Bavarian Nordic A S

Good day and thank you for standing by. Welcome to the Bavarian Nordic First Quarterly Report Q1 for the three-month period ended 31st March 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, CEO Paul Chaplin. Please go ahead.

Thank you, operator, and welcome everyone to Bavaria Nordic's Q1 results for 2026. Together with me is Henrik Juul, and I will walk through some of the key highlights and activities for the first quarter. and then hand over to Henrik who will go through some of the more detailed financial results. So if you'll turn to slide four, we've had a solid start to 26. Revenue is just over a billion kroner with a 16% EBITDA margin. And as I said, I'll leave it to Henrik to walk through some of the details of the financials. However, Before I go into some of the practicalities, I just need to remind everyone that on Travel Health, it's a very seasonal business. So sometimes our quarterly results don't really reflect the business that we're expecting over the entire year. And typically for Travel Health, Q1 is more of a light quarter, with Q2 being a heavier quarter. And on public preparedness, really, Quarterly results, you know, it's driven all by government contracts and the delivery schedules according to those contracts. So we can either have a light or a low quarter depending on those contracts. And some of that explains when, and Henrik will get into it, when you look at Q1 in 26 and compare to 25 last year's Q1 for different reasons for stocking and all the rest of it was slightly higher. Having said all that, we have had a great, fantastic start to the year. A 14% growth in our travel health business, and I'll come back to that, but it's driven by rabies, the continued rollout of our vincunia vaccine for chikungunya and TBE. Vincunia, as I said, the rollout continues of the launch. We have recently got the approval in Switzerland and we continue to launch in new countries such as Belgium and Netherlands, and we're seeing good demand in some of the countries that we launched in last year. On public preparedness, we recently, after Q1 this Monday, announced a new order from the US government, and I'll come back to that in more detail, But that has led to an increase in the 26 guidance, increasing the public preparedness up to potentially 2.5 billion from the 1.8 to 2 and an increase in the EBITDA margin up to 28%. As I said, I'll come back to more of the details on public preparedness. So really a strong start for the year, already a hike in guidance based on the public preparedness, the new contract and strong continued demand in travel health. If we go to the next slide, talk a little bit about the travel health. As I said, a 14% increase in Q1. On rabies, we're really seeing strong demand, continued strong demand in the two key markets in the US and Germany with a 23% and 29% growth in Q1. And really, this strong growth that we're seeing with rabies is really due to Unfortunately, an increase in the number of deaths last year in the US and a number of different cases of travelers coming back infected. And again, unfortunately succumbing to the infection. And I would say rabies is really getting into the category now of the standard travel vaccine. And what I mean by that is there are a number of vaccines for travel that are considered pretty standard when people turn up at their GP or travel clinic. On TBE, We saw a 12% growth in the overall market. And although there was a decline compared to last year, as I said, this is more related to a stocking situation by wholesalers in 25, which we didn't see in this year. But we are completely on track in a normalized year for TBE. And as I said, we typically see stronger growth or stronger demand in Another thing to mention that's not on the slide is VivaTiff, which is our vaccine against typhoid, which we acquired back in 23. Unfortunately, the typhoid market, we really have not seen a rebound of that market since post-COVID, as we have in other travel sectors. And one of the reasons we saw for that for VivaTiff was that we weren't really addressing one of the previous markets, which were GPs, which prescribed the vaccine in the US. So last year, we took action and had a contracted sales force really targeting that sector. And this year, this quarter, I should say, we've seen a 12% growth in VivaTiff, and that's really showing signs that the actions that we're taking is really beginning to show signs or shoot of growth. So if we go to the next slide and talk a little bit more about Vencunia, really, we are on track with our launch. And if anything, I would say our original plan last year post-approval has been accelerated. So we've now launched, I believe, in 14 countries, US, throughout Europe, and also the UK, and as I said, recently added Belgium and the Netherlands. In Germany, we're seeing strong demand, and hopefully we will begin to see that strong demand in the other territories that we're rolling out. Of course, part of the launch is to raise awareness of chikungunya, so it will take time, but we are beginning to, as I say, see a very successful rollout. One area which is not as going as well as well as we would like is in the US. And unfortunately, this is related to some headwinds related to the recommendation. While the recommendation was achieved last April, this is still not being published by the CDC. And unfortunately, some wholesalers are not buying the products and stocking until this publication. So that is slowing the demand we were expecting in the us but as i said in other areas such as germany and elsewhere such as uk we are seeing a nice demand as i said in switzerland we've got the recently we got the recent approval and we plan to launch in q2 um and we're also expecting uh an approval from health canada uh in the first half of this year so again continued regulatory approvals and continuing on the plan launched for Vinconia, and we stand by our projected guidance for this vaccine, 26. If you go to the next slide, often we're getting a lot of questions lately around our travel health portfolio and with the current geopolitical situation, whether there's an impact on travel. What this slide is showing is that travel in most areas of the world continues to grow. albeit at a slower rate than we've seen post-COVID. So there is an argument to say that that growth is slowing down. We, however, have not seen any impact regarding our travel health portfolio in terms of geopolitical situation. But of course, it's obvious that there could be impacts if the situation continues. airfares and all the rest of it increase. But as I said, right now, we've seen no impacts. We've seen solid growth. And as I said, right now, travel is still growing, albeit at a slower rate. We go to the next slide. On public preparedness, I want to talk a little bit about the recent order from the US government. So this is under what we refer to as our freeze-dried contract that was awarded in 2017. look at the graph the red graph at the bottom to the left of this slide this came with an original order for 11 and a half million doses of our freeze-dried version at that point in time we had not developed the freeze-dried so there was also of that 500 and almost 40 million us dollars there was about 140 million to perform clinical study to do a tech transfer from contract manufacturer. There was 300 million to fill the bulk, and there was some bulk orders in that 540 million. With the latest order that was announced on Monday, the 97 million, BARDA are now completing the order for the 11.5 million doses, really showing their long-term commitment over what is almost 10 years. to develop, to tech transfer, and to acquire 11.5 million doses of the freeze-dried version. It's a great example of a public-private partnership because BN also invested in our own manufacturing line here in Denmark, and it's a great success story. What it also shows is that under this contract, the U.S. government has ordered additional bulk and additional doses to address the NPOC outbreak of 22. And we've received orders of greater than 1.2 billion since 2017 under this contract, which again really demonstrates the strong partnership between Bavaria Nordic and the U.S. government. Of that 97 million order that we received on Monday, the majority is for additional bulk. to replace bulk that was used for the MPOPs order. And that will be revenue recognized this year. And that led to the increase in guidance that I've already stated and I'm sure Henrik will walk through. So within that increased guidance to up to 2.5 billion, we now have secured contracts for 2 billion. And that really represents the upper range of what we call a normalized year. but we still expect additional orders between 300 to 500 million in the remainder of the year. Again, demonstrating that public preparedness is a steady-based business moving forward. If we go to the next slide, a few words quickly on the pipeline. In terms of R&D, the majority of our R&D spend this year is really on what we refer to as lifecycle management activities primarily chikungunya. We have a number of post-market commitments which have been initiated, a pediatric study to expand the label to include children, a booster study looking at the longevity of the immune response, and also an efficacy study. We're also in the mix of a phase two study which will support the transition from an egg-based production to a proprietary cell line that we've developed And that initial data or interim data will read out later this year. We also have a program fully funded by the DOD for equine encephalitis. And indeed, there is a public request for information regarding future phase three studies for such an indication, which we have responded to. And we also have some early stage programs for Lyme and EBV that will be coming through in the years to come. So with that, I will hand over to Henrik, who can walk through the more details on the financials.

Yeah, thank you, Paul. So we are now on slide 10, talking about commercial performance for the first quarter. So we deliver total revenue for the first quarter of 1,058,000,000 Danish kroner. comprised of 294 million from our public preparedness business and 721 million from our travel health business. The public preparedness business, Paul already alluded to it, we can have strong quarters, we can have less strong quarters. It really depends on the supply schedules linked to the individual contracts that we have with governments. When we compare to last year, we have to remember again the comparison quarter to quarter. is not that meaningful. Secondly, 25 was a year where we were impacted positively by an ongoing outbreak, and we saw revenue in Q1 of 25, including sales to UNICEF, RESC-EU, BARDA, etc. So that is the reason that we see a lower revenue of the public bedness business this quarter, this year. But it is exactly as expected. And as Paul alluded to, we already, given the order we got from BARDA loan announced recently, we have upgraded our guidance for the full year and our expectations to this part of the business. If you look at the travel health business, 721 million Danish kroner. 6% up compared to last year, if you just look at the numbers as they are here, but 14% growth when we exclude the discontinued partner revenue. And if you look on some of the individual product lines here, it's clearly driven by continued strong demand for our rapist vaccines. U.S. grew by 23%, the market. The German market grew by 29%. And as us being the market leaders in both US and Europe, we will also see growth rates beyond the 20%. On Insapur, 171 million. That is when you look at the numbers here, 16% down compared to prior year. But this is really explained by inventory fluctuations at wholesaler levels. If we look into the market data, then we can see that Germany actually grew by 12% and we gained 1% market share during the period, which means that we are selling more in the markets than we did same quarter last year. First quarter 25 on TPE was impacted by very early order patterns from the wholesalers and we actually saw 60% increase in the first quarter last year. And whereas this year is to some extent impacted by the low shelf life we entered the quarter with from the regulators, and which has caused us to be a little hesitant in supplying short shelf life products into the market, which at the end drives down inventory levels at the wholesaler level. So nothing to be concerned about. It is not reflecting the performance in the market, and Entepur is still expected to be one of the growth drivers for our business on a full year basis. Vin Kunja, we delivered 41 million, obviously against close to nothing first quarter of last year when we only just launched. So we continue to be on track. Paul already alluded to where we are doing better than anticipated and where we are still facing some challenges. But we are holding on to our expectations for the full year of 250 million Danish kroner in revenue. We would say we are starting to see positive growth and we are seeing the impact of some of the investments we have done to re-establish this business here. So that is quite a positive message. So all in all, 1 billion and 58 million Danish kroner in revenue, which is fully in line with our expectations. and fully in line with our ambitions for the full year as well. On slide 11, let's have a look at the full profit and loss. We talked about revenue. Gross profit ended at 45%, which is impacted by several factors. I think first of all, as you will recall, we have said previously, In the first months of the year, January, we typically have a shutdown of our manufacturing site for maintenance, which will mean that we are absorbing less of that cost to inventory, and it will mean idle costs going into production costs. Then we have also previously talked about the provision we did last year on our tick-borne encephalitis product, Encephur, due to the short shelf life. During the first quarter, as we got even more convinced that we would be able to increase the shelf life, we reversed some of that provision, valued at 29 million, so that was a positive impact on our gross profit for the quarter. We have also in our report this time mentioned that now we got the 24-month shelf life and therefore we could release more of this provision, which will happen in Q2. with an amount similar to what we saw in the first quarter. Finally, I think the underlying production is going extremely well. We have to say we are seeing very good performance on our sites, good success rates and good yield outcomes of manufacturing, which is really reflecting the fact that we are getting more and more into routine manufacturing of these products here. So 45% is quite as expected for the first quarter, and we are obviously talking a higher level for the full year. If you look further down, R&D costs 175 million, very much in line with the first quarter of last year. The big items in this spend here is really the Chikungunya, the trials that we are conducting at the moment, and it is the our MVA cell line development that is going on as well. SD&A costs up compared to last year and explained by the continued investment behind the launch of Vinconia, but also the impact that we see from expanding into more markets that has happened over the last 12 months. Bottom line, 165 million Danish kroner corresponding to an epiderm margin of 16%. So fully in line with our expectations, we knew and we also did communicate that Q1 would be a light corner due to the seasonality of our travel health vaccine and the simple timing of the public preparedness orders. So right now, after the upgrade, we are targeting 28% epiderm for the full year. On the next slide, cash flow and balance sheet. I will just mention a couple of highlights here. Cash flow from operating activities, negative by 752 million. This is impacted by the fact that during the first quarter, we paid the final milestone to GSK, which lowered the accounts payable and therefore impacted cash flow from operating activities. So we paid more than 500 million Danish kroner to GSK. and we have now paid all the milestones to both GSK and Emergent Biosolutions. If we look a little further down, then we see cash flow from financing activities. That is mainly explained by the share buyback that is ongoing. We have a few days ago, we could announce that we completed the second tranche of the 500 million Danish kroner share buyback. So to date, we have bought back approximately 350 million Danish kroner of shares. And to the right, I will just highlight our current cash balance, approximately 2.3 billion Danish kroner in cash. That was by the end of the first quarter. At that time, we still had approximately 100 million of the share buyback still to be done. So approximately 2.2 billion post the share buyback is what we have. in terms of our cash position. Let me turn to the final slide and just remind you of our outlook for 2026. So right now, after the order we got from BARDA, we have lifted our expectations to the top line. We are now expecting revenue between 5.5 billion Danish kroner and 5.7 billion Danish kroner. and an EBITDA margin that we have increased from 25% to approximately 28%. Travel health remains unchanged in the assumptions here. It's really the public preparedness business, which we have increased by 500 million Danish kroner. So now expecting between 2.3 to 2.5 billion Danish kroner. And out of this, we have already secured the 2 billion Danish kroner in revenue. So, We knew we entered into this year with an assumption that from a public preparedness perspective, it would be what we call a normalized year. I think we can still say it's a normalized year from the view that it's not impacted by impacts, outbreaks. But the continued interest from governments in buying our vaccines for stockpiling has actually taken our revenue beyond the revenue level we normally associate with, hey, normalized business, which is 1.5 to 2 billion Danish kroner. So again, with the current outlook, which we are fully on track to deliver against, this looks to be another good year for Bering Nordic. And with that, I will give the word back to the operator so we can open up for questions and answers.