Ladies and gentlemen, welcome to the Acquisition of two Commercial Vaccine conference call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. Instructions will follow at the time. If anyone should require assistance during the conference, please press Star, then zero on your touchtone telephone. I would now like to turn the conference over to your host, Mr. Rolf Sørensen. Please go ahead.
Thank you. Good morning, and welcome to this conference call regarding the Bavarian Nordic's acquisition of two commercial vaccines from GSK. My name is Rolf Sørensen, and with me today, I have our Chief Financial Officer, Henrik Juuel, as well as our President and CEO, Paul Chaplin. Before we begin the presentation, I would like to read the following statement. This presentation 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 regarding our short-term objectives and opportunities, financial expectations, and the full year and financial preparedness as of end of year, as well as statements concerning our plans, objectives, goals, future events, performance, that is not historical information. All 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 over to Paul Chaplin for the presentation.
Thanks, Rolf. It's with great pleasure and excitement that I invite you to today's call, because today, Bavarian Nordic has announced a truly transformative transaction that has actually created a strong commercial independent vaccine company by acquiring two established products from GlaxoSmithKline. In doing so, together with JYNNEOS, which was recently approved, we are creating a leading infectious disease franchise that will allow us to accelerate our pathway back to profitability. We've had a five-year vision that by 2023, we will be a leading and profitable vaccine company. With today's transaction, we've actually accelerated that vision by three years. The two products that we're acquiring actually use the same egg-based technology as all our other products, where we have established ourselves as a world leader. This, of course, will allow us to unlock future synergies in the years ahead.
These two products have a combined annual revenue of EUR 175 million in 2019. They have attractive margins. That is going to allow us to build up a strong cash flow, which will allow us to continue to invest in our promising and attractive and innovative pipeline. On slide four, here is our V23 vision, where we wanted to become a leading and profitable vaccine company, commercializing products for infectious disease and cancer. With the acquisition of these two established products, we've obviously met one of the strategic goals, which is to expand our commercial footprint and capabilities. Earlier this year, JYNNEOS was approved, which allows us to maintain our global leadership in our smallpox vaccine.
We continue to move our infectious disease programs forward, and despite some setbacks, which are expected in R&D, we are on a path to develop a deep cancer immunotherapy portfolio. By adding our commercial arm, we've really created a strong, independent vaccine company that can really move our pipeline forward and hopefully bring more products through to launch in the years ahead. On slide five, our new pipeline. The two products that we're acquiring, Rabipur, is a vaccine against rabies, and Encepur is a vaccine against tick-borne encephalitis, which, together with JYNNEOS, is truly creating a strong, leading infectious disease franchise that will allow us to invest in both our late-stage pipeline and our early-stage pipeline and potentially bring in more products through into the clinic. Slide six. Both these products, Rabipur and Encepur, are two highly effective vaccines with strong established revenue streams.
As I mentioned, estimated to be EUR 175 million this year, with attractive margins. Their markets are expanding, offering new opportunities, and we plan to develop and establish a dedicated and focused commercial organization, which will be managed by a senior experienced leadership, which is currently being recruited. This will create significant synergies in itself for our activities with JYNNEOS, but in terms of manufacturing, we believe there are true strong synergies as all our products are currently using egg-based technology. With that, I will hand over to Henrik Juuel.
Thank you very much, Paul, and just like you, I'm extremely proud to be here today and take part in this announcement of a very exciting opportunity for Bavarian Nordic. On slide number seven, just the key highlights of the consideration. Total consideration for these two assets will be up to approximately EUR 796 million. It is divided between an upfront payment of approximately EUR 301 million, which will be paid immediately upon closing, planned for December 31. The remaining parts are future conditional milestones, up to a total of EUR 495 million.
These conditional milestones are mainly related to transfer of marketing authorizations in local markets and transferring of manufacturing from the GSK manufacturing site to our site here in Kvistgård, and then there is a smaller component related to commercial performance included as well. The majority of the conditional milestone payments are expected to take place from 2022 and onwards, until completion of transfer, which is expected in 2024, 2025. The whole transaction is anchored in three separate agreements. There's the asset purchase agreement, naturally, then there's also a supply agreement between GSK and Bavarian Nordic. GSK will be supplying the products to Bavarian Nordic from closing and until we are ready to take over manufacturing.
There's also a transitional services agreement, where GSK will provide other services until we are ready to take over fully, and the main component here is really distribution, which we anticipate to be able to take over in 2021. A total consideration of up to EUR 796 million. You might wonder why we say approximately, and the only reason for that is a technicality that in the upfront payment, there is an adjustment of expected inventory values at closing. We are acquiring the business without inventories, as GSK will be our supplier in the interim period. There is an adjustment, and in the EUR 301 million, there's an estimated inventory value at closing. This will be adjusted after closing, but we do not anticipate any material change to that number.
Let's turn to slide number eight. How do we anticipate to finance this deal? Short-term, we will need to pay by closing, and that is by December 31, the EUR 301 million upfront payment. We do have a very strong cash position already, and could probably take up to EUR 150 million out of that, but we have secured a very sizable and strong bridge facility with our two banks, Nordea and Citibank, of EUR 270 million. Short-term, very strong financing, enabling us to pay the upfront payment by the end of the year. As you will see, actually, current cash available plus the bridge facility, EUR 421 million, so more than we would need at closing, basically.
Next, we will do a plan to do a rights issue that needs to be approved at an EGM, to be held in November. That, we expect, would give us proceeds of approximately EUR 350 million, and that will replace the bridge loan facility. That post the rights issue, we are again extremely well-funded, like we are today, and we will no longer carry the bridge facility. Next slide, very high level timeline. We are here today, signing and announcing this exciting transaction for Bavarian Nordic. We will call soon for an EGM to be held in November, where we will ask the shareholders for approval of the rights issue to be conducted first half of 2020.
The planned and expected closing is on December 31, and where we will have to pay the upfront payment as well. The closing is conditioned upon antitrust approval in three markets, U.S., Spain, and Portugal, which we consider a formality to get approval there. It's conditional upon approval for the rights issue at the EGM, to be held in November. First half of 2020, we will run the rights issue process, with an expectation to have it complete before Easter of next year. I have to say that the rights issue will be managed by our joint global coordinators, Nordea and Citibank, and they have fully underwritten the rights issue. With that, Paul, I will turn the presentation back to you.
Thanks, Henrik. On slide 10, these two products offer a very strong strategic fit, and with that, some key opportunities in the years ahead. Some of the opportunities in terms of manufacturing, obviously, by bringing two additional commercial products into our commercial facility, will allow us to better optimize the utilization, both for the bulk production, but also when our fill-finish facility comes online, our fill-finish network. We also see an opportunity to expand our footprint, and actually add a new clean room area. Both of these will allow us to become a fully multi-product facility, manufacturing products in parallel.
That gives us the opportunity to further reduce the cost of goods, and it will expand our commercial portfolio and production platform, which will allow us to potentially launch new products coming through our pipeline or to acquire additional products that could be complementary with our technology. On the sales and marketing, we really believe that with a focused, small team, there is potential in having a much better focus in terms of sales and marketing, concentrating on a number of key countries. Once we've established this commercial network, that will obviously allow us to utilize that capacity for launching products ourselves, or again, through acquiring additional products that are complementary and strategic for us moving forward.
On slide 11, as part of the agreements, we already have robust plans in place to transfer the various manufacturing and opportunities. In terms of sales and marketing, here, we take immediate responsibility after closing. It's essentially the of January 1. Here, we'll have key personnel in place on that date in certain markets, and you'll see as I come to the coming slides, both these products have some key territories that need a lot of focus. We are in the process currently of hiring a chief commercial officer with a proven vaccine expertise within the field, who will be here hopefully by year-end. In terms of distribution, GSK will continue being the distributor for us until we bring that in-house, where we'll be relying on third-party logistics providers, and this will happen during 2021.
In terms of manufacturing, there is a stepwise plan where we will bring step by step, the whole manufacturing process, starting with the packaging, then the fill-finish component, and then finally ending in 2024 with the bulk manufacturing. Just to remind everyone, we've done tech transfers a number of times over the years and are highly experienced in the egg-based technology which these two products rely on. On slide 12, to talk a little bit more about the products. Rabies is a deadly infection that is nearly always fatal once clinical symptoms has come through. It's caused by lyssavirus , and approximately there are 59,000 annual deaths each year around the globe caused by rabies. The vaccine is essentially 100% effective, either as a prophylactic or as a post-exposure vaccine.
In the U.S., every 10 minutes, a person starts a post-exposure rabies vaccination after receiving a bite from an infected animal or a suspicious, unknown animal. The world map there just shows the key territories where we'll be focusing the sales efforts for Rabipur. On slide 13, Rabipur is a sterile freeze-dried vaccine. Again, it will be complementary in our fill-finish facility, which is coming online at the end of the year. It is used, as I said, both as a prophylactic but also post-exposure after a bite. The key markets here are the U.S. and Germany, which you can see in the bottom right-hand corner. It's estimated that in 2019, there'll be sales of EUR 105 million.
Over the last few years, we've seen a 4% growth in this market. Very attractive market, one where we can focus our marketing efforts in key territories, where we can secure at least 80% of the, of the planned revenues in the years ahead. Slide 14, talk a little bit about tick-borne encephalitis. It's a disease that is spread by ticks, and it causes an infection of the nervous system and often manifests as meningitis or encephalitis. Unfortunately, in up to 20% of the people, that can actually result in numbness or paralysis around the body, and up to 2%, unfortunately, can actually lead to death.
It's a very serious disease that's on the increase, primarily as the ticks are migrating further north, and is a major issue now, not only in Germany, but also in the Scandic region. Slide 15, it's estimated there are sales of about EUR 70 million in 2019. Here, again, the two key markets, Germany, Sweden, or I should say Scandinavia, are driving a lot of the sales. Encepur is the number two product in this space, and we believe, actually, with a more focused marketing effort, we can actually increase our market share significantly in this area. Two extremely exciting opportunities that I believe will be synergistic, not only in terms of manufacturing, but in terms of what we plan to do with JYNNEOS.
With that, I will hand the presentation back to Henrik Juuel .
Thanks, Paul. On slide number 16, elaborates on what can we actually expect financially from these two new assets here. In terms of the sales, we are have early ambitions here to grow the Rabipur part of product low to mid single digits. This is in line with the historical growth rates. I think rabies is a very sizable, but rather stable market.
Encepur, on the other hand, we have historically seen quite high growth rates, up to 15%, very much driven the last two years by the expansion of the endemic area, which is, might not be sustainable long term, naturally, we still do expect to see quite positive growth rates coming from Encepur, and have set a mid to a high single digit growth rate is probably what we should expect. These two products are highly profitable, by the end of full transition, we expect a margin, EBITDA margin, above 50%. That even includes absorption of indirect production costs that we have, irrespective of this deal or not, as we will see a much better utilization of our facilities here in Kvistgård.
If we were to reduce or take that out, I think that corresponds to approximately five to eight points, that is even up between revenue and the 50% EBITDA that actually covers existing costs at Bavarian Nordic. We will not get access to the full EBITDA potential from step day one, as GSK will be providing services for us and supplying the product until we have transitioned the business fully. We anticipate a starting point of 30%-40% EBITDA margin gradually improving, will already with a significant impact after we take over distribution, planned for 2021. That would be the key driver for the first jump, and then of course, gradually, when we start taking over packaging, filling, and eventually bulk, we will see the full potential, financial potential of these two products.
We are not guiding specifically on 2020 for the combined business, as this is not a closed deal yet. We know for sure that the year one will be impacted to some extent by non-recurring transition costs, which we estimate should be at a level of around five to ten points, which should be deducted from the 30%-40% starting point for these two assets here. Again, with this, as Paul said, I think this really brings our vision forward by three years, and these products will enable us basically to become a profitable company. It is our ambition that post the full transition, we will remain a profitable company. Turning to the next page, which is really a summary that I will walk quickly through.
Again, this is about acquiring two vaccines from GSK. Combined estimated annual revenue of around EUR 175 million expected for 2019. It accelerates our strategy to become a leading and profitable vaccine company. It provides sustained profitability, generating strong cash flow. We see it as a controlled and safe establishment of a commercial infrastructure. Again, finally, highly complementary with our technical expertise and our current manufacturing technologies, and thereby unleashing significant synergies. The price, up to approximately EUR 796 million, consisting of the upfront of EUR 301, and future conditional milestone payments of EUR 495 million.
This will be short-term financed with a bridge loan facility combined with existing cash, and the facility will be replaced by a rights issue to be issued next year, targeting approximately EUR 350 million. Again, finally, the next steps, we will soon call for an AGM to approve the rights issue. This will be held in November, and closing is planned for to happen by December 31, and is only conditioned upon antitrust approval in three markets, and then the shareholder approval of the rights issue. On slide number 18, just an updated outlook for 2019 for Bavarian Nordic.
As planned, the closing will take place on December 31, really, the only thing that is impacted directly by this transaction, that is our cash preparedness by the end of the year, which we are lowering to from DKK 1.6 billion to approximately DKK 1 billion. If you do the math, you will see that we are actually, with the large size facility of DKK 271 million in our current cash, we can actually end the year with a higher cash balance. Before the end of the year, we might have reduced that DKK 270 million. That was planned simply to put us in a very strong position. Right now we're anticipating to end the year with a cash preparedness of DKK 1 billion.
With that, I will turn back to Paul again, and I think it's probably time for quick wrap-up and questions.
Thanks, Henrik. A truly transformative move for Bavarian Nordic. It's probably one of the biggest days in the history, in our 25-year history. As I said, I'm extremely proud and excited to be the one giving you the news. We have now created a strong, independent vaccine company that is set for the years ahead, to drive profitability and growth. With that, I'll hand back to the operator, for Q&A.
Ladies and gentlemen, if you have a question at this time, please press the star and the number 1 key on your touchtone telephone. If your question has been answered you, or you wish to remove yourself from the queue, please press the hash key. Your first question comes from Michael Novod from Nordea. Your line is open.
Yes, hello, it's Michael Novod from Nordea in Copenhagen. A few questions. First on the EUR 160 million that GSK is also talking about, taking the total, say, acquisition cost to EUR 955 million. That is inventory you're buying from GSK over the transition period, and it's mentioned in the GSK release. Maybe you can just elaborate a bit on how we should see that impacting the different years from 2020- 2025 or 2024. Secondly, how many people do you think you need in commercial to run these operations now with two or three approved vaccines on the market?
Then secondly, or thirdly, the price per course of vaccine, if you look at the different products you are acquiring. Then lastly, on the growth rates, you're guiding growth of low to mid on the rabies, and you're guiding mid to high on the TBE. But that is actually lower than what we've seen for the last three years for these vaccines. When you are, say, boosting the commercial efforts, shouldn't we be able to see higher growth rates rather than lower growth rates for these vaccines? Thank you very much.
Thank you, Michael. This is Henrik. Let me start with the first one. It's correct that GSK, they are mentioning the EUR 955 million. The deal is that we are acquiring the business without inventories and without any working capital as such. GSK will be suppliers over the next year, and we have an agreement that once we are ready to take over distribution, we will of course, acquire their remaining inventories in their local subsidiaries. We will also, during the next sort of, four to five years, as we start taking over manufacturing, also take over their working products, progress products, finished goods, raw materials, as long as we start taking over. This is not part of the consideration. Therefore, it would not be correct to include it in the consideration part.
It is part of the, you can say, the working capital that will follow this business. We will, over the next years, as soon as we start taking over manufacturing, start to build up our own inventory, and in combination with the inventories at GSK, that will provide us a safe and secure level of inventories. I think as Paul alluded to previously, I think one of the things where we believe we can make a difference, that is really to ensure that there is enough supply to the market. Those products have suffered from stock outs in the past. This is an extremely important part. The number that GSK have used, the difference between ours and theirs, is an estimated amount of what the inventories will be three to four years down the road.
I think that is to a large extent in our control. We are giving them the forecast, manufacturing forecast, sales will be our responsibility, of course. That explains the difference. Maybe, before Paul takes some of the others, I can talk about the growth rates. Yes, you're right. These rates that we are setting out are sort of in line with or slightly below, and particularly on Encepur, than what we have seen the last three to four years. I think this is really where we have an ambition to do better. These products are not getting the attention today that they really deserve by GSK. GSK have only owned the products for three to four years, took them over from Novartis. We are a little humble in this situation.
We are building up a commercial organization. That's why we have guided as we have. We also know that the 15% growth on Encepur is very much driven by the last two years, and it's probably not a sustainable growth rate. I think as the markets that the endemic is expanding into right now, one can expect that that is being saturated, these markets. Of course, expanding could continue even into new markets, and then we would continue the nice growth rates. Yes, we have ambitions to do better than what you see. We have guided the low to mid and the mid to high single digits. This is a starting point before we take over the business. We had some questions on the size of the commercial organization, Paul?
The size of the commercial. At the moment, I'll answer that by saying, well, at the moment, GSK has no real promotional activities for Rabipur or Encepur. Their activities, the sales that you're seeing are with minimal sales and marketing. The other is that there are key territories where I believe if we were to concentrate our efforts, we would get the majority of the revenues from. I think I'll answer that question by saying that we're looking at spending in around about the 10% range in terms of distribution, sales, and marketing of the revenues. It will be a fairly sizable organization, but we are actually supplying emergency rooms, hospitals, for Rabipur rather than focusing on GPs. With Encepur, it's travel clinics, and some GPs, but mainly travel clinics.
It's a rather limited commercial setup that we're going to need.
Maybe just the pricing per course of. What are the current pricings today, per course of vaccines?
Oh, yes. Sorry. Yep. Of course, they vary around the different territories. Rabies is actually in the U.S. a fairly expensive vaccine. I think it's priced at the range of about $1,000 for the course of treatment. In the U.S., it's primarily given post-exposure. Encepur again varies around the different territories, but it's typically priced, like most other travel vaccines, more than $100 per dose. Per course, I should say.
Okay. Thank you.
Your next question comes from Thomas Bowers from Danske Bank. Your line is open.
Yes, thank you very much. A couple of follow-ups. Just on the inventory, again, to go back to that question, I'm just wondering why does it take five years to transfer the bulk production? Is that related to the current inventory levels, or do you need to do some, just take two, three years to do the tech transfer, and maybe also some equivalent studies or whatever you need here? Some color on that, please. Then just in regards to the gross margin guidance, you say plus 50% once fully integrated.
I guess, also given the, especially the pricing on the rabies vaccine shouldn't be any reason for not expecting any immune or Ebola-like margins once you've fully integrated. Why not say plus 80%? I guess that would be achievable as I see it immediately. Then lastly, maybe just on the production capacity, now with these two vaccines and the fill-finish factory operational quite soon. Do you still have room for more internally? Also, how should we see the potential for any third-party fill-finish production when you have this in-house? Yes, thank you.
Thank you, Thomas. This is Henrik. On the tech transfer, why does it take five years? We actually do believe we can do it in four years, but tech transfer within our industry is a very, very regulated process that simply takes this time. The first year will be used to securing and getting the equipment on board that we need. They are manufacturing on the same processes, but there are still some variations to that we would need to acquire some equipment. That is the first year. Basically, there's a very regulated transfer process. We expect that, even with all our attention and focus, and GSK's focus, we expect that to be done by the end of 2024.
I think quite interesting, this was an area that, where we actually was a key just a focal point for GSK to make sure that they were actually dealing with a partner who they believed could do the tech transfer. So I think that the four years is quite a competitive timeline. With regards to the inventories, I think we will gradually take them over because the inventories of finished goods sitting with their sales subsidiaries, we will take these over as soon as we are ready to take over distribution in the individual markets, which will happen according to the plan during 2021.
The inventories of work in progress and raw materials, we will take over as soon as we start moving the individual parts of the manufacturing chain. That was the inventory part. On the gross margin, we say more than 50%, you say, "Well, why not 80%?" 80% is about 50%, you're right. I think there's no doubt that these products are highly profitable products. I think a lot of the future margin is really dependent on the synergies we can harvest out of moving the products here.
So far, I think we are not ready to say more than 50%, but remember here again, I think even delivering 50%, then we are absorbing probably like five to eight percentage point of existing costs that Bavarian Nordic will have, irrespective of this business here. I think when it comes to the expected growth rates, we are not expecting any of the sales growth to be driven by unusual price increases as well at all. They would be driven mainly by volume increases. On production capacity, Paul, I don't know if you want to add a word to that?
Sure. Right now, one of the things that this deal is doing is allowing us to utilize our spare production capacity in a much more optimal way. In 2024, when we have transferred the products, the current facility, as is, will be pretty much taken out of producing both Encepur and Rabipur, and there will still be some room in there to produce JYNNEOS. However, that's one of the reasons that we're also investing in new clean room suite that will be independent. That will also come online around about the same time, in 2024, and that will obviously then expand our bulk capacity to produce additional products in parallel and/or look at bringing other new technologies in, moving away from the eggs. That will increase our bulk capacity.
In terms of the fill-finish, Rabipur is a freeze-dried product and will be manufactured here, and it's an ideal fit for our new facility, which has a large freeze-drying capacity. Encepur, however, is a filled syringe, which we don't have the technology for here, so that will be outsourced. That means that while we are utilizing the fill-finish capacity in a much better way, there is still capacity for other products, RSV, to come online or for third-party fill-finish.
Great. Thank you. Then maybe just one last question, just on the growth guidance, sort of modest guidance compared to what delivered previously. But can you just elaborate a little bit on the rabies vaccine? I mean, in the Western world, I guess most are vaccinated once when they're bitten by an animal. So how do you see the growth potential compared to, well, what Black is doing right now with the distributors and with the sales force? Is there anything left to penetrate, or are you maybe considering going outside the developed markets there?
I think, yes.
Yes. No, we're not thinking of going outside the developed markets. We'll focus on the markets where GSK currently is also focusing. I think one of the main areas for potential growth is in securing supply. If you look at the number of stock-outs over the last few years by both suppliers, the competition, and also GSK, they're quite significant. I think with a much dedicated focus, don't forget, we'll only have three commercial products, which will have our full 100% attention, we believe that there is a way of increasing the sales for Rabipur. With Encepur, it's a little different in that, yes, there's also stock-outs, but I think the main area there is an expanding market, which currently right now doesn't have a lot of marketing and sales efforts.
We believe, again, with a dedicated force, really putting efforts into that, we can increase our market share, which is expanding in Europe.
All right. Got it. Thank you very much.
Your next question comes from Niklas Mallin. Your line is open.
Thanks. My questions on the deal have actually been answered. I just had one remaining on your cash preparedness and the number that you quoted on the slide. Does that include the priority review voucher that you received from approval of JYNNEOS? Thank you.
Thanks, Nick. That was an easy question. No, it does not include the priority review voucher. We have, obviously, now with the approval of JYNNEOS, we have received the voucher, and we intend to sell it. We have received some interest now that we have it in our hands, but it's not included in any of our guidance, the potential proceeds.
What's the timing on when you might sell that voucher?
I think it could be any time, it could also be during 2020. I think basically, we are still in a very strong financial position. The market works the way at the moment, we could sell it tomorrow if we wanted, we would have to compromise a little on the price. We could sit tight a little and hopefully get a better price. We have offers already, I think we, as we are on, fortunately, in a strong position, we don't need to rush and sell it.
All right. Thank you.
Your next question comes from Peter Welford. Your line is open.
Hi, thanks for taking my questions. firstly, just with regards to the transfer of both the manufacturing and the distributors, are there any penalties at all within the contract if you miss those timelines? I guess I'm thinking particularly on the manufacturing, where vaccine manufacturing has proven pretty difficult at times. are there any sort of requirements as far as a back end, I guess, at which point you have to fulfill certain requirements for transferring both the bulk and also the fill finish? Secondly, I wonder if you could just talk about, a bit about the synergies with JYNNEOS for the monkeypox at all. does this, I guess, influence your thinking as to how that should best be rolled out and in which markets?
That sort of brings me on to the next one, which is, I guess, looking at the market in which you say the majority of these revenues are in, it looks as though obviously Germany, and then, and then the US for rabies, but then, I think you said Sweden for Encepur. I guess curious, is the opportunity here to expand those into new markets? Also, how that then fits with your thinking with regards to maximizing the monkeypox opportunity, which I think you've talked about largely being the US more? Thank you.
Thank you, Peter. First question, the transfer of manufacturing. I think that that is really based on a cooperation between the two partners. There are no penalties if we don't stick to the timelines. I think we have already spent considerable time with GSK to develop detailed tech transfer plans. I think it is important for both parties to be successful in this tech transfer. I think GSK have absolutely no interest in this not happening. First of all, their benefit of this is that they can get the two last products they have manufactured with these technologies, they can get it out of their manufacturing facility. That's really advantageous to them, but they also want to make sure that the market is supplied.
It would significantly hurt their reputation if we were not able to supply to the market. What convinced them to go with us, I think, is actually our expertise within manufacturing, where we gave them comfort on the capabilities to actually do the tech transfer. We are quite comfortable that with our expertise and experience within manufacture of live viruses, we can handle this transfer quite safely.
Shall I take the synergies?
Yes.
You have a question related to potential synergies together with JYNNEOS. You're right, there are gonna be a lot of synergies, because obviously for the monkeypox indication per se, we see that very much as a traveler's vaccine. Which obviously is fits hand in hand with Encepur and actually how Rabipur is mainly sold in Europe. In Europe, the rabies vaccine is basically more of a prophylactic for people traveling to endemic areas. That fits hand in hand, and how we could sell and distribute the JYNNEOS in terms of the monkeypox indication. In terms, obviously, of smallpox, that's really a slightly different sales, where it's directly to our established relationships to the government, to DOD. There again, there are sales directly to DOD of the Rabipur as well.
I think some of our existing relationships with the U.S. government are synergistic for the products we're just acquiring, obviously, what we need to build up in terms of supporting travelers vaccines will be highly synergistic for what we plan to do with JYNNEOS. That's great. Thank you.
Again, ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the hash key. Your next question comes from Carsten Madsen from SEB. Your line is open.
Yeah, thanks a lot. Carsten from SEB. I was just wondering if you could talk a little bit about how this deal will change your CapEx expectations until 2024, maybe? You outlined a lot of numbers about the revenue and potential margins, but to me, I'm a little bit unsure whether you need to do any additional CapEx investments in order to realize the full potential of this deal, or whether you can already do it on your existing setup. Thanks.
Thank you. CapEx going forward, I think what we are embarking to do with regards to our site here in Kvistgård, is that as these products will consume a large portion of our existing capacity, we are planning to expand with a dedicated clean room suite here in Kvistgård, which will enable us to manufacture different products in parallel, which we cannot do today. That is an additional investment, which we probably would have had at some point anyway, disregarding this project here. We anticipate that to be around, like, EUR 30 million-EUR 40 million during the next three to four years.
The cost for this is included in your sort of, not included in your capital preparedness, but you have it in your plans, so you don't need to do another rights issue later in 2 or 3 years' time.
Exactly.
To finance this. Yeah.
Exactly. No, definitely not. I think we have a comprehensive financial plan stressing all the way to full profitability in 2024, 2025. We will be equally well funded post the rights issue as we have been in the past few years here.
Yep.
Even after the these modifications we need to do to the existing facilities here.
Just a note on that. You know, what I would say is that the planned rights issue is to help us transform the company into a profitable company, and with these products from JYNNEOS, we do anticipate quite a strong cash flow. With this, we're creating a strong independent vaccine company that will be able to drive its own investments moving forward.
Yeah.
Yep. Great. Thanks.
Again, ladies and gentlemen, if you have a question at this time, please press the star and then the number one key on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the hash key. I am showing no further questions at this time. I would now like to turn the conference back to our speakers.
Well, thank you, everyone, for joining this major milestone that we've announced today. Just before I say goodbye, I just want to remind you all there is another call scheduled for 3:00 P.M., which is mainly a Q&A call. You're welcome to join that call as well. With that, thank you for your time and your attention, and goodbye.
Ladies and gentlemen, this concludes today's conference. Thank you for your participation, and have a wonderful day. You may all disconnect.