Bavarian Nordic R/I S/Adr

Yeah, thank you, Operator. And good afternoon to someone and good morning to the rest of you. My name is Rolf Sørensen, Investor Relations. And with me today, I have Executive Vice President, CFO, Henrik Juel, and President and CEO, Paul Chapin, as usual. And we will go through the third quarter announcement slides and that followed by Q&A afterwards. We've had a very busy quarter, but before we start, I just want to go through this disclaimer. This presentation 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 regarding our short-term objectives, opportunities, financial expectations for the full year, and cash position as of year-end, as well as statements concerning our plans, goals, future events, performance, and other information that is not historical information. All such forward-looking statements are expressly qualified by these cautionary statements. We undertake no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law. So after this, I will hand it over to you, Paul, for the first introduction.

Yeah, thanks, Rolf, and welcome, everyone, to our Q3 update. As Rolf indicated, we've had an extremely strong last three months, a strong quarter, driven by strong sales of both rabies, rabipore reservoirs, particularly in Germany and the US, but also of our smallpox monkeypox sales in response to the ongoing outbreak of monkeypox and this has allowed us to record record sales of more than a billion and highly profitable results in the last quarter based on EBITDA and even leading to a profitable result in the first nine months. This has allowed us these strong sales and opportunities, has allowed us to change our guidance numerous times this year and we're heading towards a break-even result. 2022 was always going to be a challenging year in that we're investing more than $2 billion in R&D as we have two phase three programs ongoing. And both RSV and ABN COF II are going according to plan in terms of the enrollment. However, the big event of the year since May has been the outbreak of monkeypox, and I'm extremely proud of the way the variant Nordic responded to this public health emergency. We've been able to address all demand for our monkeypox vaccine. And we've done that through obviously increasing our capacity and manufacturing capacity and working diligently to supply the vaccine to now more than 70 countries worldwide. To go to the next slide, slide four, I'll talk a little bit more about monkeypox. The first case of monkeypox was reported on May 6 in the UK. And as I said, I'm extremely proud that our first supply was also in May of 22. We rapidly scaled up our manufacturing capacity in terms of our fill and finish, allowing us to produce doses that we have in terms of bulk on stock to meet the demand. We've also expanded our filling capacity by bringing a contract manufacturer in the U.S. on board, and we're currently transferring the manufacturing process, and that CMO will be up and running in the coming months. This, as I said, has allowed us to supply all demand that we've received, and we've given access to our vaccine to more countries worldwide, and more than 3 million doses have been manufactured and distributed to date, with many more vaccines in the order books, including for next year. A really encouraging sign is that our Jynneus, Invernex, or Invermune vaccine has historically been manufactured and delivered to countries for cold storage. in the event that smallpox should be released. And we're extremely encouraged that the vaccine is now being actively used, with more than a million doses having been administered, and many more likely to be so. The other thing that we're encouraged by is that the effectiveness data that's now coming through various different studies is really demonstrating that even a single vaccination of Junaeus, Invenex, or Imumine has a high degree of efficacy in the range of 79% And this, in part, has led to a drop in cases of monkeypox in certain territories such as the EU. However, the outbreak continues, particularly in certain regions like Latin America. And the public health emergency has been continued both by the WHO and the US in November. We go to the next slide, change tracks and talk a little bit about COVID-19. and our vaccine candidate, ABN-CoV-2. We currently are conducting a phase three study, both in Europe, in Belgium and Denmark, and also in the US. We will eventually enroll 4,000 subjects, 3,000 in the US, which will be primarily for safety, and then an additional 1,000 subjects here in Europe where we'll be comparing the immune responses to Comirnaty. The enrollment has been initiated and we are on course to complete enrollment by the end of the year. However, the study started a little later than planned due to some regulatory challenges, late regulatory challenges and logistics of access to Comirnaty. And for that reason, the results of this study will be read out early next year. The other exciting thing about our vaccine candidate, ABN-CoV-2, it's been designed to generate strong immune responses against all variants of concern. And that data we've already reported from both phase one and phase two studies. However, it's based on a viral-like particle technology, which is known from the scientific community to induce durable, long-lived immune responses. And we're extremely encouraged by the six-month follow-up data from our phase two study, where from 41 subjects where we had follow-up data, we could see that we had long-lived durable immune responses. So the neutralizing responses were six or 10 times higher than the pre-boost levels, whether you were talking about Wuhan or the Omicron variant. And this represented less than a 50% decline in the peak booster response. And these responses are in the range that has been reported to be highly efficacious in the range of 90%. I don't need to remind everyone that this data is rather unique in the COVID-19 space as the current licensed vaccines based on RNA really have rapidly declining immune levels after already four months. So this is unique. It fits into the hypothesis that this really could be a universal booster vaccine that could be giving high protection against multiple variants of concern and giving you long-lasting protection. Let's go to slide six. RSV is another late stage vaccine candidate that we've been developing for a number of years. It's differentiated in its approach in that we're really trying with our vaccine to mimic immune responses that a natural RSV infection would induce. We know a natural RSV infection protects people for a couple of years, and that's the hypothesis and approach of our vaccine. Our vaccine has shown to be highly immunogenic, generating broad antibody T cell responses, and in the human challenge that we've already recorded, showed a 79% efficacy against mild disease. We're currently conducting a phase three study in 20,000 subjects, and enrollment is going according to plan. both here in Europe and in the U.S., and we expect to complete enrollment by year end. And top line data will likely be reported mid of next year. Now, we often get the question, what is the market opportunity for RSV? And obviously, it has a high disease burden with a large number of people being hospitalized each and every year, very similar to the levels of flu. Many people estimate that the RSV market will have a value of somewhere between $5 and $6 billion by 2025. So it offers an extremely important commercial opportunity, but more importantly, we believe that this vaccine could really meet the high unmet medical need and provide great protection against the disease that causes a lot of death. and Hospitalization. And with that, I will hand over the presentation to Henrik Jung.

Thank you, Paul. So let's turn to slide number eight and then talk a little about our commercial performance in the quarter. And in this respect, I'm really pleased to announce the record quarter for Barrier Nordic with a revenue exceeding one billion Danish kroner, as Paul said. So an extremely strong quarter driven by two strong growth drivers, It is, of course, the monkeypox business, but it is certainly also the performance of our rapist business, driven by strong market performance, but also strong brand performance. So 1 billion and 4 million Danish kroner, to be exact, as total revenue for the third quarter. Highest contributor to that was our smallpox monkeypox business. coming in with 578 million Danish kroner in revenue, followed by our rapist business represented by Rabipur and Rabevaert with 338 million Danish kroner. Insipur suffered a little from a temporary stock out during the quarter and came in with 62 million Danish kroner. So strong, very strong quarter taking us to a nine month revenue level of close to 1.9 a billion Danish kroner and again on a nine month basis you actually see that the rabies business and our smallpox monkeypox business are more or less at the same size getting close to 700 million Danish kroner for nine months so very strong quarter leaving us with another approximately 1 billion for the fourth quarter to achieve our guidance of 2.8 to 3 billion Danish kroner. Before we turn to the next slide, we have also had some help from the strong U.S. dollar at the moment. And if you look at the third quarter of this year in isolation, approximately close to 400 million Danish kroner out of our 1 billion is U.S. dollar denominated revenue coming both from our rapist business in the U.S. and also our business with Canada as well. And if you look at where we guided in the beginning of the year, we guided with an exchange rate of approximately six and a half Danish kroner per US dollar. Now it is around 7.4, so that actually for the third quarter, if you just compare those two, has given us an exchange rate gain of close to 50 million Danish kroner. But I have to say, of course, we also have expenses in US dollars and in particularly our ongoing RSV trial. It means that on an EBITDA level, you can say the impact is much lower than on the impact on the top line. So let's have a closer look at the commercial markets. And on slide number nine, we have the first look at the rabies markets. Again, here we are dividing it between the U.S. market and the German market. The U.S. market in the third quarter showed continued strong growth, 35% growth, taking us to a full-year growth so far for nine months of a little more than 30%, so extremely strong growth supported by increased travel levels in the U.S. both inside domestic travel, but also outside of the US. If you look at the German markets, even stronger growth, but of course also coming from an extremely low level during the pandemic. But we have seen, if you look at the third quarter alone, more than 300% growth. And now I think it is getting to a level close to the pre-COVID, but not fully there yet. The US market is actually has gone beyond the pre-COVID levels, but there's still a way to go for the German markets. Both markets contributed extremely well, and I think our brand and our organization performed extremely well in these markets as well. We have, by the end of September, a market share in the US of 67%, so that is slightly above the level we saw some years back before competition went out of stock for a period of time. And in Germany, we have maintained our market share of approximately 95%. And that is also one of the reasons that strong growth in Germany, even that it's from a low level, with our market share, it has a substantial impact still. So very strong performance in the rapids business. On slide number 10, our tick-borne encephalitis business, where we often use Germany as the proxy for how things are going in Europe. We have the last two quarters finally seen that the market's recovering. They are not fully back to the level prior to the pandemic, but some good signals the last two quarters. Unfortunately, during the third quarter, we were impacted by a stock-out situation. A stock-out situation created, you can say, mainly due to the fact that we have seen demand picking up faster than we have been able to handle. with the relatively still inflexible setup we have with GSK manufacturing our products. There's unfortunately some lead time before we can have additional products, but I'm happy to say that this situation has been resolved right now, and we have products in the markets again. Turning to slide number 11, our full profit and loss, again, more than a billion in revenue for the corner. Total operating cost of 492 million Danish kroner, primarily driven by increased research and development costs of 360 million, with the vast majority of that all related to our RSV program. So both the costs related to the phase three trial, but also costs related to the manufacturing process. That takes us to an EBITDA of 226 million. And as Paul also alluded to, even on an EBIT level, we are positive for the quarter by 128 million. And even net profit for the period after net financial items and tax, we are looking at a period with the profits of 12 million Danish kroner. So for the full nine months, revenue of close to 1.9 billion, and a positive EBITDA of 14 million Danish kroner. So, also when we look at a full profit and loss, an extremely strong corner for Baran Nordic. On the next slide, just quick update on our cash flow and balance sheet. First of all, you see cash flow from operating activities, slightly positive. of course driven by the net profit for the period. We have seen working capital worsen and that is particularly driven by the receivables as we haven't collected all the revenue or the cash associated with all the revenue we have generated in the corner. Cash flow from investment activities negative by 291 million and here I think 295 million was invested in our property and our plants and equipment related to the expansion of our drug substance facility for the future production of our rabies and our TBE products. The cash flow from financing activities, 405 million, most of that related to the financial support we get from the Danish Ministry of Health related to the COVID-19 program. and that takes us to a positive net cash flow for the period of 117 million. Selected balance sheet figures to the right, I will only this time focus on our net cash position, so of close to 2.4 billion Danish kroner, so that is after deducting all the debts we currently hold. If we instead look at cash and cash equivalents, then we are talking about 2.7 billion Danish kroner, which is the number you should focus on when you are comparing to our guidance for the year. So again, very strong cash position and of course significantly improved by the monkeypox performance and the rapist performance during the quarter. Next slide, I will talk a little about our financial guidance. Again, as Paul alluded to, Previously, we have adjusted our guidance seven times this year to reflect the ongoing orders that we have received for monkeypox, but also reflecting a very strong performance within our vaccine business, and to some extent, also reflecting the change in the exchange rate environment. So right now, we are guiding the top line revenue of between 2.8 and 3 billion Danish kroner. We are guiding an EBITDA between a loss of 200 million and the breakeven result. And we are guiding a cash position of more than 1.7 billion Danish kroner by the end of the year. The reason we are still guiding with intervals, despite that there is now only close to one and a half months left of the year, is simply due to the fact that our guidance is still pretty sensitive to the specific shipping schedules close to year end. So we might have orders secured already that could either be shipped in the second half of December or into January. I will also just mention here that please keep in mind that since our original guidance and that is still the case on our cash position, we are assuming a debt level of 600 million by the end of the year. Of course, the recent improvement in our cash position enables us to reconsider that position, but it is still the assumption in our guidance that we will have a debt position of 600 million Danish kroner. So very pleased that we can maintain our guidance and a guidance that is a significant improvement to the original guidance we issued in March, where you can say we have labeled 2022 as the investment year. We are now looking at A guidance on an EBITDA level, getting close to a break-even in a year where we are investing around 2 billion Danish kroner in very promising phase three trials. So with that, I will actually ask the operator to open up for any questions.