Bavarian Nordic A S

Welcome everyone to this first half or Q2 update from Bavaria Nordic. Q2 was full of news flow and we are still in a very eventful period. To do this presentation we still have the A-team, Paul Chaplin and Henry Guell, President and CEO and Executive Vice President and CFO. to do the presentation and to do Q&A afterwards. So before we start doing that, just go through the forward-looking statements. This announcement includes forward-looking statements that involve risks, uncertainties, and other factors, many of which are outside our control, that could cause actual results to differ materially from the results discussed Forward-looking statements include statements concerning our plans, objectives, goals, future events, performance and other information that is not historical information. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law. So by this, Paul, I would leave it up to you to start the presentation.

Thanks, Rolf, and welcome everyone to the Q2 update. If you turn to slide three, we had an exceptionally strong performance in the second quarter and in the first half of this year. And importantly, that is due to a strong performance across both parts of our business, both the travel health and the public preparedness. In addition to that, I'm delighted to report that we're seeing strong progress in other areas of the business that will add to future growth, such as the launch of Chicken Gunya next year and the completion or the nearing completion of the tech transfer of some of the assets we purchased back in 2020. So we've seen strong demand on our travel health business with a 15% year-on-year growth. That is driven strongly by the rabies business, but we'll come back more to that in the coming slides. We're on track to complete the tech transfer of both the rabies and TBE vaccines. And on Chikungunya, we are advancing slightly ahead of our planned schedule in that we have made the submissions to the regulatory authorities in both the EU and the FDA, where we're now under a priority review status. On smallpox and pox, we're advancing both on the free stride contract that we have with the U.S. We've submitted for approval, which is an important milestone for that whole program. In terms of our lifecycle management, we're progressing on a number of fronts, including effectiveness data from the 22-23 MPOX outbreak, also hopefully expanding the indication to include adolescents, and through a collaboration with CEPI, soon to be initiating a study in children in Africa. In terms of public preparedness at the beginning of the year, we gave a range of the guidance for this part of the business. And for the first time in our history, we were including revenue from non-secured contracts. And I'm pleased to say with two recent orders that we've announced, we have largely secured all the contracts we anticipated at the beginning of the year. And for that, we can confirm the upper range of our guidance for 24, but I'll leave that to Henrik to walk you through in the coming slides. So if you turn to the next slide, slide four, talk a little bit about the travel health business As I said, we've seen very strong growth compared to this time last year. It's a 12% growth, which is amazing, considering the growth that we've been seeing over the last few quarters in this sector. On rabies, it's really strong performance in the US, an 8% growth compared to this time last year, and a very strong market share as usual. In Europe, a slightly different story in that we had a setback earlier this year with the temporary stock out, which coincided with the stock out from our competitor. We are rebounding from that position and our market share is recovering back to 82%. Importantly, for Rabies, the tech transfer is almost complete. When we took over this product back in 2020, we had a schedule of a four-year plan to complete the tech transfer. The fill finish component of this manufacturing is complete and product manufactured by Bavaria Nordic in Denmark is now entering into the market. And the bulk manufacturing is under regulatory review and expected to be approved later this year. That means we will have completed the tech transfer of probably one of the most complicated vaccines to produce, test, and release within four years. And you need to also remember that four years included actually building a manufacturing site to allow the tech transfer to occur. So this is an exceptional performance and one that I think really endorses the overall strategy of bringing new assets in-house and building up our own capabilities. Of course, now, by the end of the year, when we have the manufacturing in-house, it gives us a lot more flexibility to turn up, to ramp up or ramp down the production, depending on demand. Plus, it allows us the opportunity to look at the expansion into new territories. On TBE, we see a growth here in TBE as well. And in terms of the transfer, we will be completing this again on time, on budget. by next year. In terms of cholera and typhoid, the new assets we brought in-house, we are seeing an improvement in sales quarter on quarter, and our ambition is to relaunch, or we are in the process of relaunching these assets with the ambition to bring these two new assets up to 100 million a year in the coming years. So really strong performance on travel health and a lot more future growth in the years to come. We turn to the next slide, slide five, a little bit about Chikungunya. We're advancing our Chikungunya program for approvals next year with a plan to launch in both the US and Europe in the first half of next year. In IMA, we submitted the MMA in June, which was accepted in July. And with the FDA, we began a rolling submission in April, which was completed in June. And this BLA was accepted in August. Exceptionally, we have got a priority review both in Europe, but also in the US. And this is quite unusual for a product that's been reviewed when a product already exists on the market for chikungunya. In terms of the US, we made a couple of arguments for them to consider the priority review. One was that our application will hopefully, if approved, include populations that currently aren't covered, because it will include 12 years old and upwards, where the current product is only for adults. We also argued that we believe we have an improved safety profile compared to the approved product. We should also expand access to immune compromise, if approved. which are currently contraindicated for the approved product. These arguments or some of those arguments must have been accepted by the FDA as we have the priority review and we have a PDUFA date or expected approval date of February the 14th, which as I said, should allow us to launch in the first half of next year and address the market which we believe is in the region of 500 million US dollars. We turn to the next slide, slide six, talk a little bit about the public preparedness. And I first want to talk about the graph that's at the bottom, because at our Capital Markets Day back in February, we put the case that after the MPOCs outbreak of 22-23, we had a broader customer base than our historical customer base of primarily the US government. And that allowed us to say that we thought that we would have a base business somewhere in the region typically of around two million, two million krona, two billion krona. And this year we guided actually for three billion krona on the anticipation due to the timing of different orders. We however also explained that from time to time we would see spikes in this business due to unfortunately new outbreaks of MPOCs or one-off orders. So as I said, going into the year, we had unsecured contracts. And I'm pleased to say that with the current orders that we've announced, both from BARDA for additional bulk, but also yesterday for doses to an undisclosed EU country, we have largely secured all the contracts we anticipated at the beginning of the year, meaning that we can confirm the upper range of the guidance for this business, the $3 billion, but also, as Henrik will get to, the total business of 5.3. This does not take away from the fact that we have additional capacity to supply more orders, and I'll get on to that, which is very important, given the current situation with the current outbreak of MPOCs. The other thing that's very important for this part of the business is that we don't sit on our laurels. We have a very effective safe vaccine. However, we need to look at the life cycle management. And as I'll come to in the next slide, we are trying to expand the label by submitting data for adolescents. And through a collaboration with CEPI, we plan to start a pediatric study that hopefully in the years to come will allow us to extend into children And that's extremely important given the current outbreak in Africa is primarily, or a large number of those cases are primarily in people younger than 18. So if we skip a couple of slides and go to slide eight, obviously, and I'm sure most of the questions are gonna be related to the current situation, which is a very serious situation in terms of an outbreak of MPOCs. Both Africa and WHO, Africa CDC and WHO have declared a public health emergency due to the spread and the number of cases of MPOX in Africa. And we need to work with all the relevant stakeholders to ensure that we can provide the equitable access to our MPOX vaccine. Importantly, we've been working with a number of different stakeholders all year because at the beginning of the year, our vaccine is currently not approved in Africa. And until we find some regulatory approval, we could not donate doses or talk about supplying doses of our vaccine to Africa. Importantly, those discussions led to an emergency use authorization both in Nigeria, but also in the DRC. And that very quickly materialized into an order with HERA for 175,000 doses, which we have topped up with 40,000 doses to be donated and supplied as soon as possible to the DRC, which is one of the countries with the highest number of cases. We have importantly established a very strong alliance with the Africa CDC both in terms of supply options, what we can do. We have been very vocal in that we have additional capacity and can manufacture and deliver up to 10 million doses by the end of next year. And of that capacity, we could actually deliver 2 million doses this year. This, however, does require us to have orders, as this will require us to juggle our manufacturing and our resources to move to really fixing our production of our Mpox vaccine. So as I said, it's a serious situation, one that we're very proud to potentially be part of the solution. We are talking to all the key stakeholders in terms of what we can do in terms of supply over the coming years. That also includes exploring ways to expand in our manufacturing capabilities to potentially also manufacturing in Africa. Those discussions have been facilitated again by our alliance with the Africa CDC. So we remain ready and willing to support the international community to actually resolve this outbreak and we see ourselves Hopefully it's part of that solution, but we're not the sole part of the solution. We have to work together with the international community to address this situation. We go to slide nine. We're in such a better place than when I go back to 22, when we had the last outbreak of MPOCs. Not only have we built up inventory to supply the anticipated orders, we've also built up an inventory to allow us to potentially have a capacity for outbreaks, which we currently find ourselves in. Secondly, back in 22, we had an approved product for mpox. However, our products have been approved based on animal data and immune bridging data to a traditional smallpox vaccine. Where we are today is we now have effectiveness data generated from numerous studies that were conducted during the 22-23 outbreak that really show we have now a very effective vaccine against MPOCs. This data that showed up to 90% effectiveness after two shots, we have submitted to EMA to be considered to be included in the label, which has been accepted and recommended by the CHMP. So this will soon be included in our label. Importantly, through a collaboration with the NIH, a study was also conducted back in 22-23 in adolescents, so in individuals 12 years and older. And you can see on the graph on the right-hand side, we could show non-inferiority in terms of the immune response to adults, which is shown to be effective. And therefore, we've shown similar safety profile similar meninginicity in adolescents, and this data has already been submitted to EMA, hopefully for consideration to expand the label. And as I've already indicated through another collaboration with CEPI, who will soon be starting a study in children from two years old and up in Africa, which will hopefully be generating similar data showing both the safety and immunogenicity in children that in future will hopefully allow this vaccine to be used in all age groups. And as I said, this will be critical because more than 70% of the cases in Africa are currently being observed in individuals younger than 18. So with that, I will hand over the presentation to Henrik Jor, the CFO.

Thank you, Paul, and good afternoon, good morning to all the listeners. So on the next slide, let's walk through the commercial performance, the revenue for the first six months of 2024. The first half year of this year has been a very strong and good first half year for Bavaria Nordic, delivering nearly 2.3 billion in revenue. And if we take them from the top, we can look at our public preparedness business first, delivering slightly more than one billion Danish kroner, all in line with the plans that we are executing on and driven entirely by orders from existing customers and agreements. So no impact so far for six months from the current inbox outbreak that we're dealing with. So good, strong performance within the public preparedness business. Obviously, when you compare to 23, it's not a good benchmark. That was the year two after the previous outbreak that started in 22. So not a totally meaningful comparison. But public preparedness performance fully in line with our plans and expectations. If we then turn to the other segment, the travel health segment, we are delivering revenue of 1.1%. a billion Danish kroner, so up 15% compared to prior year, driven by growth across the entire product portfolio. Again, if we take them one by one, we look at the radius business represented by Abipur and Rabevat, 2% growth. It does look a little modest, but remember here that we did face some supply issues during the first half that have been resolved right now. and we are regaining our position in the market. And we shouldn't forget either that on the rabies business, the 2% growth is really growth on growth. We have seen basically this part of the business growing from strength to strength over time. Insapur business had a fantastic first quarter, and we had some suspicion after the first quarter that we were looking at an earlier season than previously. And I think the second quarter and the six-month results have confirmed that partly. We are delivering for six months a 10% growth, so nice, strong performance from the TPE business represented by Insucor. Vivotiv and Vaxcora, the two vaccines we acquired from Emergent BioSolutions last year, delivered together approximately 130 million Danish kroner. We are still in the relaunch phase of these two products here, so it's still early days, can say our expectations to these two products are still intact and we do expect the peak revenue to to get to around 100 million us dollars so all together on the travel health 1.1 billion and with other revenue primarily driven by development agreements with the u.s department of defense we're looking at a nearly 2.3 billion in revenue for the first six months If we then turn to the next slide, we are looking at the full profit and loss for the first six months and for the second quarter. Again, revenue in line with our expectations, strong growth from the travel health and good execution on the existing contracts on the public health side of it. Gross profit close to a billion, 985 million. If you look at the margin, 44%, it's somewhat lower than at the level we saw last year, really explained by, of course, lower level of revenue from the public preparedness side. So it's a product mix. It's a volume explanation. But it's also, to some extent, explained by some of the challenges we highlighted in the first quarter of this year, where we had a water damage in our factory in Kvistgat, north of Copenhagen. But 44%, you will see that already in the second quarter, we are at 51% gross margin. So moving back to a more normalized level compared to what we saw in the first quarter. Total operating costs for the first six months, 848 million Danish kroner. It's lower than last year, primarily driven by lower R&D spend, of course, as we are not running as many expensive phase three trials as we did last year. are still investing, of course, in the Chikungunya development. If we move all the way down to the end of the P&L here, we are looking at an EBITDA performance of 441 million Danish kroner, equivalent to an EBITDA margin of 20%. So strong second quarter with an EBITDA margin of 29%, taking us up to 20% for the first six months. So strong performance that we are very pleased with. Let's turn to the next slide here. Just a couple of highlights from our cash flow and from our balance sheet. Cash flow first. You can see cash flow from operating activities is a significant positive amount of more than one billion Danish kroner driven by positive earnings. also to a large extent by positive impact from reduced level of receivables. Remember, last year we had significant high revenue in quarter four, which we have cast in the money for that here during the first six months. And we have also, during this period here, invested in line with plans in the increase of inventory levels. Casual from investment activities, just want to highlight that 1.7 billion Danish kroner, one billion of that is simply just placement of liquidity into securities. And it also includes a milestone to GSK that was triggered when we finalized the drug substance production process for Insipor, a milestone payment to GSK. To the right, I just want to highlight here that our current CASPR session We still owe GSK and Emergent Biosolutions approximately 2 billion together. These milestones will all be paid within sort of the next nine months. And don't forget, I think on top of the current cash position, we also have access to an undrawn sustainability-linked loan of 1 billion Danish kroner. So strong cash position that really enables us to fulfill our commitments over the next nine months to GSK and Emergent and still run the business. Next slide. We are looking at the outlook. As Paul alluded to, given the recent orders that we have received, all the way from the BARDA order we got, the HERA order, and the undisclosed European country order announced last night, We are now in a position where we can clarify our guidance. And instead of using the range of 2.7 to 3 billion for the public preparedness business, we can move it all the way to the 3 billion. And we can also now say that this is all largely secured by contract already. As our travel health business is also performing strongly, We can stick to that guidance and that means we can basically take the total combined guidance for the company to a level where guidance for revenue will be approximately 5.3 billion Danish kroner and the EBITDA will be approximately 1 billion and 350 million Danish kroner. Both numbers were the top end of the originally guided range. So very pleased that we at this point in time we can claim that largely all of the public preparedness business has now been confirmed by contracts. And just to preempt the question we might get, I think first of all, first six months is not impacted at all by the current outbreak. The outlook that we are providing now to 5.3 billion Danish kroner is only limited or impacted very little by the outbreak, basically only by the order that we got from HERA for a donation to Africa. Other than that, I think the rest is basically existing business. So with that, I will give the word to the operator and open up for questions.