Bavarian Nordic A S

to this Q3 update from the Nordic. Yes, my name is Rolf Sørensen, DPI Investor Relations, on quite a dramatic day for the company. Today, here as usual, we have our president and CEO, Paul Chapman, and our CFO, Henry Guell, to provide comments and presentation. on our Q3 and nine-month period presentation. And after that, it will be followed by Q&A, as usual. Before we start, I just want quickly to go through the forward-looking statements. Forward-looking statements involve risks, uncertainties, and other factors, many of which are outside our control, but 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. With these points, I will hand it over to you, Paul, for the presentation.

Thanks, Rolf, and welcome, everyone, to our quarterly update. If you turn to slide three, I'll just run through the key highlights. And we're having an extremely successful year. And the Q3 was as planned, if not better than planned, in terms of the numbers. We've seen our travel health portfolio grow more than anticipated. If you turn to slide three, I'll just run through the key highlights. Sorry about that. Where was I? Yeah. So our travel health portfolio has grown significantly compared to this time last year. And in fact, we beat the consensus in terms of our revenues for travel health. In public preparedness, we're dealing with yet another public health crisis in MPOCs. And we've recorded very strong sales in line with our plans. And we stick to our overall guidance by year end. We're gearing up also for our launch of our new vaccine for chikungunya, and that vaccine is currently being reviewed by the regulators in both the US and in Europe with a planned approval for next year and a launch. To prepare for that launch, we're expanding our commercial presence, which I'll go into in more of the slides. That's both to take over some of the markets that we had originally given to Valneva, but also to prepare for Chikungunya. The good news is that as we have stepped up, once again, in terms of our mpox vaccine, in terms of supplying both to Europe and also for Africa, we have secured very strong orders for next year and have already 2.4 billion kroner in revenues for our public preparedness business for next year. So a great first nine months and plan to end according to the guidance at year end. We go to slide four. As I said, our travel health business has really gone from strength to strength. Yet again, very strong growth compared to this time last year. On rabies, we've seen strong growth in both the US and in Germany. We have completed the tech transfer for our rabies from GSK. And I want to say just a couple of words on that, as this was a four-year program, which many people either thought was very long or within the industry thought was going to be very, very difficult to achieve. Rabies is an incredibly difficult vaccine to produce and to test and release. And I'm extremely proud to say that we have completed the tech transfer and all the regulatory approvals are in for this difficult vaccine. And we've achieved this on time and on budget. And this will lead to an improvement in the gross margin, an impact of which we will see the full impact by 27. On TBE, we've also seen strong sales in Germany. And here the tech transfer is progressing according to plan and will be completed next year. In terms of cholera and typhoid, these are two assets that we're relaunching. That relaunch is still moving forward, and we still believe we can return these two assets to an overall combined revenue of $100 million in the coming years. So really a very strong performance on our travel health portfolio.

We go to the next slide.

Obviously, 24 will be remembered for yet another public health emergency due to MPOCs and the growing cases that we see in Africa. This has led to higher orders than anticipated for this year, which is the reason we revised our guidance recently. We've seen strong orders from the US government, from HERA, and also other EU nations. and also from UNICEF, which is extremely important as these doses are designated for Africa. We've also seen some regulatory approvals expanding the label to include adolescents. Importantly, the WHO have awarded a pre-qualification for our vaccine, allowing the distribution into Africa. And we've seen other approvals around the world. If we go to slide seven. Continuing the discussion on MPOCs, we continue to work with all the key stakeholders, and here I must recognize the great work that the African CDC are doing in terms of combating this public health emergency. We, together with many other governments, have now donated and have made available up to 3 million doses. That includes the UNICEF order for 1 million doses from Bavaria Nordic. These doses are now being rolled out to the various different African nations, and hopefully will be the start of bringing the number of cases down. In the UNICEF tender, they talk about the requirement or need for up to 10 million, and Africa CDC themselves talk about 15 million dose requirements. And due to that, we continue to manufacture at the full scale and are looking at to potentially increase our capacity as we do anticipate more orders to come in the coming months and going into next year. To ensure the continued equitable access of our vaccine, we are also looking at expanding that capacity by also discussing the tech transfer of the full finish of our vaccine into Africa. And here we're progressing quite nicely, again, working in collaboration with the African CDC. But really, we need to see what the demand forecast will really be in the coming years to justify the costs of expanding our manufacturing into Africa. Go to the next slide. As I said, in terms of MPOCs, we've seen a lot of activities in terms of regulatory approvals. We've increased the label to include adolescents both in Europe and also as part of the WHO pre-qualification. This is important as a lot of the cases in Africa are in adolescents as well. Together with CEPI, we're also starting a pediatric study hopefully supporting the use into younger children. We're also, together with CEPI, supporting studies to expand access into other areas such as pregnant and younger children. So all in all, we're doing everything we can together with the various stakeholders to expand the label to allow more access to all age groups and the entire population to hopefully improve the situation with the current outbreak.

Go to the next slide.

Our chikungunya acid is currently being reviewed by both the FDA and EMA for approvals in the US and Europe. We have a chikungunya acid that is shown to induce good levels of protection based on an immunological endpoint and also a very favorable safety profile. Under both reviews, they are under accelerated review, and that is only possible if you're meeting an unmet medical need despite the fact there is already a Chikungunya vaccine approved. And that's because we believe we have a differentiated product that has an improved safety profile and is also addressing an adolescent population. We expect the approval on the 14th of February from the FDA and EMA in the first half and as I said we're gearing up to launch this asset during the first half of next year and to do that we are expanding our commercial presence in some new entities such as the UK, Canada and France. So it's It's a really exciting asset, and it will be an exciting year next year when we launch Chicken Gunja. And with that, I'll hand over the presentation to Henrik Joh.

Yeah, thank you very much, Paul. So let's turn to the next slide where we start with an overview of the revenue for the quarter and for the nine months of 2024. So if we start with the quarter, approximately 1.4 billion Danish kroner around the same level as we saw in the third quarter of 2023. But behind these numbers, we see very strong performance by our travel health business, 21% up, largely driven by very strong performance by our rapists and our TBE business, where we both see strong market growth, but also very strong brand performance in the markets. So after nine months of 24, we now have 79% of the market in the US on rapists, and we have are back to 95% market share in Germany as well. And on Insepool, we have 29% of the market. So strong brand performance combined by very strong market development as well. We will see Vaxcora that were recently added to our portfolio with the acquisition from Emergent. We have seen Vaxcora perform very nicely, impacted also by us taking an opportunity to supply the vaccine into an outbreak situation. On VivoTiff, we see negative growth, unfortunately. And here, I think we are facing a situation where these two products, the markets have basically not recovered since COVID. Remember, Emergent, before we took over, had basically pulled them out of the market. They did not support them with any resources. And the market for VivoTiff, as an example, I think is today, at index 70 approximately compared to 2019, which is of course a challenge for us, not being the market leader, but being the smaller player in this segment here. So what we saw in the third quarter was that during the start of the relaunch in 23, we had probably supplied VWTIF a little too widely into a market that was not growing as we expected, and therefore we have seen some returns of products coming back in this quarter this year and therefore the negative growth that you see here but overall fantastic performance i would say from the travel health business that goes from strength to strength double digit growth 21 for for the quarter and 18 for the first nine months on the public preparedness side of the business half a billion in revenue approximately for the quarter and one and a half billion for nine months remember when we compared to 23 that was really the record year where we executed on all the orders that we got during the 2022 outbreak and where we supplied significant number of vaccines, typically to European customers, US customers, etc. So it's a very tough benchmark against last year. But we are sticking, of course, to our guidance for the full year. So that is on the public preparedness side, 3 to 3.4 billion Danish kroner. So you can argue we are not even halfway through that order book, and we will have a very busy fourth quarter on the public preparedness side. So after nine months, 3.6 billion Danish kroner in revenue. And I will come back and talk about the guidance in a bit more detail on one of the next slides. But let's start with the P&L on the next slide here. As I said, after nine months, 3.6 billion in revenue, 43% gross margin, total operating costs of 1.3 billion, R&D costs obviously impacted by the development of the Chikungunya vaccine that we are anticipating to launch next year, and SG&A costs impacted by, first of all, the acquisition from Emergent, where we took over some sales and marketing activities, but also expansion into a few new markets, as Paul alluded to, where we are establishing ourselves. This year in France and in the UK and Canada, we have done as well, both to take back the business we partnered with Veneva, but also to prepare us for the chicken gunja loans next year. EBITDA ends at $692 million for the first nine months, And in our production cost, I should say, the first nine months here, we have included approximately 45 million of manufacturing costs related to chicken cuneo. It is related to commercial grade batches that we anticipate to sell upon approval. We cannot capitalize these and put them on inventory on the balance sheet until the product is approved. So at approval, this expense will be reversed. If we then go to the next slide, just a few comments to our cash flow and balance sheet. So nine months, close to a billion in positive cash flow from operating activities, obviously positively impacted by positive net profit for the period, negatively impacted by the planned inventory buildup that we have already put in as an assumption when we guide it for the full year. and then positively impacted by a reduction in receivables. Remember, fourth quarter of 23 was very busy. We had a lot of revenue in that quarter and ended the year with a high level of receivables that we have cashed in to a large extent since. Cash flow from investment activities. This is primarily placing cash into securities, but it also includes recognition of milestone payments to GSK and emergent buyer solutions amounting to close to 1 billion Danish kroner. On the right side of this slide here, select the balance sheet numbers. I will just focus on the securities cash and cash equivalents, which stands at close to 1.9 billion Danish kroner by the end of September, which we find is an adequate cash position considering the milestone payments we have to pay to GSK and Emergent during the next three quarters. And this amounts to approximately 1.7 billion Danish kroner. And on top of our cash position at the moment, we also still have our sustainability-linked loan of 1 billion Danish kroner still on form. Next slide. A little about the guidance. On this slide here, you will see our latest guidance, which was upgraded in connection with the order we got from UNICEF. So right now it stands at a revenue of 5.4 to 5.8 billion Danish kroner and an EBITDA of 1 billion 450 million and 1.7 billion Danish kroner. When we did the upgrade of the guidance, we upgraded the travel health business from 2.1 to 2.2 billion Danish kroner, given the strong performance we have seen this year. And we also upgraded, of course, the public preparedness business, where we are now anticipating between 3 billion and 3.4 billion Danish kroner in revenue. You could argue that this is quite a wide range to have this late in the year. There's a good reason for that. This range is all linked to uncertainty related to the logistics surrounding the supplies that we are planning on the inbox business in the fourth quarter of this year. We have orders That adds up to the high end of this guidance, so that is 3.4 billion for public preparedness and 5.8 for the social business. Now it's all about execution, and there are a lot of things that needs to fall in place to make everything happen. Some of that is in our control, and there we are doing everything we can, of course, but some of this is also out of our control, and it is things like allocating the doses to the African nations, making sure we have the right permits to import the vaccines, getting the ship to addresses. It's really the logistical details that we need to make this happen. Good thing is that if we don't deliver all of the 3.4, then it is not lost revenue. It will basically add to our order book for next year. And speaking about the order book for next year, we have also in connection with this report here, we are announcing our current order book for 25. which stands at 2.4 billion Danish kroner. Remember, we have previously said that the base business that we're looking at within public preparedness is between one and a half to two billion in the normal year. Already this time of 24, we are now looking at an order book worth 2.4 billion Danish kroner. And as I said, anything that we are not delivering in 24 will just add to this order book for next year. So quite a strong position already secured for 2025. And with that, I will give the word back to the operator and ask to open for questions.

Thank you, sir. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Once again, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Please stand by while we compile the Q&A roster. This will take a few moments. Once again, please press star one and one on your telephone and wait for your name to be announced. Thank you.

We are now going to proceed with our first question. The questions come from the line of Lucy Codrington from Jefferies.

Please ask your question.

Hi there. Thank you for taking my question. Just regarding, sorry, I may have missed it or misunderstood when you were talking about the capacity for Phil Finnish in whether to invest in that within Africa itself. Could you just say, I got the impression that basically you're having discussions about it, but before you make that investment, you need to get better visibility on orders over the next few years. So when will you get that visibility to, I guess, justify that cost? And given that this is an endemic outbreak, does that not suggest that there will always be an element of demand necessary? Because I suspect it would take a long time to curb this.

um yeah that's my first question thank you yeah thank you so yeah just to clarify so we we're open to doing the tech transfer uh we've run a technical assessment supported by the african cdc working with a number of different companies in in africa um we've identified quite a few companies that could actually, from a technical standpoint, perform the manufacturing. But those companies and also ourselves need to get the clarity on what is the future demand going to be in able to justify that work and that cash outlay in terms of doing the tech transfer. And we are talking about 26, 27 and beyond. um so we are in dialogue with the various stakeholders on what that sort of demand could look like but we would need assurances on what that demand would be and as i said the companies themselves in africa are also looking for those assurances um before we would actually engage in the tech transfer got it and and any idea on when you might get that visibility i guess Well, as I said, we're in dialogue with stakeholders.

So, you know, let's see. Hopefully soon.

And then just a more broad question. After the outbreak in 2022, why didn't WHO grant you the pre-qualification status or qualification status at that time? Why the delay, given we'd already had an outbreak? And then just regarding, I guess, the PEDS element of this, was there a reason that these studies hadn't been conducted already and completed already? What was the delay there? Thank you.

So just on the paediatric studies, so obviously performing clinical studies in children, you always have to carefully consider the risk profile of testing vaccines. And in the non-outbreak scenario, it was deemed both by us but also the regulators that you couldn't really justify testing a vaccine, albeit one that we anticipate has a good safety profile in children when there wasn't really any benefit as there wasn't an outbreak. So the outbreak scenario has really opened up the opportunity to improve that risk profile in that there's definitely a benefit in testing a vaccine against MPOCs in the current outbreak. So that's the real reason we really had to wait for a situation where it was feasible and ethical to test the vaccine in children. In terms of the pre-qualification, you know, I think that's a question really for the WHO. I mean, we filed what we thought was needed back in, I believe, it was 23. I guess it's just a reality of the priorities at the time, which obviously changed with the new situation.

Very clear. Thank you. Thank you.

As a reminder to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We have no further questions. We just have a follow-up question coming from the line of Lucy Codrington from Jefferies. Please ask your question. So, Lucy, your line is opened.

Hi, sorry. Just one more then. I guess it's difficult to know... today the reaction just based on um as you say i think the sales themselves should have been considered to be potentially lumpy so so not necessarily a finance thing but obviously there is a lot of focus on um the trump appointment of rfk junior for um health secretary and his kind of widely um viewed his stance on vaccines so i just i guess our thinking potentially is his stance tends to relate more to kind of childhood immunization schedules, but any thoughts from your end about potential risks to vaccine plays based on that appointment? Thank you.

Yeah, thanks.

Well, the first thing I would say is that during the first term that Trump was president, it was we saw the biodefense business being heavily supported. So I look forward again to working with the new administration, look forward to working with the new administration, but our anticipation is that as usual, we will only see the biopreparedness business going from strength to strength. And regarding vaccines in general, I mean, you know, We need to deal with facts, so I think it's better to just wait and see what really happens with the appointment and what the policies will be.

Okay, thank you.

We have no further questions for the time being, so I'll hand back to you for closing remarks. Thank you.

Yeah, thank you. Thank you, everyone, for attending the call and taking the time. Have a great weekend.

Thanks. Bye.