WASHINGTON, DC, June 4 /PRNewswire-FirstCall/ -- The U.S. Department of Health and Human Services (HHS) has announced an award of a major BioShield contract(*) to Danish biopharmaceutical company Bavarian Nordic (CSE:BAVA, OTC:BVNKF) to manufacture and deliver a next-generation smallpox vaccine designed to be safer than currently stockpiled smallpox vaccines.

    The five-year contract for 20 million doses of the company's Imvamune? smallpox vaccine is valued at more than US$500 million, with options that if exercised extend the value to US$1.6 billion and the performance period of the contract. HHS is procuring the vaccine for the protection of individuals considered to be at risk for exposure to smallpox. The contract options allow for the government to procure up to an additional 60 million doses and would support additional clinical studies for extending the license to include HIV-infected, pediatric, and geriatric populations.

    This contract is the first next-generation, or completely new, product procured by HHS under the government's BioShield program, enacted after the terrorist attacks of 9/11 to guard against bioterrorism. It also is the first contract ever to receive advance payments as milestones in development and production are reached. Congress passed legislation late last year (Pandemic All Hazards Preparedness Act) that grants HHS additional authorities to provide milestone-based advance payments to companies.

    "The U.S. government wants a smallpox vaccine that is safe for all its citizens," Mr. Peter Wulff, Bavarian Nordic's President and CEO said. "Our patented technology is a third generation product and is a dramatic leap forward from the existing smallpox vaccines used or under consideration to be used today. We are pleased to continue our working relationship with the U.S. government, a relationship that has spanned more than five years and has included a number of developmental contracts."

    Wulff noted that while the only way to prevent smallpox infection is through vaccination, traditional smallpox vaccines used or stockpiled today are live replicating viruses that can pose serious side effects and lead to complications in up to 25 percent of the population. The recent, highly-publicized case of a two-year-old boy from the Chicago area who developed a serious reaction to his father's smallpox vaccination1 is the latest example of what can happen to individuals with eczema or weakened or impaired immune-systems if they are vaccinated or come into contact with someone who has been vaccinated with the currently-used vaccine.

    Imvamune?, on the other hand, is based on the Modified Vaccinia Ankara (MVA) virus, which is also a live virus but one that does not replicate in the body and is expected to be safe for both healthy as well as immuno-compromised individuals. Additionally, the MVA virus cannot be accidentally transferred to others who might be immuno-compromised, because it is administered by injection.

    According to Wulff, "Our Imvamune? clinical development program consists of 10 completed or ongoing trials, which have investigated the vaccine in persons who are immuno-compromised as well as healthy individuals. Results in more than 1,500 persons (atopic dermatitis, HIV-infection and healthy subjects) vaccinated with Imvamune? show that the vaccine was safe and well-tolerated. Data from two of our ongoing trials will be pivotal to fulfill the requirements for the use of Imvamune? during an emergency situation. Funds under this contract will also enable us to expand and expedite our clinical program for licensure of Imvamune? with the Food and Drug Administration (FDA)."

    Bavarian Nordic not only has developed a new next generation smallpox vaccine, but also has invested US$60 million of its own financial capital to put into operation a state-of-the-art manufacturing facility in Denmark that has the capacity to produce a minimum of 40 million doses of Imvamune? per year, with the capacity of being expanded to 180 million doses per year.

    About Bavarian Nordic

    Bavarian Nordic, headquartered in Denmark, is a leading international biopharmaceutical company developing and producing inno?-vative vaccines to prevent and treat infectious diseases and cancer.

    In the U.S., Bavarian Nordic operates subsidiary companies, BN ImmunoTherapeutics, in Mountain View, California developing vaccines against cancers, and Bavarian Nordic Inc. in Washington, D.C. focused on business development, marketing, and government relations for the Bavarian Nordic Group. For more information on Bavarian Nordic visit: www.bavarian-nordic.com

    (*) This project has been funded in whole with Federal funds from the Office of the Assistant Secretary for Preparedness and Response, Biomedical Advanced Research and Development Authority, under Contract No. HHSO100200700034C.

    "Safe Harbour" Statement under the Private Securities Litigation Reform Act of 1995": Except for the historical information contained herein, this release contains "forward-looking statements" within the meaning of the Private Securities Reform Act of 1995. No "forward-looking statement" can be guaranteed, and actual results may differ materially from those projected. Bavarian Nordic undertakes no obligation to publicly update any "forward-looking statement", whether as a result of new information, future events, or otherwise. Additional information regarding risks and uncertainties is set forth in the current Annual Report and in Bavarian Nordic's periodic reports, if any, which we incorporate by reference.

    Source: Bavarian Nordic A/S