Good day and thank you for standing by. Welcome to the Bavarian Nordic Half Year Report Q2 for the six month period ended 30 June 2025 conference call. At this time all participants are in a listen-only mode. After the speakers' presentation there will be a question and answer session. To ask a question during the session you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Rolf Sass Sørensen, Head of Investor Relations. Please go ahead.
Thank you, operator. And welcome everyone to this, our Q2 update from Bavarian Nordic. My name is Rolf Sass Sørensen from Investor Relations, and in today's conference call we have as usual our Dr. Paul Chaplin and our CFO Henrik Juuel that will give the presentation and comments. After that we have the Q&A session, and at the end we will also provide a brief walkthrough of the offer and the process we are looking into.
Before we start the 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 the 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 presentation.
Thanks Rolf, and welcome everyone to Q2 Report for 2025. The focus of today's presentation and talk is really on our first half year result. While Henrik will give an update at the end on the offer process and the process moving forward, as I said, the focus really is on our financial performance. If you turn to Slide 3, we've had a very strong performance in the first six months of this year.
We've seen a 33% improvement in revenues compared to this time last year, resulting in an EBITDA margin of 32%. That's really a result of selling actually 5 million doses of our vaccines across the portfolio. That's 5 million lives that we've saved in the first half of this year through the sale of our vaccines. We see a balanced growth across the portfolio. On travel health, we've seen a 24% improvement compared to last year.
And that's mainly driven by our sales of Rabies and TBE . And I'll come back to that more in the next slide. VIMKUNYA has been approved obviously in the U.S., Europe, and U.K., and we are launching according to plan and currently have launched in the U.S., Germany, and France and are on track to meet the guidance this year for public preparedness. We've already secured DKK 3.1 billion of contracts, and what that means is that represents at least our base business that we've communicated previously is DKK 1.5 or 2 billion. This is exceeding our base business and we're on track to deliver that by year end. Henrik will go into more details later. We are refining our guidance in terms of the revenue spread, but maintaining our EBITDA margin of 26% - 30%.
Also, during the course of this year, we have sold our priority review voucher, resulting in net income of DKK 810 million. When you take that into consideration, that would improve our EBITDA margin by year end to 40%- 42%. A really, really strong six months, balanced growth across the portfolio, and an exceptional performance by the company. Go to the next slide. As I mentioned, travel health has grown by 24% compared to this time last year. As you know, we've seen strong growth in this sector, quarter on quarter.
I want to take a step back and I know I keep reminding everyone, but I do want to take a step back and remind you of the strategy in that five years ago we decided to commercialize the business by acquiring assets, assets that didn't have probably the right focus with the previous ownership due to other priorities. We believe that with a renewed focus from Bavarian Nordic, we would be able to turn these assets around. Here we are again today reporting very strong growth, primarily driven by Rabies and TBE, demonstrating that this strategy that we created five years ago is really coming to life. It's created a platform that will allow us, as it has already, to acquire other assets.
On Rabies, it's a mixture of two different things, either a gain in market share or a growth in the market, depending on the different territories we look at. In the U.S. we've seen a moderate growth in the Rabies market of 5%, but we also saw a 7% improvement in our market share. In Germany, we have a very high market share at 97%, but we actually saw a remarkable growth in the first half of this year of 93%. This growth is due to a number of different things. I'm sure many of you have seen there are a number of cases being reported in the media of deaths of travelers, which has really raised the profile of the need for a Rabies vaccine. In fact, the demand for Rabies is really good and TBE is going from strength to strength.
We have already decided to start increasing the manufacturing output of both those vaccines. This is part of the consolidation plan that we had post tech transfer, but we are accelerating this now due to the high demand that we're seeing for both vaccines. On TBE we have seen a growth in the first half compared to last year. That was primarily due to a strong growth in Q1 which has cooled off a little bit in Q2, presumably due to stocking in Q1, but still a 14% growth overall in the first half of the year. And importantly, we have seen a market share improvement of 2 percentage points to 30%. I should also mention that the tech transfer of TBE from GSK is now complete. It's been completed on time, on budget. We're just awaiting the normal regulatory approvals which we expect to receive by year end.
A real success story in terms of our travel health franchise. If you go to the next slide, what we've added to our travel health portfolio is our vaccine against Chikungunya, VIMKUNYA. As I said, it's approved in the EU, U.S., and the U.K. and we have launched now in addition to the U.S., Germany, and France with additional launches planned for later this year. We have applied for an approval with Health Canada. We've initiated one of the post-marketing commitments that we have to initiate a pediatric study. As I mentioned already, we've sold the priority review voucher. Public recommendations are in place in the U.S., Germany, and the U.K., and that's for travelers going to areas where there is a current outbreak or a high risk of outbreaks in the future. We really believe we're on progress to meet the guidance.
The launch plan is going according to plan. We are seeing some uptake and interest in the vaccine, and we believe Chikungunya will be a key asset to our travel health portfolio in the coming years. If you go to the next slide, this slide almost demonstrates the issue that we have in that it's a very complicated picture of where Chikungunya outbreaks have been seen, whether they're historical outbreaks or current outbreaks.
There are differences between the CDC's recognition of outbreaks and WHO, but the one picture that this says is it's now becoming relatively clear that Chikungunya is misunderstood, is not well understood, and is misdiagnosed and underrepresented. It's probably not by coincidence that since vaccines have become available, the number of cases and outbreaks of Chikungunya are on the increase. If you go to the next slide, that's also true in Europe.
This is a warning, I think, for all health authorities that now in Europe we're seeing locally transmitted, not for the first case, but probably record number of cases of locally transmitted Chikungunya from people, travelers coming back infected, and through mosquitoes infecting others. We're close to 30 clusters or outbreaks and more than 120 cases in France and Italy. As I said, this should be a warning because with global warming, the mosquitoes that can transmit Chikungunya are already in Europe and other parts of the world. They're just waiting for the right conditions for the virus to spread. We're already beginning to see that spread, and global warming is probably only going to increase that threat.
If you go to the next slide on public preparedness, we've seen a strong performance in the first half of the year due to sales to numerous governments, but also the supplemental payments from the U.S. government for the freeze-dried doses that we'd already manufactured and will manufacture moving forward.
As I said, we've already secured DKK 3.1 billion in contracts, and that will mean even if we stay at that level, we will outperform our base business quite significantly. We do still see strong demand for our public preparedness business. We have a number of ongoing studies either in Pediatrics, which we'll be reading out in the coming months, which will allow us hopefully to expand our label to include the entire population. Go to the next slide a little bit on the pipeline.
The first program here on our pipeline slide is what we're calling the MVA-BN cell line. This is based on years of work where we've developed a proprietary cell line that would allow us to change the manufacturing process from eggs to a more robust modern process using cell lines, bioreactors, and standard techniques.
That process has been developed, we have been in dialogue with the regulators, and we'll be initiating very soon a phase II clinical study which will show the comparability from a safety immunogenicity point of view of our MPOX vaccine produced in the cell line to the traditional way of producing it in eggs. This is really going to increase our capacity and flexibility to manufacture in the future. We currently have a process and capabilities with partnerships and our own capabilities to address an MPOX outbreak as we have over the last couple of years.
The cell line will allow us to, and I hope this never happens, but will allow us to address a smallpox outbreak globally. We have other programs I mentioned on Chikungunya. Chikungunya vaccine. We have a number of post market commitments. One we've already initiated with the pediatric study. A second is to demonstrate efficacy. While we're doing all the preparation work, we have to wait for an outbreak in a certain therapy before we perform. We have a number of other programs in early stage for Lyme and Epstein-Barr virus which will be moving into 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, that is slide 10, let's have a quick look at the commercial performance for the first six months of the year. For the first quarter, for the second quarter we delivered 16% growth comprised of 35% growth from our public preparedness business and 5% from our travel health business. If we start with the public preparedness business, that corresponded to DKK 917 million in revenue for the quarter and approximately DKK 1.5 billion and a little more in revenue for the first six months, more or less precisely half of the order book that we have already secured for this year. You can say at the level of the low end of the annual base business that we have communicated to the market within our public preparedness business.
A good year for public preparedness business where we are executing on the order book that we have created so far. If we then look at the travel health business, 5% growth for the quarter is driven to a large extent by our Rabies vaccine, Rabipur and Verorab that continued the very strong growth we have seen in the last quarters. This quarter it was 26% and actually taking us to 37% growth for the first six months. Paul already alluded to some of the key drivers behind this strong growth.
Modest growth in the U.S. market growth, but a 7 percentage point market share increase. If we compare year over year Encepur , our TBE vaccine delivered negative growth of 16% which was to a large extent anticipated after a very strong first quarter where we had indications that there were inventory buildup at wholesaler levels.
If we look at the first six months that is sort of evened out and we are actually delivering a 14% growth from Encepur the first six months compared to last year. Key growth drivers here is really strong market growth in Germany reflecting the endemic expansion. 15% growth. Vivotif I will focus on year to date. DKK 96 million versus DKK 98 million last year. Close to last year's level, but not fully there. We are not too happy with the performance of this product here and we have taken measures to drive stronger performance in the market and actually over the last few months we have achieved to win a couple of percentage point market share.
However, unfortunately in a declining market, the typhoid market in the U.S. has been declining the last few months and as we are approximately a 20% market shareholder, it's not within our reach to drive the market. We are fighting for market share and the measures we have taken so far seem to work. We are definitely hoping to bring this product back to where it should be.
VAXCHORA down compared to last year, where we last year had the opportunity to participate in an outbreak and supply our product there. Not a 100% fair comparison this time. VIMKUNYA $13 million after six months. Paul, talk to where we have launched. U.S., France, Germany, where we have launched recently. We are still in the launch phase, but we are confirming our expectations to the full year of between $50 million and $100 million. We can see that actually the overall awareness in the market of the criticality of Chikungunya viruses is increasing.
We are very confident that we will deliver on our targets and that we will, with VIMKUNYA, have a great opportunity and a good growth driver for the years to come. Other revenue which is driven by the contract work that we do for various governments. I think this time mainly this is the equine encephalitis program sponsored by the U.S. Department of Defense.
That fluctuates a bit between quarters. And this time it ended at $66 million for the first six months. Altogether close to DKK 3 billion in revenue. It's 33% up compared to prior year. Before I turn to the next slide, just a reminder that we are going to phase out the partnership with Valneva where we have a Japanese encephalitis and a cholera vaccine which will come to an end by year-end this year.
Also our agreement with Dynavax on the Hepatitis B vaccine is coming to an end by April next year. All handled in good cooperation with our partners, but just to remind you that these products will leave our portfolio with these deadlines here on the next slide, full P&L where we talk to the revenue. I will start here with the gross margin 55% which is a significant improvement over the 44% or to compare them quarter by quarter, it's 50% last year and that is really due to a continued trend. In the first quarter we saw manufacturing getting into more routine manufacturing, improving both the success rates on the batches produced but also improving the yields. A good quarter, another good quarter from manufacturing point of view. R&D cost very much driven by the committed trials Paul alluded to on Chikungunya.
Also to a little extent our initiatives on Lyme and EBV, but these are still early stage and not that expensive yet. On a six-month basis, we have spent on R&D 465 million, which is approximately corresponding to the 900 million we have indicated for the full year. SG&A cost 250 million, close to that for the second quarter. Our focus here is very much on the launch of VIMKUNYA or Chikungunya vaccine.
And if you look at the first six months, we have spent nearly 500 million, so it's up approximately 50 million compared to the same period last year. That number is going to be higher for the second half year as we are ramping up the spend behind the launch of VIMKUNYA in the U.S. We are still awaiting the publication of the MMR ACIP recommendation but gearing up the investments behind the launch.
We are going to launch in more countries in the second half of the year, which will require investments as well. If we look further down the P&L, the quarter delivered an EBITDA margin of 33% and for the first six months 32%. Strong EBITDA margin again driven by a good manufacturing period but also explained to some extent by back-end loaded sales and marketing costs that we will see in the second half of the year. Strong financial performance for the quarter and for the first six months. Let's turn to the next slide here where we look at the cash flow and the balance sheet for the period.
What we saw in the first half here was positive cash flow from operating activities, obviously driven by positive net profit to some extent offset by negative development in working capital as we have seen so far this year, an increase in inventory which we expect to be reduced in the second half of the year. Cash flow from investment activities mainly driven by the milestone payments we have recognized to both E mergent $50 million. These have been paid as well, but also the recognition of the final milestones to GSK of EUR 100 million. The milestones to GSK, they have been recognized as achieved, but they have not been paid out yet and will be so in Q3 for €30 million of the EUR 100 million, and the remaining part, the EUR 70 million, will be paid in the beginning of 2026.
If we look at the balance sheet, I will only highlight our cash position there, so close to DKK 1.7 billion, what we hold in cash and cash equivalents. As I said, we still owe EUR 100 million to GSK. We also have the net proceeds from the sale of the priority review voucher of DKK 810 million, which has already arrived at our bank account here in July. Continued very solid financial position as well. Next slide, our outlook for 2025.
Based on the strong continued performance from the travel health business and more visibility on public preparedness business, we have decided to refine our guidance and basically narrow the revenue interval that we guide. Previous guidance sets revenue between DKK 5.7 billion and DKK 6.7 billion. We are now refining that to between DKK 6 billion and DKK 6.6 billion, increasing the lower end but also narrowing the window.
The EBITDA margin excluding the voucher remains unchanged. It will be between 26% and 30% for the full year. When we include the proceeds from the voucher, DKK 810 million, this EBITDA margin will change from 40% - 42%. And on below on the slide here, you can see how the guidance on revenue stacks up between the different business areas here. travel health, we are increasing our expectations from DKK 2.5 billion - DKK 2.75 billion, basically driven by the strong performance by both our Rabies, but also our TBE vaccine.
Public preparedness, given the higher degree of visibility we now have, we are narrowing the window to between DKK 3.1 billion and DKK 3.7 billion. Remember here that the low end of this guidance has already been secured by contracts. A refinement of our guidance within the already existing one.
Final slide from my side. As Paul mentioned in the beginning of the meeting, the focus of this call here is really on our results and our progress year to date in the business. Of course, we can't have this call without just mentioning and giving you an update on the takeover offer. I'll just spend two minutes only on this. I assume you're all aware of the content of the offer. The consortium, consisting of EQT and Nordic Capital, will make an all-cash offer on Bavarian Nordic of DKK 233 per share. This is coming out of a very intense process involving negotiations and due diligence, etc., and ended up being a recommended offer. What can we expect now in the next following weeks?
Here we are anticipating that the consortium next week, when the four weeks review by the Danish Financial Supervisory Board is over, will announce a comprehensive offer document laying out the detail of the offer, and with that our board will have an obligation to announce a board statement, a comprehensive board statement basically reflecting on the offer and the process behind it. A lot of the questions that we are being faced with at the moment I think will be answered by these documents that we are expecting to be announced at the latest Tuesday next week. I think that is what we were planning to say about the offer today. I will give the word back to the operator and ask for Q&As.
Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now take the first question from the line of Thomas Bowers from SEB. Please go ahead.
Yes, Craig, thank you very much. A couple of questions here from my side. First of all, what's the reason why you've not communicated any payouts, dividend payouts, share buyback with excess capital you now have following the PRV sale? I don't think it's fully in line with previous communication. I understand the current M&A process, but is there another underlying reason for this?
Just on the margin guidance for the year, you stick to 26-30% adjusted EBITDA, you are now at 32% for H1, which sort of implies an EBITDA for the second half below 25% just to get to the sort of midpoint level here immediately. I think the product mix looks great, very balanced between travel and engineers. For H1 and H2, you lift the low end by some $300 million on revenue, and also R&D seems quite nicely split between the two halves.
Any color here to make me understand why you're still at 26% as the low end would be appreciated. My last question, just on the R&D cost outlook, can you maybe just try to break down the approximate cost related to this ending Chikungunya outbreak study for me, just to get a better understanding on the potential impact to the cost guidance of $900 million for the year, which could be phased into 2026, depending on whether you were able to start that study in H2. Thank you.
Okay, thank you, Thomas. Let me try to answer these questions. First of all, I think what we have communicated previously with regards to potential payout is that first of all we need to pay back to GSK and Emergent BioSolutions and then we would in the autumn come back to the market and on the back of these payments consider potential share buybacks. That is in principle still the case. Of course, right now we have a process ongoing which means that we cannot go out and do share buybacks until that has been resolved. Next question, the margin guidance. You're absolutely right.
I think what explains how we can go from 32% year to date to 26% - 30% by year end, the main explanations for that, as I tried to explain when I showed the P&L, is that we have had the first six months with very good success in manufacturing. Second quarter 55% gross margin. Can we continue that? I think then that is an upside to our EBITDA margin.
There's no guarantee. We are working with biological manufacturing. As I also explained, our sales and marketing costs are very back end loaded, both in the U.S. where we have already launched, but also in the other markets where we are about to launch. Therefore, we are still sticking to our margin expectations of 26% - 30% for the full year. On R&D, we do not normally comment on cost of specific starters. We haven't done that in the past for Chikungunya here. I can't really say that. It's still our expectation that our full year R&D spend will be around DKK 900 million.
Okay, great. Thank you very much.
Thank you. As a reminder to ask a question, please press *1 and 1 on your telephone. The next question comes in the line of Romy O'Connor from Van Lanschot Kempen. Please go ahead.
Hi. Thank you for the presentation. Two questions, please. The first on your public preparedness business. I see that the big part of the revenue guide for 2025 is based on contributions from here. I would like to ask if you see any risk for further reduction of contracts given that we see revenue decrease in this half the year, and what risks you see here. I also want to discuss maybe your thoughts on the recent outbreak and whether you can comment on revenue splits that we see in the relevant geographies given that the launch now is in Germany and France. Thank you.
I'm not sure we got the first question. That was regarding public preparedness business where you talked about a decline and loss of contracts, or could you please.
Yes, I was wondering if you see any risk for further reduction of public preparedness contracts in the next half of the year.
Yeah, could you elaborate on further please?
Maybe loss of contracts, U.S., things like this. J ust any color. Also on the narrowing of the guidance perhaps?
Yeah. Okay. First of all, we haven't lost any contracts. When we guided in the beginning of the year, we guided 3- 4 billion in a situation where we have an outbreak in Africa. I think we were anticipating probably more orders for Africa, to be honest. We have got a 1 million dose order to Africa that we are executing upon, but we haven't since then received any more orders.
Fortunately, we have a good mix of different customers. We already have an order book of 3.1. We are into that interval between 3 - 4. There are still dialogues and further upsides. We also have to realize that we are eight months into the year. Therefore, I think we believe it's prudent to say that we have an interval now of DKK 3.1 - 3.7 billion.
And then your second question was regarding the country split between Chikungunya . I think that is really too early to say. We are just at the beginning of the launch in these countries and the revenue that we see is mainly supplying into the whole supply chain to start with. It's very early days. I think we can add to that. We are actually seeing an increasing awareness probably beyond what we could have dreamt of when we developed this product here. No one knew about Chikungunya. Now we see outbreaks in a number of countries. We see the media picking up these stories. There is an increased awareness which we believe will translate into more business opportunities in all these markets.
Thank you. Thank you. There are no more questions on the phone. I would like now to turn the conference back to Paul Chaplin for closing remarks. My apologies. There is another question. Should we take it?
Yes, let's take the next question.
Thank you. The next question comes from the line of Thomas Bowers from SEB. Please go ahead.
Thank you very much. Just a quick follow up here. When we look at Rabies vaccine right now, it of course seems like going somewhat more or better than previously expected growth rate. Can you maybe just update us when, when should we sort of expect you to have used the GSK produced inventory? Are we still going to be sort of like see a gradual 15-20 basis points improvement to the gross margins over a one to two year time frame, or is this maybe going to speed up a bit?
That's a good point, Thomas. I think the situation right now is that we are manufacturing a Rabies product end to end at Bavarian Nordic, and that has all been approved by the regulators. We are still sort of flushing the GSK products out of the system, actually starting to ship our own manufacturing products. We should be selling our own products towards the end of this year or into next year, so that as we have guided the market previously, full year impact from January 1, 2026 at least, where we will see the improved margins from the Rabies business.
Okay, got it. Maybe another follow-up just on Encepur . Of course, not overly surprising maybe that you see a decline here in Q2 compared to the very strong Q1. Is there anything, I know that's a lot of noise with inventory stocking. Are we, sort of going forward, should we expect Q1 to be the stronger quarter going forward, or was there something, sort of special item-like style here in the first half that made that Q1 so strong?
Maybe I can take that one. Hi Thomas. I guess the short answer is we don't know. Typically, as you just indicated, Q2 is the strongest because that's the peak of the season for the vaccination. Sometimes the season can start earlier, which is why you see these fluctuations moving. I think what we believe happened in Q1 this year is that there was some stocking by the wholesalers because there was a price improvement, price increase that we put in place. Most likely we will return to what we're typically seeing, which is a ramp up in Q1 and Q2 being the peak.
Okay, got it.
Thank you very much.
Thank you. There are no further questions. I would like to hand back over to Paul Chaplin for closing remarks.
Thank you. Thanks everyone for joining the call and for the questions. Have a great weekend. Thank you. Bye.
This concludes today's conference call. Thank you for participating. You may now disconnect.