/S and the two Danish subsidiaries
amounts to DKK 362.2 million (DKK 362.1 million), whereas
the tax value of non-recognized temporary deductible
differences amounts to DKK 10.5 million (DKK 64.4 million).
Tax rate used for Danish entities is 22%.
As Bavarian Nordic, Inc. has moved from California to North
Carolina in January 2017, the state tax losses and state tax
credit carried forward will most likely never be utilized,
hence no tax asset has been recognized.
Bavarian Nordic GmbH and Bavarian Nordic Switzerland AG
have no tax losses carried forward.
The Company’s right to use the tax losses carried forward is
not time-limited.
Non-recognized deferred tax asset on current year losses
in foreign subsidiaries also includes deferred tax on inter-
company transactions between Bavarian Nordic A/S and
Bavarian Nordic, Inc. under the Distribution Agreement for
sale of RabAvert in US, DKK 14.6 million (DKK 0 million).
Annual Report 2020
85
Note 15
Earnings per share (EPS)
Accounting policies
Earnings per share is calculated as the profit or loss
for the year compared to the weighted average of the
issued shares in the financial year. The basis for the calcula-
tion of diluted earnings per share is the weighted-average
number of ordinary shares in the financial year adjusted for
the dilutive effects of warrants.
DKK thousand 2020 2019
Net profit for the year 277,521 (346,777)
Earnings per share of DKK 10 5.1 (10.7)
Diluted earnings per share of DKK 10 5.1 (10.7)
The weighted average number of ordinary shares for the purpose of diluted
earning per share reconciles to the weighted average number of ordinary
shares used in the calculation of basic earnings per share as follows:
Weighted average number of ordinary shares (thousand units) 54,122 32,340
Weighted average number of treasury shares (thousand units) (76) (59)
Weighted average number of outstanding ordinary shares used in the
calculation of basic earnings per share (thousand units) 54,046 32,281
Average dilutive effect of outstanding warrants under incentive schemes - -
Weighted average number of outstanding ordinary shares used in the
calculation of diluted earnings per share (thousand units) 54,046 32,281
Outstanding warrants that may have an effect on the calculation of diluted
earnings per share in the future.
2020-programs 1,310,297 -
2019-program 687,467 564,585
2018-program 554,066 462,835
2017-programs 396,601 323,763
2016-program 444,558 366,690
2015-program - 293,630
2014-program - 118,500
Outstanding warrants, cf. note 30 3,392,989 2,130,003
Annual Report 2020
86
Accounting policies
Intangible assets are measured at historic cost less
accumulated amortization and impairment losses. Cost
of acquired product rights are measured at cash consid-
eration and present value of any deferred payments for
those rights. Furthermore costs of acquired product rights
include transaction costs that are directly attributable to the
acqusition.
Internal development projects that meet the requirements
for recognition as intangible assets are measured at direct
cost relating to the development projects.
Amortization is provided on a straight-line basis over the
useful economic lives of the assets.
The useful lives of acquired product rights are estimated to
be 20 years and software is estimated to be 3-5 years.
Amortization of acquired product rights is recognized as
part of cost of goods sold under production costs.
Impairment
The carrying amounts of intangible assets carried at cost
or amortized cost are tested at least annually to determine
whether there are indications of any impairment in excess
of that expressed in normal amortization. If that is the
case, the asset is written down to the recoverable amount,
which is the higher of its fair value less costs to sell and its
value in use. Impairment losses on intangible assets are
recognized under the same line item as amortization of the
assets.
For development projects in progress, the recoverable
amount is assessed annually, regardless of whether any
indications of impairment have been found.
Significant accounting estimates
When determining the amortization period for
acquired product rights, Management need to make
an assessment of expected useful economic life. In the
assessment Management take among other things the fol-
lowing components into consideration: The maturity of the
products acquired, development in the market the acquired
products are targeting, the current competitors, clinical
development of new competing products and entry barriers
to the market due to advanced production technology.
Straight-line amortization reflects the use and impairment
of the product rights.
Management continuously updates the valuation model
used when acquiring the product rights to assess the value
creation expected from the acquisition. The latest update
of the model indicates a value above the net present value
of the purchase price, hence there is no indications of
impairment.
As per December 31, 2020 Management still judge that
the sales milestone of EUR 25 million included in Asset Pur-
chase Agreement is not probably and therefore the present
value has not been added to the cost of the product rights.
Significant accounting judgments
Management has made the following accounting
judgment which significantly affect the amounts recognized
in the consolidated financial statements:
The acquisition of the two product rights from GlaxoSmith-
Kline does not include any legal entities, and no other
tangible asset, no employees and no working capital has
been transferred to the Company as part of the transaction.
Management has assessed that the acquisition constitute
an asset deal and not a business combination. In determin-
ing the accounting treatment, Management has performed
judgments and estimates determining the method for
determination of the cost price of the acquired products
rights including the method and period of amortization and
method for recognition of deferred consideration.
Note 16
Intangible assets
Annual Report 2020
87
Product rights
December 31, 2019 the Company acquired the product
rights to two commercial products owned by GlaxoSmith-
Kline - Rabipur/RabAvert and Encepur. The products are
further described in the Management Commentary.
The products have been on the market for more than 20
years. There is no need to further develop the products.
Management assess that it will require up to 10 years
of clinical development for competitors to bring a new
competing product to the market likewise the production
process required to produce these products is highly com-
plex. Based on these factors Management assess that the
acquired product rights should be amortized over 20 years.
The acquisition price for the two product rights consist of
the upfront payment and the present value of the mile-
stone payments included in the Asset Purchase Agreement
with GlaxoSmithKline, see further below. Transaction costs
that are directly attributable to the acquisition have also
been included in the acquisition price. The upfront payment
and the transaction costs have been divided between the
two acquired product rights based on a 60%/40% split
equal to the historical revenue split of the two products.
The milestone payments, except for the sales milestone,
are specific for each product and have been allocated
accordingly.
Note 16
Intangible assets – continued
2020
DKK thousand
Product
rights
Acquired
patents and
licenses Software
Other
intangible
assets in
progress Total
Costs as of January 1, 2020 5,458,700 - 101,041 3,043 5,562,784
Additions - 29,813 2,991 57,040 89,844
Transfer - - 2,525 (2,525) -
Disposals - - (18,962) - (18,962)
Exchange rate adjustments - - (8) (15) (23)
Cost as of December 31, 2020 5,458,700 29,813 87,587 57,543 5,633,643
Amortization as of January 1, 2020 - - 78,529 - 78,529
Amortization 272,935 - 9,606 - 282,541
Disposals - - (18,166) - (18,166)
Exchange rate adjustments - - (13) - (13)
Amortization as of December 31, 2020 272,935 - 69,956 - 342,891
Carrying amount as of December 31, 2020 5,185,765 29,813 17,631 57,543 5,290,752
Geographical split of intangible assets – 2020
Denmark 5,288,247
Germany 609
USA 1,896
Total intangible assets 5,290,752
Annual Report 2020
88
Note 16
Intangible assets – continued
DKK thousand
Acquisition price for product rights
Upfront payment at closing (EUR 307.6 million) 2,297,680
Directly attributable transaction costs 9,890
Cash outflow in 2019, cf. cash flow statement 2,307,570
Net present value of future probable milestone payments at initial recognition, cf. note 25 3,151,130
Total acquisition price 5,458,700
Allocation of acquisition price:
Rabipur/RabAvert 3,140,250
Encepur 2,318,450
Total acquisition price 5,458,700
The milestone payments relate to transfer and re-regis-
tration of marketing authorizations, technology transfer of
different steps of the production and packaging activities
as well as a milestone payment when all services agreed
to be rendered has been completed. The Asset Purchase
Agreement specifies the above milestone payments for
each product. In total EUR 470 million. The Asset Purchase
Agreement with GlaxoSmithKline also includes a sales
milestone of EUR 25 million. The sales milestone is related
to the total revenue of the two products. As Management
didn’t judge the sales milestone to be probable as per De-
cember 31, 2019, the sales milestone was not recognized
as part of the product rights at initial recognition.
Deferred consideration for the acquired product rights are
described in note 25.
Acquired patents and licenses
In July 2020, the Company concluded a license and collab-
oration agreement with AdaptVac. The license agreement
provides the Company the global commercialization rights
to a COVID-19 vaccine candidate based on AdaptVac’s
technology. The Company has conducted a preclinical study
for which positive results were announced March 8, 2021.
AdaptVac will initiate a phase 1/2 open label, dose-escala-
tion trial sponsored by Radhould University Medical Center.
The Company will assume responsibility for the further
clinical development and manufacturing. Under the terms
of the agreement, the Company made an upfront payment
of EUR 4 million to AdaptVac. The upfront payment has
been capitalized and recognized as “Acquired patents and
licenses”. The Company has also committed to payment
of potential future development and sales milestones and
tiered royalties. As those milestone payments are not
assessed to be probable as per December 31, 2020, these
milestone payments are not recognized as an asset and a
liability.
The Company will start amortizing the acquired license
once a vaccine has been approved. At least annually Man-
agement will assess if any indications of impairment.
Intangible assets in progress
Rabipur/RabAvert and Encepur are currently manufactured
by GlaxoSmithKline and the basis of the technology transfer
to the Company is an as-is transfer of the current manufac-
turing process. This transfer will be a staged process, start-
ing with packaging then filling and ending with the transfer
of bulk manufacturing. The Company will incur material
costs in terms of internal labour and consultancy to handle
the technology transfer and gain crucial knowledge about
the manufacturing process. These costs will be capitalized
as an intangible asset. As per December 31, 2020 the
capitalized costs amounts to DKK 38.1 million, recognized
as intangible assets in progress. Other intable assets in
progress relates to IT investments.
Annual Report 2020
89
Note 17
Property, plant and equipment
Accounting policies
Property, plant and equipment include land and
buildings, production equipment, leasehold improvements,
office and IT equipment and laboratory equipment and
is measured at cost less accumulated depreciation and
impairment losses.
Cost includes the costs directly attributable to the purchase
of the asset, until the asset is ready for use. For assets con-
structed by the Group cost includes materials, components,
third-party suppliers and labour.
Borrowing costs directly attributable to the construction of
property, plant and equipment are included in cost. Other
borrowing costs are recognized in the income statement.
Depreciation is charged over the expected economic lives
of the assets, and the depreciation methods, expected
lives and residual values are reassessed individually for the
assets at the end of each financial year. Assets are depreci-
ated on a straightline basis over their estimated useful lives
as follows:
Buildings 10–20 years
Installations 5–15 years
Leasehold improvements 5 years
Office and IT equipment 3–5 years
Laboratory equipment 5–10 years
Production equipment 3–15 years
Management reviews the estimated useful lives of material
property, plant and equipment at the end of each financial
year.
Impairment
The carrying amounts of property, plant and equipment
carried at cost or amortized cost are tested annually to
determine whether there are indications of any impairment
in excess of that expressed in normal depreciation. If that
is the case, the asset is written down to the recoverable
amount, which is the higher of its fair value less costs to
sell and its value in use. Impairment losses on property,
plant and equipment are recognized under the same line
item as depreciation of the assets.
2019
DKK thousand
Product
rights Software
Other
intangible
assets in
progress Total
Costs as of January 1, 2019 - 100,626 119 100,745
Additions 5,458,700 364 2,974 5,462,038
Transfer - 50 (50) -
Exchange rate adjustments - 1 - 1
Cost as of December 31, 2019 5,458,700 101,041 3,043 5,562,784
Amortization as of January 1, 2019 - 68,245 - 68,245
Amortization - 10,282 - 10,282
Exchange rate adjustments - 2 - 2
Amortization as of December 31, 2019 - 78,529 - 78,529
Carrying amount as of December 31, 2019 5,458,700 22,512 3,043 5,484,255
Geographical split of intangible assets – 2019
Denmark 5,483,903
Germany 177
USA 175
Total intangible assets 5,484,255
Other intangible assets in progress include investments in
software.
Note 16
Intangible assets – continued
Annual Report 2020
90
Note 17
Property, plant and equipment – continued
2020
DKK thousand
Land and
buildings
Leasehold
improve-
ment
Plant and
machinery
Other
fixtures and
fittings, other
plant and
equipment
Assets under
construction Total
Costs as of January 1, 2020 322,501 11,112 301,174 91,072 618,101 1,343,960
Additions 26,408 1,331 657 12,254 182,224 222,874
Transfer 201,776 1,995 185,345 197,886 (587,002) -
Disposals (2,390) - (2,152) (6,443) - (10,985)
Exchange rate adjustments (4) (34) - (351) (14) (403)
Cost as of December 31, 2020 548,291 14,404 485,024 294,418 213,309 1,555,446
Depreciation and impairment losses as of January 1,2020 160,174 10,269 256,909 70,704 - 498,056
Depreciation 17,642 453 14,014 6,969 - 39,078
Impairment losses 5,354 - 10,712 - - 16,066
Disposals (1,109) - (1,275) (6,243) - (8,627)
Exchange rate adjustments (2) (31) - (250) - (283)
Depreciation and impairment losses as of December 31, 2020 182,059 10,691 280,360 71,180 - 544,290
Carrying amount as of December 31, 2020 366,232 3,713 204,664 223,238 213,309 1,011,156
Geographical split of property, plant and equipment – 2020
Denmark 990,423
Germany 20,031
USA 702
Total property, plant and equipment 1,011,156
Assets under construction relates to the fill and finish
manufacturing facility in Kvistgaard. As per December 31,
2020 investments in the building, the installations and the
freezedryer, filing and packaging line have been transfered
to the relevant asset groups, whereas other production
equipment is still recognized as ‘Asset under construction’.
The depreciation of the fill and finish building and equip-
ment will start in 2021.
The Company has not incurred any borrowing costs directly
attributable to the construction of the fill finish manu-
facturing facility, hence no borrowing costs have been
capitalized.
Mortgage loans of DKK 23.2 million are secured by
mortgages totaling DKK 50.0 million on the property
Bøgeskovvej 9/Hejreskovvej 10A, Kvistgaard. In addition,
as of December 31, 2020, mortgage deeds for a total of
DKK 75.0 million have been issued. The carrying amount
of assets mortgaged in security of mortgage loans is DKK
570.9 million (land and buildings: DKK 366.2 million; plant
and machinery: DKK 204.7 million).
Annual Report 2020
91
Note 17
Property, plant and equipment – continued
2019
DKK thousand
Land and
buildings
Leasehold
improve-
ment
Plant and
machinery
Other
fixtures and
fittings, other
plant and
equipment
Assets under
construction Total
Costs as of January 1, 2019 322,500 11,107 301,174 86,895 262,114 983,790
Additions - - - 1,600 358,502 360,102
Transfer - - - 2,515 (2,515) -
Exchange rate adjustments 1 5 - 62 - 68
Cost as of December 31, 2019 322,501 11,112 301,174 91,072 618,101 1,343,960
Depreciation and impairment losses as of January 1, 2019 143,058 10,060 246,863 65,001 - 464,982
Depreciation 17,116 204 10,046 5,673 - 33,039
Exchange rate adjustments - 5 - 30 - 35
Depreciation and impairment losses as of December 31, 2019 160,174 10,269 256,909 70,704 - 498,056
Carrying amount as of December 31, 2019 162,327 843 44,265 20,368 618,101 845,904
Geographical split of property, plant and equipment – 2019
Denmark 832,778
Germany 12,043
USA 1,083
Total property, plant and equipment 845,904
Mortgage loans of DKK 25.4 million are secured by
mortgages totaling DKK 50.0 million on the property
Bøgeskovvej 9/Hejreskovvej 10A, Kvistgaard. In addition,
as of December 31, 2019, mortgage deeds for a total of
DKK 75.0 million have been issued. The carrying amount
of assets mortgaged in security of mortgage loans is DKK
538.5 million (land and buildings: DKK 162.3 million; plant
and machinery: DKK 44.3 million; fill and finish facility
under construction: DKK 331.9 million).
Annual Report 2020
92
Note 18
Right-of-use-assets
As of 1 January 2019, Bavarian Nordic applied IFRS 16
‘Leases’ for the first time. IFRS 16 “Leases” replaced IAS 17
“Leases”, and the new standard was implemented using
the simplified retrospective transition approach without
restating comparative figures, with a lease asset value
equal to the lease liability value upon transition. Upon
implementation January 1, 2019, the group recognized a
right-of-use-asset of DKK 83 million and a lease liability
of DKK 83 million. The implementation did not have any
impact on equity.
Accounting policies
The right-of-use assets comprise the initial meas-
urement of the corresponding lease liability. Right-of-use
assets are subsequently measured at cost less accumulated
depreciation and impairment losses.
All operating leases with a lease term of more than 12
months are recognized on the balance sheet as right-of-
use-assets.
For leases with a lease term of less than 12 months the
lease payments are recognized as an operating expense on
a straight-line basis over the term of the lease.
The right-of-use-assets are measured at the present value
of all future lease payments. When assessing the lease
term, any extension or termination options are included in
the assessment. The options are included in determining
the lease term, if exercise is reasonably certain. When de-
termining the discount rates used to calculate the net pres-
ent value of future lease payments, an incremental country
specific borrowing rate is used, based on a government
bond plus the Group’s credit margin, ranging from 2.5% to
3.0%. A single discount rate is used for a portfolio of lease
assets with reasonable similar characteristics. Initial direct
costs are not included in measurement of the right-of-
use-assets. Non-lease components are not separated from
lease components.
Impact from change in lease terms, lease payments or mod-
ification of the lease contract is further described in note 27.
Right-of-use assets are depreciated over the shorter period
of lease term and useful life of the underlying asset. The
depreciation starts at the commencement date of the
lease. IAS 36 is applied to determine whether a right-of-
use asset is impaired and any identified impariment losses
are accounted for as described in note 16.
2020
DKK thousand
Rent
facility Car leasing Equipment Total
Right-of-use assets as of January 1, 2020 58,369 1,628 593 60,590
Additions 26,982 1,705 542 29,229
Modifications 1,336 459 (1) 1,794
Depreciations (17,437) (1,486) (390) (19,313)
Exchange rate adjustments (319) 6 - (313)
Right-of-use assets as of December 31, 2020 68,931 2,312 744 71,987
2019
DKK thousand
Rent
facility Car leasing Equipment Total
Impact from applying IFRS 16 as of January 1, 2019 80,470 1,736 662 82,868
Additions - 1,039 306 1,345
Modifications (10,419) 292 (64) (10,191)
Depreciations (11,975) (1,439) (310) (13,724)
Exchange rate adjustments 293 - (1) 292
Right-of-use assets as of December 31, 2019 58,369 1,628 593 60,590
DKK thousand 2020 2019
Amounts included in the income statement
Interest expense leases 1,965 1,771
Depreciation recognized on right-of-use assets 19,314 13,724
Cost recognized for short term leases (less than 12 months) 2,050 1,507
Income from subleasing right-of-use assets - 365
Annual Report 2020
93
Note 19
Inventories
The inventory of Rabipur/RabAvert and Encepur products
amounted to DKK 307.5 million (DKK 0 million) as per
December 31, 2020.
During 2020 a provisional write-down of DKK 21 million
was made for batches at risk. Later in the year the final
release tests failed and products were scrapped and
recognized as ‘use of write-down’. Use of write-down also
includes scrap of old JYNNEOS vials full written down prior
years.
2019 write-downs included a reversal of write-down on
three batches that subsequently were deemed usable
for the validation of the freeze-drying production process
funded by the U.S. Biomedical Advanced Research and
Development Authority (BARDA). The batches were used
and sold under the BARDA funded contract and recognized
as contract income.
Accounting policies
Inventories except for raw materials are measured at
the lower of cost using the weighted average cost formula
method less write-downs for obsolescence and net realis-
able value. Raw materials are measured at cost based on
the FIFO method. For raw materials, cost is determined as
direct acquisition costs incurred. The cost of finished goods
produced in-house and work in progress includes raw
materials, consumables, filling cost, QC testing and direct
payroll costs plus indirect costs of production.
Indirect costs of production include indirect materials and
labour as well as maintenance of and depreciation on the
machinery used in production processes, factory buildings
and equipment used and cost of production administration
and management. The net realisable value is the estimated
sales price in the ordinary course of business less relevant
sales costs determined on the basis of marketability, obso-
lescence and changes in the expected sales price.
Significant accounting estimates
Production overheads are measured on the basis
of actual costs. The basis of the actual costs is reassessed
regularly to ensure that they are adjusted for changes in
the utilization of production capacity, production changes
and other relevant factors. Biological living material is used,
and the measurements and assumptions for the estimates
made may be incomplete or inaccurate, and unexpected
events or circumstances may occur, which may cause the
actual outcomes to later deviate from these estimates. It
may be necessary to change previous estimates as a result
of changes in the assumptions on which the estimates
were based or due to new information or subsequent
events, for which certainty could not be achieved in the
earlier estimates.
Estimates that are material to the financial reporting are
made in the determination of any impairment of invento-
ries as a result of ‘out-of-specification’ products, expiry of
products and sales risk.
DKK thousand 2020 2019
Raw materials and supply materials 73,919 39,578
Work in progress 201,601 163,513
Manufactured goods and commodities 309,099 1,727
Write-down on inventory (63,537) (104,056)
Inventories 521,082 100,762
Write-down on inventory as of January 1 (104,056) (107,692)
Write-down for the year (25,692) (17,824)
Use of write-down 65,672 7,683
Reversal of write-down 539 13,777
Write-down on inventory as of December 31 (63,537) (104,056)
Cost of goods sold amounts to, cf. note 4 584,574 87,272
Annual Report 2020
94
Credit risk
The Group's customers are predominantly public authorities
and renowned pharmaceutical companies and wholesalers,
therefore the credit risk is very low. Historically the Group
hasn’t recognized losses on receivables. There are some
insignificant overdue receivables as of December 31, 2020
(DKK 4 million). As of December 31, 2020 a loss allowance
of DKK 80 thousand has been recognized. The loss allow-
ance is recognized in the income statement under sales
and distribution costs.
The majority of sales of Rabipur/RabAvert and Encepur are
made to wholesalers where the risk of loss is very low and
therefore the loss allowance is limited.
The Group has applied the simplified approach to measure
the expected credit loss and a lifetime expected loss
allowance for all trade receivables.The allowance is an
estimate based on shared credit risk characteristics and
the days past due. At the time of revenue recognition, the
Company assesses the full lifetime expected credit losses.
In addition, undue and due receivables are analyzed in an
ongoing process. Based on the credit assessment, receiva-
bles analysis, historical experience and industry experience,
it is estimated whether the receivables are recoverable or
write-downs are needed. The Company monitors the credit
exposure on all customers, both new and existing.
The Company recognizes a loss allowance for expected
credit losses and writes off trade receivables when there is
information indicating that the debtor is in severe financial
difficulty and there is no realistic prospect of recovery.
Subsequent recovery of amounts previously written down
is credited against sales and distribution costs.
The payment conditions for the customers, including credit
periods and any payment of interest in case of non-pay-
ment, vary, but are always based on industry practice in
the relevant market. The weighted average credit period is
approximately 60 days for the sales of Rabipur/RabAvert
and Encepur.
The tables detail the risk profile for trade receivables.
Accounting policies
Receivables are measured at initial recognition at fair
value and subsequently at amortized value usually equal to
the nominal value, net of impairment based on expected
credit losses.
Write-downs are calculated using the ‘full lifetime expected
credit losses’ method, whereby the likelihood of non-ful-
filment throughout the lifetime of the financial instrument
is taken into consideration. A provision account is used for
this purpose.
DKK thousand 2020 2019
Trade receivables from smallpox vaccine sale - 281
Trade receivables from Encepur and Rabipur/RabAvert 121,355 -
Trade receivables from contract work 17,937 43,124
Trade receivables 139,292 43,405
2020
DKK thousand
Gross
carrying
amount
Loss
allowance
Net
carrying
amount
Trade receivables
Not past due date 135,358 - 135,358
Overdue by 0-3 months 4,014 (80) 3,934
Trade receivables 139,372 (80) 139,292
2019
DKK thousand
Gross
carrying
amount
Loss
allowance
Net
carrying
amount
Trade receivables
Not past due date 43,405 - 43,405
Trade receivables 43,405 - 43,405
Note 20
Trade receivables
Annual Report 2020
95
Note 21
Other receivables
Note 22
Prepayments
Accounting policies
Receivables are measured at initial recognition at fair
value and subsequently at amortized value usually equal to
the nominal value, net of impairment, to counter the loss
after an individual assessment of risk of loss.
As per December 31, 2019 “Incurred project costs related
to subsequent years” related mainly to support qualification
of the new fill and finish facility funded by BARDA. The
project costs were expensed in 2020 along with revenue
recognition.
Accounting policies
Prepayments recognized under assets include costs
paid in respect of subsequent financial years, including
project costs incurred that relate to revenue of subsequent
years. Prepayments are measured at cost.
DKK thousand 2020 2019
Deposits 4,122 1,445
Receivable VAT and duties 31,486 24,188
Derivative financial instruments at fair value 606 3,530
Interest receivables 3,767 664
Other receivables 1,475 5
Other receivables 41,456 29,832
Classified as:
Non-current assets 4,122 1,445
Current assets 37,334 28,387
Other receivables 41,456 29,832
DKK thousand 2020 2019
Incurred project costs related to subsequent years 824 3,591
Other prepayments 12,908 5,598
Prepayments 13,732 9,189
Annual Report 2020
96
Note 23
Other liabilities
Under the new Danish Holiday Act a transitional arrange-
ment exists under which vacation accrued for the period
September 1, 2019 to August 31, 2020, has been frozen
and will not be paid out before retirement. The Company
has decided to deposit the accrued amount, DKK 25.1 mil-
lion, to the Holiday Fund (“Lønmodtagernes Feriemidler”)
to ensure the asset management of the funds. The deposit
was made in February 2021.
For a further description of financial instruments see
note 24. The phantom share programs are described in
note 30.
Accounting policies
Derivative financial instruments and liability relating
to phantom shares are measured at fair value. For further
details regarding measurement of fair value for phantom
shares see note 30.
Other financial liabilities are measured at initial recognition
at fair value less any transaction costs. Subsequent other
financial liabilities are measured at amortized cost using
the effective interest method, whereby the difference be-
tween proceeds and the nominal value is recognized in the
income statement as a financial expense over the period.
Amortized cost usually equal to the nominal value.
DKK thousand 2020 2019
Financial instruments at fair value 1,414 1,243
Liability relating to phantom shares 4,849 1,135
Payable salaries, holiday accrual etc. 101,229 58,755
Gross to net deduction accrual 26,355 -
Other accrued costs 17,967 18,672
Other liabilities 151,814 79,805
Annual Report 2020
97
Accounting policies
Derivative financial instruments
On initial recognition, derivative financial instruments are
measured at the fair value on the settlement date.
Directly attributable costs related to the purchase or
issuance of the individual financial instruments (transaction
costs) are added to the fair value on initial recognition, un-
less the financial asset or the financial liability is measured
at fair value with recognition of fair value adjustments in
the income statement. Subsequently, they are measured
at fair value at the balance sheet date based on the official
exchange rates, market interest rates and other market
data such as volatility adjusted for the special characteris-
tics of each instrument.
Changes in the fair value of derivative financial instruments
designated as and qualifying for recognition as effective
hedges of future transactions (cash flow hedges) are rec-
ognized as comprehensive income. The ineffective portion
is recognized immediately in the income statement. When
the hedged transactions are realized, cumulative changes
are recognized in the income statement together with the
hedged transaction or in respect of a non-financial item as
part of the cost of the transactions in question.
For derivative financial instruments that do not qualify for
hedge accounting, changes in fair value are recognized as
financials in the income statement as they occur.
The Company has designated certain derivative financial
instruments as cash flow hedges as defined under IFRS 9
“Financial Instruments”. Hedge accounting is classified as
a cash flow hedge when the hedges of a particular risk is
associated with the cash flows of highly probable forecast
transactions.
Securities
Securities consist of listed bonds, which are measured
at fair value on initial recognition and as of the balance
sheet date. The Group’s portfolio of securities is treated as
“financial items at fair value through profit or loss“, as the
portfolio is accounted for and valued on the basis of the fair
value in compliance with the Company’s investment policy.
Both realized and unrealized value adjustments are recog-
nized in the income statement under financials.
Note 24
Financial risks and financial instruments
DKK thousand 2020 2019
Categories of financial instruments
Trade receivables 139,292 43,405
Other receivables 40,850 26,302
Cash and cash equivalents 285,487 297,545
Financial assets measured at amortized cost 465,629 367,252
Securities 1,384,120 174,819
Financial assets measured at fair value through the income statement 1,384,120 174,819
Derivative financial instruments to hedge future cash flows (exchange rate) 606 3,530
Financial assets used as hedging instruments 606 3,530
Deferred consideration for product rights 2,822,668 3,151,130
Debt to credit institutions 395,442 1,770,559
Lease liabilities 74,623 61,400
Trade payables 345,320 112,088
Other liabilities 145,551 77,427
Financial liabilities measured at amortized cost 3,783,604 5,172,604
Liability relating to phantom shares 4,849 1,135
Financial liabilities measured at fair value through the income statement 4,849 1,135
Derivative financial instruments to hedge future cash flows (interest) 1,414 1,243
Financial liabilities used as hedging instruments 1,414 1,243
Annual Report 2020
98
Note 24
Financial risks and financial instruments – continued
Exchange rate risks on recognized financial assets and liabilities
DKK thousand
Cash
and cash
equivalents,
securities Receivables Liabilities Net position
2020
EUR 35,364 32,418 (3,005,383) (2,937,601)
USD 80,634 111,426 (126,786) 65,274
CHF 572 655 (12,916) (11,689)
2019
EUR 10,586 1,120 (4,585,427) (4,573,721)
USD 86,171 63,511 (20,074) 129,608
Sensitivity analysis on exchange rates
DKK thousand
Likely
change in
exchange rate
Hypothetical
change
in equity
Hypothetical
change in
profit
2020
Change if higher USD-rate than actual rate 15% (46,537) 12,469
Change if higher EUR-rate than actual rate 1% (28,226) (29,445)
Change if higher CHF-rate than actual rate 1% (1,934) (107)
2019
Change if higher USD-rate than actual rate 15% (45,663) 20,335
Change if higher EUR-rate than actual rate 1% (45,221) (46,416)
Policy for managing financial risks
Through its operations, investments and financing the
Group is exposed to fluctuations in exchange rates and
interest rates. These risks are managed centrally in the
Parent Company, which manages the Group´s liquidity. The
Group pursues a treasury policy approved by the Board of
Directors. The policy operates with a low risk profile, so that
exchange rate risks, interest rate risks and credit risks arise
only in commercial relations. The Group therefore does not
undertake any active speculation in financial risk.
The Group´s capital structure is regularly assessed by the
Board of Directors relative to the Group´s cash flow position
and cash flow budgets.
Market risks
The pharmaceutical market is characterized by the aim of
authorities to reduce or cap healthcare costs in general.
Market changes such as price reductions and launch of
competing generic products may have a considerable
impact on the earnings potential of pharmaceuticals.
Interest rate risk
It is the Group’s policy to hedge interest rate risks on
loans whenever it is deemed that interest payments can
be hedged at a satisfactory level relative to the related
costs. Hedging will then consist of interest rate swaps that
convert floating rate loans to fixed rate loans. Management
determines the economic relationship between the hedged
item and the hedging instrument to ensure a high hedge
effectiveness. The interest rate risk involved in placing cash
funds and investing in securities is managed on the basis
of duration.
Exchange rate risks
The Group’s exchange rate exposure is primarily to USD and
EUR. The exchange rate exposure to USD is hedged to the
greatest possible extent by matching incoming and outgo-
ing payments denominated in USD, looking at maximum
one year ahead. Regular assessments are made of whether
the remaining net position should be hedged by currency
forward contracts or currency option contracts.
The exposure to EUR is not hedged as management be-
lieves that fluctuations in EUR are limited due to the Danish
fixed-rate policy which is expected to be maintained. Thus
the fluctuations in EUR do not have a significant impact on
financial performance.
The table shows the net effect it would have had on equity
and profit for the year if the year-end exchange rates of
USD, EUR and CHF had been 15% or 1%, respectively,
higher than the actual exchange rates. A corresponding fall
in the actual exchange rates would have had an opposite
(positive/negative) effect on profit and equity.
Annual Report 2020
99
Note 24
Financial risks and financial instruments – continued
Cash flow hedge - forward currency contracts
DKK thousand
Forward
price
Contract
amount
based on
agreed rates
Fair
value as of
December 31
Fair value
adjustment
recognized in
other com-
prehensive
income
2020
Participating forward currency contracts (USD/DKK)
minimum
5.93 - 6.00 496,967 606 606
606 606
2019
Forward currency contract (USD/DKK) 6.68 601,155 3,530 3,530
3,530 3,530
Derivative financial instruments not designated
as hedge accounting
Currency forward contracts and currency option contracts
which are not designated as hedge accounting are clas-
sified as financial assets/liabilities measured at fair value
with value adjustments recognized through the income
statement.
There were no open currency contracts as of December
31, 2020 or as per December 31, 2019 not designated as
hedge accounting.
Hedging of expected future cash flows
In December 2020 the Company concluded currency
forward contracts of USD 125 million to hedge the sale of
bulk drug substance batches to BARDA following the award
of the contract for 2021 deliveries. The concluded currency
forward contracts are deemed to be 100% effective.
In December 2019 the Company concluded a currency
forward contract of USD 90 million to hedge the main part
of the income from sale of the Priority Review Voucher.
In 2016 the Company refinanced the old mortgage loans
(fixed rate) and obtained a new mortgage loan with float-
ing rate. The Company also concluded an interest rate swap
to convert the floating rate loan to a fixed rate loan. The
interest rate swap has the same maturity date and nominal
amount as the mortgage loan to secure high effectiveness
of the hedge.
Cash risks
The Group´s bank deposits are placed in deposit accounts
without restrictions. The Group’s cash and cash equivalents
totaled DKK 285.4 million as of December 31, 2020 (DKK
297.5 million).
The Group’s fixed rate bond portfolio expires as shown
below. Amounts are stated excluding interest.
Cash flow hedge - interest rate swap
DKK thousand
Contract
amount
based on
agreed rates
Fair
value as of
December 31
Fair value
adjustment
recognized in
other com-
prehensive
income
2020
Interest rate swap
DKK - fixed rate 0.9625% p.a. (expiry 2031) 23,461 (1,414) (171)
(1,414) (171)
2019
Interest rate swap
DKK - fixed rate 0.9625% p.a. (expiry 2031) 25,578 (1,243) (886)
(1,243) (886)
Annual Report 2020
100
Note 24
Financial risks and financial instruments – continued
Fluctuations in interest rate levels affect the Group’s bond
portfolio. An increase in the interest rate level by 1 percent-
age point relative to the interest rate level on the balance
sheet date would have had a negative impact of DKK 23.5
million on the Group´s profit and equity (DKK 25.5 million).
A corresponding decrease in the interest rate level would
have had a positive impact of DKK 23.5 million on profit
and equity (DKK 25.5 million). The impact for 2019 was
calculated based on the average bond portfolio holdings
for the year. The bond portfolio was reduced to a very low
level end December 2019, following the purchase of the
Rabipur/RabAvert and Encepur product rights.
2020 2019
DKK thousand
Fair value as of
December 31
Effective
interest
Fair value as of
December 31
Effective
interest
Bond portfolio
Within 0-2 years 286,325 -0.4% - -
Within 3-5 years 467,023 -0.4% 43,443 -0.3%
After 5 years 630,772 0.1% 131,376 0.1%
Total 1,384,120 -0.2% 174,819 0.1%
Annual Report 2020
101
Maturity of financial liabilities (including interest) 2020
DKK thousand
Due within
1 year
Due between
1 and 5 years
Due after
5 years Total
Deferred consideration for product rights
1)
393,624 2,753,133 - 3,146,757
Credit institutions 15,499 394,556 12,700 422,755
Lease liabilities 20,422 54,201 - 74,623
Trade payables 345,320 - - 345,320
Other liabilities 150,897 - - 150,897
Non-derivative financial liabilities 925,762 3,201,890 12,700 4,140,352
Derivative financial liabilities 1,414 - - 1,414
Maturity of financial liabilities (including interest) 2019
DKK thousand
Due within
1 year
Due between
1 and 5 years
Due after
5 years Total
Deferred consideration for product rights
1)
469,844 3,062,577 - 3,532,421
Credit institutions 1,401,839 407,829 15,057 1,824,725
Lease liabilities 14,032 44,538 6,855 65,425
Trade payables 112,088 - - 112,088
Other liabilities 78,562 - - 78,562
Non-derivative financial liabilities 2,076,365 3,514,944 21,912 5,613,221
Derivative financial liabilities 1,243 - - 1,243
1)
Further explained in note 26.
Note 24
Financial risks and financial instruments – continued
With respect to the Group´s debt to credit institutions, an
increase in the applicable interest rate by 1 percentage
point would have had a negative impact on the Group’s
profit and equity of DKK 4.0 million (DKK 4.0 million). A
corresponding decrease in the interest rate would have had
an equivalent positive impact.
In May 2015, the Group secured a loan facility of EUR 50
million from the European Investment Bank (EIB) in support
of the Group’s research and development of vaccines
against Ebola and other infectious diseases as well as can-
cer immunotherapies. The loan facility, which is unsecured,
was fully utilized in October 2017 with a net proceed of
DKK 372.2 million. The loan is a five year bullet loan with
expiry in 2022 and with a fixed interest of 3.532%.
In August 2018 the Company was granted an unsecured
loan facility of EUR 30 million from the European Invest-
ment Bank to support the Company’s investments in the
fill and finish manufacturing facility. The loan facility, which
is unsecured, may be utilized in up to three tranches. The
repayment period may be up to seven years from disburse-
ment of the tranches. The loan could potentially carry a
fixed or variable interest payment. The margin associated
with the loan facility is 3.21%. As of December 31, 2020
the balance remains unused. The Company will have to
draw down on the loan latest August 2021.
In October 2019, the Company entered into a committed
bridge loan facility agreement with Citi and Nordea as
lenders pursuant to which the lenders granted a EUR 185
million (DKK 1,373 million) bridge loan to the Company.
The Bridge Loan was utilised on December 30, 2019
and the proceeds were applied towards partly financing
the upfront payment of the acquisition of product rights
from GlaxoSmithKline, EUR 307.6 million paid in cash on
December 31, 2019.
The Bridge Loan was repaid March 2020 following the
completion of the right issue.
Debt to credit institutions also include a mortgage loan of
DKK 23.2 million (DKK 25.4 million), further described in
note 26.
The Group has a credit facility of DKK 20 million (DKK 20
million) at Nordea. As of December 31, 2020, DKK 0.1
million (DKK 0.1 million) of the credit facility is utilized for
bank guarantees.
Annual Report 2020
102
Credit risks
The primary credit risk relates to trade receivables. The
Company assesses the expected credit losses also con-
sidering changes in the macro environment that might
impose an increased risk of losses. This is compared to the
previous model where indications of credit losses were
needed for the Company to recognize an expected loss.
The Group´s customers are predominantly public authorities
and renowned pharmaceutical companies and wholesalers,
and the credit risk on the Group’s receivables is therefore
considered to be very low. A loss allowance of DKK 80
thousand has been recognized as of December 31, 2020,
cf. note 20.
To manage credit risk regarding financial counterparties,
the Company only enters into derivative financial contracts
and money market deposits with financial counterparties
possessing a satisfactory long-term credit rating from
at least two out of the three selected ratings agencies:
Standard and Poor’s, Moody’s and Fitch.
Cash and cash equivalents are not deemed to be subject to
any special credit risk as they are deposited with Nordea.
The bond portfolio is invested in either Danish government
bonds, Danish mortgage bonds or bonds issued by Danish
banks with high ratings.
Optimization of capital structure
Management regularly assesses whether the Group´s
capital structure best serves the interests of the Group
and its shareholders. The overall goal is to ensure that the
Group has a capital structure which supports its long-term
strategy and growth target.
Securities (level 1)
The portfolio of publicly traded government bonds, publicly
traded mortgage bonds and bank bonds is valued at listed
prices and price quotas.
Derivative financial instruments (level 2)
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.
Liability relating to phantom shares is determined using the
Black-Scholes. The valuation is based on observable share
price, interest rates and volatility rates.
Fair value hierarchy for financial instruments measured at fair value 2020
DKK thousand Level 1 Level 2 Total
Securities 1,384,120 - 1,384,120
Financial assets measured at fair value through the income statement 1,384,120 - 1,384,120
Derivative financial instruments to hedge future cash flow (currency) - 606 606
Derivative financial instruments to hedge future cash flow (interest) - (1,414) (1,414)
Financial assets/liabilities used as hedging instruments - (808) (808)
Liability relating to phantom shares - (4,849) (4,849)
Financial liabilities measured at fair value through
the income statement - (4,849) (4,849)
Fair value hierarchy for financial instruments measured at fair value 2019
DKK thousand Level 1 Level 2 Total
Securities 174,819 - 174,819
Financial assets measured at fair value through the income statement 174,819 - 174,819
Derivative financial instruments to hedge future cash flow (currency) - 3,530 3,530
Derivative financial instruments to hedge future cash flow (interest) - (1,243) (1,243)
Financial assets/liabilities used as hedging instruments - 2,287 2,287
Liability relating to phantom shares - (1,135) (1,135)
Financial liabilities measured at fair value through
the income statement - (1,135) (1,135)
Note 24
Financial risks and financial instruments – continued
Annual Report 2020
103
DKK thousand
Due within
1 year
Due
between
1 and 5 year
Due after
5 years Total
2020
Deferred consideration for product rights 357,736 2,464,932 - 2,822,668
Total 357,736 2,464,932 - 2,822,668
2019
Deferred consideration for product rights 459,730 2,691,400 - 3,151,130
Total 459,730 2,691,400 - 3,151,130
Note 25
Deferred consideration for product rights
The Asset Purchase Agreement with GlaxoSmithKline
includes milestone payments relating to transfer and regis-
tration of marketing authorizations, technology transfer of
different steps of the production and packaging activities
as well as a milestone payment when all services agreed
to be rendered by GlaxoSmithKline has been completed. In
total EUR 470 million. During 2020 the two first mile-
stone payments of a total of EUR 50 million was paid. The
payments are presented as cash flow from investment
activities in the cash flow statement. The majority of the
milestone payments are expected to be payable in 2022-
2023. The completion milestone is expected to be payable
beginning of 2025.
The Asset Purchase Agreement with GlaxoSmithKline
also includes a sales milestone of EUR 25 million. As per
December 31, 2020 Management does not judge the sales
milestone to be probable and therefore the sales milestone
has not been recognized as either part of the product rights
(note 16) nor the deferred consideration for product rights.
The carrying amount are measured using a discount rate of
4% per annum. The discount rate was determined at intial
recognition based on an interest rate on a similar loan of
the same size and maturity as the contingent milestone
payments and the Company’s credit rating as of December
31, 2019.
The fair value of the deferred consideration as per Decem-
ber 31, 2020 amounts to DKK 2,838 million, measured
using the updated discount rate of 3.8%. The discount rate
has been determined based on the same components as
described above.
Accounting policies
Deferred consideration including contingent mile-
stone payments for product rights is recognized when its
payment is probable and it can be measured reliably and
is at initial recognition measured at fair value which equals
present value of future deferred payments. Subsequently,
the deferred consideration is measured at amortized cost.
This means that the difference between the present value
of the consideration and the nominal amounts due is
recognized in the income statement as a financial expense
over the period until expected payment date using the
effective interest method.
The expected phasing of future payments and the probabil-
ity of contingent payments are assessed on each reporting
date.
The cash flow from payment of deferred consideration
for product rights will be recognized as cash flow from
investment activities.
Annual Report 2020
104
Note 26
Debt to credit institutions
DKK thousand
Due within
1 year
Due
between
1 and 5 year
Due after
5 years Total
2020
Mortgage
1)
2,174 8,670 12,403 23,247
European Investment Bank (loan in DKK)
2)
- 372,195 - 372,195
Total 2,174 380,865 12,403 395,442
2019
Bridge loan
3)
1,372,953 - - 1,372,953
Mortgage
1)
2,163 8,651 14,597 25,411
European Investment Bank (loan in DKK)
2)
- 372,195 - 372,195
Total 1,375,116 380,846 14,597 1,770,559
1)
Floating interest - swapped to fixed interest of 0.9625% - expiry 2031
2)
Fixed interest of 3.532% - bullet loan with expiry 2022
3)
Variable interest, the base rate is EURIBOR plus a margin adjusted up-wards during the tenor of the bridge loan ranging
from initially 1.25% to 2.75%
Cash flow from financing activities
DKK thousand
January
1, 2020
Cash
movement
Non-cash
movement
December
31, 2020
2020
Bridge loan 1,372,953 (1,373,434) 481 -
Mortgage 25,411 (2,164) - 23,247
European Investment Bank (loan in DKK) 372,195 - - 372,195
Lease liabilities 61,400 (17,799) 31,022 74,623
Total liabilities from financing activities 1,831,959 (1,393,397) 31,503 470,065
DKK thousand
January
1, 2019
Cash
movement
Non-cash
movement
December
31, 2019
2019
Bridge loan - 1,372,953 - 1,372,953
Mortgage 27,566 (2,155) - 25,411
European Investment Bank (loan in DKK) 372,195 - - 372,195
Security lending (repo transactions) 246,729 (246,729) - -
Lease liabilities
1)
82,868 (12,923) (8,545) 61,400
Total liabilities from financing activities 729,358 1,111,146 (8,545) 1,831,959
1)
Lease liabilities as of January 1, 2019 (DKK 82,868 thousand) reflects impact from applying IFRS 16 as of January 1, 2019.
The fair value of the debt to credit institutions amounts to
DKK 395.6 million (DKK 1,779.5 million). The fair value of
mortgage debt is based on the market value of the un-
derlying bonds set by the bank (level 2), whereas the fair
value of the bridge loan and the European Investment Bank
loan is based on a discounted cash analysis flow of future
payments of interest and principal by applying a market
based discount rate (level 2).
The bridge loan was repaid end March 2020 when the
rights issue was completed.
The tables below detail changes in the Group’s liabilities
arising from financing activities, both cash and non-cash
changes. Liabilities arising from financing activities are
those for which cash flows were, or future cash flows will
be, classified in the Group’s consolidated statement of cash
flow as cash flows from financing activities.
Accounting policies
Loans are measured at the time of borrowing at
fair value less any transaction costs. Subsequently, debt is
measured at amortized cost. This means that the difference
between the proceeds of the loan and the amount to be
repaid is recognized in the income statement over the
term of the loan as a financial expense using the effective
interest method.
Annual Report 2020
105
DKK thousand 2020 2019
Non-current 54,201 47,549
Current 20,422 13,851
Lease liabilities 74,623 61,400
DKK thousand
Due within
1 year
Due
between
1 and 5 year
Due after
5 years Total
2020
Lease liabilities 20,422 54,201 - 74,623
Total 20,422 54,201 - 74,623
2019
Lease liabilities 13,851 40,772 6,777 61,400
Total 13,851 40,772 6,777 61,400
Note 27
Lease liabilities
Accounting policies
The lease liability is initially measured at the present
value of the future lease payments (see further in note
18), discounted by using an incremental country specific
borrowing rate ranging from 2.5% to 3.0% applying only
a single discount rate for a portfolio of lease assets with
reasonable similar characteristics.
The lease liability is subsequently measured by increasing
the carrying amount to reflect interest on the lease liability
using the effective interest method and by reducing the
carrying amount to reflect the lease payments made.
The lease liability is remeasured and corresponding
adjustments are made to the related right-of-use-asset
whenever:
• The lease term has changed, in which case the lease
liability is remeasured by discounting the revised lease
payments using a revised discount rate.
• The lease payments change due to changes in an index
or rate, in which case the lease liability is remeasured
by discounting the revised lease payments using an
unchanged discount rate.
• A lease contract is modified and the lease modification
is not accounted for as a seperate lease, in which case
the lease liability is remeasured based on the lease term
of the modified lease by discounting the revised lease
payments using a revised discount rate at the effective
date of the modification.
Annual Report 2020
106
Note 28
Prepayment from customers
Note 29
Related party transactions
In July 2020, the Company recieved an initial and non-re-
fundable payment of DKK 55.1 million (USD 8.3 million)
from Janssen Vaccines & Prevention B.V. (Janssen) related
to purchase of MVA–BN–Filo Drug Substance. The initial pay-
ment amounts to 60% of the agreed purchase price. The
batches will be delivered in beginning of 2021.
In December 2015, the Company signed a license and col-
laboration agreement with Janssen Vaccines & Prevention
B.V. (Janssen). Under the agreement, Janssen will acquire
exclusive rights to the Group’s MVA-BN
®
technology for use
in a prime-boost vaccine regimen together with Janssen’s
own AdVac
®
technology with the purpose of targeting all
cancers induced by human papillomavirus (HPV). Under
the terms of the agreement, the Group received an upfront
payment of DKK 61.7 million (USD 9 million) in January
2016. Revenue recognized in 2020 amounted to DKK
3.1 million. As per December 31, 2020 the full upfront
payment has been recognized as revenue. There is no
repayment obligation.
Under the HPV license and collaboration agreement Janssen
has ordered a new Master Seed Virus and made an upfront
payment of DKK 16.9 million (USD 2.5 million) in February
2020. As per December 31, 2020, recognition of DKK
16.9 million in revenue is outstanding. The recognition of
revenue will occur once the Master Seed Virus has been
produced and released.
In March 2018, the Company signed a new contract with
the United States Department of Defense for the de-
velopment of a prophylactic vaccine against the equine
encephalitis virus – a rare but potentially deadly mos-
quito-borne illness. The multi-year collaboration includes
total considerations of up to USD 36 million. In 2018, the
Company received prepayments of DKK 14.7 million related
to production activities conducted in 2018. In the beginning
of 2019, the Company received the last prepayments
(DKK 35.1 million) related to the production activities. All
prepayments were recognized as revenue in 2019 when
the products were released. As per December 31, 2020, no
recognition of revenue was outstanding.
In September 2017, Janssen Vaccines & Prevention B.V.
(Janssen) was awarded a contract from BARDA of USD 44.7
million, with options for additional funding over 5 years to
help support the development and potential licencure of
the Ebola vaccine regimen. The company supports Janssen
in this process with a number of activities relating to MVA-
BN
®
Filo, which are also being funded under the contract
with BARDA. The Company received DKK 14.4 million in
prepayments. The prepayment was recognized as revenue
in 2019 when the products were released. As per Decem-
ber 31, 2020, no recognition of revenue was outstanding.
In August 2017, the Company signed a license and collab-
oration agreement with Janssen Vaccines & Prevention B.V.
(Janssen). The collaboration grants Janssen the exclusive
rights to Bavarian Nordic’s MVA-BN
®
technology for vaccine
agains hepatitis B virus (HBV) and the human immunode-
ficiency virus (HIV). Under the terms of the agreement, the
Group received an upfront payment of DKK 62.9 million
(USD 10 million) in September 2017. Revenue recognized
in 2020 amounted to DKK 3.5 million. As per December
31, 2020 the full upfront payment has been recognized as
revenue. There is no repayment obligation.
The recognition of revenue is described in note 3.
Accounting policies
Prepayments are recognized under liabilities and will
be recognized in the income statement as the delivery of
paid products takes place.
DKK thousand 2020 2019
Prepayment from customers as of January 1 6,631 41,818
Prepayments received during the year 77,185 35,115
Recognized as revenue during the year (9,469) (70,302)
Prepayment from customers as of December 31 74,347 6,631
The Group Management and Board of Directors of Bavarian
Nordic A/S are considered related parties.
Besides the remuneration of the Board of Directors and the
Executive Management, cf. note 8, and the share-based
payments, cf. note 30, there are no transactions with
related parties.
Transactions with subsidiaries are eliminated in the
consolidated financial statements, in accordance with the
accounting policies.
Annual Report 2020
107
Note 30
Share-based payment
Accounting policies
Share-based incentive plans in which employees
can only opt to buy shares in the Company (warrants) are
measured at the equity instruments’ fair value at the grant
date and recognized in the income statement over the
vesting period. The balancing item is recognized directly
in equity. The fair value on the date of grant is determined
using the Black-Scholes model.
Cash-based incentive programs in which employees can
have the difference between the agreed exercise price and
the actual share price settled in cash (phantom shares) are
measured at fair value at the date of grant and recognized
in the income statement over the period when the final
right of cash-settlement is obtained. Granted rights are
subsequently re-measured on each balance sheet date and
upon final settlement, and any changes in the fair value of
the programs are recognized in the income statement. The
balancing item is recognized under other liabilities.
The fair value of the cash-based incentive programs is
determined using the Black-Scholes model.
Restricted stock units are measured at fair value at grant
date. Based on the achieved cash bonus for members of
the Executive Management, subject to the Board of Direc-
tors’ decision on the portion that should be converted to
restricted stock units, the number of restricted stock units
are calculated by dividing the allocated cash bonus amount
by the share price of the Company at grant date. As the
cash bonus has already been accrued and expensed in the
income statement, the grant of restricted stock units has no
additional impact on the income statement. The accrued li-
ability for the converted cash bonus is reclassified to equity.
Matching shares are measured at the same fair value as
the initial restricted stock units and expensed over the
three year vesting period. The balancing item is recognized
directly in equity. Restricted stock units granted as sign-on
bonus for members of the Executive Management and
restricted stock units granted to the Board of Directors are
expensed at grant date with the balancing item recognized
directly in equity.
Incentive plans
In order to motivate and retain key employees and en-
courage the achievement of common goals for employees,
management and shareholders, the Company has estab-
lished incentive plans by way of warrant programs and
restricted stock units programs, the latter only for members
of the Executive Management and Board of Directors.
Furthermore, the Company has established three-year
phantom share programs for all employees of the Group.
Warrants
The Board of Directors has been granting warrants to the
Company´s management and selected employees of the
Company and its subsidiaries.
The warrants are granted in accordance with the authoriza-
tions given to the Board of Directors by the shareholders.
The Board of Directors has fixed the terms of and the size
of the grants of warrants, taking into account authorizations
from the shareholders, the Group’s guidelines for incentive
pay, an assessment of expectations of the recipient´s work
efforts and contribution to the Group´s growth, as well as
the need to motivate and retain the recipient. Grant takes
place on the date of establishment of the program. Exercise
of warrants is by default subject to continuing employment
with the Group. The warrants granted are subject to the
provisions of the Danish Public Companies Act regarding
termination of employees prior to their exercise of warrants
in the case of recipients who are subject to the act.
Annual Report 2020
108
Note 30
Share-based payment – continued
Warrant overview – 2020
Outstanding as
of January 1
Adjustment
rights issue Additions Exercised Annulled Terminated Transferred
Outstanding as
of December 31
Corporate Management 340,791 90,006 123,645 (63,205) - (51,835) - 439,402
Other Executive Management 326,333 92,460 318,438 - - (13,905) - 723,326
Other employees 1,284,437 329,937 861,938 (86,590) (80,685) (206,797) (39,880) 2,062,360
Resigned employees 178,442 45,931 - - - (96,352) 39,880 167,901
Total 2,130,003 558,334 1,304,021 (149,795) (80,685) (368,889) - 3,392,989
Weighted average exercise price (DKK) 239 207 104 187 290 - 188
Weighted average share price at exercise (DKK) 207
Number of warrants which can be exercised as of December 31, 2020 478,632
at a weighted average exercise price of DKK 215
Warrant overview – 2020
Outstanding as
of January 1
Adjustment
rights issue Additions Exercised Annulled Terminated
Outstan-
ding as of
December 31
Can be
exercised as of
December 31
Average
exercise
price (DKK)
August 2014 118,500 31,295 - (149,795) - - - -
December 2015 293,630 77,059 - - (1,800) (368,889) - -
December 2016 366,690 94,188 - - (16,320) - 444,558 444,558 206
July 2017 26,955 7,119 - - - - 34,074 34,074 340
November 2017 296,808 77,031 - - (11,312) - 362,527 - 240
November 2018 462,835 118,503 - - (27,272) - 554,066 - 142
November 2019 564,585 146,863 - - (23,981) - 687,467 - 146
January 2020 - 6,276 23,763 - - - 30,039 - 156
November 2020 - - 1,280,258 - - - 1,280,258 - 207
Total 2,130,003 558,334 1,304,021 (149,795) (80,685) (368,889) 3,392,989 478,632
Annual Report 2020
109
Note 30
Share-based payment – continued
Warrant overview – 2019
Outstanding as
of January 1 Additions Exercised Annulled Terminated Transferred
Outstanding as
of December 31
Corporate Management 262,590 78,201 - - - - 340,791
Other Executive Management 221,172 105,161 - - - - 326,333
Other employees 1,065,467 381,223 (18,500) (143,753) - - 1,284,437
Resigned employees 288,442 - (60,000) - (50,000) - 178,442
Total 1,837,671 564,585 (78,500) (143,753) (50,000) - 2,130,003
Weighted average exercise price (DKK) 248 185 131 242 131 - 239
Weighted average share price at exercise (DKK) 175
Number of warrants which can be exercised as of December 31, 2019 412,130
at a weighted average exercise price of DKK 299
The applied volatility is based on the historical volatility
of the Bavarian Nordic share, except for November 2020
program where the volatility is based on the volatility for a
peer group.
Recognized costs in 2020 DKK 23.3 million compared to
DKK 21.4 million in 2019.
Specification of parameters for Black-Scholes model Dec. 2016 Jul. 2017 Nov. 2017 Nov. 2018 Nov. 2019 Jan. 2020 Nov. 2020
Average share price 222.50 383.50 259.50 159.00 154.05 171.20 179.84
Average exercise price at grant 260.20 430.40 303.00 179.60 185.40 197.00 206.82
Average exercise price determined at date of rights issue
March 30, 2020 205.80 340.40 239.60 142.00 146.60 155.80 -
Applied volatility rate 44.6% 44.1% 52.4% 53.3% 52.2% 53.0% 39.8%
Expected life (years) 3.0 3.0 3.0 3.0 3.0 3.0 3.0
Expected dividend per share - - - - - - -
Risk-free interest rate p.a. -0.48% -0.46% -0.55% -0.43% -0.69% -0.65% -0.66%
Fair value at grant
1)
54 98 80 52 45 53 41
1)
Fair value of each warrant at grant date applying the Black-Scholes model.
Annual Report 2020
110
Note 30
Share-based payment – continued
Exercise periods Can be exercised wholly or partly in a period of 14 days commencing from the day of publication of:
November 2020 Annual Report 2023 Interim Report Q1 2024 Interim Report Q2 2024 Interim Report Q3 2024
Annual Report 2024 Interim Report Q1 2025 Interim Report Q2 2025 Interim Report Q3 2025
January 2020 Annual Report 2022 Interim Report Q1 2023 Interim Report Q2 2023 Interim Report Q3 2023
Annual Report 2023 Interim Report Q1 2024 Interim Report Q2 2024 Interim Report Q3 2024
November 2019 Annual Report 2023 Interim Report Q1 2023 Interim Report Q2 2023 Interim Report Q3 2023
Annual Report 2023 Interim Report Q1 2024 Interim Report Q2 2024 Interim Report Q3 2024
November 2018 Annual Report 2021 Interim Report Q1 2022 Interim Report Q2 2022 Interim Report Q3 2022
Annual Report 2022 Interim Report Q1 2023 Interim Report Q2 2023 Interim Report Q3 2023
November 2017 Annual Report 2020 Interim Report Q1 2021 Interim Report Q2 2021 Interim Report Q3 2021
Annual Report 2021 Interim Report Q1 2022 Interim Report Q2 2022 Interim Report Q3 2022
July 2017 Interim Report Q2 2020 Interim Report Q3 2020 Annual Report 2020 Interim Report Q1 2021
Interim Report Q2 2021 Interim Report Q3 2021 Annual Report 2021 Interim Report Q1 2022
December 2016 Annual Report 2019 Interim Report Q1 2020 Interim Report Q2 2020 Interim Report Q3 2020
Annual Report 2020 Interim Report Q1 2021 Interim Report Q2 2021 Interim Report Q3 2021
Annual Report 2020
111
Note 30
Share-based payment – continued
Phantom shares
In 2016, the Company established a three-year phantom
share program for all employees of the Group except for
management and other employees receiving warrants. The
employees receive up to four phantom shares per month
free of charge during the period from January 1, 2017 to
December 31, 2019. Each employee who is a full-time em-
ployee during the entire term of the plan will be eligible to
receive a maximum of 144 phantom shares. The program
expired without exercise in January 2020.
In 2017, the Company established a three-year phantom
share program for all employees of the Group except for
management and other employees receiving warrants. The
employees receive up to four phantom shares per month
free of charge during the period from January 1, 2018 to
December 31, 2020. Each employee who is a full-time em-
ployee during the entire term of the plan will be eligible to
receive a maximum of 144 phantom shares. Following the
rights issues in March 2020 the monthly grant increased to
five phantom shares for the remaining grant period and the
maximum increased to 182 phantom shares.
In 2018, the Company established a three-year phantom
share program for all employees of the Group except for
management and other employees receiving warrants. The
employees receive up to four phantom shares per month
free of charge during the period from January 1, 2019 to
December 31, 2021. Each employee who is a full-time em-
ployee during the entire term of the plan will be eligible to
receive a maximum of 144 phantom shares. Following the
rights issues in March 2020 the monthly grant increased to
five phantom shares for the remaining grant period and the
maximum increased to 183 phantom shares.
In 2019, the Company established a three-year phantom
share program for all employees of the Group except for
management and other employees receiving warrants. The
employees receive up to four phantom shares per month
free of charge during the period from January 1, 2020 to
December 31, 2022. Each employee who is a full-time em-
ployee during the entire term of the plan will be eligible to
receive a maximum of 144 phantom shares. Following the
rights issues in March 2020 the monthly grant increased to
five phantom shares for the remaining grant period and the
maximum increased to 183 phantom shares.
In 2020, the Company established a three-year phantom
share program for all employees of the Group except for
management and other employees receiving warrants. The
employees receive up to five phantom shares per month
free of charge during the period from January 1, 2021 to
December 31, 2023. Each employee who is a full-time em-
ployee during the entire term of the plan will be eligible to
receive a maximum of 180 phantom shares.
Grants are made on a monthly basis during the life of the pro-
grams as long as the employee is employed with the Group.
On expiry of the programs, the employees may exercise the
phantom shares granted to them and thus be entitled to
a cash bonus calculated on the basis of the increase in the
price of the Company´s shares. The exercise is conditional
on the price of the Company´s shares being at least DKK 5
higher than the exercise price at the time of exercise.
On expiry of the programs, former employees are entitled
to settlement of the phantom shares granted during their
term of employment.
Annual Report 2020
112
Note 30
Share-based payment – continued
2020-2022 phantom share program 2020
Outstanding as of January 1 -
Granted during the year 29,554
Adjustment following rights issue March 2020 1,367
Outstanding phantom shares as of December 31 30,921
Liability in DKK thousand as of December 31 1,864
Specification of parameters for Black-Scholes model
Share price December 31 187
Average share exercise price 147
Expected volatility rate 40%
Expected life (years) 2.0
Expected dividend per share -
Risk-free interest rate p.a. -0.17%
2019-2021 phantom share program 2020 2019
Outstanding as of January 1 19,213 -
Granted during the year 29,437 19,213
Adjustment following rights issue March 2020 6,445 -
Outstanding phantom shares as of December 31 55,095 19,213
Liability in DKK thousand as of December 31 2,985 864
Specification of parameters for Black-Scholes model
Share price December 31 187 171
Average share exercise price 142 180
Expected volatility rate 40% 51%
Expected life (years) 1.0 2.0
Expected dividend per share - -
Risk-free interest rate p.a. -0.15% -0.17%
The expected volatility for 2020 is based on the volatility
for a peer group.
The expense in respect of phantom shares granted in 2020
provided a cost of DKK 1.9 million.
The liability is included in other liabilities, cf. note 23. The expected volatility for 2020 is based on the volatility
for a peer group, whereas the volatility for prior year is
based on the historic volatility of the Company.
Phantom shares granted in 2020 provided an expense of
DKK 1.9 million, whereas the revaluation of previously
granted phantom shares provided an expense of DKK 0.2
million, total net expense of DKK 2.1 million
(net expense 2019: DKK 0.9 million).
The liability is included in other liabilities, cf. note 23.
Annual Report 2020
113
2018-2020 phantom share program 2020 2019 2018
Outstanding as of January 1 36,769 17,644 -
Granted during the year 29,376 19,125 17,644
Adjustment following rights issue March 2020 11,082 - -
Outstanding phantom shares as of December 31 77,227 36,769 17,644
Liability in DKK thousand as of December 31 - 271 145
Specification of parameters for Black-Scholes model
Share price December 31 187 171 127
Average share exercise price 240 303 303
Expected volatility rate 40% 51% 52%
Expected life (years) - 1.0 2.0
Expected dividend per share - - -
Risk-free interest rate p.a. - -0.21% 0.02%
2017-2019 phantom share program 2020 2019 2018 2017
Outstanding as of January 1 54,857 35,772 18,234 -
Granted during the year - 19,085 17,538 18,234
Expired during the year (54,857) - - -
Outstanding phantom shares as of December 31 - 54,857 35,772 18,234
Liability in DKK thousand as of December 31 - 130 953
Specification of parameters for Black-Scholes model
Share price December 31 171 127 224
Average share exercise price 260 260 260
Expected volatility rate 51% 52% 52%
Expected life (years) - 1.0 2.0
Expected dividend per share - - -
Risk-free interest rate p.a. -0.30% -0.07% 0.05%
Note 30
Share-based payment – continued
The expected volatility for 2020 is based on the volatility
for a peer group, whereas the volatility for prior years is
based on the historic volatility of the Company.
Phantom shares granted in 2020 provided an expense
of DKK 0.0 million, whereas the revaluation of previously
granted phantom shares provided an income of DKK 0.3
million, total net income of DKK 0.3 million (net expense
2019: DKK 0.1 million).
The expected volatility is based on the historic volatility.
The 2017-2019 program expired in January 2020 without
exercise as the actual share price was below the exercise
price of DKK 260.20.
Reversal of the phantom share program provided
an income of DKK 0.0 million (net income 2019:
DKK 0.1 million).
The liability is included in other liabilities, cf. note 23.
The 2018-2020 program will exercise in January 2021 if
the average share price for the period December 30,
2020 - January 14, 2021 will exceed the exercise price of
DKK 239.70. Otherwise the program will expire without
exercise.
Annual Report 2020
114
Restricted stock units
In March 2020, the Board of Directors decided to postpone
the payment of half of the achieved cash bonus for mem-
bers of the Other Executive Management for 3 years, con-
verting the postponed bonus of DKK 2.1 million into 8,705
unconditional restricted stock units using the share price of
the Company at grant date (DKK 240). The Board of Direc-
tors decided to grant additional restricted stock units free of
charge on expiry of a 3 years period (so-called “matching
shares”) upon the recipient still being employed in March
2023. One matching share is granted for each two acquired
restricted stock units. The maximum number of matching
shares is 4,353. The initial granted restricted stock units and
the potential matching shares total 13,058 shares.
At the annual general meeting in June 2020, the Board
of Directors were granted a total of 7,111 unconditional
restricted stock units corresponding to 50% of the annual
fixed fee of DKK 1.4 million (excl. committee fee). The
restricted stock units will be delivered after 3 years in June
2023.
As sign-on bonus the new CMO was granted a total of
8,651 unconditional restricted stock units in May 2020
and 4,325 additional restricted stock units on expiry of a 3
years period (“matching shares”) upon the CMO still being
employed in May 2023.
Outstanding restricted stock units 2020
Outstanding as
of January 1
Adjustment
rights issue
Granted
during
the year
Released
during
the year
Outstanding
as of
December 31
Value at
grant date
(DKK) Vesting date
Executive Management:
Conversion of cash bonus for 2019 - 2,298 8,705 - 11,003 240 Mar. 2023
Matching shares - bonus 2019 - 1,147 4,353 - 5,500 240 Mar. 2023
Sign-on bonus CMO - - 8,651 - 8,651 149 May 2023
Matching shares - sign-on CMO - - 4,325 - 4,325 149 May 2023
Conversion of cash bonus for 2018 12,722 3,358 - - 16,080 144 Mar. 2022
Matching shares - bonus 2018 6,362 1,677 - - 8,039 144 Mar. 2022
Sign-on bonus CFO 6,767 1,787 - - 8,554 156 Nov. 2021
Matching shares - sign-on CFO 3,383 894 - - 4,277 156 Nov. 2021
Conversion of cash bonus for 2017 6,910 1,824 - - 8,734 244 Mar. 2021
Matching shares - bonus 2017 3,456 910 - - 4,366 244 Mar. 2021
Conversion of cash bonus for 2016 5,642 - - (5,642) - 292 Mar. 2020
Matching shares - bonus 2016 2,821 - - (2,821) - 292 Mar. 2020
Executive Management 48,063 13,895 26,034 (8,463) 79,529
Board of Directors:
Fee 2020 - - 7,111 - 7,111 190 Jun. 2023
Fee 2019 9,765 2,575 - - 12,340 138 Apr. 2022
Fee 2018 6,857 1,809 - - 8,666 175 Apr. 2021
Fee 2017 3,693 973 - (4,666) - 365 Apr. 2020
Board of Directors 20,315 5,357 7,111 (4,666) 28,117
Total 68,378 19,252 33,145 (13,129) 107,646
Note 30
Share-based payment – continued
Annual Report 2020
115
In August/September 2020, the Company bought back
52,397 of its own shares to meet the obligation to deliver
up to 33,145 shares to the members of the Executive
Management and the Board of Directors in March/May/
June 2023. The purchase of own shares also captured
the adjustment to previous granted restricted stock units
following the rights issue, 19,252 shares.
The grant of the initial restricted stock units to the Executive
Management (8,705 shares) had no impact on the income
statement for 2020, as the corresponding cash bonus (DKK
2.1 million) was accrued in 2019, though the amount has
been reclassified from “Salary and wages” to “Share-based
payment” in the staff cost note (note 8). The obligation
related to the matching shares amount to DKK 1.0 million
measured at the same fair value as the initial restricted
stock units (DKK 240). The obligation will be expensed
over the three year vesting period. The sign-on bonus to
the new CMO was expensed by DKK 1.3 million. During
2020, DKK 4.6 million has been expensed and recognized
as share-based payment for Executive Management (incl.
grants of matching shares for prior years). The grant of
restricted stock units to the Board of Directors (7,111 shares
- DKK 1.4 million) were fully expensed at grant.
Outstanding restricted stock units 2019
Outstanding as
of January 1
Granted
during the
year
Released
during
the year
Outstanding
as of
December 31
Value at
grant date
(DKK) Vesting date
Executive Management:
Conversion of cash bonus for 2018 incl. matching shares - 19,084 - 19,084 144 Mar. 2021
Sign-on bonus CFO incl. matching shares 10,150 - - 10,150 156 Nov. 2021
Conversion of cash bonus for 2017 incl. matching shares 10,366 - - 10,366 244 Mar. 2021
Conversion of cash bonus for 2016 incl. matching shares 8,463 - - 8,463 292 Mar. 2020
Conversion of cash bonus for 2015 incl. matching shares 11,144 - (11,144) - 270 Mar. 2019
Executive Management 40,123 19,084 (11,144) 48,063
Board of Directors:
Fee 2019 - 9,765 - 9,765 138 Apr. 2022
Fee 2018 6,857 - - 6,857 175 Apr. 2021
Fee 2017 3,693 - - 3,693 365 Apr. 2020
Board of Directors 10,550 9,765 - 20,315
Total 50,673 28,849 (11,144) 68,378
Note 30
Share-based payment – continued
Annual Report 2020
116
Note 30
Share-based payment – continued
Note 31
Contingent liabilities and other contractual obligations
DKK thousand 2020 2019
Warrants 23,336 21,437
Restricted stock units 5,948 4,152
Share-based payment recognized directly in equity 29,284 25,589
2020-2022 phantom share program 1,864 -
2019-2021 phantom share program 2,121 864
2018-2020 phantom share program (271) 126
2017-2019 phantom share program - (130)
Share-based payment recognized as a liability (change during the year) 3,714 860
Total share-based payment expensed 32,998 26,449
DKK thousand 2020 2019
Collaborative agreements
Contractual obligations with research partners for long-term research projects.
– Due within 1 year 45,052 36,884
Other contractual obligations
– Due within 1 year 17,769 14,088
– Due between 1 and 5 years 12,604 9,615
Total share-based payments
Below a specification of all share-based payments
expensed in 2020 and 2019. The amounts reconcile to
note 8.
Sales milestone to GlaxoSmithKline
The Asset Purchase Agreement with GlaxoSmithKline
regarding the acquisition of the product rights to Rabipur/
RabAvert and Encepur includes a sales milestone of EUR 25
million. As per December 31, 2019 Management does not
judge the sales milestone to be probable and therefore the
sales milestone has not been recognized as either part of
the product rights (note 16) nor the deferred consideration
for product rights (note 25).
License and collaboration agreement AdaptVac
Under the license and collaboration agreement with
AdaptVac the Company has an obligation of payment of
potential future development and sales milestones and
tiered royalties.
License agreements National Cancer Institute
The Group has license agreements with the National Cancer
Institute (NCI) and Public Health Service (PHS) in the U.S.
for PROSTVAC, CV301 and BN-Brachyury, respectively. The
agreements include contingent liabilities for the Group
to pay performance-based royalties, if and when certain
milestone events are achieved. Further, the agreements
include potential contingent liabilities for the Group to pay
additional sublicensing royalties on the fair market value of
consideration received, if and when the Group grants such
sublicenses.
Company mortgage
The Company has by letter of indemnity granted Nordea a
floating charge on unsecured claims arising from the sale
of goods and services and stocks of raw materials, interme-
diate products and finished products, DKK 150 million (DKK
150 million). The floating charge secures the operating
credit line of DKK 20 million and the line for trading in
financial instruments, DKK 50 million (DKK 50 million).
Lawsuits
Based on management’s assessment the Group is not
involved in any lawsuits or arbitration cases which could
have a material impact on the Group’s financial position or
results of operations.
Annual Report 2020
117
Note 32
Significant events after the balance sheet date
Note 33
Approval of the consolidated financial statements
On January 5, 2021, the Company announced that sales
contracts with three European governments for the supply
of IMVANEX
®
smallpox vaccine have been concluded. The
combined value of the contracts is EUR 11 million and will
be revenue recognized during first half of 2021, where
deliveries are expected to occur.
On March 8, 2021, the Company announced preclinical data
for the capsid virus like particle (cVLP) COVID-19 vaccine
candidate, ABNCoV2, licensed from AdaptVac. The data con-
firmed the previous strong immunogenicity results already
published, and demonstrated a protective efficacy from
vaccination post-challenge with SARS-CoV-2.
On March 10, 2021 the Company announced the comple-
tion of a directed issue and private placement of 5,150,000
new shares at an offer price of DKK 223 per share, raising
gross proceeds of DKK 1,148 million.
Except as noted above, there have been no significant
events between December 31, 2020 and the date of
approval of these financial statements that would require
a change to or additional disclosure in the financial
statements.
The consolidated financial statements were approved by
the Board of Directors and Corporate Management and
authorized for issue on March 12, 2021.
Annual Report 2020
118
FINANCIAL
STATEMENTS – PARENT
Financial statements of the
Parent Company
Income Statements 120
Statements of Financial Position
– Assets 121
Statements of Financial Position
– Equity and Liabilities 122
Statements of Changes in Equity 123
NOTES
1 Significant accounting policies
and significant accounting
estimates and judgments 124
2 Revenue 125
3 Research and development costs 125
4 Staff costs 126
5 Depreciation, amortization and
impairment losses 127
6 Financial income 128
7 Financial expenses 128
8 Tax for the year 129
9 Intangible assets 130
10 Property, plant and equipment 131
11 Right-of-use-assets 132
120 124
CONTENTS
12 Investment in subsidiaries 133
13 Inventories 134
14 Lease liabilities 134
15 Prepayments from customers 135
16 Other liabilities 135
17 Related party transactions 136
18 Contingent liabilities and
other contractual obligations 137
19 Mortgages and collateral 138
20 Proposed appropriation of
net profit/(loss) 138
21 Significant events after
the balance sheet date 138
Annual Report 2020
119
DKK thousand Note 2020 2019
Revenue 2 1,883,483 661,056
Production costs 4,5 1,174,546 355,212
Gross profit 708,937 305,844
Sales and distribution costs 4 267,112 54,121
Research and development costs 3,4,5 363,459 420,426
Administrative costs 4,5 288,877 224,729
Total operating costs 919,448 699,276
Other operating income 627,647 -
Income before interest and tax (EBIT) 417,136 (393,432)
Income from investments in subsidiaries 12 15,236 8,955
Financial income 6 119,665 49,529
Financial expenses 7 275,043 95,200
Income before company tax 276,994 (430,148)
Tax on income for the year 8 - -
Net profit for the year 20 276,994 (430,148)
Income Statements
For the years ended December 31, 2020 and 2019
Note
Notes with reference to the consolidated financial statements
Revenue 3
Production costs 4
Sales and distribution costs 5
Administrative costs 7
Other operating income 11
Annual Report 2020
120
Statements of Financial Position – Assets
December 31, 2020 and 2019
DKK thousand Note 2020 2019
Non-current assets
Product rights 5,185,765 5,458,700
Acquired patents and licenses 29,813 -
Software 17,475 22,336
Other intangible assets in progress 55,194 2,868
Intangible assets 9 5,288,247 5,483,904
Land and buildings 365,704 161,879
Leasehold improvements 1,629 -
Plant and machinery 204,665 44,265
Other fixtures and fittings, other plant and equipment 213,726 12,067
Assets under construction 204,702 614,566
Property, plant and equipment 10 990,426 832,777
Right-of-use assets 11 35,516 19,251
Investments in subsidiaries 12 144,004 129,415
Other receivables 3,879 1,184
Financial assets 147,883 130,599
Total non-current assets 6,462,072 6,466,531
DKK thousand Note 2020 2019
Current assets
Inventories 13 503,768 100,072
Trade receivables 27,866 35,465
Receivables from subsidiaries 104,944 116
Other receivables 36,441 27,660
Prepayments 12,474 8,810
Receivables 181,725 72,051
Securities 1,384,120 174,819
Cash and cash equivalents 263,686 287,398
Securities, cash and cash equivalents 1,647,806 462,217
Total current assets 2,333,299 634,340
Total assets 8,795,371 7,100,871
Annual Report 2020
121
DKK thousand Note 2020 2019
Equity
Share capital 584,501 323,891
Treasury shares (1,077) (684)
Retained earnings 4,210,337 1,421,739
Reserve for development costs 13,157 15,366
Other reserves 87,916 102,506
Equity 4,894,834 1,862,818
Liabilities
Deferred consideration for product rights 2,464,932 2,691,400
Credit institutions 393,269 395,443
Lease liabilities 14 25,858 13,844
Non-current liabilities 2,884,059 3,100,687
Deferred consideration for product rights 357,736 459,730
Credit institutions 2,173 1,375,116
Lease liabilities 14 11,356 5,658
Prepayment from customers 15 74,347 6,631
Trade payables 322,264 103,460
Payables to subsidiaries 137,018 118,602
Other liabilities 16 111,584 68,169
Current liabilities 1,016,478 2,137,366
Total liabilities 3,900,537 5,238,053
Total equity and liabilities 8,795,371 7,100,871
Significant accounting policies and significant accounting
estimates and judgments 1
Related party transactions 17
Contingent liabilities and other contractual obligations 18
Mortgages and collateral 19
Proposed appropriation of net profit/(loss) 20
Significant events after the balance sheet date 21
Notes with reference to the consolidated financial statements Note
Trade receivables 20
Prepayments 22
Financial risks and financial instruments 24
Deferred consideration for product rights 25
Debt to credit institutions 26
Prepayment from customers 28
Share-based payment 30
Statement of Financial Position – Equity and Liabilities
December 31, 2020 and 2019
Annual Report 2020
122
Statements of Changes in Equity
December 31, 2020
DKK thousand
Share
capital
Treasury
shares
Retained
earnings
Reserve for
development
costs
Other
reserves Equity
Equity as of January 1, 2020 323,891 (684) 1,421,739 15,366 102,506 1,862,818
Net profit for the year - - 276,994 - - 276,994
Exchange rate adjustments - - (648) - - (648)
Change in fair value of financial instruments entered into to hedge future cash flows - - - - (3,096) (3,096)
Share-based payment - - - - 29,283 29,283
Warrant program exercised 1,498 - 17,514 - (3,448) 15,564
Warrant recharged - - 1,212 - - 1,212
Warrant program expired - - 33,563 - (33,563) -
Capital increase through rights issue 259,112 - 2,565,214 - - 2,824,326
Costs related to issue of new shares - - (103,184) - - (103,184)
Purchase of treasury shares - (524) (10,575) - - (11,099)
Transfer regarding restricted stock units - 131 3,635 - (3,766) -
Sale of preemptive rights - treasury shares - - 2,664 - - 2,664
Reserve for development costs - - 2,209 (2,209) - -
Equity as of December 31, 2020 584,501 (1,077) 4,210,337 13,157 87,916 4,894,834
Transactions on the share capital and rules on changing
Articles of Associations, see statement of changes in Group
equity.
Other reserves consist of costs for share-based payments
and hedging reserves.
Annual Report 2020
123
Note 1
Significant accounting policies and significant accounting estimates and judgments
Accounting policies
The financial statements of the Parent Company
Bavarian Nordic A/S have been prepared in accordance
with the Danish Financial Statements Act (Class D).
The financial statements are presented in Danish kroner
(DKK), which also is the functional currency of the Parent
Company. The accounting policies are unchanged from
previous year.
Changes in accounting policies
The accounting policies are unchanged from last year.
Supplementary accounting policies
for the Parent Company
Accounting policies for investments in subsidiaries are
described in note 12.
Pursuant to the schedule requirements of the Danish Finan-
cial Statements Act, entries recognized in the statement of
comprehensive income in the consolidated financial state-
ments are recognized directly in the statement of changes
in equity in the Parent Company’s financial statements.
Warrant recharged to subsidiaries is treated as the Parent
Company’s issuance of equity in exchange for cash.
The recharge is subsequently recognized in the income
statement under the cost plus agreements with the subsid-
iaries. Income tax effects relating to warrant recharged is
recognized in the income statement.
As allowed under section 86 (4) of the Danish Financial
Statements Act, no cash flow statement has been prepared
for the Parent Company, as it is included in the consolidat-
ed cash flow statement.
Significant accounting estimates and judgments
In preparation of the financial statements for the
Parent Company, Management makes a number of account-
ing estimates which form the basis for the preparation,
recognition and measurement of the Company’s assets and
liabilities.
Management has made the following accounting estimates
which significantly affect the amounts recognized in the
financial statements:
• Investments in subsidiaries (note 12)
• Receivables from subsidiaries (note12)
Please refer to the specific note for further description of the
significant accounting estimates and assumptions used.
Annual Report 2020
124
DKK thousand ´ 2020 2019
MVA-BN smallpox vaccine sale 540,769 324,258
Rabipur/RabAvert 659,022 -
Encepur 455,012 -
Sale of goods 1,654,803 324,258
Milestone Payments 66,553 -
Contract work 162,127 336,798
Sale of services 228,680 336,798
Revenue 1,883,483 661,056
Total revenue includes:
Fair value adjustment concerning financial instruments entered into to hedge revenue 13,146 (13,006)
DKK thousand ´ 2020 2019
Research and development costs incurred this year 467,456 639,362
Of which:
Contract costs recognized as production costs (103,997) (218,936)
Research and development costs recognized in the income statement 363,459 420,426
Note 2
Revenue
Note 3
Research and development costs
The Group’s sale of RabAvert in US is handled and recognized
in Bavarian Nordic, Inc. as from August 1, 2020. Up until then
the sale was handled by GlaxoSmithKline. Bavarian Nordic
Inc. operates under a distribution agreement and purchase
the products from Bavarian Nordic A/S. The internal sale
for the period August 1 – December 31, 2020 exceeded
Bavarian Nordic, Inc.'s sale to customers by DKK 31.3 million,
hence the RabAvert revenue recognized in the Parent
Company is higher than the RabAvert revenue recognized in
the Group.
The contract with the United States Department of Defense
for the development of a prophylactic vaccine against the
equine encephalitis virus is concluded with Bavarian Nordic,
Inc., whereas all costs related to the contract are covered
by Bavarian Nordic A/S. Bavarian Nordic A/S re-invoice
those costs to Bavarian Nordic, Inc. Net Bavarian Nordic,
Inc. earns a mark-up, reducing the contract work revenue
in the Parent Company compared to the contract work
revenue in the Group.
For further disclosures see the consolidated financial state-
ments note 3.
Accounting policies and significant
accounting estimates
See consolidated financial statements note 3.
Write-down of the CV301 development project was included
by DKK 68.3 million in 2019.
Accounting policies
See consolidated financial statements note 6.
Annual Report 2020
125
Note 4
Staff costs
DKK thousand 2020 2019
Wages and salaries 293,496 213,359
Contribution based pension 25,970 18,632
Social security expenses 2,459 2,041
Other staff expenses 24,283 21,982
Share-based payment 32,074 26,194
Staff costs 378,282 282,208
Staff expenses are distributed as follows:
Production costs 195,337 147,763
Sales and distribution costs 17,397 17,027
Research and development costs 48,272 39,005
Administrative costs 98,367 78,413
Capitalized salaries 18,909 -
Staff costs 378,282 282,208
Average number of employees converted to full-time 408 298
Number of employees as of December 31 converted to full-time 475 324
DKK thousand 2020 2019
Staff costs include the following costs:
Board of Directors:
Remuneration 3,825 3,883
Share-based payment 1,350 1,350
Remuneration to Board of Directors 5,175 5,233
Executive Management:
Salary 5,186 5,061
Paid bonus 2,540 869
Other employee benefits 576 649
Contribution based pension - -
Share-based payment 4,011 5,483
Corporate Management 12,313 12,062
Salary 9,288 8,126
Paid bonus 2,089 960
Other employee benefits 465 484
Contribution based pension 1,114 827
Share-based payment 8,557 6,316
Other Executive Management 21,513 16,713
Remuneration to Executive Management 33,826 28,775
Total management remuneration 39,001 34,008
Annual Report 2020
126
CEO and President of the Company Paul Chaplin constituted
the Corporate Management in 2020. As from February
2021 CFO Henrik Juuel also constitutes part of the Corporate
Management.
For 2020 CFO Henrik Juuel, COO Henrik Birk, CPO Anu Kerns
and CBO Tommi Kainu constituted the Company’s member
of the Other Executive Management.
Incentive programs for management and other employees
are disclosed in the consolidated financial statements
note 30.
The CEO’s contract of employment contains standard terms
for members of the management of Danish listed com-
panies, including the extended period of notice that both
parties are required to give. For the Company, the notice is
maximum 18 months. In the event of a change of control,
the term of notice for the Company will be extended to
maximum 24 months.
Accounting policies
See consolidated financial statements note 8.
Note 4
Staff costs – continued
Note 5
Depreciation, amortization and impairment losses
DKK thousand 2020 2019
Depreciation and amortization included in:
Production costs 310,784 31,132
Research and development costs 1,400 955
Administrative costs 20,547 14,543
Depreciation and amortization 332,731 46,630
Hereof profit ()/loss from disposed fixed assets 3,149 -
Impairment losses included in:
Production costs 16,066 -
Impairment losses 16,066 -
For further disclosures see the consolidated financial
statements note 9.
Annual Report 2020
127
Note 6
Financial income
Note 7
Financial expenses
DKK thousand 2020 2019
Financial income from bank and deposit contracts 193 602
Financial income from subsidiaries 21,743 24,192
Financial income from securities 8,756 16,435
Fair value adjustments on securities 6,783 -
Adjustment of deferred consideration due to change in estimated timing of payments 67,719 -
Currency adjustment deferred consideration 11,900 -
Net gain on derivative financial instruments at fair value in the income statement 2,571 5,502
Net foreign exchange gains - 2,798
Financial income 119,665 49,529
Accounting policies
See consolidated financial statements note 12.
DKK thousand 2020 2019
Interest expenses on debt 30,741 17,211
Financial expenses to subsidiaries 2,274 1,942
Fair value adjustments on securities - 15,331
Unwinding of the discount related to deferred consideration 145,149 -
Net foreign exchange losses 62,558 -
Write-down of receivables from subsidiaries, cf. note 12 34,321 60,716
Financial expenses 275,043 95,200
Accounting policies
See consolidated financial statements note 13.
The deferred consideration for product rights is measured
at net present value and the difference between the net
present value and the amounts due is recognized in the
income statement as a financial expense over the period
until expected payment date using the effective interest
method.
Annual Report 2020
128
Note 8
Tax for the year
Accounting policies
See consolidated financial statements note 14.
Deferred tax
Recognized deferred tax assets relate to temporary
differences between valuations for accounting and taxation
purposes and tax losses carried forward.
For further disclosures see the consolidated financial
statements note 14.
DKK thousand 2020 2019
Tax recognized in the income statement
Tax for the year recognized in the income statement - -
Tax on income for the year is explained as follows:
Income before company tax 276,994 (430,148)
Calculated tax (22.0%) on income before company tax 60,939 (94,633)
Tax effect on:
Income from investments in subsidiaries (3,352) (1,970)
Write-down of receivables from subsidiaries - not deductable for tax purposes 7,551 -
Income()/expenses that are not taxable/deductible for tax purposes (10,648) 13,412
Write-down of tax assets (54,490) 83,191
Tax on income for the year - -
Tax recognized in equity
Tax for the year recognized in equity - -
DKK thousand
January
1, 2020
Recognized
in the income
statement
Recognized
in equity
December
31, 2020
Product rights - (94,360) - (94,360)
Other intangible assets 2,040 (1,663) - 377
Property, plant and equipment 22,593 15,749 - 38,342
Right-of-use-asset 55 318 - 373
Development projects for sale 32,446 - - 32,446
Accrued project costs (790) 609 - (181)
Receivables - 18 - 18
Provisions - 17,930 - 17,930
Financial instruments (503) - 681 178
Share-based payment 8,573 6,824 - 15,397
Tax losses carried forward 362,036 85 - 362,121
Not recognized tax asset (426,450) 54,490 (681) (372,641)
Recognized deferred tax assets - - - -
Annual Report 2020
129
Note 9
Intangible assets
2020
DKK thousand
Product
rights
Acquired
patents and
licenses Software
Other
intangible
assets in
progress Total
Costs as of January 1, 2020 5,458,700 - 98,687 2,868 5,560,255
Additions - 29,813 2,991 54,691 87,495
Transfer - - 2,365 (2,365) -
Disposal - - (18,962) - (18,962)
Cost as of December 31, 2020 5,458,700 29,813 85,081 55,194 5,628,788
Amortization as of January 1, 2020 - - 76,351 - 76,351
Amortization 272,935 - 9,421 - 282,356
Disposals - - (18,166) - (18,166)
Amortization as of December 31, 2020 272,935 - 67,606 - 340,541
Carrying amount as of December 31, 2020 5,185,765 29,813 17,475 55,194 5,288,247
Carrying amount as of December 31, 2019 5,458,700 - 22,336 2,868 5,483,904
Accounting policies
See consolidated financial statements note 16.
Annual Report 2020
130
Note 10
Property, plant and equipment
2020
DKK thousand
Land and
buildings
Leasehold
improve-
ment
Plant and
machinery
Other
fixtures and
fittings, other
plant and
equipment
Assets under
construction Total
Costs as of January 1, 2020 321,503 2,702 301,174 42,658 614,566 1,282,603
Additions 26,222 1,331 657 10,902 173,342 212,454
Transfer 201,776 343 185,345 195,742 (583,206) -
Disposals (2,390) - (2,152) (6,443) - (10,985)
Cost as of December 31, 2020 547,111 4,376 485,024 242,859 204,702 1,484,072
Depreciation and impairment losses as of January 1, 2020 159,624 2,702 256,909 30,591 - 449,826
Depreciation 17,538 45 14,013 4,785 - 36,381
Impairment losses 5,354 - 10,712 - - 16,066
Disposals (1,109) - (1,275) (6,243) - (8,627)
Depreciation and impairment losses as of December 31, 2020 181,407 2,747 280,359 29,133 - 493,646
Carrying amount as of December 31, 2020 365,704 1,629 204,665 213,726 204,702 990,426
Carrying amount as of December 31, 2019 161,879 - 44,265 12,067 614,566 832,777
For collateral see the consolidated financial statements
note 17.
Accounting policies
See consolidated financial statements note 17.
Annual Report 2020
131
Note 11
Right-of-use-assets
2020
DKK thousand
Rent
facility Car leasing Equipment Total
Right-of-use assets as of January 1, 2020 17,531 1,417 303 19,251
Additions 24,215 619 542 25,376
Modifications 1,303 432 (1) 1,734
Depreciations (9,332) (1,184) (329) (10,845)
Right-of-use assets as of December 31, 2020 33,717 1,284 515 35,516
2019
DKK thousand
Rent
facility Car leasing Equipment Total
Impact from applying IFRS 16 as of January 1, 2019 21,070 1,493 545 23,108
Additions - 929 - 929
Modifications 688 292 - 980
Depreciations (4,227) (1,297) (242) (5,766)
Right-of-use assets as of December 31, 2019 17,531 1,417 303 19,251
Amounts included in the income statement
DKK thousand 2020 2019
Interest expense leases 875 525
Depreciation recognized on right-of-use assets 10,845 5,766
Cost recognized for short term leases (less than 12 months) 1,865 267
Accounting policies
See consolidated financial statements note 18.
Annual Report 2020
132
Note 12
Investment in subsidiaries
In November 2019, the Company established a compa-
ny in Switzerland for the purpose of running the future
commercial organisation for Rabipur/RabAvert, Encepur
and JYNNEOS.
The carrying amount of investments in subsidiaries mainly
relates to Bavarian Nordic GmbH (DKK 137.2 million) and
the net share of profit from this subsidiary amounts to DKK
12.3 million.
Accounting policies
Investments in subsidiaries are recognized and
measured under the equity method. This means that, in
the balance sheet, investments are measured at the pro
rata share of the subsidiaries’ equity plus or less unam-
ortized positive, or negative, goodwill and plus or less
unrealized intra-group profits or losses.
Subsidiaries with a negative equity value are measured
at zero value, and any receivables from these subsidiaries
are written down by the Company’s share of such negative
equity if it is deemed irrecoverable. If the negative equity
exceeds the amount receivable, the remaining amount is
recognized under provisions if the Company has a legal
or constructive obligation to cover the liabilities of the
relevant subsidiary.
Upon distribution of profit or loss, net revaluation of invest-
ments in subsidiaries is transferred to the net revaluation
reserve according to the equity method under equity, if the
net revaluation is positive. If the net revaluation is nega-
tive, it is recognized in retained earnings in equity.
Goodwill is calculated as the difference between cost of the
investments and the fair value of the assets and liabilities
acquired which have been measured at fair value at the
date of acquisition. The amortization period for goodwill is
usually five years.
Investments in subsidiaries are written down to the lower
of recoverable amount and carrying amount.
Income from investments in subsidiaries’ contains pro rata
share of subsidiaries profits or losses after elimination of
unrealized intra-group profits and losses.
Significant accounting estimates
As of December 31, 2020, Bavarian Nordic, Inc. had
a negative equity of DKK 414 million (DKK 442 million).
Following the discontinuation of the PROSPECT study in
September 2017, the Parent Company’s receivable from
Bavarian Nordic, Inc. was fully written-down as Manage-
ment assessed that there would be no significant cash
flows from sale in the coming years. Management main-
tains this assessment as of December 31, 2020.
2020
DKK thousand
Investments in
subsidiaries
Receivables from
subsidiaries
Costs as of January 1, 2020 186,953 442,552
Additions - 74,898
Exchange rate adjustments - (40,577)
Cost as of December 31, 2020 186,953 476,873
Net revaluation as of January 1, 2020 (57,538) (442,552)
Net share of profit/loss for the year 15,236 -
Write-down - (34,321)
Exchange rate adjustments (647) -
Net revaluation as of December 31, 2020 (42,949) (476,873)
Carrying amount as of December 31, 2020 144,004 -
Carrying amount as of December 31, 2019 129,415 -
Company summary Domicile Ownership Voting rights
Subsidiaries
Bavarian Nordic GmbH Germany 100% 100%
Bavarian Nordic, Inc. USA 100% 100%
Bavarian Nordic Switzerland AG Switzerland 100% 100%
Aktieselskabet af 1. juni 2011 I Denmark 100% 100%
Aktieselskabet af 1. juni 2011 II Denmark 100% 100%
Annual Report 2020
133
Note 13
Inventories
Note 14
Lease liabilities
DKK thousand 2020 2019
Raw materials and supply materials 73,037 38,888
Work in progress 201,602 163,513
Manufactured goods and commodities 292,667 1,727
Write-down on inventory (63,538) (104,056)
Inventories 503,768 100,072
Write-down on inventory as of January 1 (104,056) (107,692)
Write-down for the year (25,692) (17,824)
Use of write-down 65,672 7,683
Reversal of write-down 538 13,777
Write-down on inventory as of December 31 (63,538) (104,056)
Cost of goods sold amounts to 566,116 87,272
For further details regarding development in inventory
values see consolidated financial statements note 19.
Accounting policies and significant
accounting estimates
See consolidated financial statements note 19.
Accounting policies
See consolidated financial statements note 27.
DKK thousand 2020 2019
Non-current 25,858 13,844
Current 11,356 5,658
Lease liabilities 37,214 19,502
DKK thousand
Due within
1 year
Due
between
1 and 5 year
Due after
5 years Total
2020
Lease liabilities 11,356 25,858 - 37,214
2019
Lease liabilities 5,658 13,844 - 19,502
Annual Report 2020
134
For further details of prepayment from customers,
see consolidated financial statements note 28.
Accounting policies
See consolidated financial statements note 28.
For further details of derivative financial instruments, see
consolidated financial statements note 24. The phantom
share programs are disclosed in the consolidated financial
statements note 30.
Accounting policies
See consolidated financial statements note 23.
Note 15
Prepayment from customers
Note 16
Other liabilities
DKK thousand 2020 2019
Prepayment from customers as of January 1 6,631 27,116
Prepayments received during the year 77,185 -
Recognized as income during the year (9,469) (20,485)
Prepayment from customers as of December 31 74,347 6,631
DKK thousand 2020 2019
Derivative financial instruments at fair value in the income statement 1,414 1,243
Liability relating to phantom shares 4,849 1,135
Payable salaries, holiday accrual etc. 84,026 49,926
Gross to net deduction accrual 2,502 -
Other accrued costs 18,793 15,865
Other liabilities 111,584 68,169
Annual Report 2020
135
Note 17
Related party transactions
The Corporate Management and Board of Directors of
Bavarian Nordic A/S are considered related parties as they
have significant influence over the Company.
Main intercompany transactions:
Bavarian Nordic GmbH provides research and development
services to Bavarian Nordic A/S.
Bavarian Nordic, Inc. distributes and sells RabAvert in the
US on behalf of Bavarian Nordic A/S. This is done under a
Distribution Agreement.
Bavarian Nordic, Inc. provides research and development
services to Bavarian Nordic A/S.
Bavarian Nordic, Inc. also provides services to Bavarian
Nordic A/S in terms of commercial affair work towards the
U.S. Government, with the purpose of ensuring an efficient
communication and service to U.S. authorities, in order to
maintain existing contracts and explore new product/con-
tract opportunities on the U.S. market.
Bavarian Nordic Switzerland AG provide global commercial
services to Bavarian Nordic A/S.
All services except for the distribution agreement are
delivered under cost plus agreements and on arms length
conditions.
The distribution agreement is honored according to OECD’s
guidelines for a Limited Risk Distributor.
Apart from intra-group transactions mentioned above and
the remuneration of the Board of Directors and Corporate
Management, cf. note 8 and note 30 in the consolidated
financial statements, there are no transactions with related
parties.
Annual Report 2020
136
Note 18
Contingent liabilities and other contractual obligations
Repayment obligation
Repayment obligation regarding received prepayments see
the consolidated financial statements note 28.
Sales milestone to GlaxoSmithKline
The Asset Purchase Agreement with GlaxoSmithKline
regarding the acquisition of the product rights to Rabipur/
RabAvert and Encepur includes a sales milestone of EUR
25 million. As per December 31, 2019 Management does
not judge the sales milestone to be probable and therefore
the sales milestone has not been recognized as either part
of the product rights nor the deferred consideration for
product rights.
License and collaboration agreement AdaptVac
Under the license and collaboration agreement with
AdaptVac the Company has an obligation of payment of
potential future development and sales milestones and
tiered royalties.
Tax audit
In April 2018 the Danish tax authority (“Skattestyrelsen”)
notified the Company that Skattestyrelsen was proposing
an adjustment of the allocation of the PROSTVAC devel-
opment costs between Bavarian Nordic A/S and its U.S.
subsidiary, Bavarian Nordic, Inc. for the income years
2012-2016. During 2018 and 2019 the Company has been
in dialogue with Skattestyrelsen regarding the proposal.
On July 1, 2019, Skattestyrelsen decided to withdraw
the proposed adjustment. The transfer pricing tax audit
for 2012-2016 has thereby been completed without any
changes to taxable income.
Incentive agreements, company mortgage
and lawsuits
See the consolidated financial statements note 31.
2020 2019
Collaborative agreements
Contractual obligations with research partners for long-term research projects.
– Due within 1 year 42,227 36,884
Other contractual obligations
– Due within 1 year 17,738 14,026
– Due between 1 and 5 years 12,604 9,584
Annual Report 2020
137
Note 19
Mortgages and collateral
Note 20
Proposed appropriation of net profit/(loss)
Note 21
Significant events after the balance sheet date
DKK thousand 2020 2019
Guarantees for subsidiaries
The Parent Company stands surety for a credit facility to a
subsidiary of a maximum of 3,330 3,843
The Parent Company stands surety for letter of credit to
subsidiaries of a maximum of 2,200 2,689
DKK thousand 2020 2019
Retained earnings 276,994 (430,148)
Total 276,994 (430,148)
Bavarian Nordic A/S has signed a guarantee in favor
of Bavarian Nordic, Inc.’s landlord in North Carolina. As
guarantor Bavarian Nordic A/S guarantees the full and
complete payment by Bavarian Nordic, Inc. of the rent and
all other sums payable under the lease contract. The rent
for the lease period (until August 2022) amounts to DKK
2.0 million (DKK 3.5 million).
Mortgages
See description regarding property, plant and equipment in
note 17 in the consolidated financial statements.
See description in note 32 in the consolidated financial
statements.
Annual Report 2020
138
STATEMENT BY MANAGEMENT
ON THE ANNUAL REPORT
The Board of Directors and the Corporate Management have today
considered and approved the annual report of Bavarian Nordic A/S for the
financial year January 1 – December 31, 2020.
The consolidated financial statements are presented in accordance
with International Financial Reporting Standards as adopted by the EU.
The parent financial statements are presented in accordance with the
Danish Financial Statements Act. Further, the annual report is prepared in
accordance with Danish disclosure requirements for listed companies.
In our opinion, the consolidated financial statements and the parent finan-
cial statements give a true and fair view of the Group’s and the Parent’s
financial position at December 31, 2020 as well as of the results of their
operations and the Group’s cash flows for the financial year January 1 –
December 31, 2020.
In our opinion, the management commentary contains a fair review of
the development of the Group's and the Parent’s business and financial
matters, the results for the year and of the Parent’s financial position and
the financial position as a whole of the entities included in the consolidated
financial statements, together with a description of the principal risks and
uncertainties that the Group and the Parent face.
In our opinion, the annual report with the file name BAVA-2020-12-31.zip
is prepared, in all material respects, in accordance with the ESEF Regulation.
We recommend the annual report for adoption at the Annual General Meeting.
Hellerup, March 12, 2021
Corporate Management
Paul John Chaplin Henrik Juuel
President and Chief Executive Officer Chief Financial Officer
Board of Directors
Gerard W.M. van Odijk Anders Gersel Pedersen Erik Gregers Hansen
Chairman of the Board Deputy chairman
Peter H. Kürstein-Jensen Frank A.G.M. Verwiel Elizabeth McKee Anderson
Anne Louise Eberhard
Annual Report 2020
140
INDEPENDENT
AUDITOR'S REPORTS
Opinion
We have audited the consolidated financial statements and the parent
financial statements of Bavarian Nordic A/S for the financial year
January 1 – December 31, 2020, which comprise the income statement,
statement of financial position, statement of changes in equity and
notes, including a summary of significant accounting policies, for the
Group as well as the Parent, and the statement of comprehensive
income and the cash flow statement of the Group. The consolidated
financial statements are prepared in accordance with International
Financial Reporting Standards as adopted by the EU and additional
requirements of the Danish Financial Statements Act, and the parent
financial statements are prepared in accordance with the Danish
Financial Statements Act.
In our opinion, the consolidated financial statements give a true and
fair view of the Group’s financial position at December 31, 2020 and
of the results of its operations and cash flows for the financial year
January 1 – December 31, 2020 in accordance with International
Financial Reporting Standards as adopted by the EU and additional
requirements under the Danish Financial Statements Act.
TO THE SHAREHOLDERS OF BAVARIAN NORDIC A/S
Further, in our opinion, the parent financial statements give a true and
fair view of the Parent’s financial position at December 31, 2020 and of
the results of its operations for the financial year January 1 – December
31, 2020 in accordance with the Danish Financial Statements Act.
Our opinion is consistent with our audit book comments issued to the
Finance, Risk and Audit Committee and the Board of Directors.
Basis for opinion
We conducted our audit in accordance with International Standards
on Auditing (ISAs) and the additional requirements applicable in
Denmark. Our responsibilities under those standards and requirements
are further described in the Auditor’s responsibilities for the audit
of the consolidated financial statements and the parent financial
statements section of this auditor’s report. We are independent of the
Group in accordance with the International Ethics Standards Board of
Accountants' Code of Ethics for Professional Accountants (IESBA Code)
and the additional requirements applicable in Denmark, and we have
fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Annual Report 2020
141
Key audit matter
Revenue under the BARDA contracts for JYNNEOS
Revenue recognized under the Biomedical
Advanced Research and Development Authority
(BARDA) contracts with the U.S. Government
related to JYNNEOS amounted to DKK 680 million
in 2020 (DKK 539 million in 2019).
Contracts with BARDA include multiple elements,
and recognition of revenue is significant and
requires subjective evaluations. Management
therefore exercises judgement in determining
whether the Group has fulfilled all of its perfor-
mance obligations.
Management’s assessment includes whether it is
probable that future economic benefits from the
sale of JYNNEOS bulk drug substance will flow to
the Group, the benefits can be measured reliably,
ownership of the goods and services is transferred
to BARDA, and the Group no longer retains man-
agerial responsibility for, or control of, the goods
sold and services delivered to BARDA.
Refer to notes 2 and 3 in the consolidated financial
statements.
Based on our risk assessment procedures
on the Group’s business process and internal
controls for revenue under the BARDA contracts,
we tested the appropriateness of the Group’s
revenue recognition.
We read the BARDA contracts, discussed them
with Management and evaluated the related
accounting treatment. During the audit, we tested
whether the performance obligations for revenue
recognized and measured under the BARDA
contracts were met in 2020.
We also evaluated the financial statements
disclosures related to revenue.
To the best of our knowledge and belief, we have not provided any
prohibited non-audit services as referred to in Article 5(1) of Regulation
(EU) No 537/2014.
After Bavarian Nordic A/S was listed on Nasdaq OMX Copenhagen in
1998, we were appointed auditors at the Annual General Meeting held
on May 27, 1999 for the 1999 financial year. We have been reappointed
annually at the annual general meeting for a total consecutive engage-
ment period of 22 years up to and including the 2020 financial year.
Key audit matters
Key audit matters are those matters that, in our professional judge-
ment, were of most significance in our audit of the consolidated finan-
cial statements and the parent financial statements for the financial
year January 1 – December 31, 2020. These matters were addressed in
the context of our audit of the consolidated financial statements and
the parent financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Statement on the management commentary
Management is responsible for the management commentary.
Our opinion on the consolidated financial statements and the parent
financial statements does not cover the management commentary, and
we do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements and
the parent financial statements, our responsibility is to read the manage-
ment commentary and, in doing so, consider whether the management
Annual Report 2020
142
commentary is materially inconsistent with the consolidated financial
statements and the parent financial statements or our knowledge ob-
tained in the audit or otherwise appears to be materially misstated.
Moreover, it is our responsibility to consider whether the management
commentary provides the information required under the Danish
Financial Statements Act.
Based on the work we have performed, we conclude that the
management commentary is in accordance with the consolidated
financial statements and the parent financial statements and has been
prepared in accordance with the requirements of the Danish Financial
Statements Act. We did not identify any material misstatement of the
management commentary.
Management's responsibilities for the consolidated
financial statements and the parent financial statements
Management is responsible for the preparation of consolidated financial
statements that give a true and fair view in accordance with International
Financial Reporting Standards as adopted by the EU and additional require-
ments of the Danish Financial Statements Act as well as the preparation
of parent financial statements that give a true and fair view in accordance
with the Danish Financial Statements Act, and for such internal control as
Management determines is necessary to enable the preparation of consol-
idated financial statements and parent financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements and the parent
financial statements, Management is responsible for assessing the
Group’s and the Parent’s ability to continue as a going concern, for
disclosing, as applicable, matters related to going concern, and
for using the going concern basis of accounting in preparing the
consolidated financial statements and the parent financial statements
unless Management either intends to liquidate the Group or the Entity
or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the consolidated
financial statements and the parent financial statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements and the parent financial statements
as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guaran-
tee that an audit conducted in accordance with ISAs and the additional
requirements applicable in Denmark will always detect a material
misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions
of users taken on the basis of these consolidated financial statements
and these parent financial statements.
As part of an audit conducted in accordance with ISAs and the additional
requirements applicable in Denmark, we exercise professional judgement
and maintain professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the con-
solidated financial statements and the parent financial statements,
whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient
Annual Report 2020
143
and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
the effectiveness of the Group’s and the Parent’s internal control.
• Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made
by Management.
• Conclude on the appropriateness of Management’s use of the going
concern basis of accounting in preparing the consolidated finan-
cial statements and the parent financial statements, and, based on
the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on
the Group's and the Parent’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements and the parent financial statements
or, if such disclosures are inadequate, to modify our opinion. Our con-
clusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause
the Group and the Entity to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the con-
solidated financial statements and the parent financial statements,
including the disclosures in the notes, and whether the consolidated
financial statements and the parent financial statements represent
the underlying transactions and events in a manner that gives
a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business activities within the Group to
express an opinion on the consolidated financial statements. We are
responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding,
among other matters, the planned scope and timing of the audit
and significant audit findings, including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with a statement that
we have complied with relevant ethical requirements regarding inde-
pendence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence,
and where applicable, related safeguards.
From the matters communicated with those charged with governance,
we determine those matters that were of most significance in the
audit of the consolidated financial statements and the parent finan-
cial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law
or regulation precludes public disclosure about the matter or when, in
extremely rare circumstances, we determine that a matter should not
be communicated in our report because the adverse consequences of
doing so would reasonably be expected to outweigh the public interest
benefits of such communication.
Annual Report 2020
144
Report on compliance with the ESEF Regulation
As part of our audit of the consolidated financial statements and parent
company financial statements of Bavarian Nordic A/S we performed
procedures to express an opinion on whether the Annual Report of Ba-
varian Nordic A/S for the financial year January 1 - December 31, 2020
with the file name BAVA-2020-12-31.zip is prepared, in all material re-
spects, in compliance with the Commission Delegated Regulation (EU)
2019/815 on the European Single Electronic Format (ESEF Regulation)
which includes requirements related to the preparation of the Annual
Report in XHTML format and iXBRL tagging of the consolidated financial
statements. Management is responsible for preparing an Annual Report
that complies with the ESEF Regulation. This responsibility includes:
• The preparing of the Annual Report in XHTML format.
• The selection and application of appropriate iXBRL tags, including
extensions to the ESEF taxonomy and the anchoring thereof to
elements in the taxonomy, for financial information required to be
tagged using judgement where necessary.
• Ensuring consistency between iXBRL tagged data and the consolidat-
ed financial statements presented in human readable format.
• For such internal control as Management determines necessary to
enable the preparation of an Annual Report that is compliant with
the ESEF Regulation.
Our responsibility is to obtain reasonable assurance on whether the
Annual Report is prepared, in all material respects, in compliance with
the ESEF Regulation based on the evidence we have obtained, and
to issue a report that includes our opinion. The nature, timing and
extent of procedures selected depend on the auditor’s judgement,
including the assessment of the risks of material departures from the
requirements set out in the ESEF Regulation, whether due to fraud or
error. The procedures include:
• Testing whether the Annual Report is prepared in XHTML format.
• Obtaining an understanding of the company’s iXBRL tagging process
and of internal control over the tagging process.
• Evaluating the completeness of the iXBRL tagging of the consolidated
financial statements.
• Evaluating the appropriateness of the company’s use of iXBRL
elements selected from the ESEF taxonomy and the creation of
extension elements where no suitable element in the ESEF taxonomy
has been identified.
• Evaluating the use of anchoring of extension elements to elements in
the ESEF taxonomy.
• Reconciling the iXBRL tagged data with the audited consolidated
financial statements.
In our opinion, the Annual Report of Bavarian Nordic A/S for the financial
year January 1 – December 31, 2020 with the file name BAVA-2020-12-
31.zip is prepared, in all material respects, in compliance with the ESEF
Regulation.
Copenhagen, March 12, 2021
Deloitte
Statsautoriseret Revisionspartnerselskab
Business Registration No 33 96 35 56
Martin Norin Faarborg Eskild Nørregaard Jakobsen
State-Authorized State-Authorized
Public Accountant Public Accountant
MNE no 29395 MNE no 11681
Annual Report 2020
145
Forward-looking Statement
This annual 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 annual report. Bavarian Nordic does not undertake any
obligation to update or revise forward looking statements in this annual report nor to confirm such statements in relation to
actual results, unless required by law.
Design and layout
Kontrapunkt
Photos
Carsten Andersen
Phillippe Wiget
Print
Dystan & Rosenberg
Annual Report 2020
146
