Good day, and thank you for standing by. Welcome to the Bavarian Nordic Q1 2025 results conference call and webcast. At this time, all participants will be in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, please press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please note that today's conference is being recorded. I will now liken the conference over to your speaker, Rolf Sørensen, Vice President, Investor Relations. Please go ahead.
Yeah. Thank you, Operator. And welcome, everyone, to this Q1 update from Bavarian Nordic on a lovely green day. My name is Rolf Sørensen from Investor Relations. Today, in this conference call, we also have Paul Chaplin, our CEO, and Henrik Juuel, CFO, to give the presentation and comments to all the questions you may have to the session we have, as usual, afterwards. As you may recall, last time, we had some issues for some analysts and investors having difficulties getting through with questions. If you realize difficulties getting through, please give me a call or send me a text so I can manage to get your questions to management if it's not possible to get through.
Before we start this presentation, please note that this announcement includes forward-looking statements that involve risks, uncertainties, and other factors, many of which are outside our control but could cause actual results to differ materially from results discussed. Forward-looking statements include statements concerning our plans, objectives, goals, future events, performance, and other information that is not historical information. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law. With this, I will hand it over to you, Paul, to start the Q1 presentation.
Thanks, Rolf. Welcome, everyone, to our Q1 earnings. If you turn to slide three, we have obviously had a tremendously strong start to the year. I will let Henrik talk about the numbers in a few slides' time. Basically, we recorded almost DKK 1.4 billion in revenue, representing a 62% growth compared to this time last year. We have established an EBITDA margin of 31%. Extremely strong start to the year. That is due to all parts of the business. On travel health, we saw a strong start, which I will go into more detail. On public preparedness, we had originally said it would be a light quarter for our public preparedness due to the back-end loaded nature of the existing orders. We were, however, able, due to a strong manufacturing performance, to bring some orders forward, allowing us to record these strong numbers.
Importantly, we've already announced a new order from the U.S. government, which, while helps the revenues this year, is really securing good, solid revenues for 2026. In addition to the strong financial performance, we've also launched our chikungunya vaccine, Vimkunya, where it's been approved in the U.S., Europe, and also in the U.K. You turn to the next slide. As I said, the performance of the public preparedness was due to existing orders that we already had in the books. We were able, as I said, due to the excellent manufacturing performance, to bring forward certain deliveries. We have, as I said, secured this order from BARDA for $144 million. That does allow us to secure or increase the existing contracts from DKK 2.5 billion to DKK 2.65 billion.
A little bit short of the bottom end of the guidance for the public preparedness this year. We are still incredibly confident that we will be able to secure new contracts. We are currently negotiating a new framework agreement with HERA. We are also in negotiations with a number of different governments around the world. We are continuing to manufacture at full scale, meaning that the timing of new orders will be fine in that we have inventory and stock on hand. In addition to the strong performance, we have also had the approval for our freeze-dried version of Jynneos. That is going to be incredibly important moving forward, as the U.S. government is only going to be stockpiling freeze-dried. That has helped secure the recent order we just announced. Obviously, we will, in the coming months, start negotiating for a new contract that will replace the existing contract.
If we turn to the next slide, on travel health, we've really seen a strong performance. I will leave it to Henrik to talk really about the various different numbers. We've seen strong performance for rabies, TBE, and our other vaccines such as typhoid. Even with Vimkunya, we've recorded our first sales rapidly after the approval from the FDA and actually even before the recommendation from ACIP. What we're seeing in terms of travel health is the market has grown. We've seen strong brand performance in the various different areas where we've seen market share gains. This, together with some stocking from wholesalers, really tells the picture of a very strong performance in Q1. If we go to the next slide, this is some data from some external data, which is predicting that vaccine sales will grow 6% year on year between now and 2030.
The interesting thing is, when you start looking at the different vaccine sales sectors, it's the travel health that really shows the strongest growth of 20% KGA over the coming years. I'll get into some of the reasons for that growth. Basically, in travel health, it's more resistant to some of the vaccine skepticism that we see is on the rise. Mainly, this is because people who are seeking vaccination for travel are already convinced about the need for vaccination. It's also due to a number of new vaccines that are thought or believed that will be introduced in the coming years, including chikungunya. It's an extremely exciting sector to be in and one that we actually identified way back in 2020 when we bought the original first couple of assets from GSK.
If you go to the next slide, slide seven, one of the areas that explain this growth in travel health is that for certain vaccines, such as the tick-borne encephalitis vaccine, Encepur, we're seeing an expansion of the endemic regions. What you're seeing here is a graph of Germany. The red area are areas which are at high risk of the infected ticks. The orange areas are areas where infected ticks are being found and are expected to become red or endemic in the years to come. This is a picture that we also see in Sweden and in other areas of the Nordics and Baltics, that the endemic region is expanding. Therefore, the growth that we're seeing in TBE is expected to continue as the endemic regions continue to expand.
If we go to the next slide, another reason for strong growth in travel health will be the emergence of new vaccines addressing unmet medical needs. One of these areas is chikungunya. Obviously, Vimkunya, our chikungunya vaccine, has now been approved by the FDA, but it's also approved in Europe and by the U.K. We've made a filing application to Health Canada. We expect the approval next year. I already said it in the beginning, we've seen some initial sales as we launched in the U.S. very rapidly post the approval, almost a record for the industry, I would say. We are gearing up for the launch in Europe in the coming weeks. With the approval comes some commitments to the regulators. We will be initiating studies in children and also an efficacy study or a planned efficacy study later this year.
As I said, we are gearing up for launch very, very soon. If you go to the next slide, we really feel that Vimkunya is well positioned to become the preferred choice for travelers who are potentially at risk of getting chikungunya. The reason for this is Vimkunya is based on a virus-like particle technology, which means that it cannot cause an infection. It is designed specifically to be safe, particularly for populations who may have a weakened immune system or the elderly. The data that has been generated for the approval shows a very rapid onset of protection within one week. These are very, very important in terms of the favorable safety profile, the rapid onset of protection, and the fact that it is in a prefilled syringe makes it the preferred administration for healthcare professionals.
As we launch and are launching the product, our focus is to ensure that we get solid recommendations from the authorities, drive awareness of the dangers of chikungunya, and also to try and promote the benefits of Vimkunya. If you go to the next slide, talk a little bit about the pipeline. We have a number of programs in our pipeline. One is for converting our manufacturing for our Mpox, Mpox vaccine away from eggs into a proprietary cell line. This is something that is really innovative. It is going to improve yields, improve our capacity, ensuring that not only can we deal with future Mpox outbreaks, but God forbid that if smallpox was ever re-emerged, we would be able, with partners, to deal with a global pandemic. We have agreed with the FDA a regulatory path.
Part of this includes performing a clinical study to show that the product produced in the cell line is the same as the product produced in eggs. This study will start later this year. On chikungunya, we do have some commitments, as I mentioned. We'll be initiating a pediatric and efficacy study later this year. We have a fully funded program from the U.S. Department of Defense for equine encephalitis. Our two new targets, Lyme and Epstein-Barr virus, are, as planned, gearing up to enter the clinic next year. With that, I will hand over the presentation to Henrik Juuel.
Yeah. Thank you very much, Paul. On the next slide, we will start with a breakdown of the commercial performance for the first quarter. As already said, fantastic quarter with strong growth of 62% in total revenue versus prior year, and basically driven by strong performance in both our business segments, public preparedness and our travel health business. Public preparedness, 83% up compared to prior year, driven by executing orders that we secured already last year. As Paul also said, we had expected on public preparedness a somewhat more light quarter. With a lot of efforts from our organization, we managed to pull some of these forward to secure earlier revenue. Very good performance there. Travel health delivered 52% growth over prior year, and mainly driven by our rabies and our TBE businesses that showed extremely strong growth of 53% and 62%, respectively.
The rabies business was grown. Basically, again, the market continues to grow. We have gained market shares in key markets, both in the U.S., where we have gained five percentage points back to 77% of the market. In Germany, we have seen significant growth when comparing to Q1 of 2024, where there were some supply constraints in some of the European markets. On top of that significant market growth, we have also regained market share in the German market, so that we today have 97% of that market. Very strong growth from the rabies business. On TBE, Paul already alluded to the endemic expansion. We have really seen the impact of that with a market growth of 17%, pure market growth, and the comparison of apple to apple, really, because we had no supply constraints within this part of the business last year.
Very nice market growth. On top of that, we could add a 2 percentage point market share gain in our largest market, Germany. Very strong growth there. In Germany, I have to say, both our rabies and TBE business was slightly impacted by some wholesalers stocking up. Whether that is something that will have a negative impact going forward or not is still to be seen. Typically, wholesalers can also stock up on a more permanent level when they see there is an uptick in demand in the market. Very, very strong indications, very strong performance from these two products here. Vivotif remains to be in the relaunch phase.
We're very pleased that we saw the first Vimkunya revenue on the list here in the first quarter in record time after we got the approval in the U.S. and even ahead of the ACIP recommendation. We managed to supply into the market and record revenue of DKK 5 million here. Altogether, DKK 1.3 billion and DKK 47 million in revenue for the first quarter, up 62% compared to prior year. On the next slide, you will see a full profit and loss. There I would start mentioning, first of all, our gross margin. We talked about the revenue already. Gross margin of 51%. That is 2 percentage points better than our full-year performance last year. Basically, it reflects a more smooth period within manufacturing, where we have seen better yields. We have seen higher success rates, etc., which is obviously very good for the margins.
R&D costs slightly lower than last year and back-end loaded this year. As you will recall, we have guided to spend approximately DKK 900 million this year. A relatively low first quarter. It's back-end loaded. Most of the project R&D costs will be spent on post-licensure committed trials on chikungunya. SG&A costs went up from DKK 209 million to DKK 250 million and is really driven by the launch of chikungunya, but also Bavarian Nordic expanding into new markets like the U.K., Canada, France. These markets really to support the launch of chikungunya, but also to support taking back products from our partnership with Valneva. Adding all of this together gives an EBITDA of DKK 420 million or a margin of 31%. Very strong level of profitability in the quarter. Next slide.
Just want to use this slide to remind you about what we promised you at the capital markets day last year with regards to the gross margin improvements. As you know, we are transferring our two products, the rabies and TBE vaccines, from GSK to Bavarian Nordic. In that process, we are expecting to improve the gross margins as we take full control, and we will no longer be paying a premium to GSK. We can harvest some of the process benefits as well. We are planning a 30% reduction in cost of goods sold on these two vaccines, which eventually will translate into a 15%-20% improvement in gross margin. It will come stepwise. We have completed the tech transfer of the rabies vaccine already, but we need to flush out the GSK-based inventories before we start seeing a real impact from that.
The TBE tech transfer is coming right behind, and we are planning to finalize that over the next few months here. The same goes for the TBE vaccine. We need to floss out GSK inventory. We will start to see some impact late this year from rabies, full impact rabies next year. We will start to see impact from TBE. From 2027, we should see a full-year impact of this 15%-20% improvement in gross margin. Remember, these two products last year together, we had a revenue of DKK 1,850,000,000 approximately. You can do your math and see what does 15%-20% mean in terms of overall EBITDA levels. It is a significant contribution to our future profitability as a company. Next slide. Few words on our cash flow and balance sheet for the period.
We saw negative cash flow from operating activities. We had a positive net profit, but that was more than offset by an increase in net working capital. Net working capital primarily driven by a reduction in current liabilities as we paid a milestone to GSK that was recorded the previous quarter, but not paid. It ended up being a current liability. Cash flow from investment activities, that is mainly consisting of a milestone payment to Emergent BioSolutions, or actually two, of a total of $50 million related to the approvals in EMA and by FDA of our Vimkunya vaccine. You will see all of these milestone payments are going through the system as we speak right now. To the right, securities, cash, and cash equivalent, you will see we have right now approximately DKK 1.2 billion.
We still owe GSK the last milestones related to the finalization of the tech transfer of the TBE vaccine. In total, we owe them DKK 739 million. We also have an amount still not paid included in current liabilities of $20 million to Emergent BioSolutions. As you will see on this page here, we have sufficient cash to honor those commitments that will take place over the next few months as we finalize the tech transfer. On the next slide, just want to remind you on that one that we are reiterating or confirming our full-year guidance for the year. We are still expecting revenue between DKK 5.7 billion-6.7 billion and expect to end the year with an EBITDA margin between 26%-30%.
I will, on this slide here, just highlight, and you can see here that now the level of secured orders in our public preparedness business now stands at DKK 2.65 billion, as there was a DKK 150 million impact from the recently announced option that was exercised by BARDA. So a contribution to 2025, but primarily securing the business for 2026 from that order. I would also like to highlight on this slide here as well, as you will have seen, the U.S. dollar has depreciated in value against euro and Danish kroner over the last period here. When we did the guidance, we assumed a level of DKK 7 per $1. Right now, it's around DKK 6.6. It has declined. We have hedged all known exposure in U.S. dollars. Therefore, it should have no material impact on our guidance for this year.
With that, I'll just end up saying great start of the year. We can confirm the guidance. I think we have made some very important company announcements recently, particularly on our chikungunya regulatory process, but also securing business with the U.S. government, some for this year, but also for next year. With that, I will open up for Q&A. Operator, please open for Q&As.
Thank you. As a reminder to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Once again, please press star one and one and wait for your name to be announced. We are now going to proceed with our first question. The questions come from the line of Thomas Bowers from SEB. Please ask your question.
Yes. Thank you very much. A couple of questions from my side here. First of all, on EBITDA, you deliver 31% for the quarter. You have some R&D costs, tailwinds, of course. When adjusting for that, maybe 27%-28%, as far as I can calculate. You also have negative product mix impact, of course, travel being impacted by the tech transfer. What am I missing here in order to stay within your current 26%-30% guidance range? Second question, can you maybe just add a bit of color on travel health growth outlook for the year? You keep the DKK 2.5 billion target or some 10% year-over-year growth. You are sort of implying a negative quarter-over-quarter growth going forward. Is there any constraints, supply constraints, anything we should be aware of? Any changes to seasonality?
Maybe we also saw that last year with a very strong Q1 for TBE, but now even stronger, of course. Is there anything also saying that we should be maybe a little more cautious about Q2 or maybe even potentially also for the fourth quarter in terms of seasonality? Lastly, squeezing in just a question on Vimkunya. Any comments on initial feedback and also primarily thinking on your competitor with the safety concerns out there? We know that they had a quite large order to the French authority. Is there anything here that potentially could lead you to take over that order maybe or anything maybe upside to your 50-100 million target for this year? Thank you.
Yeah. Thank you, Thomas, for the questions. I think, first of all, on EBITDA, we delivered 31%. We have guided 26-30%. You can see the upper end of what we have guided is not far from what we are showing this quarter, actually. It has been a very good quarter for us in several aspects. I already talked about the gross margin. We saw a smooth quarter. We are manufacturing biologics, remember. There can be variations between quarters on actually what gross margin you can deliver and how successful you are in your manufacturing. We do believe we are entering a period with more routine manufacturing after a very hectic 2024 with two tech transfers and ramp-up within manufacturing. Hopefully, we can maintain that good trend. That will definitely help. You mentioned it also, the R&D is back-end loaded.
I don't think you're missing anything really in your calculations. As you know, we have guided 26%-30%. What we deliver in the first quarter is close to the upper end of that. Maybe I can continue on travel health, the next question. I think you're alluding a little to we had a fantastic first quarter, and we're still sticking to DKK 2.5 billion for the full year. I think our take on that one is these vaccines are pretty seasonal. The seasons are not exactly the same every year. We saw that last year with a very strong TBE Q1 performance. I think we are just taking a somewhat cautious approach this time. We want to see the next couple of months. Hopefully, they continue along the same trends.
To your questions, we do not see any supply constraints at the moment. We have no concerns. It is simply just a cautious approach that we're taking. We want to see a couple of months more before we revisit our expectations for the full year. You had a question on Vimkunya. Maybe that's one for you, Paul.
Yeah. Yeah. So you're right. There's been, unfortunately, some safety issues with the competitor product, and that's led to EMA suspending the use of that product in people 65 years and older. We have not currently launched Vimkunya in Europe. So unfortunately, we were not in a position where we could supply product to the French authorities. We are, of course, in dialogue with the French authorities. As I said in the presentation, we'll be launching in the coming weeks in Europe. We're certainly not thinking of changing the guidance that we have for this year. Of course, outbreaks of chikungunya will only help in the sales. The other thing I would say of interest is that since there have been now two chikungunya vaccines available, the cases of chikungunya globally are increasing, and more sporadic outbreaks have been reported.
I think that only just goes to show that the cases of chikungunya have been underrepresented historically, and there's a lot more disease that people are now picking up. I think it bodes extremely well for the launch of Vimkunya. For now, we'll keep the guidance as it is, and we'll see how that launch goes in the coming weeks.
Sounds great. Thank you very much.
Thank you. As a reminder to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Thank you. We are now going to proceed with our next question. The questions come from the line of Benjamin Jackson from Jefferies. Please ask your question.
Hi, team. Thank you for this. It's Ben Jackson at Jefferies. Just two quick questions, slightly higher level than those latter three. I'm thinking more to, firstly, on obviously potential exposures to tariffs as you're thinking around this change with regards to the last time we spoke and caught up on that. Is there any potential strategies you're having to think about there to hedge that exposure? Secondly, interesting to know if you have noticed any kind of change in dialogue or commentary with the discussions you're having with regards to U.S. organizations. Obviously, there have been a couple of changes in the FDA, specifically focused around here on vaccines and also commentary about how vaccine trials may change.
Specifically, I am looking and thinking, have you had to change your strategy or thinking about, one, the early-stage R&D that you're conducting and how you're planning to conduct it? Two, are there any changes in thinking about how you're having to approach the post-approval process in the R&D sense? Any ideas around that would be great. Thank you.
Yeah. I'll answer it backwards. I'll take the first one. In terms of our interactions with the U.S. government, if I just take BARDA first, really, we've seen no impact of anything. It is business as usual. You saw that we've obviously secured the latest option or order for the freeze-dried that actually occurred a little earlier than we had originally planned and was flawless, to be quite frank, in terms of the execution. In terms of the public preparedness business, it seems to be business as usual from our side, currently at least. In terms of FDA, I think it's important to note that nothing has really changed. I mean, obviously, the head of SEB has just been appointed, but in terms of policies and regulations, they haven't changed.
There is a lot of speculation and a lot of rumors that things may change, but nothing has currently changed. The thing, if you look at our pipeline, we're still at the very early stage going into phase I. I don't think any, even if any changes occur in terms of the SEB efficacy trials being required, that's typically the standard anyway. I don't think anything has really impacted to make us change in terms of the developments or anything like that. As I said, we have to wait and see how things develop. That actually is also the answer to the tariff question because how do you prepare for something that hasn't occurred? We don't know whether it will occur or at what level it will occur.
I think if you look at our manufacturing setup, some of our manufacturing is already in the U.S. I think the impact of tariffs in the U.S. may not be as big an impact for BN as a lot of people are speculating. I think at the end of the day, we have to wait and see what happens. We will obviously be able to deal with the situation. I don't know, Henrik, if you've got anything more on tariffs.
No, you're absolutely right. I think we are sort of suspending the waiting time, if you can call it that, preparing ourselves, analyzing scenarios, and have reached the conclusion that we do not expect this to be dramatic in any way for Bavarian Nordic. We have a list of potential mitigating actions and strategies we can take to mitigate a potential situation.
Very clear. Thank you very much.
Thank you. We are now going to proceed with our next question. The next questions come from the line of Jesper Ilsoe from Carnegie. Please ask your question.
Thank you so much. I have three. First off, continuing on the topic of travel health sales, very strong underlying momentum. Of course, there have also been some easy comparisons, some wholesale stocking you pointed out, and I also understand some price increases. My question is basically just perhaps you can split the very strong growth this quarter into the different components just to help us understand how we should extrapolate it and sort of if this is a new higher base or basically a new growth rate. That is the first question. Second question, you still have this Priority Review Voucher. Just wanted to understand the process from here and update. Have you started a process reaching out to companies to sell it? If not, what is basically holding you back?
Can you just also address whether you intend to send that cash from the TRV back to shareholders? The last one is basically more a household question on the topic of tax, which may be a boring topic, but you still have this non-recognized tax asset. Can you just remind us about the size of this tax asset and how you intend to use it because you still do not pay that high tax rates? Thanks so much.
Can I just tackle the first and the last one? The tax, I definitely think is you.
I thought that was one for you, Paul.
Okay. Thanks, Jesper. First of all, on travel health, you said it was an easy comparison. I do not think we see it as an easy comparison. Yes, there have been a few price adjustments, but they are not easy. I think you implement them when you can and when competition allows it in the markets. There has been a little, I would say, wholesaler stocking. The thing with wholesaler stocking, there is not sort of a report you can pull out and say, "Wholesaler stocking was at this level, X million Euros." You can do some analysis that is not perfect. You can look at what you are selling into the market, what the market is pulling out of the pharmacies and other channels, and see, is there a mismatch between these, which can indicate some wholesaler stocking?
What does wholesaler stocking then mean? I think if it's a temporary phenomenon, it will hit you again in the coming months as they will not replenish the inventory. If it's really driven by an underlying strong demand, I think it is just the wholesalers reacting to that situation. They typically want to have X number of days of the projected demand on stock. I think it's also too early to say whether this stocking is temporary or permanent, new level. I think what is important to see, I think that is the underlying growth that we see. Take TBE, Germany, 17% growth driven by the endemic expansion. As Paul alluded to previously also, we do see the whole travel health segment outperforming the general vaccine space and with some analysis suggesting even up to 20% growth over the next five years.
I think key messages on travel health for this quarter is continued growth on the rabies business, no supply constraints. That's what you see the impact in this quarter here again. Market share gains, both in Germany and the U.S., on the rabies business. On TBE, strong underlying demand growth. Again, also a market share gain of up to nearly two percentage points. Very strong growth. On the tax, it is correct that we have non-recognized assets created as accumulated losses over time. The number is quoted in our annual report. I don't want to give you an approximate number, but you can find it in the annual report how much it is, which we can use going forward. There's no expiry date on this, so it will help us. You cannot use it at 100% every year.
I believe you can use it up to 60% in a year to offset against your income. The specific number, rather than giving you some approximate number, I would suggest you look it up in the annual report, or I can send it to you afterwards, Jesper. The final thing on the PRV, yes, correct. We have not sold it yet. We are not in a rush to sell it. I have shown you the cash flow. We do not need it, so we want to make sure it is sold at the right price. There is interest out there. We have had some inbound calls, but we have not sold it yet, and we will sell it at the right time when we find a buyer who is willing to pay the right price.
Okay. Thank you so much. Very clear. Thank you.
Thank you. We have no further questions at this time. I will now hand back to you for closing remarks.
Thank you. Thank you, everyone, for attending and for the questions, and have a great day. Goodbye.
This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you and have a good day.