Bavarian Nordic's Strategic JNJ Deal To Fill 2015 Revenue Gap
Edison | Dec 05, 2014 01:07AM ET
Bavarian Nordic's (COP:BAVA) $187m exclusive global licensing and supply deal for its development Ebola vaccine MVA-BN Filovirus with Janssen (part of Johnson & Johnson (NYSE:JNJ)) secures its financial position and provides large pharma validation for the core MVA-BN vaccine platform. Deal terms include a $43m (DKK251m) equity investment (giving J&J a 4.9% stake) and various licence/supply payments that will boost FY15 revenues, easing the company through an anticipated gap in US government Imvamune orders. End-FY14 cash preparedness guidance is raised to DKK1,000m from DKK600m: revenue guidance is maintained (recognition will occur in 2015). Factoring deal economics into our company valuation increases it to DKK5.3bn.
The three-part deal includes a $43m (DKK251m) equity investment, an exclusive licensing agreement for MVA-BN Filovirus ($25m upfront, $20m in development and regulatory milestones and undisclosed royalties on ex-Africa sales), and a $99.3m supply agreement for up to one million doses of vaccine (covering full development and scale-up funding). These doses will be used for clinical trials of a prime boost vaccine in combination with J&J’s AdVac technology (Phase I to start in 2015) and emergency use for the current West Africa Ebola outbreak. In a deal extension, J&J also has an exclusive collaboration option to evaluate MVA-BN for another three undisclosed infectious disease targets.
h3 Financials: Deal results in P&L & cash upgrade/h39m14 revenue of DKK676m predominantly relates to US Imvamune deliveries. Delivery of the remaining doses under the $118m US Imvamune option exercised in September will be completed in Q414 enabling revenue guidance (DKK1,200m) to be met. The FY14 cash preparedness expectation is increased to DKK1,000m (vs DKK600m) reflecting the impact of the Janssen deal, and including a c DKK150m reduction in debt and credit facilities. Recognition of already received/anticipated cash flows from Janssen substantially upgrades our FY15 P&L forecasts.
h3 Valuation: $703m or $32/ADR/h3
Including deal economics for MVA-BN Filovirus in our sum-of-the parts model increases our valuation to $703m or $32/ADR (previously $620m or $24/ADR). We now include receipt of the $25m upfront and impact of the J&J equity investment in our FY14e cash forecasts, as well as un-risk-weighted supply and licensing payments and risk-weighted future milestones in our DCF.
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