Evolution Securities 100 Wood Street, London, EC2V 7AN 020 7071 4300 Evolution SECURITIES www.evosecurities.com 14 September 2005 BN’s complaint indicated that it believes Acambis had unlawful access to the ‘grandfather’ strain which is the ‘ancestor’ for the viruses used in both companies’ MVA vaccines. Moreover, BN accuses Acambis of using information it gained at a meeting in 2002 with BN, which was subject to a confidentiality agreement. These legal proceedings are separate to the patent infringement case that has been filed with the International Trade Commission. In terms of the misappropriation case, BN is seeking up to triple damages as recompense. In the complaint, BN stated it exclusively licensed for commercial use all strains ofMVA, including one known as MVA-572, from a Professor Mayr. This is despite the fact that MVA-572 was used as the basis of a vaccine in the seventies. Acambis denies that BN holds an exclusive license for commercialisation of all MVA strains. In fact, even BN concedes that it only holds a license (in its eyes) for MVA strains developed by Prof. Mayr (which are not necessarily all strains). The fact that BN entered into a secrecy agreement with Acambis in February 2002 is acknowledged by Acambis. However, Acambis denies that this was in relation to a potential licensing agreement relating to MVA-BN (which is alleged by BN). According to BN, at a meeting in June 2002, data relating to the development and production of MVA-BN was disclosed to Acambis personnel, including the Chief Scientific Officer at the time, Tom Monath. Acambis agrees this meeting took place, but denies any confidential or proprietary information was handed over. The fact that a draft agreement was sent to Acambis from BN is agreed upon by both companies. However, while BN states that discussions continued until Acambis terminated talks when the first Request for Proposal for the development of an MVA vaccine was released, this is denied by Acambis. It is well known that Acambis did get the strain of MVA used as the basis for its MVA 3000 from the NIAID and this is acknowledged by Acambis in its ‘answer’. In fact, separate documentation suggests that Acambis used a version of MVA 572 that had further been attenuated at the NIAID by Dr. Moss. MVA 3000 appears to be MVA 580, a third generation version of the stock received from the NIAID. As far we know, Acambis did not have a development programme for an MVA based vaccine until it was given material by the NIAID. However, Acambis denies that it had not undertaken research into MVA prior to the publication of the first RFP. BN claims exclusive license to MVA strains Meetings with Acambis Acambis’ strain did come from NIAIDAcambis versus Bavarian Nordic: Round II Acambis’ ‘answer’ to the complaint filed by Bavarian Nordic in Delaware has been published and, as might be expected, almost everything is denied. However, a meeting between the companies in 2002 is acknowledged. Mkt Cap £263m Net Cash £9 m Acambis (ACM.L) Price/Target: 245p/270p 210 234 258 282 306 330 S O N D J F M A M J J A Source: JCF Add (remains as)
BN’s complaint indicated that it believes Acambis had unlawful access to the
‘grandfather’ strain which is the ‘ancestor’ for the viruses used in both
companies’ MVA vaccines. Moreover, BN accuses Acambis of using information it
gained at a meeting in 2002 with BN, which was subject to a confidentiality
agreement. These legal proceedings are separate to the patent infringement
case that has been filed with the International Trade Commission. In terms of the
misappropriation case, BN is seeking up to triple damages as recompense.
In the complaint, BN stated it exclusively licensed for commercial use all strains of
MVA, including one known as MVA-572, from a Professor Mayr. This is despite
the fact that MVA-572 was used as the basis of a vaccine in the seventies.Acambis denies that BN holds an exclusive license for commercialisation of all
MVA strains. In fact, even BN concedes that it only holds a license (in its eyes) for
MVA strains developed by Prof. Mayr (which are not necessarily all strains).
The fact that BN entered into a secrecy agreement with Acambis in February
2002 is acknowledged by Acambis. However, Acambis denies that this was in
relation to a potential licensing agreement relating to MVA-BN (which is alleged
by BN). According to BN, at a meeting in June 2002, data relating to the
development and production of MVA-BN was disclosed to Acambis personnel,
including the Chief Scientific Officer at the time, Tom Monath. Acambis agrees
this meeting took place, but denies any confidential or proprietary information
was handed over. The fact that a draft agreement was sent to Acambis from BN
is agreed upon by both companies. However, while BN states that discussions
continued until Acambis terminated talks when the first Request for Proposal for
the development of an MVA vaccine was released, this is denied by Acambis.
It is well known that Acambis did get the strain of MVA used as the basis for its
MVA 3000 from the NIAID and this is acknowledged by Acambis in its ‘answer’.
In fact, separate documentation suggests that Acambis used a version of MVA
572 that had further been attenuated at the NIAID by Dr. Moss. MVA 3000
appears to be MVA 580, a third generation version of the stock received from
the NIAID. As far we know, Acambis did not have a development programme for
an MVA based vaccine until it was given material by the NIAID. However,
Acambis denies that it had not undertaken research into MVA prior to the
publication of the first RFP.
BN claims exclusive license to MVA
strains
Meetings with Acambis
Acambis’ strain did come from NIAID
Acambis versus Bavarian Nordic: Round II
Acambis’ ‘answer’ to the complaint filed by Bavarian Nordic in Delaware has
been published and, as might be expected, almost everything is denied.
However, a meeting between the companies in 2002 is acknowledged.
On the basis of the above ‘facts’, BN made certain accusations, all of which are
denied by Acambis in its ‘Answer’:
• False representation: Acambis failed to advise its potential customer, the
NIAID (and other government agencies) that the strains in its possession werenot available for distribution for non-research purposes. In fact, BN goes further,
stating that Acambis has engaged in ‘deceptive trade practices’ by ‘passing off’
MVA 3000 as a product of its own R&D.
• Acambis received MVA-572 (or its derivatives) in the knowledge that the
virus was the property of BN (through the exclusive license with Prof. Mayr).
Furthermore, Acambis has no right to possess MVA-572 as it violated the
agreement between NIAID and Prof. Mayr.
• Misappropriation of secrets, that is, using BN’s technology to commercial
advantage without BN’s consent. In addition, Acambis should have known that
any attenuated MVA strain provided by the NIAID was given without the consent
of BN.
• The proprietary information gained at the June 2002 meeting was subject
to a secrecy agreement, but was actually used to initiate Acambis’ own MVA
programme.
As we pointed out two weeks ago, one slightly bizarre element is that while the
NIAID could actually be a co-defendant in the case (as, according to BN, it
handed over MVA-572 or its derivatives to Acambis), BN is accusing Acambis of
failing to advise its potential customer of the proprietary position of the MVA
3000 strain. However, the customer is of course the NIAID! This point is
highlighted by Acambis and is used as the ‘Fourth Defense [sic]’, which states
that the case should be dismissed because of the failure to cite the US
government in the legal action.
EVO Securities makes markets in Acambis
BN’s accusations
US government accused?
Year Sales EBITDA PBT adj Tax EPS CFPS Net Cash Net Cash Cash Burn R&D R&D Chg EV/Sales DCF Sensitivity
End £m £m £m % p p £m p p £m % x WACC % Fair Value £
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