Welcome to the Bavarian Nordic's Capital Markets Day in 2024. We have a busy agenda, and I'll walk through that in a little while. But the whole management team is here today. There's a lot of familiar faces to me at least, so I think many of most of you have met me numerous times. But we have the whole management team. Some will be presenting, but we'll have Q&A sessions throughout this morning, where the whole management team will be present, where you can ask questions. And with that, I thought it would just be good just to start with a quick round of introductions. I'm Paul Chaplin. I'm the CEO, but maybe if you just want to-
My name is Anu Helena Kerns , and I'm responsible for people and organization and sustainability, and I've been with Bavarian Nordic for a bit over three years.
Hi, I'm Laurence De Moerlooze. I'm the Chief Medical Officer in charge of clinical development, regulatory affairs, and pharmacovigilance, and I've joined Bavarian Nordic in April 2020.
Good morning. My name is Russell Thirsk. I'm Chief Operating Officer at Bavarian Nordic. Coming up to my two-year anniversary.
Good morning, everyone. My name is JC May. I'm the Chief Commercial Officer, joined in January 2020 after 25 years in the industry.
Good morning, everybody. My name is Henrik Juuel. I'm the Chief Financial Officer of Bavarian Nordic, and I've been with the company for five and a half years now.
Thanks, guys. So Luc Debruyne, obviously, is also here and will be talking. He's the Chairman, but I'll allow him to introduce himself when he comes up in a few minutes. So just to run through the agenda, Luc will start with a brief introduction into what's unique about the vaccine industry, what are the opportunities, and what are some of the challenges we face. I will take over and talk about the strategy and the road ahead. JC will follow and talk about one of the strategic objectives, which is our growth story. Russell will also then talk about the innovative solutions that we have in terms of a reliable supply.
Henrik will follow at the end with a more deep dive into the financials, and in between, we have a guest speaker, Marie, who will be here shortly, who will give you an overview of chikungunya, which obviously is very topical, as it's one of the vaccines that we'll be launching next year. As I said, to try and get through this agenda, we will have Q&A sessions throughout this morning, so please hold back with your questions until then. All questions should be directed to me, and then I will make sure that the relevant person with all the knowledge can answer that particular question. So with more ado, I would like to invite Luc up to the podium.
Thank you very much, Paul, for this introduction. Hello, everyone. I'm Luc Debruyne. I'm the chairman since last year, so since one year, and I've been observer of the board the year before, so two years actually that I'm here. I'm actually currently chairman of an investment fund as well, so I can be on your side as well, Fund+ in Belgium. I teach at University of Leuven, and I work for CEPI as the chair of their investment committee. CEPI is the Coalition for Epidemic Preparedness Innovations, and before that, I was 27 years at GSK. I was born there and worked in vaccines. And, I'm very pleased actually to welcome you here. And it says Capital Markets Day, but I would call it rather, meet the management team and their plan today.
So, you will hear later from Paul, as you have seen on the agenda. But this maybe it looks a bit unusual to have the chairman to introduce a capital markets day, but I thought, you know, with the long time experience in vaccines that I have, I wanted to share my perspective on what vaccines is really about. And what I can say is that vaccines is really special. It's very special because of the impact that you can have on global health, and you will hear later today on what that means for Bavarian Nordic. And the sentence that I like to use is, there is no contradiction between doing great business and doing good for the world, and vaccines actually combines that very well because you tackle all those challenges that are out there.
I don't wanna read through the slide. I mean, we all know that it saves millions of lives, and we've all just gone through the COVID pandemic. Without vaccines, we would have been not sitting here. So we, we all know the value of vaccines, but what is important is also to know that the opportunity is out there going forward as well. It's a growing business. It's not something that will stop. Millions of people are being vaccinated every day, and healthcare ministers start realizing that actually prevention is the best intervention you can do before you have to spend lots of money in medical care or hospitalization. And climate change, you can put vaccination at the same level, prevention at the same level.
Climate change, technological innovations, the awareness, the outbreaks that we have from time to time, and let's not forget, I mean, the world is a scary place now. Geopolitics, biodefense, all of that, vaccines play a role in every aspect of that. Now, you are investors or analysts, and you're obviously interested in, is this really a good business to invest in? And my answer is clearly yes, because it's very specific features that diversify it from other business. It's a growing market, so the opportunity is absolutely there. Don't forget, people tend to forget, but it has, and Henrik will show that later, it has pharma-like operating margins, so it can compete with pharma. We will not discuss GSK, but, I'm a bit linked to that, as you might know. Just look at their business. What is driving their business is vaccines.
Long product life cycles, no patent cliffs. I think that is really the feature of vaccines, very long life cycles. And then if you look at how many players there are, well, there are, since COVID, many who pretend they will be in vaccines, but honestly, I always say you cannot wake up in the morning as a CEO of a pharma company and decide, "Let's do vaccines." It doesn't work like that. You will hear later from Russell, it's huge capital investments. It takes a long time before you can make the vaccine, and you need the expertise there. You know, 70% of the time in manufacturing is spent on quality controls. You're injecting healthy people with vaccines, healthy babies, healthy mothers, healthy elderly people, healthy adolescents, so it needs to be top-notch quality.
You don't wanna wake up as a CEO again with a recall of a vaccine that didn't have the quality to be delivered. So these are really attractive things that segregate vaccines business from another business. That's why being a pure-play company is very important. Now, what I also want to say is a bit disappointing for investors, which is, analysts and investors want to know every month, every quarter, what the number will be. As I said, I have to disappoint you. It doesn't work like that in vaccines. Vaccines is quite volatile from a quarter or month-to-month basis. Why? Because you have a combination of public, and Paul will talk about that, public and private markets, where actually it's sometimes unpredictable when the government will put the order out, yes or no.
Or in the case, for instance, of BARDA business in the U.S., when they will replenish their stockpile, yes or no, or when they will donate it, for instance, for an outbreak in Nigeria or in the DRC, and then replenish. You don't know at the exact time. It can be this quarter, it can be next quarter, so it's a bit volatile. And of course, outbreaks are unpredictable. And then, as you will hear from Russell, you know, lead times take a long time. So sometimes we are making the vaccine today that actually will only be ready next year. So the forecasting principles are very, volatile as well, and it's very important that finance, commercial, and supply chain work very well together to manage all of that. But the beauty is, it's a long-run investment, and that's where I want to put your lens, actually.
It's a long-term investment in vaccines. You don't fall off this patent cliff, and it's a growing business. So with that, I wanna leave you to the team, the experts, actually, of Bavarian Nordic, so that they can convince you of the plan that they have to grab that opportunity and to make sure that it's worth investing, from your perspective. Over to you, Paul.
It's okay. Thank you, Luc. So before I start talking about the road forward and the exciting road forward, I should say, and the opportunities that we see at Bavarian Nordic, I just wanna take a step back and talk a little bit about the journey that we've been on. So historically, I mean, Luc mentioned that he was born at GSK. I should say that I was born at Bavarian Nordic, and I have seen Bavarian Nordic transition from everything from a small start-up to an R&D-focused company with manufacturing, to what we are today, which is a fully fledged commercial entity. So I've been on this long journey and can talk to it. Before 2020, we really were an R&D-focused company. We had manufacturing of one product, which was our smallpox/mpox business, which was government contracting primarily to the U.S.
It was a profitable business, but the problem with government business, as I'm sure many of you know, is the revenue can be lumpy. It can be very big revenue, but it's lumpy and unpredictable. It makes it a little bit difficult to guide the investors on exactly how we're gonna grow. In 2019, 2018, 2019, we made a decision that we wanted to commercialize the business. To do that, we were looking for assets that we could purchase, and in 2020, we were successful with the purchase of the rabies and TBE business. At that time, we had no commercial setup, and manufacturing was really for one product.
But we believed that if we took these assets that were, I always refer to them as unloved, assets that didn't have a clear focus with their current owners, with our renewed focus, we would be able to grow those assets. Now, to achieve that, we had to do a number of things. We had to change our manufacturing setup, and Russell will talk more about that. We've had to invest heavily to allow us to produce more products in parallel. We've invested in fill and finish, allowing us to have the end-to-end manufacturing. We also had to build up a commercial infrastructure from scratch. We essentially had no commercial infrastructure whatsoever, and of course, with that came risk. But here we are.
Last year, we sold more doses of rabies and TBE than anyone previously, endorsing that strategy and the success that we've managed to do in terms of building up manufacturing and our commercial setup. So where we are now is, we had a vision back in 2020 to become one of the largest pure-play vaccine companies by 2025. No matter how you slice or dice Bavarian Nordic in terms of our revenue, our profitability, or the portfolio that we've generated, we are one of the largest pure-play vaccine companies today. That's two years ahead of schedule. We're now a highly profitable business, and we have a platform to which we can grow. Now, of course, in that expansion, we have gone to a really global presence. So we now have R&D centers in Munich, in Denmark, and in two sites in the U.S.
We have manufacturing here in Denmark, but also in Switzerland, and we have a presence in many other countries around the globe. So we've gone from 400 employees to more than 1,400 employees and still growing. So we really have a global presence, and as I said, we've now set a platform in which we can build on. So another way of looking at this journey is let's look at how we've progressed in terms of the revenues and the profitability. On the left-hand slide is the development in our products. As I said, before 2020, we had Jynneos , a smallpox mpox vaccine, which we sold primarily to the U.S. We now have eight, nine products, depending on whether you talk about a product or indication, which we sell around the globe.
If you look at the development of the revenues on the graph on the right, so if you look at 2019, we were a sub-1 billion DKK revenue company, at best, break even, because we had one product, lumpy revenues, albeit a very interesting segment. In 2020, 2021, we increased those revenues to the 1.52 billion DKK, despite the fact that we had started building up a travel franchise, and then we were hit with COVID.
We still stuck to our guns and tried to sell those products despite the headwinds due to COVID, and we were successful in building up that platform so that when we saw the return of travel in 2022, and particularly last year in 2023, we were able to take full advantage, and as I've said, we've sold more doses of rabies and TBE than anyone else who's previously owned those assets, which is an endorsement of JC's work, but also the strategy. Obviously, last week, we reported record preliminary, I should remember to say, preliminary record numbers for 2023. The $1 billion in revenue and a high profit margin of almost 37%, or I should say, 37%.
That was not only due to the resurgence in travel, it was due to the surge in orders for mpox due to the outbreak of mpox in 2022, and that carried over into 2023. That surge in orders for mpox isn't sustainable, and the main reason for that is we've got a fantastic vaccine that has, in part, reduced the number of mpox cases globally. It hasn't gone, it's still present, but the number of cases has declined. So we were never gonna be able to maintain those high surge orders. However, what you're seeing at the back end of that mpox outbreak is that we have a new norm.
Instead of being a DKK 2 billion revenue company, we're now guiding this year for DKK 5 billion revenue company, and that is on the basis of a renewed interest in our public preparedness business due to mpox, but also in discussions with smallpox, and you'll hear more about that from JC. It's due to the resurgence in travel, allowing our portfolio, which is the largest, travel vaccine portfolio, to really take advantage of that return, and that is the new norm. So we've come an awful long way. So what is the road forward? Well, we want to build and become a real pioneering force in vaccines, and we wanna do that by expanding our reach or access to our life-saving vaccines and solutions. Big words, but how are we going to achieve that?
Well, as I said, we've, we've set a really good foundation, and we have two strategic streams, which hopefully will allow us to grow that business. One of them is to deliver continued growth. We wanna build on both the travel health business and on the public preparedness. On public preparedness, we have a higher level of customers coming out of the mpox outbreak than we did going in, but I will leave that more for JC to talk about how we actually are gonna grow those two arms of those business. In addition to organic growth, we also have an ambition to add to the commercial portfolio through synergistic and strategic M&A.
That is the reason why we are here today, is that we've had two successful acquisitions, one in 2020 with the rabies and TBE, and one last year from the travel franchise from Emergent. If there are similar assets or opportunities, we want to go after those to add to the top line and the profitability of the company. The other strategic stream is to bring innovative solutions. You'll hear from Russell later that making vaccines is really complicated, and it's damn hard, and you have to have a real focus on a reliable supply. It needs significant investment, it needs focus, and it needs skilled personnel.
You'll hear from Russell how we've been successful, the complications that we're facing, and how we hope to address those as we move forward, that we can really have the products coming through reliably, that will allow us on this growth journey.... The other area of innovative solutions is in terms of R&D. Now, R&D is about bringing novel ideas and new products through into our pipeline, but it's also about looking after our commercial assets. When you have a commercial asset, many people think, "That's it. All you've got to do now is sell, and that will be the end of that." But in fact, you need to look after that commercial asset. You need to look at whether you can expand the indications. You need to look at whether you can improve the manufacturing process.
That not only adds to the sustainability, the efficiency of production, it will improve margins. So there's many, many activities in terms of life cycle management, looking after our commercial assets as we move forward. Underpinning everything that we want to achieve and how we're going to achieve it is our commitment to provide sustainable impact, not only to society, but most importantly, to the people and the patients that receive our life-saving vaccines, but also, obviously, to our employees. So you heard from Luc the impact of vaccines, and it should be obvious to all of you that vaccines are one of the reasons we all live longer, because it protects us from infectious diseases.
One of the great things about working in the vaccine industry is that everything I do, everything that the management does, and everything that the employees do at Bavarian Nordic, is to improve and save lives. That's either through developing, manufacturing, distributing, selling, or getting our life-saving vaccines to the people that need them. Now, we have a growth ambition, and that is primarily driven by trying to improve the access. Our focus over the last couple of years has really been on the developed markets, and we now need to turn our attention not only to expanding and intensifying our commercial activities in those markets, but also expand, maybe through partnerships, to improve the access around the globe, even in endemic regions where these vaccines are needed. Now, of course, with this growth strategy, we're gonna have to make more vaccines.
With that, we have to do it in a careful way where we're looking after the planet and the environment, and we are committed to a net zero emissions by 2050. To do that, we need to come up with good plans of how we're gonna achieve that. One that we're constantly doing is looking at manufacturing improvements that will make the manufacturing more efficient, using less energy, but also improving the profitability and our ability to improve access. In terms of governance, we've always had high ethical standards, and we will maintain those and ensure that all our contractors and partners are held to the same accountabilities. The fact that we are one of the main trusted partners with governments around the globe is a testimony to our ethical standards of how we conduct business at Bavarian Nordic.
So how are we gonna deliver growth? As I said, I don't wanna take the thunder from JC, who is gonna really go into a lot more details, but it depends on which products we're talking about. If you're talking about rabies and TBE, we want to continue the fantastic brand performance that we've seen over the last couple of years, and obviously take advantage of the fact that travel is really returning with an abundance. We will be expanding and intensifying our commercial activities into new territories in the coming years. In terms of Vivotif and Vaxchora, the two new assets that we purchased last year, these are very much unloved assets. Their previous owners didn't follow the same strategy. They were removed from the market during COVID, and we need to relaunch those assets.
In terms of chikungunya, we're super excited about this asset. It's obviously meeting a huge unmet medical need. We'll be filing for approval later this year. We'll be launching next year with what we consider the best-in-class vaccine, and that's because we have advantages in terms of the safety profile, but also the speed in which this vaccine protects. And that's actually also recently been recognized. As you saw, last week, we announced that the European Medicines Agency has granted accelerated review for our file. That's typically only done if there's an unmet medical need, which there is, despite the fact there's already a vaccine already approved.
So we will be growing this business, double-digit growth over the coming years between now and 2027, and as I said, I'll pass the buck there, and I'll let JC talk a lot more about the details of how we're gonna achieve that. In terms of public preparedness, as you know, this is the basis of how Bavarian Nordic was created. Developing Jynneos , together with funding from the US government, has really allowed us to build much of the infrastructure that allowed us to build our commercial entity that we have today. As I said, the big thing that's happened recently is the outbreak of mpox. Most of you had probably never even heard of monkeypox before 2022. I unfortunately had.
and when we developed Jynneos , we included the mpox indication in the approval in the U.S., and we were actually warning governments that this was an emerging disease, it was endemic in regions in Western Africa, and it could spread. And that, unfortunately, is exactly what happened in 2022. An unprecedented spread of mpox around the globe. We're the only company with an mpox vaccine, and of course, we were inundated with a surge of orders.... We were able to meet all those orders and all those requests, and I have to say, I'm extremely proud as a CEO of what we achieved in 2022 and 2023. We supplied this vaccine to more than 70 countries around the globe, and it is no coincidence that the use of Jynneos coincided with a reduction in the cases of mpox.
And real-world efficacy data has shown that our vaccine has up to 80% with a single-shot efficacy and much higher with two shots. So a very effective vaccine. Now, as I said in the introduction, we can't maintain the surge of orders because the mpox cases has declined. But when we went in to this outbreak, we had two main customers, the U.S. and Canada. They have now increased their orders. We have $300 million of an order with the U.S. that still needs to come through in the coming years, between 2024-2026. We have a similar order from Canada over the next few years, but in addition to that, we've increased our order base. We now have HERA, which is the European BARDA contract, and we're in discussions with other governments, which again, I will allow JC to get back to.
So we now believe we're coming out of the outbreak scenario with a base business in public preparedness of DKK 1.5 billion-DKK 2 billion a year. Now, this will still be on top of that base business, a lumpy business. We will have one-off orders from other governments coming, that we're working on, that will see a spike in revenues. There will, unfortunately, be another outbreak of mpox. There's currently an outbreak of mpox in the DRC, in Africa. There are real concerns that could again spread, and monkeypox hasn't gone away. There are still cases here in Europe. There are still cases in the U.S. It is at a lower level, but it's only a matter of time, most experts believe, until there's another flare-up. That will also mean there will be another surge in orders coming.
So from time to time, probably more frequently than we would wish from a public health point of view, we will see spikes in revenue that will allow us to return to the sort of revenue that we reported last year. So another part of our growth story is continued M&A. Now, often when I talk about M&A, the first question I get is: What is your firepower? And there are two things with firepower when it comes to M&A, but where the question originates is: Do you have enough cash to go after M&A? So let's talk about cash. We now have successfully integrated the first assets we bought in 2020. We've sold more doses than anyone else, endorsing our strategy. We now have bolt-on acquisition from last year from Emergent that is really generating a highly profitable business.
We're a cash flow positive company. We have milestones still to pay in the short term, in the region of DKK 2.6 billion. We have sufficient cash and cash generation in the coming years to pay those bills. That probably means we have more limited firepower in the short term because of those milestone payments. However, we're very much more a bankable business today, so there are other ways of funding M&A through debt financing. Once we've paid those milestones, we have no debts. We'll still be generating a very strong cash position. We can look at ways of investing that cash back into the business, maybe through M&A or potentially, if there are excess cash available, looking at returning money to the investors. The other thing about firepower is your credibility.
When we sat and negotiated with GSK for the rabies and TBE, those assets originally weren't for sale. We knocked on the door of Big Pharma, and we said, "We're really interested in those two assets, and we would like to buy them." The biggest discussion we had at the beginning was, "Well, can you convince us that you are a reliable partner who can take over these products and deliver these life-saving vaccines?" We were fortunate that we convinced GSK that the fact that we really didn't have a very solid manufacturing base to do rabies and TBE, the fact that we didn't have a commercial infrastructure, that we could do it. Today, that credibility is completely different. We have succeeded.
We have a manufacturing base that is a lot more flexible today, so we have a lot more credibility when we knock on the door and say that we want asset A or asset B. So we have credibility, we have the financial firepower. Short-term, maybe a bit more restricted due to the milestone payments, but in the medium term, we believe there's lots of opportunities to add to the top line and the profitability of BN. So what about our R&D? So before I talk about the road ahead, I again, I need to give a little explanation about what's happened with R&D spend over the last few years. Historically, there's two things about Bavarian Nordic's R&D spend. It was relatively limited from my perspective, around the DKK 600 million mark.
The other thing that we've been extremely successful at Bavarian Nordic is getting a lot of our R&D funded. So all the development of Jynneos was completely funded. We've had other programs that have been funded, and currently today, we have a phase II asset that's fully funded by DoD. Now, in 2022, 2023, we had an unprecedented situation that we found ourselves with three phase III programs. Now, in terms of R&D, as you get later in the development, the costs really go up, and that's where you see the ramp-up in costs to DKK 1 billion or DKK 2 billion last year in terms of R&D, because we had these three late-stage programs. They are all over. So we now will see a decline in R&D spend simply because we don't have these late-stage programs.
You can see that we're guiding for about DKK 850 million in R&D this year, and most of that is related to the chikungunya asset. As I mentioned before, R&D is split between really what many people think R&D is, which is bringing new assets through and developing them through the clinic, but it's also looking after your commercial assets. A big part of the spend this year is on chikungunya. Yes, we're filing for registration, but we already have commitments with the regulators. We have to set up an efficacy study that will be a post-market commitment. We're committed to a pediatric study, and other studies that we will have to be doing to protect that asset, even though we're only filing for approval this year.
Now, of course, the mix between life cycle management and what we call R&D will change from year to year as assets come through, but we will not be seeing the return to those high R&D costs until we're much later in the development cycle of new assets, so for many years to come. So in terms of preclinical or early research, we are looking at new disease assets. We haven't announced any today. We're not ready to do so, but we do intend to bring new assets through into the clinic in the next 18 months. We are looking at new platforms in our research centers around the globe, and we have been for a number of years. And believe me, we're quite excited about some of the things that we're developing, and we'll be able to announce in due course as assets come through.
As I said, a big part of what we're doing in research is also looking at ways of improving our manufacturing process. We're processes, I should say. We've made significant improvements in chikungunya, in Jynneos , and others, but again, I will allow Russell to talk more to those. In terms of the focus into on, in terms of the pipeline focus, we announced last week, we are focusing on infectious diseases moving forward, so our oncology asset has been closed. And in terms of life cycle, these are just some of the programs that we're looking at. As I said, life cycle, what is that? You have to look after your commercial assets to to maintain the competitiveness of those assets. In terms of chikungunya, we have label expansions, as I mentioned.
We'll have efficacy studies, pediatric studies, we'll be expanding the approvals in different countries. Shelf life extensions, the best example of that is the freeze-dried activity that we have with the U.S. government that is fully funded. So a lot of these activities are ongoing in parallel to working on new assets. So again, I will touch on the guidance and the finances, but again, I will leave the details to Henrik, who will be following me. So last week, we guided for this year between DKK 5 billion-DKK 5.3 billion revenue. I know often we're criticized or it's commented that we're often cautious on our guidance. I would say this guidance does include uncontracted sales in public preparedness, which is unusual, but I think that just shows you the confidence that we have in that new base business.
Not all orders are in the book, so to speak, but we do expect to close those during the year. We're also guiding for an EBITDA of DKK 1.1 billion-DKK 1.4 billion, and that's in line really with our ambition to have an EBITDA margin of 25%-30% moving forward. As I said, we've got a highly profitable business that is growing, double-digit growth in terms of travel health, a very healthy public prepared base business that will have spikes in the coming years as we receive lumpy orders, and or unfortunately, additional mpox outbreaks. That cash we can use to invest back into the business, bolt on synergistic M&As, or alternatively, if there is excess cash, for the first time, I would say, in our history, really look at the possibility of returning cash to the investors.
So we've come a long way, and I know today isn't about where we've come from, it's more about where we're headed. But we have a lot of credibility in the industry, in the short road that we've been on in the last three years, and that we've really created one of the largest pure-play vaccine companies, which has an underlying attractive market growth. In terms of our organic growth, we see double-digit growth in our travel health business. We have lots of opportunities in public preparedness, and, as I said, you'll be hearing more about that from JC.... We have a focused R&D strategy, really looking at infectious diseases, both looking after commercial assets, but also looking after the pipeline in a prudent fashion. And there are opportunities to solidify our profitability.
As I said, we have the ambition, and have demonstrated the capability, of having pro-EBITDA margins of 25%-30%. There are a number of activities in the short term that we can use to address that. Economies of scale in production, improving manufacturing process and yields, finalizing the tech transfer of rabies and TBE, all will have margin improvements in the short term. We have a solid financial position, solid cashflow generation moving forward, that's really going to give us many opportunities to grow this business beyond where we are today. With that, I can hand over to JC.
Thank you, Paul. Good morning again. It's really a great pleasure for me to share with you our plan. Our plan to grow, and continue to grow, the business that we have with our commercial assets, whether it is with the travel health segment or the public preparedness segment. So obviously, I can say continue to grow, because since the commercial journey began in 2020, we've shown year after year, strong performance, with the best results ever for the company in 2023. And these results are coming from few things. One, love and care. Paul mentioned it. These assets that we have now in our hands, we really put a lot of resources, love, and care behind. Two, a clear commercial strategy. Three, laser focus on strategic priorities and execution. And four, a team.
A team of individuals with years of experience, whether it is in the U.S., in Europe, or in a global setting. And all these elements are going to remain, or even been strengthened in the years to come, which give us the full confidence in our ability to continue to deliver the growth and the ambition that BN has with this portfolio. So I will run through the strategic initiative that we have within the two buckets of two segments of our business. Travel health. We will look at the supportive, market condition that we see, with the travel market returning back to its pre-COVID level this year, and continue to grow at a 6% average level year-on-year moving forward.
We will continue to focus on our key markets, U.S. and Germany, but as Paul also mentioned, we now have the power to extend into the next layer of key travel health markets. Three, we will replicate what has been done with Rabipur, RabAvert, and Encepur, and relaunch and launch VIVOTIF and VAXCHORA in our key markets, and deliver also very strong performance there. And obviously, our chikungunya VLP asset, which is an asset for which, you know, we're all very excited about, with a quite unique profile, which we will launch in 2025, with the ambition to make it the leading brand in the global chikungunya market. In the pre-public preparedness segment, as Paul mentioned, you know, we have a lot of credibility and a lot of great relationship with key stakeholders.
We want to continue to support these key stakeholders in their plan to address the threat that represents smallpox and mpox, and make sure that they have everything they need to be ready in case these things happen. Last but not least, we want to expand the access to the Jynneos , IMVANEX, IMVAMUNE franchise in private markets, with the most significant one being the launch that we will do this year in the U.S. Focusing on travel health, as Paul, Paul mentioned, we're taking a lot of pride of what this organization has delivered since taking over RabAvert in the U.S., where we have sold more doses than anyone else in 2022, and we still see a very strong momentum in 2023. Now, looking forward, few points I'd like to highlight here.
One, it's very reassuring to see that the spend share of wallet in tourism is back to the level of 2019, around 8%, and doesn't seem to be impacted by the overall economic situation that we see in the world. The other key element is on the graph at the bottom right. We see the number of travel coming back to the 2019 pre-COVID level this year, and it's planned or forecasted to continue to grow at a 6% year-on-year rate moving forward. The other interesting element is the destinations of travel seem to shift and change from pretty comfortable, safe destination, to more adventurous destinations, which obviously will trigger more need for vaccinations.... Now, we want to build on this market growth and continue to have a very disciplined commercial execution to make the most of this existing underlying growth in the market.
So we will do that by, as I said, focusing on U.S. and Germany, which are and will remain our two key markets. But this year, we are expanding our footprint into the next layer, starting with U.K. and Canada, and we plan to expand even further from next year onward in other markets like France, the Benelux, and Austria. We have organized ourselves in three separate divisions, one being North America, second one being DACH, Germany, Austria, and Switzerland, and the third one being the rest of the world. These three segments are more or less balanced in terms of revenues, whether you look at it from a travel health perspective, public preparedness, or the overall commercial revenues. Each one of these regions is, has a setup that is, aligned with the market characteristics.
So in some places, we have a key account management model with contracting and pricing. In some other markets, we have a classic sales reps model, and in others, we have partnership with different partners across the world. Now, zooming in into the U.S., we have, and we do see a large growth potential for our travel health business in that market. First, we have now a very broad portfolio, and I will come back to that because we believe that is something we will be able to leverage and take the most value out of this extended portfolio. But even looking at the assets individually, RabAvert already mentioned, right? But in 2023, we see that we are 30% above what the level was in 2019. So we've already delivered pretty significant growth in that business.
However, we still believe that there is more room for growth with this asset in the U.S. by raising the awareness about the disease and the value of pre-exposure vaccination, recognizing that less than 1% of the individuals traveling to a country where there is a risk of rabies got a pre-exposure vaccination. Second asset, VIVOTIF, is a challenger in the typhoid vaccines business in the U.S., 20% market share. And here we want to really position this vaccine, new vaccine for us, as the optimal choice for individuals who prefer an oral medication. And we have a lot of data showing that people, when they have the choice, would rather prefer an oral medication versus an injectable. So clearly, there is a nice opportunity there to grow and gain market share in that business. Third one, VAXCHORA.
It's the only cholera vaccine approved in the U.S., and we know that cholera is in ongoing upsurge. WHO just published that there is a 25% increase in the number of countries that have reported cholera cases, moving from 35 to 44 markets that have reported cholera cases. That means that there is more countries for which travelers should be vaccinated to protect them against cholera. And of course, last but not least, our fourth asset that we plan to file for registration this year and launch next year is going to be a fantastic asset for which we are very excited about the profile. As Paul said, we see and we believe it's the best-in-class, with a very well-differentiated profile based on convenience, fast protection, and safety profile.
Now, why are we so confident about our ability to drive continued growth and perform in the U.S. market? There is a lot of information in that slide, but I would just like to highlight a few things. One, we have assembled in the U.S. a team of people with years of experience in the vaccines business, either in small, mid, or large vaccines company. This team has delivered, as I said, already, strong performance year on year with the only asset that we had so far in the U.S., RabAvert. But we also have a very clear focus on customer satisfaction and operational excellence. It's all about making sure we meet the customer needs and deliver exceptionally operationally day after day.
With that in mind, and this customer focus that the organization has, we have developed sales, marketing, and contracting initiatives to respond and differentiate Bavarian Nordic versus the competition with that laser focus I mentioned. Since we took over VIVOTIF and VAXCHORA mid last year, we've already aligned our these two assets to our strategic account selling model. We've also added VIVOTIF and VAXCHORA to many of our existing contracts that we have in the U.S. with the different key stakeholders, and we start seeing already a shift and a growth of our VIVOTIF performance, which ended up 2023 at 20% market share, where in 2022 it was at 15.
So we're very confident that with the foundation that we have put in place, we will be able to continue to deliver significant growth with the existing and new coming assets in the Travel Health portfolio in the US. Talking about new asset, our CHIKV VLP, we definitely believe has everything it takes to be the leader in the chik business, and we have the ambition to launch it in 2025 and make it the leading global brand in that chik business. So the chik business is a significant opportunity, estimated to be around $500 million for travelers business. But this market has to be built on. There is no market today, and it will take some time to raise awareness and educate HCP and travelers about this business.
We will come right after the competition and are gearing up with a team, again, of very experienced individuals in launches, either at the local, at the regional, or at the global level, to be ready to launch again in 2025. Our mission, and what this team is really focused on, focusing on right now, is to make sure that we understand the customer needs, whether it's customer needs pre-launch and after launch. We've run many market research. We've got a lot of insights, two of which I'd like to share. One is clearly there is absolutely very little awareness about the chikungunya disease, even within the travel health HCPs. Now, if you show them and educate them about the disease and its characteristics, they immediately see that this disease is as severe as typhoid or cholera, and they immediately recognize the value of a vaccination for addressing that disease.
The other insight is that they're really interested and like our VLP platform, as they know it from, you know, other vaccines, currently commercialized, and they have a lot of faith in the attributes of the VLP, mostly around its safety and efficacy. The other thing that the team is doing is to really build confidence and, educate our key stakeholders and recommending bodies by sharing with them, in time, all the data that we have on this asset, all the differentiating elements of this asset, so that at the time these stakeholders and recommending bodies will come with their decisions, they have all the right information. Our medical team is already in contact with ACIP experts. Some meetings are planned where these data will be shared and discussed in detail.
We also build a brand, and we were looking to be able to have a global brand, and it's the case now because the brand that we have is approved by the European authorities and the American authorities, setting up us for success on a very strong global brand. And of course, last but not least, working with my colleague Russell's organization, setting up and building up the inventory that would allow us to be ready for launch in 2025. So now moving to the public preparedness segment.
Paul mentioned it, and I think it's been very clear over the years. Bavarian Nordic has a very strong reputation of a trusted partner with the key stakeholders, where they, whether they were building stockpile inventories or in 2022, when the mpox outbreak came, that Bavarian Nordic was able to respond, step up and respond, and deliver to more than 70 countries around the globe, doses of Jynneos , IMVANEX, IMVAMUNE to help them mitigate this, this outbreak. So today, smallpox is still a top threat, whether from a biological defense perspective, but also because of, as Luc mentioned as well, the geopolitical tensions, the advancements in technologies that make smallpox high on the agenda of many governments as a point of real concern. Mpox, also mentioned by Paul, is still circulating across the globe.
We still have cases every month in many different countries, so it's not gone away, and there is a lot of uncertainty around future outbreaks, making it as well a top public health threat for the world. Based on these two, we work very closely with many government and supra-governmental entities to make sure we can respond to their needs. One government with which, you know, we already mentioned we are in discussions today is France. France has changed their recommendation, and they are working on building a stockpile that would allow them to respond to potential future outbreaks, but they also consider vaccinating their healthcare professional and first-l ine responder, even if there is not an ongoing threat in the market.
So this is just one example of a country with which, you know, we are in close discussion and work with them on making them able to execute on their strategy. Last but not least, as I said, we want to make this mpox, smallpox vaccine available also from the private market perspective. We have a pilot ongoing in Germany, and the next launch that we plan to execute is in the U.S., with launching Jynneos in the managed care market in the U.S. It is a very sizable opportunity. There was approximately 2 million individuals at risk. These are MSM, men having sex with men, with a high-risk behavior. So it's 35% of the overall MSM community that we're talking about.
25% of these 2 million received Jynneos in the previous year, but so there is still 75% of them out there that have not been vaccinated. This is the population that we want to help protect with this entry in the managed care market. And this population, we have market research showing that they are extremely interested in the vaccination and willing to get vaccinated. The other interesting part of launching Jynneos in this managed market is that it is a step for Bavarian Nordic in an enormous market. 95% of the vaccines business in the U.S. is within that managed market segment. So we will build the team to be able to launch in this market and acquire all the skills and expertise in that market.
We have a very good momentum in our plan to launch in the first half of this year, Jynneos in the U.S. Of course, we had this ACIP unanimous recommendation and positive vote for Jynneos . Some technical stuff, but important to get access to the U.S. market. A CPT code has been established. We have our pricing compendia notification that has been completed. We have CDC solicitation for VFC that is published, to which we responded, and we have some of our key players in the U.S. already agreeing to put Jynneos on the list of their contracted assets. Just to mention a few, United Healthcare, Aetna, and so on and so forth.
We also have, and building a strong team to make sure we, leverage the retail, the retail market, which is going to be a key driver for the success of Jynneos in the U.S. We have established also contracts with some. CVS is one of them that is already executed. So all in all, a good range of strategic initiatives to grow our business, whether it is in the travel health segment or in the public health segment, with key components that we will continue to leverage. One is a clear strategy, focus on strategic priorities, and a very strong and experienced team that has demonstrated it can deliver and going to continue to deliver that growth that we all expect for this portfolio. Thank you.
Is it QA? So do you wanna-
Yep.
-all come up? So we're gonna open up for a Q&A session before the break. So as I said, we'll try and govern this. If you ask, direct the question to me, and then I'll try and make sure the right person... Michael. Oh, sorry.
Oh, I'll kick off then. Thomas from Danske Bank. Just a couple of questions on manufacturing. So on chikungunya, I understand you have a lot of work pending to optimize manufacturing of the commercial launch. So what is actually needed here, and should we see this as a low-margin product, the first couple of years, just regarding scale effects, of course? Or will you have these optimization steps already in ready before the 2025 launch? And then just a general question on, again, on manufacturing and optimization steps. I guess moving away from egg- based embryo vaccine production would sort of make sense, at least to me.
So maybe can you quantify the level of investments needed and potentially any regulatory requirements, if you, for example, move into bioreactors at some point, and maybe also quantify a little bit on what sort of margin improvements you're looking at here, if that were the case? Thank you.
Yeah. You're up, Russell.
All right. So let's start with chikungunya. So we've got the manufacturing process now set up. The main part of the drug substance manufacturing happening in Switzerland, then we have the drug product part set up in the U.S. The volumes will drive the profitability of the product, and there are-
... opportunities that we have with the manufacturing process to significantly drive yield. As we've taken over this product from Emergent, there had been very little investment in the manufacturing process itself. So we're seeing pretty low levels of productivity in the first batches that we produced. We have more than sufficient capacity to support the first couple of years from launch, but we're investing heavily to drive that yield improvement for, you know, being able to expand the reach of the product and significantly improve the cost. So all of that work's underway, and I think we're making some great progress.
We've actually just finished some studies with the technical team, where we've been able to drive a 400% yield improvement on the chikungunya progress in only six months. So that's really exciting progress, and I think there's more to come in that space. When it comes to egg-based manufacturing technologies, yes, it's clearly a little bit archaic when you look at it from the outside. I think the things to remember about egg-based manufacturing technology is it's proven, it's pretty reliable, it is flexible, right? You can scale it up and down. Changing it involves significant investments because you have to be able to demonstrate that the product you manufacture on a cell culture-based manufacturing system...
I mean, it's relatively straightforward to make that technical transition, but you have to be able to demonstrate to the regulator 100% that the product is exactly the same and has exactly the same risk profile. That often involves either very expensive physicochemical comparability testing or even clinical comparability. So you have to ask yourself, "Is this gonna make good business sense to make this transition? Am I gonna get- what am I gonna get, if I make all these investments?" If what I'm trying to do is drive volume, it might make sense, right? Because I can scale up the manufacturing process more easily, and I can pay for all the investments I need to do to make the transition.
If the only thing that I'm gonna do is have a different manufacturing cost base, it's a lot more difficult to justify making that transition because the COGS saving or, you know, the co-product cost saving is gonna be maybe 10%-15% of your cost, right? Not 80%-90% of your cost. The funny thing about vaccine manufacturing is most of the cost is actually in the back end of the manufacturing. It's the box, it's the container. That's what drives a lot of the manufacturing costs, actually. Not so much the manufacturing of the drug substance. So I hope that gives you a feel. Right.
Michael?
Thanks a lot. Michael Novod from Nordea. Couple of questions. So first of all, on the tech transfer, completing with GSK. So when that is done, can you try to detail what kind of sort of ramp-up in supply are you able to see? Because, of course, there are some constraints in 2024 around what you sort of ordered with GSK. Just to get an understanding, you know, in terms of the next two, three years, what kind of ramp in supply are we actually seeing? In that respect, also, maybe if you could talk a bit about the actual margin improvements on the rabies and TBE business, when all this is complete, and how this will progress also over the next couple of years.
And then lastly, on the commercial side, also, how do we sort of foresee progress in the launch of Jynneos in the U.S. private market? Is there sort of a key event, marketing event, campaigns that will drive uptake, near-term or to midterm?
Do you want to take the first part?
Yeah.
Manufacturing and margins-
Yeah
... and then, JC, you take the... Yep.
So, rabies and TBE tech transfer is ongoing. It's ongoing to plan. I'll talk more about it a little bit later. The absolute key benefit of actually getting all of this manufacturing in-house is, as you say, it allows us to drive additional volume. And we've got a manufacturing—we've built a manufacturing capacity which allows us to build or supply roughly double what we're selling today, right? So that's the opportunity that we have in front of us. We're not necessarily gonna do that just straight off the bat 'cause we're working very closely with JC and the team to try and project how that ramp-up's gonna happen. But the technical capability, we've put that in place.
We are gonna see significant improvement in the profitability of both rabies and TBE as a result of the tech transfer. The reason for that, of course, is that we have all the cost in the business for manufacturing rabies and TBE today, but we're not absorbing it into the product sales because we're still supplying out of the GSK supply chain. So we're gonna have a huge impact there. It's gonna impact rabies, I think, more dramatically than it is gonna impact TBE, just because of the respective yields of the different manufacturing processes.
I will actually share some of the details on that in my presentation later today.
Yeah. Yeah. JC?
With regards to the launch of Jynneos in the U.S., yes, we do have a pretty aggressive launch plan with marketing activities. One element that is really important to know is it is a special population that we will have to bring in front of the vaccine, population that has not been fully aware or was aware but didn't want to go into the previous setting for vaccination, where they had to fill a five-page questionnaire about, you know, all their identity, behaviors, and so on and so forth. So we will work very closely with a lot of associations, LGBT associations, Black patients association, because we see that is also an underserved population that didn't really get the full vaccination.
So that is one element that the team is going to to work on, is to activate, you know, campaigns through these these associations. We also work closely with some of the CDC centers in some of the states, because the underserved population will still have access to the vaccine through CDC centers. And the last thing we do, we have... As you know, in the U.S., you know, they have data on everything, and we almost know the exact number of individuals per state that are at risk and that have not been vaccinated. So we will absolutely prioritize. We have a four-tier segmentation of the different states, and we have a clear focus on the tier one and tier two, where there is the highest number of individuals eligible but not vaccinated.
The last piece is a strong partnership with retailers, where most of the vaccination, we think, will take place, and they also have a lot of interest in having these additional source of revenues in these retailers. We do have plans to do activities together.
Thanks. Pete Verdult, Citi. Three buckets of questions, please. Firstly, maybe for JC, just on pricing on the travel vaccines portfolio, could I push you, and could you give us some sense of what you're seeing in the U.S. and European markets across the portfolio and your expectations going forward? For Henrik or Paul, in terms of shareholder returns, are you agnostic as to whether it's dividends or buybacks, or do you have a particular preference when we get to that point? And then lastly, when you talk about these unloved assets, I realize this is not the forum where you start detailing to us all the unloved assets you see in Big Pharma, but you know, you use the rabies and TBE vaccine as a good case example, case study.
Are there really a good number of other unloved assets out there that allow you to, would allow you to replicate that success? Just wanted to get a sense how many real opportunities there, you really think there are.
J.C., do you want to-
Yeah. So pricing of travel health vaccines, you know, it clearly in Europe, there is a difference between Europe and US. Interestingly, in the US, we see pretty significant prices for the vaccines. JE, for example, is around a $300 a dose. And Valneva just announced their price for their chik vaccine, and being around a $270 a dose. So we see this travel health segment in the US to be pretty, you know, high priced, versus, for example, pediatric vaccines, which, you know, have pretty lower price. In Europe, it's a different scale of magnitude, of course, but we also see an increase in the average selling price of the travel health vaccine.
You know, payers, first of all, most of it is out of pocket, right? So individuals, they have to, most of the time, pay for themselves. So of course, we do pricing sensitivity analysis, especially with our chikungunya VLP future launch, to understand, you know, what is the sweet spot in terms of price acceptance. But, you know, we are confident that it could be a pretty high price versus, you know, other prices of some vaccines in Europe, which remain, you know, relatively low.
Do you want to take the-
Yeah, sure. On the return to shareholder, as Paul said, I think once we have completed the milestone payments to GSK and Emergent, we will be in a totally different situation. 1.5 years down the road, we will be generating positive cash flow, we will be debt-free, basically, which also means we will have a much more expanded financial flexibility, allowing us, of course, to continue investing in the business, but also to explore more M&A opportunities and eventually, return money to shareholders. And whether it will be through dividends or share buybacks is, of course, a discussion that will depend on the situation and that we will have with the board of directors. Personally, I would think it would be very logical to start with a share buyback.
Once you have proven that you are actually, as a company, in a situation where on a sustainable basis, you can return money, you can be talking about dividends, but that's a discussion that needs to be had with the board of directors.
And then, in terms of unloved assets, well, I mean, the list isn't maybe as extensive as we would like, but there certainly are a number of assets similar to rabies and TBE, sitting with pharma, that I think would be better in our hands. And in fact, the more blockbusters that pharma gets, the more opportunities there are for Bavarian Nordic, because the sort of products that are generating the sort of revenues that we're seeing simply don't get their focus, and they want to simplify their supply chain, their manufacturing. So that's definitely one area that we will be trying to identify and exploit. The other area is obviously for companies that are subscale.... that don't have enough scale in terms of assets.
You can argue that may have been emergent situation in terms of their travel health, but there are opportunities there as well. So two buckets of opportunities that I would say, and as I said, I really wouldn't underestimate the credibility angle that Bavarian Nordic has. It is a little different today to knocking on GSK's door than it was back in 2019, and in fact, people are actually coming to us now, which didn't happen before 2020.
Thank you. Jesper from Carnegie. A couple of questions on your new ambitions for 2027. So firstly, just on the EBITDA margin. When you look at pharma companies and the vaccine divisions in big pharma, they are running at greater EBIT and EBITDA margins than you guide. So can you perhaps just give some ideas as to why it's only 25%-30% in your current company? Also, considering that you actually grow in scale over the coming years. And then secondly, on travel health, just curious what you have included, just top line on chikungunya, because if you just look at the actual targets you provide, it's slightly below what we expect in the market. But that may be due to you guys just simply assuming a slower rate of chikungunya.
Just some consideration how you have to include chikungunya and other assets in that guidance. Thank you.
Henrik, do you wanna take that one?
Which one of them? The EBITDA margin?
Yeah.
Let's start with the EBITDA margin, right? I think we are guiding now 25%-30% EBITDA margin in the period up until 2027. We have a growth strategy, and the whole point of us growing the company, I think, is to build scale so that we can deliver competitive profitability rates and take care of our own business without coming back to you guys asking for more money. So we can basically pay for our own development, continuous investment into the business, and then deliver a competitive profitability level. Will we deliver more than that after 2027? Maybe, but it's all a matter of building the right scale. We have... I've heard several examples of where that is happening right now with the acquisition from Emergent. JC can move into new territories.
Russell will get opportunities to improve the utilization of manufacturing. All components and elements that will help us drive profitability. So we take it one step at a time, but so far we have the ambition to deliver 25%-30%. We've also seen that we can do better. Paul said we delivered 37% in 2023, and that is, of course, due to the mpox outbreak and the, you can say, extraordinary high revenue we saw in 2023. But I think 25%-30%, I think, is a very good place to start.
J.C., do you want to take Chik?
Yeah. So of course, we don't give specific numbers for the different assets. But of course, Chik is in our ambition numbers. But as I said, it will take some time to build this business, which for, you know, there is very little to no awareness. So we're happy that someone will start, you know, making and raising the awareness for the disease for us, so that when we come, awareness might be a bit higher. Nevertheless, it will take some time before, you know, the awareness get there and we can fully leverage the potential. But, you know, we have to think, you know, Rabipur or Rabies is a 30+ years asset, so it's a very long lifeline.
Like, also our chairman mentioned that we definitely see a massive opportunity, not super short term, but definitely once the business is growing.
Any other questions? Oh.
When you consider the climate change, is that a risk for the company's turnover in the future or is it a possibility? I mean, I'm trying to explain, the climate change could carry on that while we have seen for the last few years and where I have traveled, you know, we have to look more forward to see. We have to be prepared. In other areas, you know, I would never have a vaccine anymore.
Do you want to take that, J.C.?
Yeah, I think, you know, we believe it's a positive trend for the business we're in. If you think, for example, chikungunya, we have seen some cases even in Italy. And we see the spread of mosquitoes really developing up north and making this disease that are seen as disease from remote, faraway countries, might come much closer to where we are today. We see also cases in south of the United States coming up from Mexico. So the spread of mosquito is one element.
Not talked a lot about TBE, but the spread of ticks, you know, and the expansion of the epidemiology of tick-borne encephalitis is really spreading massively across different countries in Europe. I don't, you know, my daughter would kill me if I would say, you know, I see global warming as a positive trend, of course. But-
Mm-hmm.
From a pure business perspective, I think it will represent an opportunity.
Okay, one more question, then we'll go for a break.
Okay. Thomas from Danske. Just a clarification. You guide for DKK 1.5 billion-DKK 2 billion annually on public preparedness. So just to clarify here, the private mpox market that you are looking at, is that within that range? Because I remember you previously have guided $50 million once you got the mpox label. That was before the 2022 outbreak. So what's included here?
Yeah. The DKK 1.5 billion-DKK 2 billion, that is pure what we call existing base business. So the private market in the US is not included in that number. And there, I think you might have seen it on one of the slides there, we actually... our ambition is to take approximately $250 million over the next four years in that market. It's a special segment that is sort of a backlog of of people that needs to be vaccinated. but $250 million over the four years gross revenue is what we expect.
Okay, we'll take a short break.
So I'm gonna talk to you a little bit about how we are building reliable and sustainable supply of vaccines at Bavarian Nordic. And we've heard a little bit this morning how difficult that can be. The chairman, Paul, sort of made reference to the barriers to entry and the difficulty of actually making a vaccine. There's multiple reasons it's complicated. I mean, part of it is the manufacturing technology itself. We use biologics manufacturing, we use sterile manufacturing. In the pharma sector, these are probably two of the most capital-intensive types of manufacturing process that you can establish. But it's not just having the money to build the factories, it's also the length of the supply chains involved.
A typical vaccine, from the point of its earliest inception to its delivery to customer, can be almost 18 months. And that's not because the manufacturing process takes 18 months, it's because there are very complex raw materials that take a long time to source. There is the manufacturing process itself, but there's also the testing and quality assurance that we have for vaccines that is extensive. Every single vaccine that we make undergoes hundreds of separate quality control tests, and in many countries, all of those tests are then repeated by the local regulators. So the extent, the length of the supply chain is significant, and that drives inventory costs, right? I mean, you've got a lot of cost in your supply chain for many, many months before you can get the product to the customer.
So these also play into this complexity that we have in vaccine manufacturing. And I think the third part, the third complexity that we have is, it's difficult to predict, and we've heard a little bit about this, you know, the diseases that pop out of nowhere. But another thing that makes vaccine supply difficult to predict is the industry is actually not very good at it. I mean, and I'm not talking just about any specific company, but if you look at vaccine supply in all countries across the world, you will see routinely vaccines being stocked out and not available. And that's not because these companies are stupid, right? It's not because they don't know what they're doing. It's hard.
It's hard to predict, and it's hard to balance the uncertainties of demand and supply. So that's the challenge that we're trying to conquer here at Bavarian Nordic. We've built a quite extensive supply chain for our vaccines, for our six life-saving vaccines, and that spans three internal locations, but also a whole list of contract manufacturers that perform different parts of our manufacturing operation. It's an extensive list. It's a necessary list for the flexibility in manufacturing that we wanna have, and also because of the variety of vaccines that we produce. I'll focus a little bit on our two main internal manufacturing locations, one here in Denmark, the other one in Switzerland. These facilities are state-of-the-art manufacturing facilities.
So these are manufacturing facilities and capabilities that are comparable to what you'll see in the biggest and most professional vaccine manufacturing outfit out there. We operate these facilities to the highest levels of quality and compliance, as you would expect, right? We're putting vaccines into healthy people, and that high quality and compliance level is absolutely key. And that standard that we've introduced has allowed us to license these products in all the major markets that we operate, which include the most stringent regulatory requirements in the industry, right? I mean, the U.S., Canada, Europe have the highest levels of quality and compliance requirements for vaccine manufacturing, and we've gone through all of those inspections.
Over the last three years, we've had over 15 separate inspections from all of the major regulators, and we've passed those with flying colors. That is a testament to the strength of the organization that we've built at Bavarian Nordic. It's not just about the fact we spent a lot of money on nice factories. It's also because we've built the quality and supply systems and processes that support that operation, and allow us to build and deliver vaccines reliably to our customers. The technologies that we've invested in are not technologies which are unique to specific vaccines. They are platform technologies, which we can use for producing other vaccines. So vaccines above and beyond the six that we manufacture today.
So that leads, you know, to some opportunities for us down the road, to internalize more vaccine manufacturing, different vaccines, in the future. I'm gonna talk a little bit about the whole monkeypox story. We've touched on it a number of times today already. It was a bit of an interesting introduction for me as Bavarian Nordic, because I'd been here, I think, about a week or two before the whole thing kicked off. But, we sort of stood up to the challenge, and, over the last couple of years, we've been able to scale our smallpox and monkeypox production capacity, fourfold. And throughout that time, we have never said no to a customer, and we've never failed to deliver on our commitments to customers. And, I...
Something that I think we're all at Bavarian Nordic incredibly proud of, but again, I think speaks to the strength of the supply capabilities that we've built. When it comes to monkeypox and smallpox, we now have sufficient capacity in place to meet what we expect as being the demand in the years to come. But just to be sure, we've also made sure that we have got third-party supply capabilities, should surges in demand happen, so that we can address public health needs, should the need arise. But we're not sitting on our laurels with smallpox and monkeypox. We want to maintain this product as the standard of care.
We want it to be the leading vaccine in its field, so we continue to invest on making it better, making sure that the presentations are suitable for the private markets in which we now begin to enter. Working on the shelf life of the product, which gives us improved manufacturing flexibility and, of course, working on the process productivity and making it more cost-effective, which is a continuous journey which never ends, but one which we make great progress on. When we look to the rest of our vaccines beyond smallpox and monkeypox, we've got a huge amount going on. I love this graph to the right here because it shows how we've expanded our internal manufacturing capabilities over the last four years. That's a tenfold increase in output that we've been able to deliver.
It's rare that you see organizations scaling at that level, you know, increasing their manufacturing output by tenfold over a four-year period. There's a number of things that are driving that increase in internal manufacturing output. I mean, of course, the monkeypox and smallpox stockpiling increases have played into it, as has the internalization of some of the steps of the GSK rabies and TBE product we've started to produce in-house. The Emergent business has also added to that growth rate. And finally, this year, we start the manufacturing processes for chikungunya to make sure that we're ready for launch in 2025. Now, that scale of growth isn't just all about manufacturing and getting batches and doses out the door.
It's also systems that need to be put in place to get all of these products to customers. It's pointless making a vaccine if you can't vaccinate with it. And that back end of building the distribution and supply chain to, instead of just to one or two customers, which is what we've done historically at Bavarian Nordic, but hundreds into thousands of customers, is a big piece of work, which we're making great progress on. With rabies and TB, as I said, we've got the manufacturing processes being set up now for rabies. The heavy lifting is all done. The commercial manufacturing has started. We're waiting for the final approval from the regulators to sell the product, but the tech transfer is effectively done at this point. For TBE manufacturing, the heavy lifting is ongoing.
We're actually producing our first batches of TBE vaccine in the factory in Denmark as we speak, so, an exciting time. But we expect to have that tech transfer completed by the end of this year, and, the entire rabies and TBE supply chain will be under our control for 2025. For cholera and, typhoid, we have significant manufacturing capability in-house and ability to grow. And, as chikungunya, we are in the process of getting that manufacturing process scaled up and also working on that process, productivity and performance to make it, well, to allow us to deliver the long-term growth, but also to improve the cost outlook for the product.
You can see here a little bit more of the detail on the rabies and TBE tech transfers and the different steps that we've got. I mean, it's been a long story. It's five years it's taken us to, to, to internalize this manufacturing. It took us that time because we had to start by actually building a factory, right? So you have to build a factory, you have to put the process in, and then you need to get it licensed. But why, why is this such a pivotal point for Bavarian? I think firstly, when we've got these assets in-house, we will have the manufacturing capacity in place to grow these products.
We've seen great performance from the commercial team in many geographies, and you know, we know we can replicate that in other markets once we've got the supply in place. So that's the first thing that's super important. The second piece, of course, is the impact it's gonna have on the profitability of our business. Today, what we are doing as we sell through rabies and TBEs, we're absorbing GSK's manufacturing costs. You know, as of this year and next year, we'll start to absorb our own manufacturing costs. And all of those costs are actually in place already, right? So we're spending the money today, and we'll start to see the benefit of that, starting next year. So I think really excited to see the progress that we're making with rabies and TBE.
I think another reason we're very proud of what we're building at Bavarian Nordic is our ability to tech transfer probably two of the most complicated vaccines from a manufacturing perspective to plan and to budget. That's a really quite a significant achievement. I've spent my career in vaccine manufacturing. I think I made every vaccine out there over the years, and I can tell you, these two are not easy. They are complex products to make. But our technical focus isn't just on moving products from one place to another, it's also about making the products better and investing in them.
You know, we spoke a number of times today about why these assets are best placed with Bavarian Nordic, because we can give them the love and care that they need to be successful for the longer term. For Jynneos , we've invested in together with BARDA, in establishing a freeze-dried formulation for the product. I, I'm personally very excited about that, the opportunity that brings. It brings us a refrigerator stable presentation, which will be much easier to distribute, and I think will open up a number of opportunities for us further down the road. With our VAXCHORA asset, which we acquired last year, you may know that there is actually a global shortage today of cholera vaccine, and we've heard earlier about how that disease is becoming more of a challenge in many geographies.
We also have an absolutely enormous manufacturing capability that we've acquired for cholera. Now, a lot of the demand for cholera vaccine is in emerging markets. It's in endemic markets. So we are working hard to develop a presentation which can be competitive in those markets. And we're excited about what that can mean for an improved supply of cholera vaccine around the world, but also a significant impact on public health. Finally, we work on shelf life extension, and we—it might not sound very exciting, but it is really exciting because what we've heard a lot about vaccines is this unpredictability in the demand, the seasonality in the demand. And what that volatility sometimes drives is wastage, right? You make a vaccine, then it expires before it can be used.
That's not good. It's not good for sustainability, and it's certainly not good for profitability. So we're investing in making sure that we can get improved shelf life of our products, and as a result, reduce waste and improve our flexibilities to supply. So that's another area where we're working hard. So just to sort of wrap up a little bit, what we're trying to do with our reliable and sustainable vaccine supply chain at Bavarian Nordic, I mean, it all starts with absolute integration of our demand and supply situation. It's a difficult space to manage. Together with JC and the team, we've made great progress in establishing world-class and integrated sales and operational planning. And then we are going after the cost opportunities that we have.
We have significant opportunities in sourcing and distribution as a result of the acquisition we've made with the Emergent business. But we also have a lot of technical opportunities of continuously improving the products to improve their cost performance and their profitability. And that's because we care about these assets, right? It's not as though these were things that only we could have done. The previous owners could have done these things, too, but it was never on their top things to-do list, and so it never got done. And I think that, again, speaks to why these assets are in the best place now with Bavarian Nordic. But at Bavarian Nordic, we also try and do these things in the right way.
So we make the right choices about setting up our manufacturing from a environmental sustainability standpoint, and we also make sure that we always keep in mind the criticality of having the highest quality products on the market and the trust that stems from that. It's an absolute requirement of a vaccine manufacturer, and that's certainly how we do things at Bavarian Nordic. So I hope that gave you a bit of an introduction to our reliable and sustainable supply chain. Thank you. I think we now go to a break.
A break.
Yeah.
Okay, welcome back from the break. So now it's my turn to speak and take you through some of the financials. First of all, looking a little back on the years we have behind us, and particularly our 2023 results, but then start talking a little about what are our ambitions, short and medium term. So last week we went out, and we pre-announced preliminary 2023 results so that we could really elaborate on that today as well. So as you know, we delivered revenue of just above DKK 7 billion. Of course, sparked by the mpox outbreak and all the contracts we secured during 2022 and executed upon during 2023, but also due to extremely good performance on the travel health business. We actually managed to grow that part of the business by 49%.
Obviously, supported to some extent by the two products we acquired from Emergent, VIVOTIF and VAXCHORA, which we had included for 7.5 months, but the growth primarily came from 40% growth on our TBE business and 32% growth in our rabies business. So as both JC and Russell has alluded to, has been a busy year, and we have sort of been running on the edge of keeping up with demand in terms of manufacturing. But a fantastic, good year. We sold more of these products than any other previous owners have done. Again, a testimony to the fact that our investment philosophy worked. We delivered an EBITDA of DKK 2.6 billion, corresponding to a margin of 37%.
This is an extraordinarily high margin, I would say, of course, driven by the, the mpox revenue we have. Remember, the mpox business, as it was driven by the outbreak, there was not a lot of, push from our side, really. We had a very, very slim commercial organization in JC's team, that supported, the handling of these orders during the outbreak. We also ended the year with a, a good, strong cash position. Close to DKK 1.9 billion is what we have in our cash by the end of 2023. So a good cash position. What we are guiding now for 2024 is a revenue between DKK 5-5.3 billion, and that consists of approximately DKK 2.1 billion within the travel health business, which corresponds to a 12% growth over 2023.
Then we are guiding between DKK 2.7 billion and DKK 3 billion within our public preparedness business. As Paul said in his presentation, this is actually the first time that we guide beyond secured orders, and we can do that because we have managed to increase the base business, the number of customers. We are not relying only on the U.S. government to buy our vaccines. Within that guidance, DKK 2.7 billion-DKK 3 billion, approximately DKK 1.6 billion consists of secured orders, and that comes from the U.S. government. It's our freeze-dried contract. It's our 10-year contract with the Canadian authorities. It's the two contracts we have disclosed with HERA in Europe, and it's a number of smaller contracts as well.
But that means the rest we have to go out and secure during the year, and we are guiding this way again, as we are confident that we will close more deals based on the ongoing discussions we have with a number of customers. EBITDA will guide to a range between DKK 1.1 billion and close to DKK 1.4 billion. That in itself corresponds to a margin of 22%-25%. However, what's included in these numbers are the manufacturing costs of chikungunya vaccines that can eventually be sold. That is approximately DKK 240 million we will expense in the year, and once we have an approved vaccine, that will be reversed and put into the inventory.
So if we had adjusted for that this year, we were actually delivering a margin between 27% and 30% EBITDA margin in 2024, so living up to our ambition. R&D investments coming down. Paul showed you the slide, coming down from more than DKK 2 billion in 2023 due to the all the three Phase III trials we had running in parallel. It will come down to a level of approximately DKK 850 million in 2024. Nearly half of that is driven by the chikungunya development, and it includes not only the development itself, it also includes some of the manufacturing processes that we are developing prior to launch.
I think what we are really proud of is that this revenue here, DKK 5 billion-DKK 5.3 billion, we are actually delivering it, what I would call a more normalized year. There is not an outbreak we are delivering to at the moment. Mpox is still out there, but there's not a huge outbreak like we have saw in 2022 and partly 2023. So we are today a DKK 5 billion Danish kroner business, delivering also healthy EBITDA margins. If we then look a little bit beyond 2024, into the 2024 to 2027 time frame, then we are anticipating to grow the travel health business on an average by 10%-12% in that period. JC talked to some of the important growth drivers there. It is, of course, continued growth driven by travel.
It's also the launch of chikungunya eventually that will drive the travel health business. On the public preparedness side, we have increased the base business, and we do believe that currently it's probably in the range of DKK 1.5-2 billion that comes from regular customers who are either stockpiling or building up inventories to deal with mpox outbreaks. And on top of that, we do anticipate there will be spikes like we have seen in 2022 and 2023. We don't know when, but there will most likely be another outbreak. There might also be the odd government who decides to place a larger order to replenish their stockpiles.
The numbers you see to the right here, this is with our current business only, so it doesn't assume anything, acquired or anything added on top here. And we did talk about it already, during Russell's presentation. Once we have completed the tech transfer, we will get a significant positive contribution to our, profit margins. And I will jump to the next slide to elaborate a little on that. As you know, we have been through this tech transfer process since we acquired the products from GSK back in 2020. We are getting close to complete. Actually, we are expecting the rabies product to get full license this year and the TBE product, as Russell said, slightly, a little later into 2025. The graph to the left illustrates what kind of COGS savings we are anticipating with this.
We are gradually going to save as much money as we take over the different steps in the manufacturing, and the big contributor will really be now when we take over manufacturing of the drug substance. So we are anticipating to be able to reduce on average the COGS by 30%. So far, we have been buying finished product or semi-finished products from GSK with a margin obviously to GSK. So that's gone, that margin. Plus, when we take over the manufacturing, we will get a manufacturing in place that will help us absorb the indirect cost we have in Kvistgård and all the investments we have done to build up the manufacturing capabilities of these products.
So these savings here, they will result in a profit margin, gross margin improvements for these products of around 15-20 percentage point for these two products. Just to put it into perspective, had we had access to those kind of COGS in 2023, our EBITDA would have been DKK 250-300 million higher. So it is a significant impact that we are expecting from this. The effect, unfortunately, we have to wait a little to see the full effect in the P&L. First of all, we need to complete the tech transfer, and what we have done during the last couple of years is also building up significant inventories. We need to make sure that there is a very safe handover from GSK manufactured products to our own manufactured products.
So therefore, we have quite a significant inventory that we need to consume before we can start consuming our own produced products. But we are expecting the effect to start really in 2026 and with a full 12 months impact in 2027. We have been on this journey to become one of the largest pure-play vaccine companies. And to do that, we have actually made a lot of investments. Both Luc and Russell talked about how complicated the vaccine industry is and how you need to invest also in very bespoke manufacturing sites. We are past most of these investments, and I'll just take them one by one. First of all, the inventories, we talked about it.
You can see on graph number one there, how we have built up inventories, and that has consumed cash outside of the PNL for the last couple of years. We will still do that in 2024, but this is the last year where you will see a significant ramp-up in inventories. Right now, our inventory value is around DKK 1.6 billion. That's an asset we can sell, and we, which we will go out and sell. Close to DKK 1 billion of that is related to the Encepur, that is our TBE and our rabies vaccines, where we need to secure this safe handover to own manufacturing. We will continue building up inventory this year with approximately DKK 1 billion.
I do expect that net working capital impact will be slightly less, as receivables and payables will offset some of this, but it is the last year. After that, we will see inventories stabilizing, and we will actually, over time, expect to see them decrease. Not that we have fewer vaccines on inventory, but they will be capitalized on the balance sheet at a lower manufacturing cost, as we just talked about. Number two graph talks to all the CapEx investment we have done. We have built a brand-new fill and finish facility in Kvistgård, and we have built a facility that can today manufacture both rabies and TBE vaccines. Again, as Russell said, right now, they're really busy manufacturing the TBE vaccine.
These investments will also taper off, so we anticipate this year to spend approximately DKK 300 million, some in maintenance, some in smaller projects, some in the chikungunya manufacturing that we are building up. But a lot of the investments are behind us, and we have really created an end-to-end manufacturing site in Kvistgård. Graph number three also shows another area where we have invested. That means basically consuming cash that you didn't see on our PNL. The whole tech transfer process has over the years been capitalized. That's how you do it. Then you put it on the balance sheet, and you start amortizing it once you sell the product, and it becomes part of your future cost of goods sold. We are right now manufacturing in these sites, so we are not capitalizing any longer.
So you will see that is actually going to zero in 2024. That is all our payments to the sellers of the business we have acquired, GSK and Emergent BioSolutions. We also paid some smaller amounts to AdaptVac for the in-licensing of the COVID-19 vaccine. So you will see on this one here, we have spent quite a lot of cash in the previous years. That is also coming to an end. We are, with the completion of the tech transfer, and with the submission plans for chikungunya and expected approval, anticipating that over the next five or six quarters, we will be paying back DKK 2.6 billion to GSK and Emergent, and at that point in time, have no further financial obligations to these companies, bringing us in a totally different position.
So it's DKK 2.6 billion approximately, that we owe these companies. We have, in our assumptions to the guidance, said that we expect DKK 1.8 billion of those to be paid this year, and the rest first half of 2025, actually. The graph here shows DKK 1.5 billion, and that's really it will be between DKK 1.5 billion and DKK 1.8 billion. There are a couple of the milestones that can either be Q4 or Q1, but these are the assumptions we work on. So all of this basically means that our cash flow will be significantly improved, going forward. And as we will be debt-free, we will also have much greater financial flexibility, and I think that was recently also, I think, witnessed by the revolving credit facility that we managed to establish with Nordea and Danske Bank.
So we actually have, beyond the cash we have, we have DKK 1 billion credit facility that we have access to should we need it. And being in that situation, much improved cash flow, no debt, that will also enable us to more aggressively look at, at M&A, as Paul said. And also look at how to apply excess cash and consider returning back to the shareholders, either through share buybacks, which most likely it would be, short, medium term, or eventually down the road, dividends. So strong performance. We have some obvious serious obligations, the DKK 2.6 billion, but we are in a good position to pay that back with the strong cash position we have and with the anticipated cash flow that will come into the business.
But we have often got the question: Why don't you pay back to the shareholders already now? And there, I must admit, I'm probably just a, I would say, prudent, humble CFO, who likes to make, to make sure the money is on the bank when they are due to be paid to GSK and Emergent. So being a little cautious, we have... You can say, we can see the light. 1.5 years, it's all paid back, and it's our business, and maybe even more importantly, the manufacturing is under our control so that we can respond much faster to the changes in demand in the market. So these were actually the few slides that I had on the financials, and now I will invite my colleagues up here to the stage. So we will take another Q&A session.
I'll start. Michael from Nordea. So with regards to the margin, Henrik, when you look at when you do the adjustment this. If you did the adjustment this year, 27%-30% EBITDA margin, you see a 15-20 percentage point improvement when you do the tech transfer fully of the GSK products. So I know, of course, the company guides for what it believes is realistic, but still, so the margin guidance, when you bear that in mind, looks a bit on the conservative side, unless you suddenly see that you will be sort of expanding your cost base again towards the end of this 2026, 2027 periods. Maybe a bit of more flavor on that, please.
So you're right that there are upsides to our margin. I think we want to take a step at a time and demonstrate that we can actually deliver within the 25%-30% range. I think we are also going to invest in some areas to secure more longer-term return. JC mentioned a couple of areas. We finally gained the scale in some markets so that we can expand geographically. So U.K., Canada will be the first ones, and of course, once you move into these markets, maybe they are not the highest profitable ones. So we are going to invest in some areas. We are also going to invest to drive the Jynneos launch in the private market in the U.S.
That will be at a different margin than the mpox business that we have seen previously. So, but yes, there could be upsides, but, I think we want to demonstrate that we can stay within the 25%-30% band the next few years first.
Thank you. Thomas from Danske Bank. So a quick question on shareholder returns. Could that potentially happen already in 2025, or at least within the 2027 period? And then a question on working capital. I understand that part of the continued increase also reflects some better preparedness for mpox. So my question is just, is this sort of a reflection also of governments maybe not, you can say, taking the bait in order to build these stockpiles, so you feel that you internally need more-
... preparedness, and maybe also could you address what would sort of the internal capacity of that mpox preparedness be, given you are building up a lot of inventories?
Yeah, so the first one was on shareholder return. I think first of all, we need to have paid all the money back to GSK and Emergent. So I think the first time it can be discussed, that is, mid-2025. At that time, we have just had a cash outflow of DKK 2.6, so I would assume we need to build up some a good cash position first again. And then, of course, at that point in time, as we have laid out in our capital allocation, is do we have good opportunities in terms of M&As? Also or do we have an opportunity to distribute back to the shareholders?
I want to be clear, we are no bank, so we are not going to sit on the money, obviously, and they will be returned if we don't see a good use of them. But I think it can't happen until we have paid back all our financial obligations to Emergent and GSK. And the other one, Thomas, that was on the-
Inventory.
Inventory, yeah. I think the major part of that inventory you see build up of DKK 1 billion approximately, is actually to continue building on the TBE and rabies products. There's a little on the on MVA as well. I think we are producing a manufacturing plan where we are not letting the kettles stand idle, basically. So if we can manufacture some MVA to inventory, we'll do it in bulk. When we had the outbreak in 2022, I think we were so lucky that we had access to an inventory of bulk. So I think I'm pretty sure that in Russell's team, there will be no idle time in the manufacturing in 2024.
Thank you. We all were pretty surprised when we saw the Covid coming in, and I love to hear that the Bavarian Nordic is very proud telling, you know, where we are heading. Can we count that you are not getting new fancy ideas if something new is coming up, popping up some, you know, suddenly in the coming two years... Are we gonna consider Bavarian Nordic as a company very much outlined according to what you have told us today? Or are you ready to fight against a new kind of Covid, whatever it's called, when it comes up? Thank you.
Maybe I'll answer the first part, but then maybe, Laurence, you can take the pipeline. So I think, COVID was a very unique situation in that we found ourselves going into a worldwide pandemic, and as a vaccine company, there were many actually in this room that were also putting Bavarian Nordic under pressure to do something about COVID. And we entered that space with our eyes wide open, knowing that it was a risky area to get into, but it was the right thing to do from a public health perspective. And that's the reason we laid out that we really needed public funding. As I should say, as nearly every COVID company received, who developed successfully or unsuccessfully, a COVID vaccine.
So I think COVID aside, that's a bit of a unique situation, and I think if we found ourselves in another global pandemic, we would also be under pressure from the authorities and, as I said, from investors to do something. But that's a very unique and hopefully something that's not gonna happen too frequently. But in terms of what our pipeline ambitions are, I think I would divert that response to you, Laurence.
Yeah. So in research, we're working on several platforms because we strongly believe that one platform doesn't fit all. You've seen other companies focusing, for example, on mRNA. We strongly believe that each infectious disease, because now we are fully focused on infectious disease, needs a different platform to address and stimulate the immune system according to the disease. So we are working on several platforms. We are also doing an exercise where we prioritize infectious disease based on medical need, but also on the strategic fit to our portfolio and the feasibility of the development. You've seen the chikungunya presentation. It's a surrogate that is used to license, and this is making the development much easier.
We are really focusing and trying to prioritize infectious disease of the future, and we will make a decision to bring one of these assets in the clinic in the following 18 months.
Pete at Citi, please. three questions. Just on the chikungunya slide, pardon my ignorance, there were four companies listed. We all know about Valneva and Bavarian, but the other two, are they many years behind or fast followers? That's question one. Number two, just for anyone of management, just your assessment of the competitive landscape in mpox. I think there's, you know, mRNA efforts and others. Just, you know, what are you seeing? What are you hearing? And then lastly, you've given us your guardrails of your financial targets.
And your commercial aspirations, if you really execute well, I mean, maybe this is for Russell, just the current manufacturing network, I mean, how much—I know you don't probably wanna talk about what utilization is right now, but how much sort of, room is there to sort of, you know, capacity to grow and support stronger than expected growth that you've laid out in terms of your targets? Basically, are we gonna get—suddenly find out a few years down the line, "Oops, big CapEx cycle, we need to build a new plant." Thanks.
On the competitive side of chik and mpox, Laurence, do you wanna take that? Obviously, Russell, you're up for the last part.
Yeah. So, for chikungunya, the other players are really far behind in phase I, phase II. There was a... Merck was also in the race, but they just give up, so there are really two strong vaccines manufacturer that are advanced, and we are one of them. I think you've heard the potential differentiators, and I don't know if you have any other questions about that. Now, for mpox, we know that the mRNA vaccine companies, so Moderna and BioNTech, are developing mpox vaccines, but they are in phase I. We also know that, you know, the regulatory pathway is different now, and the regulatory bar is quite high to have these vaccines licensed.
Our vaccines has really shown very good, real-world effectiveness, so there has been, 13 different studies in various settings and countries, all showing a very high efficacy, from 60%-90% after one dose, and even higher after two dose. So really believe that we have shown effectiveness and are the market leader, to address mpox.
Yeah.
Yeah. So on the manufacturing capacity side of things, I think we have a lot of opportunities to actually drive manufacturing process productivity, and that should eliminate the need for large additional factory-level investments to support the growth, at least in the medium term. You know, we do wanna continue to invest in our manufacturing footprint. I think there are a number of opportunities for us to internalize activities that we've currently got outsourced, that would further improve margin and flexibility from our manufacturing supply chain. So that's the type of investments that we're looking at, at least in the short, medium term.
Can you just briefly discuss real-world durability of your mpox vaccine?
So durability, we don't have a lot of data yet because, you know, the outbreak was in 2022. So it's really something we are going to watch. Us and others, you know, in public health organizations, are having these real-world effectiveness studies, so we will gather more data as we go along. But for now, no breakthrough, you know, except that it's not 100% efficacious, but we don't see a waning of the efficacy so far.
Cool.
Thank you. Three questions. Firstly, back in the Q3 roadshow, you talked a lot about the upcoming potential orders with Jynneos . You had, China, you had France. Henrik, you also discussed a bit that, U.S. may order a few more, Jynneos to replenish the stockpile. Can you just provide an update on, that situation? And then a couple of financials. So just help us understand sort of how to bridge the inventory levels in the coming two years, because I understand that at some point, it will reach a steady state, but right now you're building up inventory, then it will go down, but how much? Just to help us on, in, in our model there.
Then lastly, also at the Q3 roadshow, you sounded quite bullish on you being able to potentially hit the rabies milestone sales target that would pay out $25 million to GSK. When I try to reconcile that with sort of your initial guidance for 2023 on travel health, it seems like you are lowballing us a bit. So can you just try to reconcile those two comments three months ago to now? Thank you.
Maybe on the Jynneos orders, JC, do you wanna take those? And then-
Yeah, no, we... it's true, we mentioned these things in Q3, and we still, you know, are working on them. But as you know, it never takes exactly the amount of time that you initially thought. So on China, we've made some progress in consulting the authorities on the registrability of our dossier, et cetera. This is a process that is ongoing, but the situation and the momentum around mpox in China has cooled down a little bit, and they had other priorities that they've been working on. Doesn't mean that we've stopped, we continue, but that sense of urgency is not completely there anymore, but we still work on that possibility. France, I mentioned it, it's an ongoing discussion.
It's also, you know, dealing with governments' sense of urgency and timing is not always the same as what we have in private organizations. So nothing really changed versus what we said, apart maybe from timing.
... Yep. Still on the inventory part, yes, we're adding DKK 1 billion to the inventory this year. That is the last year, as I said, before we can start actually selling our own products. I think what you, you can expect, probably just to give you a little guidance, is stabilization in 25, and then you will start to see the impact of the lower COGS. 30% reduction in COGS. You cannot all translate it all to a 30% reduction in inventory, but maybe 20%. It depends on the portfolio of products in, on inventory. But then you should start to see the inventory level coming down. Everything, of course, subject to the revenue level. The more we sell, the more safety inventory we will need as well. And you had one question more, Jesper?
Yeah, that was just on the milestone with Vaxchora.
Yes. Yeah, good.
Could we work with you being able to meet that milestone to sell or-
Yeah.
-that?
Yeah. Yeah, I think we... It can still happen, but I think we also have to be honest that we are running very, very close, and we only have the products that we have. As we are still, they all sourced from GSK, again, showing how important it is to take control of the manufacturing. So it could happen. When you see our annual report coming out next week with all the details, you'll see we have not included it. We have never included it so far as a liable payment on our balance sheet. But we are running very close, and we will know within a few months whether we hit that or not. If we do, then it's a $25 million payment to GSK.
If we do, we will be happy because it means that we actually are selling more than we had anticipated, which we already are with the level. We are pushing just that line at the moment.
Yeah, just two short follow-ups. So can you talk a bit about the $100 million in VIVOTIF and VAXCHORA? Just sort of how you're getting there to that estimate. Seems like you're always getting into GPOs, et cetera. So just more details on that. And maybe for Paul on sort of the earlier stage R&D, what kind of areas should we be sort of be looking for within infectious diseases? Is it still niche travel? What are you looking for?
Yeah, the potential on VIVOTIF and VAXCHORA and this $100 million that we said, you know, at peak, that will come from growth of the markets. As I said, you know, the cholera market will grow. We see an expansion of the disease, and we see more future demand because more people traveling to these countries with adventurous type of vacation. And we have to, you know, invest ourselves in raising the awareness, raising the awareness in HCP and in travelers so that they really see the importance of being vaccinated.
On VIVOTIF, it's also a combination of awareness, but also, as I said, in the U.S., but also in other markets, you know, one of which is the U.K., for example, where it's a significant business, typhoid, and VIVOTIF is almost nowhere. So with the investment that we're making in the U.K., we believe that we can take a fair share of that of that U.K. business, as we will do, you know, in the U.S., with the ambition to grow our market share as well there, because as I said, you ask anyone if you'd rather get a shot or a or an oral product, and most people would go for the oral. These two vaccines are oral, so we do believe that there is absolutely an opportunity there to grow.
It's U.S., but it's also, you know, U.K. and other markets that we believe, you know, VIVOTIF has not been properly launched, positioned, supported, and there is a fair opportunity to gain there.
Yeah, and on the early research, so clearly, you know, we're focusing on infectious diseases. I think it's fair to say that the indications that we're working on and have been actually for the last year or two would be synergistic to how we're commercially set up today. So that would be travel or niche markets that we're looking at.
Just one for you, Paul. I might have asked this before to you, but, I mean, you talk about being an R&D company, but the way that you presented today, it sounds like it's search and development, not R&D. And you're going to probably push back on me, but if I look at the numbers, $10 million on research, maybe a preclinical asset 18 months from now, is that really, is that real, is that really an R&D sort of model? Or is it, is it fair that you're a search and development model going forward?
I think, yeah. So I think both statements are probably correct. I think where we are R&D-wise is that obviously, you know, we were investing a lot in those three phase III programs. We knew that that was gonna cause a void in the pipeline, but we simply didn't have the opportunity to invest and bring things through. So the areas that we have been investing in R&D, it is probably still 18 months because Russell still needs to manufacture them to. And that's no blame, you know, that he still needs to manufacture them to bring them through. So we are in this lag phase in terms of R&D. Our clear focus in the coming years is really on the commercial execution, because that is gonna drive the profitability that will allow us to invest in R&D.
But as I said in my talk, that mixture of R&D that we're spending between life cycle management and new assets coming through, that will vary from time to time as obviously we bring assets through into the pipeline. But let's be clear-
... you cannot be one of the largest pure-play vaccine companies without a healthy R&D and the ambition to bring products through while you're also looking after your commercial assets. So I think with the stage we're at, clearly commercial execution in the coming years, but we have to bring pipeline assets through in a focused way. Any other? Yep.
Thomas from Danske. Just a few follow-ups. So, JC, you mentioned earlier on, on your expansion of the global, footprint. So I'm just wondering, how should we think about the commercial collaboration with, Valneva? Of course, there's some, collision also with, when you bought the EBS, vaccines. So a bit of update there, please. And then on VEEV, you haven't really mentioned that one, so I'm just wondering if you're still planning for, Phase II start, with, BARDA here in 2024. And then just lastly, follow up on, China, just on, the mpox. So, is this primarily pricing related, or, how should we think about China? Maybe a little bit more color on that.
Do you wanna take the two commercial questions, JC? I think that's it.
No. So, Valneva, you know, we've had a great partnership with them, and we were very pleased that, you know, we could join forces in the different territories that they had and we had, and the different assets. Of course, with the acquisition of the Emergent portfolio and the chikungunya coming up launch, we have discussed with them on how to evolve that partnership, and it will come to an end. And that's why we're ramping up, because UK and Canada territories, for example, were part of the partnership we had with Valneva, and later on also France, Benelux and Austria were also part of that partnership.
So as you see that we are implementing ourselves and expanding our footprint this year and next year, then you can imagine that, you know, by the end of 2026, you know, we will be fully out of that partnership. China. So I think China... So we have a partner there that we working with, and the focus for now is to really understand where the authorities or Chinese authorities stand with regards to mpox. So there is the regulatory approval aspect, but there is also the recommendation aspect by the authorities. So we keep on working on these two fronts. As I said, we didn't get, you know, a clear feedback yet on both these topics.
But we keep focusing on it and working on it through the partner, so it's not so much BN resources that are involved in that task, even if there are some support from Laurence's team on the regulatory front. But I think the driver here will mostly be the evolution of the epidemiology in China. So there are cases, but less lately than in the previous months. And they have other priorities that they've seen a surge in some PCV situation.
And Laurence?
Yes. So we are working on starting the phase II for VEV. We already had interactions with the FDA on the study design and the overall development, and it's fully funded by the Department of Defense, as you know. So we are working diligently on that.
Sorry, Paul, one more. Can't help myself. So, in terms of the freeze-dried Jynneos that's coming into the U.S. market, how much of a game changer is that, number one? And then the reason I'm asking the question is, yeah, I always ask this every year to you. You've got this stockpile of first generation smallpox vaccine that didn't even get used during mpox last year, and the big sort of pot at the end of the rainbow would be the U.S. deciding to, should we say, update that stockpile with potentially Jynneos . Is freeze-dried enough of a game changer, or is there anything that gives you confidence that that scenario is on the table, or is it just wishful thinking?
Yeah. So I mean, yeah, freeze-dried is an interesting one because often when it comes up and you explain that it's gonna have a longer shelf life than the liquid, everyone assumes that that's killing the market. The actual opposite is true. What freeze-dried is doing is giving the opportunity for the U.S. government to stockpile more. Because if you have a limited shelf life, you can never get to the sort of levels that the U.S. government has previously communicated that they want. So freeze-dried is the game changer. It's the door that will open to larger stockpiling, and it's the only thing the U.S. government is interested in. Now, I know we did some recent orders of liquid, but that was during the mpox outbreak.
All future orders, I believe, based on all the discussions that we're having, will be on freeze-dried, and it does open the door. Now, I'm not gonna speculate whether that opens the door to replacing the entire stockpile, but it certainly allows them to get to larger stockpiles than they have previously been able to do.... Any other questions? Okay, then thanks, everyone. Thank you.
Thank you.
I think I have a summary slide, which is always the—it's almost the most tricky one because it's just before lunch, and everyone's sick and tired of hearing us all talk. But I will try and sum up, and this is the slide that you've already seen. And I'm not gonna spend too much about the journey we've come from. I started today talking about that. But quite frankly, there are few companies that I know of that, within three years, have completely transformed the face of a company. We've gone from R&D, break even, loss-making, however you wanna describe it, to a highly profitable business.
You've heard from my colleagues, from JC and Russell, and you've got the details of the financials from Henrik, that really we have an attractive business split between travel health and public preparedness, where we really have a new level. We're a DKK 5 billion revenue company with profit margins, EBITDA margins, at least between 25% and 30%. You've heard the details about our organic growth. Brand performance, that's on the basis of rabies and TBE. We've sold more than anyone else. That's not by mistake; that's by skill and talent and having great products. We're gonna continue. Travel health. Travel is rebounding, so that will allow us to expand. You've heard about we're expanding and intensifying our commercial operations into new areas. We're relaunching the unloved assets we purchased last year to give them a new lease of life.
With chikungunya, I keep saying it, and I know I'll probably get a letter from Valneva, we have the best-in-class chikungunya product, and honestly, with the talent that you've heard from JC and the team that we've built up, that will become the number one brand. There are also short-term opportunities to solidify the profitability, profitability of this company. We have a lot of manufacturing capacity that we can optimize and use better. We can improve processes. Tech, tech transfer alone, you've heard of the profit margins or the gross margins that we can improve. So we've really now created a very attractive commercial business that's highly profitable, generating significant positive cash flows. You've heard that our ambition is to inject that cash back into the business.
Our M&A, which has been so profitable for us in the two transactions we've done, we want to build on that to increase the top line and the profitability. But for the first time in our history, we're actually putting on the table, paying back money to investors, and that just shows you how far we truly have come. I said at the beginning, I was born at Bavarian Nordic, and when I joined, we were 30 people. A little R&D lab in Martinsried, no manufacturing. Today, we're 1,400 people with a global presence and a true commercial entity. That is a journey that I'm glad many of you have been on with us, but the future for Bavarian Nordic looks extremely bright. And I hope today, this little session that we've had, has given you that clarity. But we're gonna break now for lunch, I believe.
Please use the opportunity to approach all of us here that are representing Bavarian Nordic. We're here to answer and interact with all of you, answer any questions that you have. I do hope it's been helpful. I personally think it's been a great session, but thank you for your attendance and, your patience today, and, as I said, I hope you'll be staying for the lunch. So thank you.