Bavarian Nordic Awarded Second U.S. Government Contract For Safe Smallpox Vaccine; Decision an Important Step Toward Safeguarding the American Public Against Smallpox.

COPENHAGEN, Denmark & WASHINGTON -- The U.S. government has awarded international biopharmaceutical company Bavarian Nordic a three-year contract valued at a total of more than $141 million to further develop and manufacture 500,000 doses of its patented IMVAMUNE(TM) smallpox vaccine, the latest phase in the government's MVA smallpox vaccine development program.

"The U.S. government's decision to further develop and acquire IMVAMUNE(TM) recognizes the advanced stage of our clinical research program and the need for a safe vaccine for the American public," said Peter Wulff, CEO, Bavarian Nordic. "Ultimately, it is essential that the United States stockpiles a single, safe and effective smallpox vaccine that will protect all Americans."

The movement to a Modified Vaccinia Ankara (MVA) vaccine is seen by many scientific and health policy experts as a safe, effective alternative to the traditional - or second-generation - smallpox vaccines currently stockpiled by the U.S. government. According to the Institute of Medicine, these second generation vaccines can cause dangerous complications, ranging from generalized rashes to encephalitis in nearly 25-30 percent of the general population.

The contract(1), with a base value of over $100 million, calls for the manufacture of 500,000 doses of IMVAMUNE(TM) smallpox vaccine within 11 months of the award announcement and outlines an option by the U.S. government to purchase an additional 2.5 million doses of the vaccine - valued at more than $41 million - during the initial contract period. The contract also requires further clinical development and validation of animal models. The National Institute of Allergy and Infectious Diseases (NIAID), a component of the National Institutes of Health (NIH), will administer the agreement.

"With this contract, Bavarian Nordic and our partner GlaxoSmithKline are well positioned to fulfill the requirements of RFP III, which will outline the U.S. government purchase of up to 60 million doses of a safe MVA smallpox vaccine," said Wulff. RFP III is expected to be issued before year-end.

This is the second smallpox vaccine development contract awarded to Bavarian Nordic from NIAID. The first contract was awarded to the company in February 2003 followed by a supplemental award in September 2003.

For more information about Bavarian Nordic, please visit www.bavarian-nordic.com.

(1)"This project has been funded in full or in part with federal funds from the National Institutes of Allergy and Infectious Diseases, the National Institutes of Health, Department of Health and Human Services, under Contract No. HHSN266200400072C, ADB Contract No. 1-AI-40072."