Good day, and thank you for standing by. Welcome to the Bavarian Nordic Annual Report 2021 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to turn the conference over to your speaker today, Rolf Sass Sørensen. Please go ahead, sir.
Thank you, operator. Good morning to some of you, and good afternoon to the rest of you. Welcome to this full year presentation 2021 of Bavarian Nordic. As usual, I have with me here the A team, President and CEO, Paul Chaplin, and Executive Vice President, CFO, Henrik Juuel. Before we start our presentation, I just want to quickly go through the forward-looking statements. 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 financial preparedness as of year-end, as well as statements concerning our plans, objectives, 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 or revise forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law. With this, I will hand the presentation over to Paul Chaplin.
Thanks, Rolf, and welcome everyone, and to our investor call. If you turn to slide three, I'd like to start with just a few high-level observations before I move on and talk about the great progress we made in 2021 and the exciting steps we have ahead of us during this year. Back in 2020, when we expanded our commercial portfolio with the acquisition of our two new products, one against rabies and one against TBE, we said at the time that we wanted to build up our commercial infrastructure to drive profitable growth. At the same time, we came out with a vision that by 2025, we wanted to be one of the largest pure-play vaccine companies.
To do that, we had to broaden our commercial portfolio and bring more products, either through our R&D innovation or through additional M&A. Last year, we were lucky to be able to, through capital raises, raise money from our investors, who wanted to support us in this endeavor to become one of the largest pure-play vaccine companies. Through funding through the Danish government, we're now in a rather privileged position that through the huge advances that we made in our pipeline during last year, we're in a position that we can make strategic investments in two blockbuster indications that will springboard us to achieving our vision of becoming this pure-play vaccine company by 2025. The two programs that we will be investing heavily in 2022, I'll come back to in more detail.
That's our innovative RSV program that will be entering phase III, and our COVID-19 program, ABNCoV2, which is funded through the Danish government. Both these programs have generated really exciting data during 2021 that I will remind you of in the coming slides, and have really met the threshold to invest and move forward to launch in the coming years. In addition to these R&D investments, we will continue to invest in our manufacturing infrastructure. That will allow us to bring our commercial assets, the manufacturing of our commercial assets in-house and will set the groundwork for us to be able to manufacture life-saving vaccines in the future. We are transitioning to a really exciting stage in Bavarian Nordic, where we're investing in our strategic assets to secure future growth.
2when we came out with the desire to move to a commercial entity with profitable growth, we did indicate that there would be temporary periods where we may be loss-making, as we would have to make significant investments to be able to achieve the vision of becoming one of the largest pure-play vaccine companies. If we go to the next slide four. 2021 was a remarkable year in many respects, but will probably be remembered most for the two advances, significant advances we made in our pipeline. We reported fantastic data for ABNCoV2, a COVID-19 vaccine, which also coincided with funding from the Danish government, which has now secured our ability to move this program to launch, which hopefully will happen next year. On RSV, we also reported efficacy data, which is highly competitive.
The authorities, the U.S. authorities, have recognized our excellent data with a breakthrough designation, and we're now gearing up to move into phase III following the generous support of our existing shareholders. On the commercial side, yes, we still hit headwinds due to COVID-19 on some of our sales activities for different reasons. Our rabies is a travel vaccine here in Europe, which has been heavily impacted due to the travel restrictions. On TBE, there was a restriction or availability to physicians in Germany, one of our key markets. However, fortunately, last year, we were able to secure revenues through our smallpox and Ebola business that really allowed us to fulfill and achieve our guidance for 2021.
If we go to the next slide five, I wanna talk a little bit about the investments that we have made and will continue to make in our manufacturing site here in Denmark. It really has expanded over the last few years. We've completed the investment in a state-of-the-art fill finish facility. The first commercial product was transferred, and we manufactured our first doses of our smallpox vaccine, which we invoiced last year to the U.S. government. We continue to do tech transfers into that facility, both for our rabies products, our Rabipur, RabAvert, and also our freeze-dried smallpox version. We are currently expanding the bulk facility to allow us to take in Encepur and Rabipur in the coming years.
Due to that expansion, we've had to actually close the facility for approximately a year, started last year, and it will be opened again later this year in the autumn. That actually has an impact on our ability to continue to obviously manufacture. We will not be able to manufacture bulk for the US government during 2022 or Ebola orders for our partner, Janssen, which obviously, and Henrik will get to that in the coming slides, has impacted our guided revenue for 2022. However, all these investments are gonna allow us to manufacture our commercial portfolio in-house, and is the cornerstone, and I would say the foundation, to allow us to become one of the pure play vaccine companies in the coming years. We go to the next slide.
As I said, we're in a rather privileged position in that we've got two extremely exciting assets, both in blockbuster indications, which are ready for phase III. As I said, through the support of our investors, but also through funding from the Danish government, we have the funds to execute on these phase III programs and bring these products to market. Both these products are in blockbuster indications. They will, through these investments, secure future growth and allow us to bring true life-saving vaccines to the market. This, however, does mean that we have to make significant investments. We'll be investing close to DKK 2 billion in R&D in the coming year. That, of course, has a massive impact on our guidance for this year.
The revenue, as I said, is slightly lower than it was last year due to the facility closure. Obviously, our R&D investments are increasing by four-fold, which means we are in a temporary loss-making period. As I said, these investments were planned, and will allow us to secure the future growth in the years ahead. If we skip a couple of slides, and move to ABNCoV2. I often get the question, what is the future market for COVID now that society is opening up again, the sun is shining, and we're all feeling much better about our life moving forward.
You know, I would remind you, all of you that ask me that question, I was asked the same question this time last year, that we were too late, there was no real need for a new vaccine. Then unfortunately, as the year progressed, we all realized with the emergence of Omicron that we were going back into lockdown, and we all needed a new booster. The data that is being generated through the booster programs around the world is already beginning to indicate that the neutralizing titers or the efficacy is waning six months later. Most people are predicting that we will need another booster later this year. Most people believe with the current batch of vaccines that we will probably be moving to annual boosters, particularly for risk groups and elderly subjects.
That's one speculation that how the market will develop into a flu-like market, where elderly, unfortunately, that probably includes myself, and risk groups will be vaccinated. However, there could be other vaccines to ABNCoV2 that give you longer-lasting protection, and that market will then develop into more of a shingles Prevnar market, where elderly and risk populations need regular boosters, but more likely every three to five years. How that market develops, we'll only be able to tell you as the data is generated. But it's certainly a huge unmet medical need for improved vaccines, and there's a huge commercial opportunity that lies ahead of us. If we go to the next slide. We have already reported some of the phase II data last year.
If I just remind you of the trial design at the bottom left, there were three groups. Two groups that were seropositive, meaning they've been previously vaccinated, that received a single booster of either 100 micrograms or 50 micrograms, and we've already reported the 100 microgram data and shown that data. There was a seronegative group that received two vaccinations of 100 micrograms four weeks apart. We have now completed this study and reported the data a few weeks ago, and essentially we see in the booster indication very, very strong booster responses against all the tested variants of concern, and I'll show that data in the coming slides. No real difference between 50 and 100 micrograms, both showing very strong booster responses.
For various reasons that I'll get to in the coming slides, we have selected the 100 microgram dose to move forward into phase III. We believe we've met the threshold now to move into phase III. We have secured the phase III trial design with the authorities, and we believe we've met the data threshold to move forward. If we go to the next slide 10. This is a reminder of the data that we've already shared with all of you with the 100 micrograms. This is a booster indication, given a single vaccination. It's a bit busy, but if you look at the far left graph with the overall response, here you can see that we see a strong booster response to titers that are typically indicated of protective titers, greater than 90%.
The fold increase and the titer increases vary depending on the starting titers, which are the next three graphs. The overall picture doesn't really change. We can boost the memory response induced by either a previous RNA vaccine or adenoviral vaccine to extremely high protective levels with a single vaccination of ABNCoV2. If we go to slide 11. Again, this is a reminder. We see very strong booster responses to all the variants that we evaluated, including Delta, which isn't included on this slide, which again, is a differentiating factor to the existing batch of vaccines. They vary greatly in their ability to generate strong neutralizing titers to all variants. ABNCoV2 appears to be able to do that. We are still moving ahead. We're generating data against Omicron.
The reason why we believe we can move forward with the decision for phase III is simply that the phase III design is a non-inferiority to an RNA-based vaccine based on the original Wuhan isolate. If we go to slide 12. This is the data between the two different doses, 100 micrograms, which I've already shown you, and the new data with 50 micrograms. You'll see that the responses look incredibly similar in terms of the titers that are generated. Again, titers associated with very high levels of efficacy, greater than 90%. There was no difference in the safety profile between the two doses, so no advantage to go to a lower dose regarding safety. There were no differences in the responses against the variants of concern that we've evaluated. So again, the same results that I've just shown you.
However, a sub-analysis looking at the time since the booster vaccination, since the last vaccination with RNA, or the initial starting titer, really implied that the higher dose trended towards higher neutralizing titers. It's for that reason we've decided to move ahead into phase III later this year with a 100-microgram dose. Slide 13. This is the third group, which is people that are seronegative, have not been previously vaccinated. They received two vaccinations at week 0 and at week 4. Just as in the phase I, we saw extremely high titers after the second vaccination, again, to titers greater than 90% efficacy. Again, confirming the data we reported last year in phase I for people that are seronegative. You know, ABNCoV2 is really performing at all levels.
Strong booster responses, very high titers, similar titers to all variants of concern, and in the seronegative, really a strong vaccine with two shots. If you go to slide 14, if we talk a little bit about the phase III, as I said, we've been in discussions with most of the regulators, particularly in Europe, and we have a phase III design that we've agreed, which will be a non-inferiority study comparing the neutralizing titers stimulated by ABNCoV2 to an mRNA-based vaccine. The phase III manufacturing is advancing as planned. The bulk or drug substance is already manufactured, and in fact, the first doses were also filled and finished this week at our facility in Denmark.
We are completely on track and online to initiate the phase III study in the first half of this year, with data being reported later this year, and beginning to file for approval by year-end. We should be seeing pivotal results later this year, with a view that launch will occur in 2023. Again, if we just skip a couple of slides and move to slide 16. Change now and talk about our other blockbuster indication, which is RSV. As you know, we've been developing this vaccine for a number of years now. We have completed a number of different clinical studies that we've published and reported. We've shown excellent efficacy in the human challenge, and that's on the back of showing very strong immune responses, broad immune responses, both antibodies and T-cells.
This data is so impressive that the FDA have granted breakthrough designation, which means we can get fast track and priority review. As I said, we're now moving forward with a phase III design that we've also had discussions and approval of with the regulators. One other thing I would like to say on this summary slide is that, of course, while we have the financial freedom right now to advance this phase III program, we are looking for commercial partners, and we will continue to do so. However, having the cash in hand means that we can take our time and find the right partner.
There are some territories in the world where we may need to get moving sooner rather than later, where additional clinical studies may be required to work together with a partner in certain territories, like Japan, for example. There you may see that we do partnering deals in certain territories. We may also be looking for a global partner, but as I said, it is also open that there may be different partners in different territories of the world. Going to the next slide 17. This is just a reminder of the efficacy data we reported last year. This is from a human challenge study.
We showed a significant reduction in the viral load, which was the primary endpoint, and we showed an ability to prevent RSV symptoms to almost an 80% efficacy in the subject. Really impressive efficacy data for a vaccine that already had a very impressive data set in terms of immune responses, and certainly fulfills the criteria to move into phase III. If you go to the last slide, my last slide 18. The phase III design that we've agreed with the authorities will be in 20,000 subjects, 10,000 receiving our RSV vaccine and 10,000 receiving the placebo. Right now, it looks as if we will be enrolling both in the U.S. and Germany, and we plan to initiate this study in the first half of this year.
As I said, this is a significant investment, but it's one that has met the criteria based on the data set that I've walked you through, and it really is in a blockbuster indication. Although competition is hot, the market is significant and multiple RSV vaccines are most likely needed. We truly believe that the data that we've generated, we may have an advantage as our vaccine is a very strong inducer of T-cells, and T-cells is widely reported as being the component of immune response that prevents severe disease. A really exciting year ahead, where we're investing in two pivotal studies that will springboard us to our vision to become one of the largest pure-play vaccine companies. With that, I'll hand over to Henrik Juuel.
Thank you, Paul. I think as usual, we will start with taking you through the commercial performance for 2021. On slide 20, you will see a breakdown of our total revenue for 2021. We achieved consolidated total sales of close to DKK 1.9 billion, exactly in line with our guidance for 2021. As Paul alluded to previously, we did face continued headwinds against Encepur, Rabipur, and RabAvert markets due to COVID. I will come back to that in more detail.
As you will see on the table to the right here, we benefited from our diversified portfolio, with JYNNEOS/IMVANEX, our smallpox business, and our Ebola business in particular, being much more resilient, to the COVID situation. If you see on our smallpox business that's in U.S. JYNNEOS, we had a total revenue level of DKK 734 million for 2021. It was a good year. Behind those numbers, we have approximately DKK 90 million of revenue to a handful of European markets. The rest really comes from both manufacturing of bulk to the U.S. government, but also, the first liquid frozen finished product filled at our own site in Kvistgaard. Total revenue was DKK 1.9 billion approximately in line with guidance and slightly ahead of the level we saw in 2020.
On the next slide, let's dig into some of the details on the first of all, the rabies vaccine. We start with the upper left part. We look at the U.S. rabies market. This is a market that has during COVID been impacted both on the post-exposure and the pre-exposure part, but we have actually seen some signs, good signs of recovery. If we look at the full year of 2021, we're actually looking at a growth rate of 13% compared to 2020. Good growth and some good signs in the last quarters here, promising well for the future to come. Of course, if you look at the fourth quarter of 2021 in isolation, we see we are still behind the pre-COVID market levels.
There is some catching up to do, but good signs of recovery. Next is Germany, which we use as a good proxy for the market performance in Europe. In Europe, I think the rabies vaccine is a pure travelers vaccine and therefore have been extremely hard hit by COVID-19. We have actually seen if you just do the year-over-year comparison, again, a decline of 55%. But if you look at the details, you will also see that the second half of 2021, we are starting to see signs of recovery also in Germany, however, from a very low level, of course.
When we look at the -55% compared to 2020, a lot of that is of course explained by the first quarter of 2020, which was before COVID really had an impact on the rabies business. Also signs of recovery in the German market, but coming from a very low base, obviously. And to the right on this graph, we just look at our performance of DKK 506 million for the full year, 19% down compared to last year. That is of course explained by the continued impact from COVID. U.S. market being the exception to the decline we have seen.
Then it is also explained by the expected market share drop in the U.S. where we over the year 2021, our market share changed from 75% to 70%, which was in line with our own expectations as this is caused by a competitor being back after a stock out situation. We still hold a higher market share than prior to the stock out situation. On slide 22, we look at the TBE vaccine market. The TBE business is entirely a European business. It's an endemic vaccine, so it's not as such impacted by traveling. Unfortunately, what we have seen is that the market has still been impacted by COVID, as in particular in Germany, but also some of the other key markets.
The physicians have been occupied with COVID vaccinations, and there hasn't been the same kind of access to vaccinations as we saw pre-COVID. Therefore, in Germany, we have seen a drop in the market compared to 2020 of 13%. If you look at just quarter by quarter back to 2020, we are still 5% behind the last year and 12% behind the pre-COVID level. There's definitely some catching up to be done here. We delivered DKK 363 million in total revenue for the year, which is 20% below the prior year, explained by the market declines and some wholesaler and partner inventory movements.
I think on the positive side, I think during this turbulent time, we have managed to remain pretty stable market share around 31% in Germany. On slide 23, an overview of our full P&L. As said, total revenue close to DKK 1.9 billion and in line with our guidance. Production costs of approximately DKK 1.3 billion. And here I need to mention that this includes inventory or provisions for inventory write-downs caused by COVID-19. Some or most of that provision really covers expected inventory write-offs in the future given what we have on stock and the orders that we have placed with GSK. R&D, DKK 399 million, so up from the last year and really explained for up from 2020, I should say, sorry.
The increase is explained by the investments in RSV phase III already last year, where we manufactured the clinical trial material, and we also started pre-spending on the phase III, so we could be ready this year. SG&A costs DKK 485, below the 2020 level and mainly explained by lower distribution costs as a consequence of us taking over all the markets from GSK. Adding all of this up gives an EBITDA of DKK 75 million against our guidance of DKK 70 million for 2021. Slightly better than what we had guided. Slide 24, cash flow and balance sheet.
On the cash flow side, net cash flow for the period ended positive at DKK 300 million approximately, which was composed of negative cash flow from operating activities, primarily explained by a negative net profit, but also some increases in working capital following a substantial revenue that we recognized in December, and where we will receive the money here during the first quarter. Cash flow from investment activities includes many items. For instance, payments, continued payments to GSK that follows along with reaching certain milestones, continued investments in our manufacturing and also the tech transfer of Rabipur, RabAvert and Encepur, and then also capitalized costs related to our COVID-19 vaccine. In this amount for the investment activities, approximately DKK 1.7 billion of net investment in securities is also included. That's us placing our cash in safe securities.
Cash flow from financing activities is, of course, heavily impacted by the capital raise we did in 2021. It's also impacted by the funding agreement we did with the Danish Ministry of Health. We did receive DKK 160 million last year out of the total agreement of DKK 800 million. Again, ending up with net positive cash flow of DKK 300 million, but really, I think you should, to understand what capacity we have and what's how liquid we are, you should really add back the investments we've done in securities, approximately 1.7 billion DKK. To the right is our selected balance sheet figures. In respect of time here, I will focus on our cash situation at the end.
If you look at the line securities, cash and cash equivalents, DKK 3.7 billion. That includes DKK 500 million from a repo transaction with the bank, which should really be excluded when trying to understand the cash position against the guidance. That takes us to DKK 3.2 billion against a guidance of DKK 3.1 billion Danish kroner, so slightly ahead of what we guided for 2021. Our outlook for 2022. As Paul alluded to, I think these are numbers that are heavily impacted by the investments that we are making in the future, and in our pursuit of our vision to become one of the largest pure-play vaccine companies. We are, for 2022, guiding revenue in the range between DKK 1.1 billion and DKK 1.4 billion.
The midpoint of this interval here really assumes a partial return to normality for the TBE market and the rabies market, and a somewhat slower return to the normality for the European rabies market, where this is a pure travelers vaccine. We have in this revenue guidance we have not included any orders that have not been confirmed with the U.S. government, which means that what is included is an order we already received of DKK 100 million, approximately. Also, as previously announced, our order with the Public Health Agency of Canada amounting to DKK 203 million. No additional orders to BARDA is included in our revenue guidance.
As Paul also said, quite in line with our plans, we had to shut down the bulk facility in Kvistgaard starting the autumn last year, and that will end in the autumn of 2022, which means that our ability to manufacture bulk, both for our smallpox business but also for our Ebola businesses, is quite limited for 2022. I think even if we manufacture bulk, for any of these two business areas, it will happen so late that we would not be able to revenue recognize it in 2022. That explains part of our revenue guidance for 2022. Also have to say that we have included also in the revenue guidance limited revenue from our partner agreements with Valneva and Dynavax.
As we have announced previously, we have launched two traveler vaccines from Valneva, IXIARO and DUKORAL, and we are later during this first half year going to launch HEPLISAV-B from Dynavax. That is going to be a real launch of a new product in Europe. We have not included any potential income from RSV partnering in our financial numbers as well. As Paul alluded to, we are still pursuing a strategy of finding commercial partners to our RSV assets. Our heavy investments in R&D, which is approaching DKK 2 billion, or more than four times a normal year for Bavarian Nordic, of course impacts our EBITDA significantly.
We are capitalizing the investments in R&D for ABNCoV2, so that will not appear on the R&D line once we have a full P&L for 2022. Still, it is more than DKK 1.2 billion that will be visible on the R&D line for the full year of 2022.
Quite heavily impacted by the investments in R&D when we look at the EBITDA guidance of where we are guiding a loss between DKK 1 billion and DKK 1.3 billion. We do hold a very strong cash position thanks to the capital raises we did last year and the support from the Danish government really enabling us to pursue our strategy and invest in the future and still leave a good cash position by the end of 2022 of DKK 1 billion to DKK 1.2 billion. Next slide. Slide 26 is the final slide. Just to give you a quick update on some of the key strategic objectives for 2022, and Paul actually already talked to most of these. Of course, some of the very important ones will be both RSV and COVID-19.
We are soon going to start phase III on these two very important assets targeting potential blockbuster markets. On RSV, we will initiate the phase III during first half of this year and complete enrollment by the end of the year. In parallel, we will continue to prepare for commercial launch, which both involves being prepared from a manufacturing side, regulatory-wise, but also from a commercial perspective. On COVID-19, same thing. We are soon going to initiate the enrollment into a phase III study, and we will be able to report the data in the second half of 2022. At the same time prepare for the regulatory submission and start preparing for commercial launch. Again, this involves scaling up manufacturing, be prepared to supply commercial goods and also be prepared from a commercial perspective.
Again, we continue our work on the freeze-dried version of our smallpox vaccine, JYNNEOS, which eventually will unlock the option we have with the U.S. government of $299 million that we will be able to revenue recognize over the next years. Within the manufacturing side, I think this is all about continuing the tech transfer of our rabies and TBE vaccines into our plant in Kvistgaard. Specifically to 2022, I think one of the key targets will be to complete the qualification of the packaging of these products. We will also complete the investments in the expansion of the bulk facility so that is ready for transferring the manufacturing of the bulk of these products for the future.
Within the commercial area, it's all about defending, gaining market shares for our commercial products and continue improving the awareness of the Bavarian Nordic among the key stakeholders in the market. As I already mentioned, we have already assumed marketing and distribution responsibility for IXIARO and DUKORAL from Valneva, and we are going to launch HEPLISAV-B in Germany in license from Dynavax. With that, I will just end up by saying that this is really going to be a pivotal year for the Bavarian Nordic. First time ever are we going to run two significant phase III trials in parallel, targeting potential blockbuster markets. By this, I think we are really fueling our vision to become one of the largest pure-play vaccine companies.
I think with that, I will give the word back to the operator and ask you to open up for Q&As, please.
Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound hash key. Once again, please press star and one if you would like to ask a question. Your first question today comes from the line of Thomas Bowers from Danske Bank. Please go ahead, your line is open.
Yes. Great. Thank you very much. I think I'd kick off with a couple of JYNNEOS questions here. First of all, I understand that you can say the freeze-dried BLA has been postponed until 2023. I'm just wondering if you can add a bit of color on the reason behind this. I understand it's related to FDA inspection. The reason behind the change and maybe even more importantly, does it sort of change how we should think of BARDA revenue under this $299 million US contract. Of course, primarily timelines and potential revenue recognition impact for 2023. Now I guess we should expect FDA approval to happen not before 2024.
Just in addition to this, you already have produced a lot of bulk material ahead of the freeze-dried approval. This revenue that you do not recognize in your 2022 guidance yet. Is this potentially additional bulk contracts, or is it something related to the freeze-dried instead, more related to maybe some milestones? Just wondering if there's any potential for revenue recognition on top of these DKK 100 million you have included in your guidance from BARDA. Lastly, just maybe as a reminder, maybe I just forgot, but just on the potential DoD contracts, is there any immediate hurdles that Bill needs to overcome for this actually to materialize at some point? Thank you.
Yeah. Thanks, Thomas. Let me start with the BLA. Yes, I think we provided a little bit more of an update in the material that the freeze-dried JYNNEOS probably now looks like the approval, as you just highlighted, will be pushed out to 2024. The changes is driven basically by the fact that the FDA wants to do one inspection both for the liquid, which we already tech transferred, but also the freeze-dried. We've had to adjust some of the freeze-dried activities to fit in with when the FDA anticipates to be here because they want to see some actual activities while they're here. That's the main reason for the change. Will that have an impact on our ability to revenue recognize? Well, it's a little bit like all the bulk and the previous liquid frozen doses that we received and revenue recognized last year has no impact.
If the option is exercised, we will be able to revenue recognize as we manufacture. It's gonna have no impact if the option is exercised or not, the fact that the FDA approval will be pushed out to 2024. Let me take the DoD contracts. Last year, we included revenue for manufacturing approximately 1 million doses of liquid frozen, which was on a new line, in Denmark. That is destined for the SNS. We're storing it ourselves right now. That's where DoD will take the doses for any military that are being vaccinated. That doesn't mean that we don't anticipate new orders to come through.
With DoD, they've been like everywhere else in the world, a little paralyzed by COVID, and there has been delays in their transition to JYNNEOS, the military. I think your third-
Okay.
Yeah, your third component was, I think it was related to could we see any additional revenues beyond what's already included in the guidance. I think that's what you were asking.
Yeah.
I think, basically due to the shutdown of the facility and the very limited period of manufacturing, that is very, very unlikely simply because even if we receive an order, the revenues would be pushed out into the following year.
Yeah. You mean orders would likely be for bulk material rather than potential front-end loaded milestones or anything like that that you have maybe previously received from BARDA?
Yeah, all liquid. Yeah.
Yeah, of course. Sorry. Maybe just lastly, if you can squeeze in one last here. Just on the encephalitis vaccine candidates that you were quite upbeat on a few years ago and are now, of course, also been impacted by COVID, I assume. Is there anything that sort of points to any new information that we could anticipate here in the next, let's say, 12 months' time, any potential advantages advance this into a late-stage project also, of course, looking at potential contracts for this?
You know, I think that whole funding from the U.S. government has been impacted and delayed completely by COVID. We actually have no indication either from BARDA or NIH if and when they're gonna pick that up again, because as I said, their primary focus right now is still on COVID.
Yeah, sure. Got it. Okay, great. Thank you very much.
Thanks.
Thank you. Your next question comes from the line of Gil Blum from Needham. Please go ahead. Your line is open.
Good morning and good afternoon, and thanks for taking our questions. Maybe a couple on COVID first. In your pivotal non-inferiority study, will there be longer-term follow-up, maybe to help us understand how immunity wanes when you compare the Bavarian Nordic vaccine to an mRNA one?
Yeah. I'm sorry. I thought you were gonna ask another question, but that's fine. Long-term follow-up. Yes, there will be a long-term follow-up included in the protocol. There actually is six months follow-up in the phase II. If I just take the phase II, there are some complications in that. If you remember in the phase II, we ran the study in Germany, and we were enrolling subjects late last year. In Germany, there was a requirement that you needed a booster shot to have a vaccine pass, which you needed to go to restaurants and all the rest of it. Some of the subjects we've lost, but even though they were enrolled in our study, they subsequently went and got a booster shot of whatever. Obviously the long-term follow-up is negated.
The good thing is that the German authorities now recognize ABNCoV2 from the experimental vaccine is sufficient for a vaccine pass for individuals in Germany. We've addressed that issue. However, how that will impact the long-term data from phase II, we'll have to wait and see when we get the data. In terms of the phase III, there will be a follow-up, and there will be a comparison. Whether that is really part of the filing, because obviously we'll be filing by the end of the year, is another thing, but it will be subsequently filed as a follow-up during the review.
All right. That makes a lot of sense. Maybe also a financial question on that end. We're gonna have pivotal data second half of 2022 and potential ramp-up in production for COVID vaccine. Is this taken into account on your financial guidance?
This is Henrik. Hi, Gil. I think the whole COVID-19 project is assumed in our guidance. We are in parallel to all the clinical activities. We are working with a contract manufacturer to scale up the manufacturing of the product. This eventually is filled at our own site in Kvistgaard, Denmark. As Paul said, we already filled the first batch for the clinical trial. Everything needed to basically take the product to hopefully an approval next year is included in our guidance.
Okay. Excellent. Maybe a last one on the RSV competitive environment. Considering the pivotal study is gonna start this year, what would you consider a potential key differentiator? I mean, there's quite a few vaccines being developed right now in RSV.
Yeah. There's a few. So I think the biggest differentiator for our approach, which differs from everyone else, is that we have an MVA T-cell component to the vaccine. We've shown in phase II and in the efficacy trial, very strong T-cell responses to all five proteins we've included. The reason I flagged that as a differentiator is that the literature is pretty clear that antibodies, which is primarily the approach of all our competitors, are important in the upper respiratory tract infections, the milder infections. In the lower respiratory tract infections, which are the endpoints for phase III, it's believed T-cells play a much more important role.
In actual fact, some of the data that was just recently reported on a therapeutic antibody from Sanofi and AstraZeneca is quite telling in that, children treated with the antibody, there was a reduction in, mild symptoms, significant, a 70% something efficacy against mild symptoms. But against hospitalization, there was absolutely no difference between the vaccinated group and the placebo group, which again argues, are antibodies really the sole answer for severe disease? We don't think so, and we think that would maybe give us a differentiating factor.
Okay. Just to make sure I understand and clarify this for myself as well, a part of the data that will be given at the end of the study will include the rate of hospitalizations, and that could potentially be a differentiator of itself.
The primary endpoint of our phase III and everyone else's phase III for RSV is a reduction in hospitalizations caused by lower respiratory tract infections, which is basically the more severe infections of the lung that cause a hospitalization that would be confirmed to be RSV. That's the endpoint. It's not mild symptomatic disease. It's severe disease leading to hospitalization that we need to see a reduction in the vaccine group.
All right. Thank you for the clarification, and thanks for taking our questions.
Thank you.
Thank you. Your next question comes from the line of Michael Novod from Nordea. Please go ahead. Your line is open.
Yeah. Thanks a lot. It's Michael from Nordea. A couple of questions, maybe one for Henrik first on the sort of trajectory for both RabAvert and Encepur going into next year. I'm fully aware that it's gonna be the majority of your revenues, but maybe just a bit more clarity on the exact split on those two products. Then on ABNCoV2, so how do you think about the potential advanced procurement orders? Do you still see the same possibilities for this, or has the market changed given we are sort of circling more through the pandemic? How do you see potential orders from sort of the more exotic regions of the world?
We've seen that COVID-19 remains a significant issue in many of those parts of the world. Then lastly, on RSV, what is the reason, maybe it's just me that has misunderstood the previous comments, but what is the reason that Australia or the Southern Hemisphere is not included in the trial anymore? It seems to be only U.S. and Germany you're gonna enroll. Thanks.
Thanks, Michael. Let me take maybe the first two questions, and we can start with ABNCoV2 and potential advanced purchase agreements. First, I can say that we have not assumed any advanced purchase orders in our guidance at all, but it is, of course, something that we are going to pursue. It's a good question you're raising. Is the market prepared still to do these advanced purchase agreements or not? We will see, but we will definitely pursue this when we feel that we have progressed the development of the vaccine far enough to have those discussions. On the ENRA, or I'd say ENRA, sorry, that's very interesting name for our Encepur and RabAvert business.
We obviously are not guided for any specific split between these products, but let me elaborate a little on what our thinking is in terms of the markets that these vaccines are operating in. I think if you take first the TBE market, this is probably the most difficult market to predict where it's going because in principle, I think the TBE market should not be impacted by COVID-19, but it did anyway last year, in the second half of last year, due to, as you know, the physicians being occupied with COVID vaccinations. In principle, the TBE market could come back full scale this year. That would need to happen very soon if that is the case.
or you could have the same situation as last year, really depending on, for instance, in a market like Germany, what their booster vaccination plans are, when they are done with their current booster vaccination campaigns. What we are assuming there, in our guidance, is that we see some progress towards normality, but definitely not back to normal yet in 2023 on the TBE visits. On rabies, again, two very different markets, where the U.S., we have already seen good signs, the last couple of quarters. We are approaching the pre-COVID level. We do believe that that trend is going to continue for 2022.
I think our job there, of course, is to hang on to our market share of approximately 70% in that market. When it comes to the European rabies market, we have seen nice growth the last couple of quarters, but as you know, it comes from a very low level as the current market in Europe is probably approximately one-fourth of what it was pre-COVID. Depending on, you know, really, the degree and the speed of normalization in Europe and maybe also by the uncertainty with the war between Ukraine and Russia, I think probably a little uncertain when people are going to travel in larger scale to the exotic destinations. Our assumption has been that we also see stepwise movements toward a normalization on the European rabies market.
I think without giving you any exact split, I hope it made you a little more insightful in terms of our thinking about how the markets will develop.
Sure.
Yeah. Let me take the RSV question. You're right. You're very good. You spot these little things. We dropped a little flag from Australia from the slide. The main reason for that is the incidence rate in Australia right now is quite low. Now, whether that is because it's the seasonal effect or whether it's because, as you know, in Australia, they're still very much or have been in quite strict lockdown, we don't know. But when we did the evaluation with the CRO, you know, we were gonna need an awful lot more sites in Australia to really allow us to see the sort of events that we wanted to see in terms of hospitalization.
Again, when we've now looked at the more thorough analysis of Germany and the U.S., we believe we have a much better chance of seeing the number of events that we need in the timeframe that we need this year. Yeah, it's nothing more dramatic than, you know, the assessment of the country, the different sites we were looking at, and we've decided to focus on Germany and the U.S.
Okay. Thanks a lot.
Thank you.
Thank you.
Thank you. Your next question comes from the line of Boris Peaker from Cowen. Please go ahead. Your line is open.
Good morning or good afternoon, I guess, to you guys. I'm just gonna follow up on COVID vaccines. I'm just curious if COVID becomes endemic, and every year, let's say every six months, we get a new strain. Do you think you'd have to run a clinical trial in each case to show that your vaccine works against a specific strain? Or is there a regulatory way to get an approval broadly and not have to redo it every six months to a year?
Thanks, Boris. It's a good question. Obviously right now, I'm sure you're aware that the only approval that they've received is based on the efficacy against Wuhan when they did the field trials. Yet those are the vaccines that are being used as boosters against current Omicron. To be honest, the real-world data shows they're pretty effective at preventing severe disease and hospitalization, even against Omicron. What is also clear from the vaccine is the level of neutralizing antibodies definitely differs between the different variants. You know, the latest study that I saw only a few days ago that after the booster shot, the decline against Omicron is half of the decline against Wuhan. There are variances against the different variants.
The answer is I don't know. However, what we're going for is an approval based on non-inferiority to Wuhan, which is the only efficacy marker for any COVID vaccine, and to show that we get broad neutralizing titers against all the current variants of concern. You're right. How the regulatory world is going to adapt to the current situation and moving out of pandemic, which we are, into an endemic. We'll have to wait and see how they view new variants.
Got it. My second question is, I'm just curious also on the COVID vaccines. Your design is to show non-inferiority, and I understand that's sufficient from the regulatory perspective, but I'm just curious, with mRNA vaccines being the dominant variant of vaccines used out there, if all you show is non-inferiority, do you think that's commercially sufficient to gain traction? Or do you think new modalities of vaccine, and I'm talking more broadly about anybody else developing new modalities outside of mRNA, will ultimately have to show superiority to mRNA to really, you know, gain significant traction?
We're talking about non-inferiority of the peak responses. I think where we could have a differentiating factor, which isn't part of the primary endpoint of the phase III, one could be on durability. We all know both from the data that's been published, the RNA vaccines, whether that's a platform thing or whether that's a COVID thing, are really struggling to generate a robust immune response. We get short-lived protection. We could have a longer more durable response, which could be a differentiating factor. And the other, as I said, is a broader response against the emerging variants, which is a mixture of strongly applied antibodies emerging with all responses. And thirdly, anyone who's had several RNA vaccines know they're quite reactogenic. There could be differentiators on safety profile, compared to RNA vaccines.
Lastly, you've got the storage temperature, which is still a major issue in RNA vaccines, or at least some of them.
Great. Thank you very much for taking my question.
Thank you. Your next question comes from the line of Peter Verdult from Citi. Please go ahead. Your line is open.
Thank you. Peter Verdult, Citi. I've got a few, but some are very quick, so forgive me. Just maybe a follow on from Paul from the previous question, just in terms of how problematic or not executing the ABNCoV2 trial in this current environment is or will not be. I realize that you're just looking for non-inferiority in neutralizing antibodies, but you know, given hospitalization rates are so low, is that problematic or timelines, could they be problematic in the current environment? Second question. I realize you're being conservative. You're saying that you're only booking confirmed orders in your initial guidance. I believe there's a potentially $100 million smallpox US government contract out there.
Should we assume that is an abundance of caution on your part, or is that more sort of up in the air as to whether you will or not secure that contract? Last two from me. Quick one is just whether you'd be willing to quantify the inventory write-offs that you took in 2021. Then last one, there's been a little bit of a debate in the market today. The revenue pressures you cite are clearly temporary, but is there any implication in terms of potentially having to tap the equity markets once more to achieve your vision given the investments you're making? Thank you.
Yeah, thanks. Let's try and walk through those questions. I think the first question related to the access to a comparative vaccine to do the phase III for ABNCoV2. No, I think we've been flagging for some time that could be an issue given that those vaccines are currently not commercialized in a true traditional sense, but are sold directly to governments and direct access is problematic. That's one of the reasons that in parallel to a more standard randomized clinical study, we've also been in dialogue with the regulators that what if we can't get access to a comparator, how would we be able to do a comparative study?
There we have had positive feedback, and we are able to conduct the study in a slightly different way, where we can tap into national vaccination booster programs. Of course, now the onus is on us together with the CRO to find countries or regions of countries that are lagging in their vaccination boosters where we can tap into the booster program and do the comparative study. That's exactly what we've been working on. We've been working on both paths in parallel. We are confident that we should be able to do that. I think there was a question related to JYNNEOS and...
Perhaps I can take that one. Just on JYNNEOS, Peter, I think I heard you talk about a potential $100 million order. I think as we said, we have only included confirmed orders in our guidelines for 2022. The only, let's say, additional order that is out there, which is still at an option level, that's the $299 million on freeze-dried. I'm not sure where that $100 million comes from, but I think what we are expecting once the authorities start exercising that option is probably that it comes in tranches. It could be of like a $100 million. I think even if they exercise that option this year, it would be to be executed next year.
That's, I think it's the only thing I can think of in relation to that $100 million. In terms of the other markets, what if there's a higher demand in the market? I think if you go and say the upsides that we might have, of course, is related to our commercial business that is on the rabies and the TBE business. I think if the markets grows faster than what we are expecting in our guidance here, I think we have the products to follow the market, basically. As I said earlier in our presentation, we have made provisions for potential inventory write-offs. That is not because these are out of shelf life right now, but they might become in 2022 or 2023, and these products can still be sold. We have a buffer to follow the demand should it surge faster than what we had expected.
Then I think there's a question, do we have plans to go back to the capital markets? I think the answer to that is definitely not.
Thank you. Thank you for the clarification. Just on the inventory write-offs, can you give a ballpark quantification, please?
Yes. I think it's the number is DKK 172 million included for 2021, so quite a substantial amount. Some of it was included already in the first nine months, the rest in the fourth quarter. DKK 172 million was a provision we made for potential write-offs of the rabies and TBE products. A lot of it, of course, driven by the significant market decline in Europe on the rabies business.
Thank you.
Thank you. Your next question comes from the line of Peter Welford from Jefferies. Please go ahead. Your line is open.
Hi. Thanks. Two quick questions left. Just firstly on RSV, if we look at the data that nirsevimab published, and also I take your point on the lower respiratory versus upper respiratory. I guess if we look at the size of the phase III studies that these vaccines are conducting, it still seems, you know, possible that even with antibodies, you could end up with a statistically significant difference in hospitalizations, driven by an antibody response. I guess, curiously could give us your take, statistics aside, what is a, I guess, firstly regulatory approvable, and secondly, clinically meaningful reduction in hospitalizations that you think would be required, for an RSV vaccine?
Secondly, just on the outlook, if I take your TBE and sales, sorry, together with the rabies sales for this year, and then add on the contract order of DKK 200 million and the US $100 million, you already get just above the bottom end of the guidance for our revenues. It seems as though the revenue outlook is assuming pretty modest increases in TBE and rabies, and also no contract revenue from BARDA or anything booked this year. I guess two questions. Firstly, is that right? Secondly, is it fair to assume that contract revenue will be fairly minimal this year compared to prior years? Thank you.
Yeah, maybe I can start with that. The contract revenue, yes, will be relatively low. You will see since 2020 to 2021, it has declined, and that has very much in the past been driven by the agreement we had with BARDA on supporting us on our CMC and qualification activities on the fill and finish facility, but also the phase III on the freeze-dried. That is sort of waning off, and that will continue that way. We're not anticipating much in terms of contract work. I think as I said, I think if you add up our numbers, I think we are, you can say we are probably the dip with the market sort of starting to move towards normality. I think that reflects sort of the midpoint in our guidance.
Those are the assumptions I alluded to earlier when I described sort of how we see that the individual segments of the markets develop. Paul, then there was one on RSV.
Yeah. It was a good question, actually. What level of efficacy probably could lead to approval? Again, without going into any stats or what our assumptions are, I think, for RSV, of course, there's currently no vaccine. I would say it's probably in the region of the 65%-70% level.
That's great. Thank you very much.
Thank you. Your next question comes from the line of Suzanne van Voorthuizen from Kempen. Please go ahead. Your line is open.
Hi, guys. Thanks for taking my question. I have two. The first one is, how confident are you in the timelines for the phase III with ABNCoV2, with the start in H1 and the data in H2? Is the start of the study really imminent, or is this more towards summer? And is the data more like a fall event or more towards year-end? Any color will be appreciated. My second question is a follow-up on the differentiation points and, yeah, how to facilitate the commercial proposition. The durability factor will take more time before that becomes clear from the long-term follow-up, I guess. But regarding the feature of ABNCoV2 being more variant proof, how do you plan to build that case further from the phase III?
Are you, for example, planning to include some secondary endpoints, analyzing the responses against a range of variants and yeah, really in a head-to-head comparison to the mRNAs? Or how are you thinking about that?
Thanks for the question. Let's take the trial design. The primary endpoint is non-inferiority of the peak neutralizing titers to a comparator, which will be an mRNA-based vaccine. However, there are, of course, secondary endpoints, of course, safety being one, but we'll also look at variants of concern. Currently, we all know what those are, and any new variants that come through during the trial, and they will also be compared to the comparator. You mentioned also durability. That will be done as a secondary endpoint.
Again, you know, as I said already to one of the previous questions, that's not likely to be part of the main file because, again, getting to your timing, we are confident as we sit here now that we will be starting the study in the first half of this year. We will report data in the second half in time to allow us to start regulatory submissions by year-end. I think that's the best update I can give.
All right. No, thanks a lot.
All right. Thanks.
Thank you. Your next question comes from the line of Sten Westerberg from Analysguiden. Please go ahead. Your line is open.
Yes, good afternoon, Sten Westerberg. A few questions. First, in your annual report, you're mentioning that you hope to be able to come up with a better value proposition compared to current, currently marketed, COVID vaccines. Could you spend some more, you know, shed some more light on what kind of proposals these are? That would be my first question.
Getting back to the differentiating factors. You know, can a booster with ABNCoV2 be more durable, or can we move away from boosters which looks like every six months or from a year to something a bit longer, maybe three, five years? That data obviously takes time to generate and won't be available at the time of the launch. Certainly one of the differentiating factors we're after, based on the science of the VLP versus what we're beginning to understand with RNA. That's one. The other one is the breadth of response.
I think, you know, from the phase I, which was performed by the PREVENT-nCoV consortium and our phase II, we are seeing quite compelling data that we see very strong responses to nearly all the variants that we've tested to date. Again, we haven't tested Omicron, but we tested all the other variants, including Beta, which, as you know, has very low responses from RNA-based vaccines. It's quite compelling already that we seem to have a very broad protective response, which of course we need to build on in the phase III, and as I mentioned already, continue to test any other variants that come through or emerge through. Those are the main differentiating factors. I'd say a third one could possibly also be the safety profile. Again, you know, we need to generate that data.
We have too little data now to be making those claims. The last one really is the storage and shipment temperature. There are, as you know, some vaccines that have a very cold storage and shipment that I think will be a disadvantage when other vaccines like ABNCoV2 come through that can be stored at room temperature.
Okay. In the value proposition you are speaking or we should not expect you to include, for example, a more competitive pricing?
Yeah. I mean, we haven't talked about pricing. I mean, the pricing right now is pretty stable for nearly all vaccines that are emerging in terms of COVID-19, how that pricing will change as the market changes. Right now, it's very much to government business. You know, will that change most likely to more of a private type market? In fact, you know, a lot of people, a lot of analysts are predicting actually the prices to increase. Again, you know, we will keep an eye on price as and when we get nearer to the market. I think the good thing for us is that we can be very competitive on price with the technology that we have.
Okay. My last question. Based on your experience, do you expect there will be a need for a tailored Omicron vaccine booster, during the course of these years?
Short answer, no. Yeah, and if I give the explanation for that, the real-time data for the current batch of vaccines, which we know generate lower titers to Omicron than compared to, for example, Wuhan, have shown that they've been very effective at preventing severe disease and hospitalization, and have allowed society to control that variant. So that's one piece of evidence that would suggest it doesn't make a lot of sense. The other one is that of course, there's data already from some RNA-based vaccines with Omicron-specific constructs, which seem to be not any more immunogenic than the original Wuhan strain, which again argues against the cost of developing a new variant when in fact it doesn't look like there's any real benefit.
Again, there could be differences here if we're talking about durability or if a new variant comes with even more mutations than Omicron that seems to escape the Wuhan immune responses. To date, that hasn't happened.
Thank you so much. That concludes my questions.
Thank you.
Thank you. There are no further questions. I will hand the call back to you.
Thank you. Thanks everyone for taking the time to join the call and for all your questions and interest. Have a great weekend. Thanks a lot.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect