Ladies and gentlemen, thank you for standing by, and welcome to half year report Q2 for the six-month period ended 30 June 2020 conference call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask questions during the session, you need to press star one on your telephone. I must advise you that this conference is being recorded today, Wednesday, 26th of August, 2020. I would like to hand the conference over to speaker today, Rolf Sass. Please go ahead, sir.
Yeah, thank you, speaker, and welcome to this first half announcement call, the Bavarian Nordic's first half. With me today, I have our Executive Vice President, Henrik Juuel, CFO, and my name is Rolf Sass, VP, Investor Relations. Before we start our presentation, I will read the following disclaimer. This presentation includes forward-looking statements that involve risks, uncertainties, and other factors, many of which are outside our control, that could cause actual results to differ materially from the results discussed. Forward-looking statements include statements regarding our short-term objectives and opportunities, financial expectations for the full year, and financial preparedness as of year-end, as well as statements concerning our plans, objectives, goals, future events, performance, and all information that is not historical information. All such forward-looking statements are expressly qualified by these cautionary statements.
We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law. With this, I will hand the presentation over to Henrik Juuel.
Thank you very much, Rolf. A warm welcome to all of you. Good morning and good afternoon. Welcome again to this Bavarian Nordic half year 2020 earnings call. As you will have noticed, unfortunately, Paul couldn't be with us today. He is home sick, and we are expecting him back in the office very soon. I promised him to send his regards, but that's unfortunately the situation, and today you will have to do with Rolf and myself. To start, I think first half of 2020 has been a very, very busy period for Bavarian Nordic. However, also a very, very successful period for the company. We have made significant progress, basically on all our strategic initiatives, and that is despite the COVID-19 situation. I think on this next slide, number...
Slide number three in the deck, I will just list to you some of the most important events and achievements. First of all, I think the whole commercial transition is moving extremely fast. It's on track. We have put the organization in place. We are taking over key markets, et cetera, and we signed the agreement in June with Valneva. I will come back in more details on what's happening on this commercial track. We also, in July, we finally got the Ebola vaccine approved in the EU, in our cooperation with Janssen, and just prior to that, we even got an order for new bulk of the Ebola vaccine, valued to the tune of approximately $14 million.
We also got a new contract in April, in our smallpox business, with $202 million over a two year period, with $106 million as the first option, and the majority of that actually having an impact already this year. We also got the announcement out this week that we had positive top-line data on our phase III results for the freeze-dried version, and I will come back to what that really means to us on one of the later slides. Within the manufacturing, I think we have spent a lot of resources really protecting our manufacturing site to make sure that we can continue uninterrupted, and that has been quite successful.
We have seen no delays in manufacturing, nor in the projects that we are running to support the transition of the acquired products and the expansion of the facilities. The last bullet says that we also recently finally signed the agreement with AdaptVac on the COVID-19 vaccine, which we are very pleased with. I will come back and talk a bit more about that project also on one of the subsequent slides. Finally, despite we are impacted on our travel vaccines business, we are in a position where we can maintain the guidance for the full year and even raise it for our cash position expected by the end of the year. Let's turn to the next slide. I think this next slide basically groups all the achievements that we have seen by our strategic pillars.
I will not repeat all of the details, but just highlight that, for instance, within the commercial, I think this is all about establishing a real full-scale commercial operation, enabling us to expand the business and drive future profitable growth. Within R&D, our ambition is to expand and advance the portfolio of our pipeline projects. We got the Ebola vaccine approved, we got the new order, et cetera, underlying, you can say, the potential for future Ebola business as well. We also, in June, announced positive top line data from the phase one equine encephalitis study, sponsored by the Department of Health, and we are now seeking further funding for that project so that we can advance it further into the clinic. We have also started testing new modes of administration within our immuno-oncology business.
We have two smaller studies with intravenous administration running at the moment. Turning to the manufacturing side, here, I think we have three important tracks running. First of all, we have the fill-and-finish facility, which will really, once that is up and running, enabling us to have a full end-to-end manufacturing capability. Right now, I think the only thing remaining is really the qualification, and we are expecting to have the first product on the line late this year, which will be the liquid frozen version of Jynneos, so that we can deliver the up to the 1.4 million doses to BARDA under the contract we signed earlier this year.
Second initiative within manufacturing, that is to expand the bulk facility so that we first of all, we can accommodate the manufacturing of the rabies and TBE vaccines, but also so that we can create more flexibility within our bulk facility and being able to produce different bulks in parallel. That is also progressing well, and we had over the summer here, we actually started the excavation of the ground. And you will see later when we come back to our cash position, I think this is one of the reasons that we are going to have quite a high cash spend in the second half of the year, as we have not spent much of the investment we have guided for this year yet. That is to come in the second half year.
Third initiative within manufacturing, that is the tech transfer process of the two projects. That is still in its early stages, naturally, but it is progressing well and in accordance with the plans. The other items on this slide here, I will deal with in the following slides in more detail. Next slide, let's talk a little about the significant commercial transition that we are undergoing right now. With the acquisition of these two vaccines from GSK, we needed to put a commercial organization in place very quickly. We are pleased and proud to say that we have basically the organization in place today. All the global positions, starting with the head of the global sales, J.C. May, and his leadership team, is now fully in place.
Are the teams in our two key markets, the U.S. and Germany. Even this week, we had the field force in Germany trained, ready to go into the market, on the road, 1st of September, when we take over the physical distribution, and the market authorizations in Germany. Very well on track in terms of the building up the commercial organization. Also, another very important step that is to take over the physical distribution and the market authorizations in the individual markets. We started this summer with Holland. Smaller market, but important as it will be our future distribution hub for global distribution.
First of July, we basically took over distribution there, meaning that GSK in the future will send the finished products to our location in Holland. We will distribute from there into the markets where we have taken over. First of August, major achievement, we took over the physical distribution in the U.S. We are planning to do the same, first of September in Germany. This, I think, taking over physical distribution is a huge task involving a lot of people in our organization. You need to have all the logistics in place, contracts in place with the logistics service providers, system integrations. You need contracts with your wholesalers. You even in some markets, like the U.S., you need a lot of the contracts in place with the payers, et cetera.
A lot of work has taken place before we could actually transfer these markets over. We will, as you will see at the end of the slide below there, you will see from the left, the U.S. from August, Holland, July, Germany, expected first of September, and then the other markets will follow after that. These markets are smaller markets, and looking at our current plans, that means that by the end of this year, we will actually have transferred over 90% of the turnover will be under our control in terms of physical distribution. Final thing is we also, during the first half year here, signed a distribution and marketing agreement with the French vaccine company, Valneva.
Meaning that Valneva will market and distribute our two products, Rabipur, Rabivac, and Encepur, in selected European countries, plus Canada, where we will then, on the other hand, we will market and distribute their two products, Ixiaro and Dukoral, in Germany and Switzerland. The whole philosophy behind this deal is to exploit synergies. Where Nordic and Valneva are, you can see we are relatively modest in size when it comes to our presence in certain geographies. It simply doesn't make sense for Bavarian Nordic to establish their sales forces in some of these smaller European markets. Valneva is already there in some of the markets, and we are building, you can say, a strong presence in both Germany and Switzerland.
We will, in this cooperation, we will basically explore synergies between the two companies so that we take the products where we are strong, they take all four products where they are strong. In terms of timing, we think that the first markets to be transferred to Valneva later this year and the rest next year. The products that will be transferred to us will happen probably most likely second half of next year. A significant transition we have gone through in the whole commercial area, and well on track. On the next slide, this is one of the old slides that most of you know. I just wanted to put it here to remind you all about the importance of the positive Phase III top line results we announced earlier this week.
I think it was not a surprise to us, but of course, it was a very, very important milestone that we could tick off because it means that we can basically continue our plans on the freeze-dried version of Jynneos, which is to have the final results late this year from the study, so that we can file next year and with an expected approval in 2022. Remember, I think out there, the carrot is waiting for us, $299 million contract that we have already, and which we can execute upon once we have an approved product and we have the fill-and-finish facility up and running. Another thing I would just highlight here as well is, again, just to remind you about the contract that we were awarded earlier this year.
Total of $202 million in two options. First has been executed by BARDA already. That is an amount of $106 million, whereof the majority of that will be revenue recognized this year. You can see we have also listed here that most of the revenue will actually come in Q2 and Q3. There will be some in Q4 as well. In Q2, we actually saw more than half of that contract being revenue recognized, helping us to achieve the DKK 700 million total revenue for the second quarter. On the next slide, a few words about RSV. Again, you know this slide. There's no change in our plans.
We are still planning for initiating the phase III study next year, and the study as such, the design of that is unchanged. It will be over two seasons with 12,000-14,000 subjects, and it will cost this $90 million-$110 million. However, we also at the moment, in a period where we want to, we need to assess the feasibility of conducting such a study due to COVID-19. That is a feasibility assessment we will do over the next month or two. It is quite clear that if we assess that the prevalence of RSV is too low in the market next year, then we will not risk a significant investment in a study like this, and then we will change our plans accordingly.
We haven't made that decision, so it's still our plan, and we are still preparing ourselves for the initiation of phase III next year. On the next slide, an update on our COVID-19 vaccine program with AdaptVac. Again, here, we are very pleased that we, over the summer, managed to finalize the agreement with AdaptVac and got it signed, giving us the global commercialization rights to the vaccine. Really right now, I think our job is to accelerate the development and the speed in this program. We right now have a timeline where we are targeting a phase I/II. The study to be initiated late this year, with the readouts beginning of next year, and then targeting an approval by the end of 2021.
That is, of course, you can say, all pending funding that we are currently seeking. There is funding within achieved by AdaptVac to conduct a phase I study that will take place later this year, but we are seeking funding so that we can expand that to a phase I/II, and thereby accelerate the timelines. This is really something that we are very excited about, and we do believe that we have a vaccine candidate here that is unique in certain sense. We do believe that it is one of the candidates that can meet some of the important criteria from the WHO, for instance, being suitable for all ages, including the elderly, and a vaccine candidate that has the ability to be used as a single shot only.
On the next slide, I will move into the sales performance and the financial performance for the second quarter and the first half year. I will start off with the acquired products. On Rabipur, RabAvert, our rabies business, we saw total revenue for the second quarter of DKK 142 million. That was 44% below the same period last year. In a market that we assess to have declined by 75% during the second quarter, meaning that we actually outperformed the market during the second quarter. How did we do that? I think basically, the key explanation to this is that we have a very, very strong position in the more resilient part of the rabies business, which is the U.S. business, which is less about travel.
It is a primarily a post-exposure, also pre-exposure, but for local endemic use. We have managed to increase our market share in the US market since the first quarter of 2019 to the second quarter of this year, from 64% - 85%. You can say that way, we have managed to compensate for some of the market decline. It is clear, though, that the European market suffers from COVID-19, and we have seen in some of the biggest European markets that the market has dropped by 80%-90%. It's clear if people are not traveling, there will be very little use of the rabies vaccine in Europe.
That part of our business is the least profitable, and we have a very strong position in the more resilient part of the business. If we look at the first six months performance, DKK 360 million versus DKK 435 million for the same period last year, so that's 17% down. Our assessment is that the market in the same period has been reduced by around 40%. Again, it's the same explanations. It's the significant market share gain in the U.S. It is our strong position in the U.S., and of course, then it's also a little tailwind we saw in the beginning of the year with our competitor being out of stock, impacting in particularly January and February.
Looking a little forward, I think we in the U.S., we are quite optimistic on the U.S. market, and we are actually seeing some positive trends, both on market share, but also that the market could return to a more normal situation. In the U.S., we see there are several indicators that the outdoor activities are on the rise now in the U.S., we could actually look into an improving U.S. market. In Europe, I think we will have to wait and see when travel normalizes. Until then, we should not expect much from the rabies business in Europe.
On the next slide, let's have a look at the Encepur sales for the second quarter was DKK 193 million, 10% down compared to same period previous year. That is actually also a bit better than what we have seen in the market. Global market, I can only look at April, May here, was down approximately 38%. There could be some, again, like we saw in the first quarter, there can be some time lags and inventory movements on the wholesaler levels between the quarters. If we look at the first half year, DKK 295 million against DKK 386 million. That's down by 24%, which is pretty much in line with the market decline that we have seen over the six-month period.
I think on the Encepur business, we are more comfortable that this will return to normal sooner than the rabies business. The underlying demand of the TBE vaccine is unaffected by COVID-19, and the decline we have seen, we believe, is really caused by the shutdown that we saw in several markets. If we look into the Q2 numbers, we can see already in June, we saw a quite a good month, even better than the prior year, some of that catch-up effect we had hoped for. I think another very, very important point here is that during this period here, we managed to maintain market share of TBE, which is contrary to what we have seen historically the last years, where Encepur has lost market share to competition.
We have, during this period, managed to stabilize the market share basically. On the next slide, an overview of the financial results. Very positive results for the second quarter. If I start there, DKK 700 million revenue, of course, significantly impacted by the smallpox revenue, which is nearly half. It's DKK 320 million out of the DKK 700 million is from the BARDA order, but still DKK 700 million, and an EBITDA close to DKK 200 million. Very good results. For the first six months, we're looking at total revenue of DKK 1,065 million.
We are looking at an EBITDA of 839 million DKK, where, of course, the sale of the Priority Review Voucher that we did in the first quarter also has a significant positive impact here. On the EBITDA, I think it's important to understand that this is heavily front-loaded, partly, or to a large extent, of course, due to the PRV income, where there's no cost associated. Also, due to some of the seasonality that we see in, on the revenue side. As I said previously, we have included so far, slightly more than half of the expected BARDA revenue this year. On the other products, we know that we are moving out of the seasons. There will still be more, of course, in the third quarter. The TBE season typically ends around August.
We will see this year if COVID-19 has changed that. For the fourth quarter, I think historically, we haven't seen high revenues for either products on the rabies or the TBE product, except in 2019, where we saw significant rabies business due to a stock out situation from our competitor. I think all of this together has enabled us to maintain our full year guidance, we have even chosen to upgrade our cash guidance from previously DKK 1.35 billion to now DKK 1.5 billion. An increase by DKK 150 million. That's a sum of many items put together.
One of the key drivers of that has really been that the BARDA revenue comes in, a lot of it in the second and third quarter, enabling us to also get the cash impact of those before the year ends. Let's turn to the next slide with an overview of our financial position. Again, I said, very, very strong cash position. We have in cash now nearly DKK 2.4 billion, and on top of that, we have unutilized credit lines from our European Investment Bank loan that has not been drawn upon yet. Below those, we have just listed the bank and institutional debt overview. And at the end, just to complete the picture, we have included the deferred considerations to GSK. Remember, we still owe GSK up to EUR 495 million.
This approximately DKK 3.2 billion, that is the net present value. That's the book value of the deferred consideration, which is calculated as net present value on probability adjusted milestone payments. You can, of course, then ask, "Okay, how are you going from DKK 2.4 billion to DKK 1.5 billion by the end of the year?" We are going to consume quite a significant amount of cash in the second half of the year. Some of it will go into the continued investment in manufacturing. Remember, we guided previously that we would invest approximately DKK 300 million in the changes within manufacturing.
We have first six months invested DKK 66 million, and we only just started the excavation, and we are going to buy some of the equipment as well that we need for the tech transfer of the, of the two vaccines from GSK. It is heavy back-end loaded. The investments going into the manufacturing. Second important item is that as we take over physical distribution from GSK, we have an obligation to take over the local inventories of finished goods, so that will consume some cash.
On top of that, after we have taken over physical distribution, that means also future manufacturing orders that we place with GSK will be shipped and delivered to our distribution hub, meaning that by the end of the year, we will not only have the inventory we took over from GSK, but we will also have new products that have been manufactured since we took over. We are talking about products being manufactured in campaigns, so we can actually see the inventory level that we will be carrying on our balance sheet can be jumping up and down between quarters due to these campaigns. As in particular, TBE is a seasonal product, of course, we need to make sure that by the end of this year we have sufficient inventory to be prepared for the season next year.
Final item, to explain the significant cash consumption, our milestone payments to GSK. We are expecting to pay approximately EUR 50 million to GSK this year that are triggered by some of the important marketing authorizations that will shift hands during this period of time. Still, after this significant cash consumption, which is all in line with our plans, no change there at all, we will be leaving this year with a cash position of approximately 1.5 billion DKK, so still in a very strong position. Turning to the final slide, which is basically our usual overview of key strategic activities and milestones this year. I will not repeat all of this, but just highlight a few that we have still to deal with this year.
I think first of all, on the commercial side, we talked about most of it. Physical distribution, we put that in a bracket as we have started it, but after September, I think we have covered maybe 75%, and we will continue that. By the end of the year, as I said, we have taken over physical distribution for corresponding to 80%-90% of our turnover. The fourth bullet within the commercial group, that is, you can say the task to increase awareness, and establish new market for monkeypox.
to be honest, I admit that that is not having much traction at the moment due to COVID-19 overshadowing this, but it is still something that we, of course, are working on and will continue to be a task for us in the time ahead of us. We need to establish this at this market now we have the indication for monkeypox. On the next strategic pillar in our R&D area, we have talked about most. We haven't talked about Chordoma yet, and there I think we are awaiting the readout from our BN-Brachyury study in Chordoma later this year. Hopefully, by the end of the year, we can take that one off with some positive outcome. That is still to be seen and to come.
Then, of course, what is not on this slide here yet, as this is based on our target and strategy and plans when we entered into the year, is of course, the COVID-19 project which will receive a lot of attention from our side, and which you will find on this list of key strategic activities going forward. Finally, we have all the activities within the manufacturing. We have talked about those. They are all on track, despite COVID-19, so we are very pleased with that. Then, of course, on top of all these achievements here, we are extremely pleased that we have managed to maintain our guidance and even increase it for cash position. All in all, very busy and exciting agenda here at Bavarian Nordic, and a very significant transformation that we are undergoing.
Halfway through this year here, we are very pleased with the progress so far. Thank you very much, and I will hand the word back to the operator and ask you to open up for Q&As, please.
Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. As a reminder, if you wish to ask questions, just press the star one on your telephone and wait for your name to be announced. If you want to cancel your request, just press the hash key. Once again, please press star one for questions. Sir, your first question comes from the line of Chad Messer from Needham Partners. Please go ahead. Your line is open.
Hi, good morning, and thank you for taking my questions. This is Gil Blum on for Chad. You earlier spoke of, kind of taking over the physical distribution from GSK. The people that come along with the physical distribution, are you basically just rehiring the same key distributors?
We are not taking over any people. I think basically the physical distribution, when we're with GSK, it was handled also by third-party logistics service providers. We are basically moving it from one third-party logistic service provider to another. In this case, for Europe, we are using the company Movianto, so very professional logistics service provider, meaning that we are not taking over any organization. Of course, we have had to hire our own people. We need planners who can deal with the GSK and the manufacturing until we have taken that over and making sure that we are basing our orders on the right forecast from our commercial team, et cetera.
We are not taking over any people from distributors or from GSK in this respect.
Thank you for clarifying. Could you perhaps provide any color about the expected reductions in RSV rate? Is there other existing evidence that, COVID-19 is reducing infection rates in RSV?
Yeah, I think there are some. I think in particular, if you look at flu, we have seen that if you look at the prevalence rate in some markets, and you look at the prevalence rates January, February, this year, there was a sudden drop in the prevalence rate when the COVID situation came in, simply due to the social distancing and using of masks, et cetera. Of course, what is not 100% clear is that because it's under registered, or is it really a lower prevalence? That is why I think we, as a company, I think we need to make a very, very thorough and thoughtful consideration in our assessment about do we believe that the prevalence rate is really lower or not.
There's not an easy answer to that, but there are some indications that some of these diseases, you have seen a drop in prevalence due to social distancing and use of masks and other protective measures.
I guess wearing a mask is a positive thing at all, at all times. Are there any expectations for backlog in the TD market, which would kind of change the normal seasonality that's seen in this market?
Sorry, what do you mean, padlock or-
Backlog.
backlog.
Sorry. Yes, sorry. Okay. Yeah. Well, that's a very good question. I think normally you can say the season would end towards the end of the summer here. Of course, you know, due to the interruption that COVID-19 created, I think there is, of course, a chance that some of those people who did not get vaccinated will go to the doctor now, and that could extend the season a little longer than we have seen in the normal years. Of course, that's what we hope for. It's yet to be seen, of course. We are now sending our...
First of September, our reps will be on the ground in Germany and will, of course, push for extending the season and running a campaign, letting people know that they do not need to wait until next year to get vaccinated.
All right, thank you for taking my questions, and congratulations on the recent positive readout.
Thank you very much. Thanks for the questions.
Sorry, your next question comes from the line of Michael Novod from Nordea. Please go ahead. Your line is open.
Okay, thanks a lot. Yes, it's Michael Novod from Nordea in Copenhagen. I have a range of questions. First of all, if we just get a bit more granularity on the backlog on both on TBE, potentially also on not on backlog, but more on the demand side, on the rabies vaccines in the U.S. If we look at Symphony/IMS IQVIA data, then we can see there's a significant rebound in July on the rabies sales in the U.S. Do you see sort of the same things going into August?
We're now two months into your third quarter, so maybe you could just give a bit more granularity, because normally we would see that around 60% of the full year sales would be in the first half of the year. If we apply that to your first half sales in 2020, then we only get to around DKK 1.1 billion in TBE plus rabies sales. It would be great to get some more granularity on how you see the demand situation also going into August. Then on secondly, on the dialogue you have regarding funding for your COVID-19 vaccine beyond phase one, two, how is sort of the process? Can you give a bit more commentary on the structure of that process?
Do you actually get feedback on an ongoing basis, or is it a complete black box regarding this? Lastly, on your Brachyury vaccine in Chordoma, how should we sort of interpret the outcome? Because we know from other trials in Chordoma that it's a bit of a strange disease in terms of using the RECIST 1.1 criteria. Do you have some interactions with the FDA regarding sort of how to measure the response when you look at the data, whether it's gonna be RECIST 1.1, or whether there could be other measures to include?
Okay. Thank you, Michael. I think first of all, on the two vaccines, I think the, on the TBE and that potential backlog, I think again, I think that's a very good question. Of course, we hope to see that the season will be longer than we have seen usually. As I said in my presentation, we saw very strong June numbers indicating some catch-up and some of the backlog being rectified. Of course, we are, with our field force in place, I think we are going to push for an extended season. Whether we will manage or not, we will see. There might be some who will say, "Okay, I didn't make it due to COVID-19 and the shutdowns.
I will get vaccinated next year." I'm sure there will also be some who are just queueing up and will get vaccinated. I do expect to see some impact of the backlog being emptied. On the rabies, I can't comment in detail on the Q3 numbers. Again, I can say that we have, we are seeing some good numbers in the U.S., and there is a trend in the U.S. towards more outdoor activities, actually, some of it driven by COVID-19. We are seeing the national parks opening up again, we are seeing other measures indicating much more outdoor activity levels that could push for some market growth again within rabies in the U.S.
I think we have good hopes for TBE. I can't see, unless we get a shutdown again, I can't see why the TBE market shouldn't return to normal, basically. We feel we will be in a good position. We have stabilized the market share. We have our field force in place for the next season. On the rabies side, U.S., there are definitely opportunities there. Also on the pre-exposure part, with more outdoor activities, you don't have to wait until you have been in contact with a rabid animal, we can go and push more for the pre-exposure market, domestically in the U.S.
I think the only tricky thing, of course, is the rabies business in Europe, where we simply just have to face the music and say, until the travel resumes to more to normal, this market will be significantly underwater. On the next one, the funding. Sorry, did that answer that first one, Michael?
Yeah, that was perfect. Thanks a lot. It was perfect.
On the funding side, I think that's another good question. I think, of course, we are seeking funding through all the channels that we know about. These processes vary very much from very formalized processes, where you submit, you apply for funding together with a lot of others, and where there are strict timelines and feedback periods, et cetera. Then some other channels where it's more, much more informal discussions, talking about opportunities, et cetera. Of course, we are seeking funding from all parts, basically. On the BN-Brachyury,
Can I just ask a follow-up to the funding?
Sure.
I was just wondering, whether you have any sort of contact to sort of local government, i.e., the Danish government, because we see sort of the German government being extremely active on CureVac. We've seen the U.S. government being extremely active on some of their assets, whereas, you know, in Denmark, we mainly have seen politicians complain about selling an old vaccine facility five years ago. Is there any kind of interactions with the Danish government as they should be aware, you have a significant vaccine capacity, I don't know, 30 miles north of the capital?
Oh, that's right. Yes. There are contacts with the Danish government as well. This is something we are pushing harder at the moment. That there are even a better contacts, but there are contacts and ongoing meetings with people representing the government.
Okay. Thanks.
On the I just have to, just to mention here, so to make sure that it is clear to everyone, and in terms of the funding of this study here, there is funding already for the phase one study. We want to expand that study in order to accelerate the timelines to a larger phase one/two. That we do not have funding for today. There is funding for the phase one study that can go ahead, but the larger expanded phase one/two is part of the funding that we are seeking.
That larger expansion, is that also going to sort of, is that sort of the initial plans also for the Q4 start, or how should we think about that?
That is the plan for the Q4 start, yes.
Okay.
Yeah.
Yes. Right.
Good. On the brachyury Chordoma study, I think as you know, it has originally been designed that we should measure the outcome using RECIST. We can't change that, of course, but you can argue whether well, was that the right measure to use? I think we do see some interesting data when you look at other ways of measuring the shrinkage of the tumor, et cetera. In terms of using the data from the study to move forward, I think we have to stick to the study designs. Of course, we can still try to apply other measures to the study, other ways of measuring this, to read, to get some different readings out of it.
Okay, cool. Thanks a lot.
Okay. Thanks, Michael.
Once again, if you would like to ask questions, just press star one. Sir, we got another question comes from the line of Thomas Bowers from Danske Bank. Please go ahead, your line is open.
Yes, thank you, Thomas from Danske. Just to kick off here with sort of a follow-up to the whole COVID-19 vaccine and funding here, from CEPI, the last update here from CEPI on Monday, they are announcing that they're evaluating nine additional candidates on top of that, the nine they have already backed and supported. I'm just wondering, is there any dialogue with CEPI and do you have any kind of indications what they are looking at here?
Are they considering other large clinical programs, or are you maybe the only candidate that are seeking funding for phase III, and then the eight other parties are maybe looking to get some earlier stage funding? Then my second question, just on the ACIP recommendation. Is there any updates on this? I guess you still need the last meeting and maybe add some color to that on the possibility to get these DoD orders, or would this be a mostly an event coming in the wake of the ACIP conclusion? Well, most of all, the timing of news from ACIP. Thank you.
Okay. Thank you, Thomas. First, on the COVID-19 funding. Yeah, I think of course we are in the race with CEPI, and I think what are they funding? I think they, to start with, they have chosen, as many of the others, to fund the ones that are ahead of the pack. I think they have also realized that these might not necessarily be the best vaccines ultimately. Therefore, they are in the second round, which they extended due to a lot of applications. I think they are looking at later states, which means maybe only like six months behind the leaders.
Looking at different technologies, that is definitely our hope, because that's where we can differentiate us, coming out with different, a different technology, where we can tick more of the boxes, in terms of what WHO are asking for. It's a process where basically you submit, and I think CEPI, they are working hard internally. There's not a lot of insight into how they actually make their decisions. We can only, I think, keep pushing for a positive outcome of the process, but we are definitely in the race with CEPI and with others as well. In terms of the ACIP recommendation, there's no news. As we talked about, I think this is expected to be slow-moving process, when ACIP are changing their recommendations.
We do believe, of course, that the up to 1.4 million doses that we are going to deliver to via BARDA will not be sitting idle in the stockpile, but will be used, we believe, by DoD and by first-line responders as well. Of course, we hope to see an update on the ACIP recommendation within perhaps the next year or so. It's a little unclear how long that can take.
Okay, great. Thank you very much.
Thanks, Thomas.
Sir, we got another question comes from the line of Peter Welford from Jefferies. Please go ahead, your line is open.
[crosstalk]Hi, sorry, can you hear me now?
[crosstalk]Yeah, we hear you.
Yes, now we can hear you.
Yeah. Hi, sorry. Apologies, something went wrong there. I thank for taking my questions. Just first of all, could we just talk about the guidance for a minute, just with regards to the revenue outlook? I guess I just wonder if you can sort of talk a little bit about how we should be thinking about this. Given the sort of structure you've given us for Rabipur and Encepur, and how we should think about that, I think you've been very clear on the trajectory for that this year. You've also outlined the JYNNEOS booking of the U.S. government, $106 million, which I think, you know, together with represents the majority of the outlook you've got of DKK 1.9 billion.
On top of that, I think we've also got the $10 million milestone on the Ebola from Janssen. I think there's also $25 million funding from the government for the freeze-dried Phase III, which obviously is now broadly finished. I guess if we put all this together, can you help us think about, you know, what it is we're missing in terms of how it doesn't seem incredibly conservative still to keep the DKK 1.9 billion revenue outlook? I've got another question- follow-up question on the pipeline, but maybe you could do that one first.
Yeah. Thanks, Peter. Thanks for the questions. I think you are touching upon all the right components, I think let's take them one at a time. I think first of all, the TBE business, I think we have not, in our guidance, assumed that the season will be longer. We have assumed some catch-up that we have seen already in June, and a little in August. We are not assuming that the season extends beyond what we have seen historically. That means you will see relatively little revenue from the TBE business in the period going from September to December.
On the Rabies business, I think we know that last year we had a very abnormal December before we took over the business due to the stockout situation. Basically, what we have assumed in our guidance is, first of all, taking the seasonality into perspective, and then of course, we have not expected much from the European Rabies business. Basically, we are not expecting any change in the travel patterns this year. On the JYNNEOS side, I think we have first half year, we have included, I think, close to 60% of the revenue we expect from that part of the business. On top of that, you are right, then we have the Ebola milestone of $10 million.
That takes us, if we add all that together, that takes us to close to DKK 1.9 billion. Of course, it's all a question of the outlook for Encepur and Rabipur. There are, of course, scenarios where both can play out better. Longer season on the Encepur, and you can say pick up of the market in the US beyond what we are expecting right now. There are up to these two upsides to the top line.
Do you envisage the majority, if not all, of the $106 million U.S. government contract, the smallpox, will that almost all be booked during the course of 2020?
The majority, not all of the 106. It will be lower than 100 for the full year. As I said, we have, year-to-date, we have revenue recognized close to 60% of the full year. You can more or less do the math. What we have said all the time is, it's the majority of the 106, but it's not all of the 106. I think the, remember, the 106, that is first of all, the delivery of bulk batches, but it's also up to 1.4 million liquid frozen doses, where many of these will be delivered into next year.
Understood. Then-
And, uh-
Sorry, carry on.
No, go ahead, please.
I was just gonna ask, just with regards to the pipeline, but it gets little attention these days in the sense, obviously, understandably, the focus has shifted very much towards infectious diseases. But just curious, beyond brachyury, on the other oncology vaccine parts of the, of the, of the, I guess, the pipeline and the, and the platform. Just with regards to bigger thinking, what is the strategy here in terms of, you know, is there still a significant amount of internal resources allocated to these sorts of programs and further developments?
Is it something where there is potentially a strategic review of that business, or is it perhaps a business where you could consider doing either a broad collaboration or some sort of other deal to perhaps, I guess, complete your transition, if you like, and make it less of a drain, I guess, on Bavarian Nordic?
Yeah. Good question, Peter. I think on the immuno-oncology, you can say right now our strategy, that is to test some of our candidates using new administration methods, basically. That is intravenous and intratumoral. We are already now testing in two smaller trials in intravenous. I think what you have noticed is that we have started to communicate on these immuno-oncology projects differently. We used to highlight each and every small trial, and the situation with immuno-oncology is that we need a lot of attempts, but they are relatively inexpensive studies, so we don't want to push them too hard. That's also why we have not lifted up these two smaller studies we are running now with intravenous.
Those are, one is with Brachyury, the other one is with a new platform that we are testing in intravenous as well. I think at some point, in not the too far distant future, I think we will provide a more fresh update on the whole immuno-oncology area.
Understood. Thank you.
Thanks, Peter.
Sir, we got a follow-up question comes from the line of Michael Novod from Nordea. Please go ahead. Your line is open.
Yeah, thanks a lot. Just a sort of a housekeeping question. When you start to actually sell Ixiaro and Dukoral, will it show in specific products in the P&L, or what would that sort of be booked under? Thanks.
I think we are planning to show them specifically, just like we do today. We highlight the revenue by the products. I think the setup is we have with Valneva's, that we are actually buying the products at a certain agreed transfer price, and then we sell them just like we sell Rabipur, Encepur, et cetera.
Okay, good. Thanks.
Sir, we don't have any question at this moment. Please continue.
Thank you very much to you all for listening in and showing the interest in Bavarian Nordic. Very pleased to have you here today, and again, I should send my regards from Paul to all of you. Thanks. Have a good day.
That concludes our conference for today. Thank you for participating. You may now all disconnect. Speakers, please stand by.