Yeah. Thank you, operator, and good afternoon to some and good morning to the others, to this presentation of the Bavarian Nordic's annual accounts 2020. With me in the room, I have Paul Chaplin, President and CEO, and Henrik Juuel, Executive Vice President, CFO. Before I hand over the presentation, I will read the following statements. 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 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 you, Paul.
Thanks, Rolf. Welcome everyone to our annual accounts for 2020. If you turn to slide three, Bavarian Nordic is a fully integrated, profitable vaccine company that aspires to be one of the largest pure-play vaccine companies by 2025. We've built up a fully integrated infrastructure, so we have beginning to end commercial manufacturing, proven R&D capability, and now a commercial infrastructure supporting key markets in the U.S. and E.U. 2020 was about the integration of our two new assets, which were vaccines against rabies and TBE, which combined to create a portfolio of marketed products of four products. With that integration, we rapidly expanded as a company last year and grew by 40% with more than 700 employees. We have a really exciting pipeline with some late-stage assets. One is RSV, the other, as I'll talk more about, is COVID-19, both of which have near-term triggers during 2021.
Go to slide four. 2020, as I said, was a really important year. I think it was the beginning of our transition to become a commercial company. I have to say that despite the headwinds of COVID-19, we had a near perfect execution of our plans to integrate our two new assets against rabies and TBE. That is credit to all our employees at Bavarian Nordic. We even managed to maintain our guidance and our revenue, as you'll hear from Anders later, our revenue was in line with expectations, and our EBITDA and cash was even better than guided. This, as I said, was despite the fact that COVID-19 had an impact on some of our sales, but this was actually offset by better than expected JYNNEOS business as we received a more than $200 million order from the U.S. government.
It wasn't all about smallpox and JYNNEOS. We actually were able to gain or maintain our market shares for rabies and TBEs despite the difficult markets. It really endorses our commercial strategy that we believe these assets were the key focus. We can actually grow these assets better at Bavarian Nordic than their predecessors. Other key drivers of activity in 2020, we finished the expansion of our commercial manufacturing and have now added a commercial fill finish capability, and we're already beginning to transfer our first product, JYNNEOS, onto the line. We licensed the COVID vaccine asset from AdaptVac. Now with encouraging preclinical results, which I'll walk you through in the coming slides, we have decided to accelerate this program and enter phase II, which I'll talk more about in the coming slides.
On slide five, thanks to the strong support from new and existing shareholders, we were able to complete an offering this week where we raised just over DKK 1 billion by issuing new shares. This investment will now allow us to kickstart our COVID program and move that into a large phase II study, which I'll talk about. The whole supply of vaccines, COVID vaccines, has really shown that there are a number of bottlenecks in the manufacturing and supply of vaccines, because as I've said many times, the production of vaccines is a difficult task. We also want to use some of the proceeds to have the flexibility to potentially take advantage of opportunities where we could utilize our manufacturing capabilities to produce for third parties.
The rest of the proceeds is really to ensure that we can continue to execute on our strategy, which is expanding our commercial portfolio, potentially through additional M&As, and to strengthen our cash position. On slide six, one question I've had very recently, obviously with the announcement that we're moving forward with COVID, is, "Aren't you a little late, and is there really a need for a new COVID vaccine given that there are a number of vaccines already approved?" Well, it's true that great advances have been made, and there are a number of vaccines approved and more to come. However, the durability or how long-lasting that protection is, or the breadth of that protection that is afforded by the current vaccines against the various circulating variants is unclear.
It is, however, clearer by the day that COVID-19 is not going to be eradicated. It is a disease that will remain with us and have to be managed through frequent vaccinations. It's likely that regular boosters are going to be required to boost that protective immune response to protect us from the ongoing disease. What we're hoping to do with our candidates is actually to demonstrate that this vaccine candidate, which has some excellent preclinical data, really showing that it's highly immunogenic, can act as a universal booster to people previously vaccinated, increasing the durability of the response and providing a broader response against the various circulating variants that we see today. If we go to slide seven, just to remind you what the candidate is.
It's a capsid virus-like particle platform, which was licensed in from AdaptVac, which is a technology that was born out of Copenhagen University. This is a highly flexible platform where one component is not specific to the specific disease or how the vaccine is designed. The actual capsid itself can be manufactured and used in any vaccines using this technology. The specific part of the platform is the protein, which is manufactured with a small linker, which binds to the capsid at very high densities. This high density expression of the antigen of choice, in this case, the surface protein of SARS, is expressed in exactly the same way to the immune system as the immune system would see if it came across the virus.
For that reason, virus-like particles are normally highly immunogenic, as we know from the HPV vaccines, and one that we believe will be an excellent booster, in the current environment, where the majority of the population is likely to be vaccinated against COVID-19. If you go to the next page, this is the exciting or some of the exciting preclinical data that we reported earlier this week. We did a non-human primate study where we looked at various different regimes of the vaccine. I'm only showing one for simplicity. We looked at single vaccinations that were adjuvanted or two shots non-adjuvanted. Here I'm showing you one group where after the second vaccination, you can see that there are very, very strong neutralizing antibodies on the left-hand side of the graph, which is about 50x higher than the high human convalescent serum.
It's very difficult always to compare immune responses across studies and across different animal studies. If you remember many of the current vaccines that are currently licensed, two shots of, for example, the RNA vaccines, gives you comparable titers to the convalescent serum, not significantly higher titers as we're seeing here. These strong titers translate into a very robust protection from SARS when these animals are challenged. The graph on the right-hand side, you're looking at the viral copies following the challenge. The gray are the control animals at day two, four and six post-challenge. You can see apart from two animals, there is complete 100% sterilizing protection in all the animals that are vaccinated with our virus-like particle.
These two animals that have a small amount of virus at day two are significantly lower than the controls and completely eliminate the virus by day four. This is extremely strong efficacy data, again, superior to what has previously been published for other COVID-19 vaccines. Slide nine. Our partner, AdaptVac, together with an E.U. consortium, has actually started the first phase I/II study today, actually, I believe. There, they'll be looking at the safety and immunogenicity of this vaccine candidate with or without adjuvant in just under 50 healthy adult volunteers. The first data we expect to be reported in Q2. In parallel, we have now decided to also push forward into phase II, where we plan to start the study in Germany already in April, where we will be boosting people who have previously been vaccinated up to 200 volunteers.
As I said, looking for how strong that booster response can be, how durable the response is, and whether we can get broad neutralizing antibodies against the various circulating variants of SARS. We will be ready to potentially start a phase III after the summer. For that, obviously, we continue to look for further funding to move the program into phase III. Slide 10. A little bit about our RSV program. This year, we have started the human challenge study. This is where we will vaccinate volunteers with our highly promising RSV vaccine, and then challenge those individuals with RSV and look for, hopefully, a reduction in the viral load in the blood following challenge in the vaccinated individuals compared to placebo.
This will be pivotal key data that we'll be reporting in the second half of this year that will hopefully encourage us beyond what we already believe, that this is a highly efficacious candidate and support entering phase III next year. Slide 11. Talk a little bit about the integration of our two new vaccines, Rabipur/ RabAvert, and Encepur. At the beginning of the year, many investors, rightly so I guess, were concerned about the challenges that lay ahead. We were a company with no real commercial infrastructure or proven commercial capability, and we faced an enormous task to build up a new infrastructure that was capable of taking over some of the key markets as rapidly as possible, while in parallel, transferring the manufacturing process from our partner, GSK. As I said, sitting here a year on, it's almost a perfect execution of the plan.
I say almost because I'm a perfectionist. It probably was perfect execution of the plan. We now have a commercial infrastructure in place, in our key markets in the U.S. and the E.U. We've actually transferred to date, or I should say a few weeks ago, up to 18 countries, which covers more than 90% of the projected revenues of these two products. We've partnered with Valneva, another vaccine company in selected E.U. markets and Canada, and we've initiated the tech transfer. To remind you, the tech transfer, it's a lengthy process, unfortunately. It begins with taking over the packaging, which will happen already this year. Then we'll take over the fill finish, and finally the drug substance. To support that tech transfer, we've initiated the expansion of our bulk facility, which will be completed next year.
This will not only support taking in Rabipur and Encepur in-house, but will also increase our manufacturing capacity as we'll now be able to manufacture bulk product in parallel, greatly increasing our capacity. A very strong performance in 2020, despite the challenges that we faced, the unexpected challenges we faced with a worldwide pandemic. I'm extremely proud of the management and the employees and the strong support that we have obviously received from our investors, so thank you. With that, I'll hand over the presentation.
Thank you, Paul. This is Henrik Juuel, CFO speaking. Let's turn to a few slides talking about the commercial and our financial performance for 2020 and the fourth quarter. We will start looking into the rabies markets, where you will remember that the rabies market for Bavarian Nordic is characterized by two very distinct markets. We have the U.S. market and the German market representing the bulk of our rabies business, and the U.S. market, which is an endemic market, both has the post-exposure and pre-exposure segments, whereas the German market is a pure traveler's market or a pre-exposure market as we call it. If you look at how the U.S. market performed during 2020, then obviously the U.S. market was impacted by COVID-19 due to some of the lockdowns, but showed much more resilience compared to the European market.
If you look to the right, you will see that the German market has nearly been eroded due to COVID-19, as people are not traveling and not needing any rabies vaccines. As I said, I think the U.S. market, if we compare just the fourth quarter 2020 to the prior year, went down by 38%, which is, of course, a massive drop, but still a much more resilient market than the European rabies market. I think going forwards, I think we are, in regards to the German market, we are not expecting that to recover until we see travel resuming again. You will have seen in our guidance, I will come back to that in a few slides as well, that we are guiding with a range on the revenue.
The upper range of what we are guiding will assume that there will be some return to travel in the late third quarter and in the fourth quarter of this year. In the U.S., I think here we did see somewhat of a soft fourth quarter in the U.S. rabies market, simply due to, I think more than half of the states were in quite severe lockdown. If we turn to the next slide. The other markets relating to the other product that we acquired, the tick-borne encephalitis market. I think here we are looking at Germany only. This is only relevant for Europe, and Germany I think is a good proxy for how the market is doing in Europe.
If you compare the fourth quarter 2020 to 2019, you will see that it's slightly down, but close to the same level. We did see some good signs in the third quarter of 2020 that the market was recovering. I think as we all know, I think then in the fourth quarter, many markets went into lockdowns again, and this had somewhat negative impact also on the TBE market. I have to say, though, that the fourth quarter is typically a low season for the TBE business. I think for the TBE markets, I think these are clear evidence that there is the underlying demand is still there, and it's all about the access to vaccinations. The access, you can say, is relevant from two perspectives. First of all, there are some of the restrictions.
In some areas, people have simply not been able or allowed to go to their physicians. We have also seen situations where people basically self-impose restrictions, and they are afraid of going to the doctor until it's more safe out there. With regards to 2021, I think we are, of course, opening for a very soon reopening of those key markets in Europe. Remember the main vaccination season that kicks off very soon, typically in April. That's when we start to see the larger volumes of TBE vaccinations. Hopefully, we are having a gradual opening of these markets in front of us. That was a little about how the markets have performed for these two products. Let's look at our specific performance. If we, again, first start with the rabies business.
If you look at the full year, it is 35% down compared to 2019 when GSK was managing this business. That is, of course, a mix of basically the European market being nearly all gone and the U.S. market being somewhat down. With our significant market share gains in the U.S., we have, to a very large extent, compensated for that loss of market in the U.S. I think all in all, I think with a strong performance in U.S., we are really pleased with the rabies performance for 2020, where we managed to gain market share. For the fourth quarter, we did see a drop in market share from approximately 79% in the third quarter down to 70% in the fourth quarter. That was fully expected as the competitor came back after a stock out situation.
I think the current market share level is still significantly above the market share that the RabAvert in the U.S. had prior to the stock out situation. Strong performance in the U.S. We just need to see, again, the reopening in the U.S., first of all, to drive both the post and pre-exposure market. Of course, in Europe, we need to see travel resuming back to something a little more normal. On the next slide, our Encepur performance in the TBE market. Here we have seen for the full year a drop compared to 2019 of 14%. This is all explained by the COVID-19 impact. Here it's really not the demand, as I said, that has been impacted, but it is the access to vaccinations that during the second and third quarter actually lowered the market size.
I think what we are really pleased about with our performance here is that we have managed to consolidate our position. Historically, GSK did suffer market share loss to our key competitor in the market. We, during 2020, which was our first year of commercialization, we managed to consolidate our position and keep our 30% share of the market. Now it's really all about driving further market share gains. Then, of course, again, as I said, the upper end of our guided scenario for revenue does reflect that we are seeing a reopening of the market soon so that people can get access to vaccinations. Next slide. I have a few slides now on the financial performance of 2020. These are not breaking news, as we actually came out with and pre-announced our financial results end of January.
I'm happy to say that there has been no changes to these figures. They are audited now, and they are 100% in line with the numbers we pre-announced in January. To take them from the top and down, DKK 1.852 billion in revenue for the year against a guidance of DKK 1.9 billion. Remember, that was the guidance that we issued in February before anyone knew anything about the impact from COVID. We do regard this as meeting the guidance. If you look at the donut chart to the right, you will see the breakdown of the full year revenue. Our highest revenue product was Rabipur/ RabAvert, our rabies business, DKK 628 million of revenue in 2020, despite the impact in particularly on the European part of the business. As number two, we have our smallpox business with JYNNEOS, both BDS, but also finished products to the U.S. government.
On the third place, we have the Encepur product, DKK 455 million. Remember, we also got a milestone payment from Janssen when our Ebola vaccine was approved, DKK 67 million. Finally, we had some contract work. Primarily sponsored by BARDA and related to our CMC work for our fill-and-finish facility and support to the freeze-dried phase III trial. If you look further down the P&L, you will see that our R&D expenses for 2020 came in DKK 341 million, so somewhat lower than in 2019, and this is simply due to the phasing of our main pipeline asset, RSV, where we spent more money in 2019 and not so much in 2020. SG&A costs came in at DKK 564 million, significantly above the 2019 level and explained by, of course, the commercialization of our business.
We also sold a priority review voucher and which was finally closed in January 2020, and that brought us DKK 628 million in additional cash and income. Right at the bottom, you will see our EBITDA that ended at DKK 740 million. Above the latest guidance we issued of DKK 725 million and significantly above the DKK 675 million we originally guided in EBITDA in February 2020. Turning to the next page. Just a few words on our cash flow and the balance sheet. Basically, on the cash flow, we saw it was more or less neutral for the year, - DKK 5 million net cash flow. Cash flow from operating activities was positive, of course, significantly positively impacted by the sale of the priority review voucher. Some negative contribution from working capital, where we, during the year, increased our inventories as we took over markets from GSK.
Cash flow from investment activities includes several movements, selling and buying securities, depending on the cash we had at hand. If you look at the real tangible investments, it did include a little more than DKK 200 million of investments in property, plant, and equipment related to the finalization of our fill-and-finish plant, also the initiation of the expansion of our bulk facility. Furthermore, the investment line also includes payment of milestones to GSK amounting to nearly DKK 400 million. Cash flow from financing activities, we saw a positive contribution of approximately DKK 1.3 billion, and that was the net impact of the significant rights offering we did in the beginning of 2020, and where we used some of that to pay back the bridge loan we took in December 2019 to pay GSK the upfront consideration for the acquisition.
On the table to the right, I don't want to go too much into the details of that, but just highlight the securities, cash and cash equivalent. Basically, our cash position, we ended at nearly DKK 1.7 billion and had guided DKK 1.6 billion, so still quite well above the guided number, which gives us a good and solid position. Remember, we still have a deferred consideration to GSK of DKK 2.8 billion, and we are going to continue investing in the expansion of our plants. Therefore, it makes a lot of sense now we are embarking to advance our COVID-19 program further, to go out and raise the cash for that, which was never in our original plans. Next and final page in the presentation here. I will talk a little about our guidance for 2021.
We are guiding at this time an interval. Revenue will be between DKK 1.9 billion and DKK 2.2 billion. The low end of this guidance here reflects a scenario where a lockdown continues beyond the first quarter and into the second quarter, and particularly in key markets like the U.S. and Germany, where we have the majority of our business. The higher end of the revenue, but also the EBITDA guidance, that reflects a scenario where we are going to see a gradual reopening now, and continuing into the second quarter, which will allow people access to vaccinations, but also which will eventually translate into traveling picking up in the third and fourth quarter of this year. We are not anticipating any impact on our smallpox business and our Ebola business as we speak today.
The EBITDA guidance is between DKK 100 million and DKK 250 million, and again, reflects the same scenarios as the revenue guidance. We do expect that to end the year with a cash position of between DKK 1.4 billion and DKK 1.6 billion, and this includes net proceeds of approximately DKK 1.1 billion from the private placement we did earlier this week. R&D spend for 2021 is expected to be at approximately DKK 750 million, including up to DKK 200 million to support phase II and the scale-up for our COVID-19 vaccine. The latter, we are expecting to capitalize. Therefore, I think the amount that you will find by the end of the year in the P&L will be approximately DKK 550 million in R&D. In order to understand our cash position by the end of the year, we have added some notes below.
We are continuing to invest in our facility expansions and also in the tech transfer from GSK. That will amount to a total of DKK 650 million in 2021. As part of the whole transfer from GSK, we will take over the remaining markets during the first half of 2021. As we also start taking over the packaging, this will increase our inventories. Therefore, we expect working capital to increase by approximately DKK 300 million. We will also continue to pay milestones to GSK during 2021, probably at a level close to what we paid in 2020. Of course, these milestone payments are closely linked to specific milestones in the whole integration project. Our cash position also assumes that we make a drawdown of EUR 30 million existing credit facility we have with the European Investment Bank.
I think that's basically some of the important assumptions to fully understand the cash position by the end of the year. To the right, we have summarized what are some of the key activities and milestones that will keep us busy again in 2021. If you look at within R&D, I think it is, of course, to complete the phase II human challenge trial that we have initiated in RSV, where we expect to actually read out in September, providing us a good and sound basis for deciding on a potential phase III in 2022. The phase III in 2022, we are already this year preparing ourself in terms of preparing the manufacturing, basically the material that we need for that potential phase III.
Together, these two, the Human Challenge Trial and the preparation for the phase III, will be the most significant expense within our R&D budget for 2021. The new thing here is, of course, also as we have announced, we are now going to kickstart the advance of the development of the COVID-19 vaccine candidate. We have committed to invest up to DKK 200 million into a regulatory phase I/ II. We're starting and scale-up of manufacturing to phase III volume levels. We are continuing to seek funding even for those phases, but in order not to lose momentum and lose important time in this project, we have decided to kickstart basically the development. We will also continue the work towards getting the freeze-dried version of our smallpox product eventually approved, and we will continue working with intravenous administration of our new brachyury containing construct as well.
On the commercial side, I think we have the full commercial infrastructure in place during 2020. I think we did extremely well and had a strong brand performance. We are in a good position for 2021 to basically drive profitable growth for these products. Of course, we are very dependent on how COVID-19 develops. Definitely we have a good starting position. Key focus area will also be to take over the physical distribution for the remaining markets. As Paul alluded to earlier, we already took over 18 markets corresponding to more than 90% of the total revenue from these two products. Of course, I think it's also all about improving the awareness of Bavarian Nordic as a key commercial player in the markets amongst the healthcare physicians.
On the manufacturing side, this year will actually be exciting because we have completed the construction and qualification of our brand new fill finish facility, and this year will be the first time that we are actually going to fill commercial products on the line. Quite an exciting milestone ahead of us. Also in 2020, we initiated the expansion of our bulk facility, and the plan is that this year we will complete the construction of that. Of course, we will also progress the whole technology transfer of the two acquired products, which is a longer project, eventually ending with taking over bulk in 2024. Again, I think busy calendar ahead of us for 2021 with some quite exciting milestones ahead of us. With that, I think I will turn the word back to the operator and ask for questions.
Ladies and gentlemen, we will now begin the question-and-answer session. If you wish to ask a question, please press star and one on your telephone and wait for your name to be announced. If you wish to cancel the request, please press the hash key. Once again, if you wish to ask a question, please press star and one. Your first question comes from the line of Michael Novod from Nordea. Your line is open. Please ask your question.
Thank you very much. It's Michael Novod from Nordea in Copenhagen. A range of questions. First to the ABNCoV2 COVID vaccine. Could you comment a bit on, I don't know whether you can, but the assay used for your vaccine when measuring neutralizing antibodies in non-human primates? Secondly, also the route of challenge in the non-human primates and the dose, as well as whether you see CD4 and CD8 T cell responses in these monkeys. That's for the COVID. Secondly, on the Encepur and Rabipur/ RabAvert, is there any chance you can try to, at least in ballpark frames, try to give us where you see those two products split-wise in 2021? Just so we have a feeling of how you see it.
Hi, Michael. This is Henrik. I think on the Encepur or Rabipur, we feel that it's a little too early to start breaking down our revenue expectations for 2021, simply given the uncertainty we are facing with regards to reopening. I can only allude to what we have previously said about these two products here, that we generally expect that for the Rabipur or the rabies business, this is a business that should normally grow low single- digits at least, just the market. On top of that would come our, you can say, market share and business as well, whereas the Encepur business, in normal circumstances, should be growing at least high single-digit numbers annually. Of course, I think it is uncertain times, and therefore, we prefer to wait a couple of months to become more specific on the exact breakdown of our guidance.
Okay.
On the COVID question. The assay was against a live virus in a BSL-3 facility, very similar to how most people are looking at the neutralization. The challenge dose was one times 10 to the five TCID50, which is in line with others. The challenge dose and strain varies from the various different companies, but some have gone as low as one times 10 to the four, and some have gone as high as 10 to the six or two times 10 to the six. We're at one times 10 to the five.
CD4 and CD8?
T-cells. Actually, the interesting thing with the virus-like particle is that both in mice and in the primates, we really didn't see a very strong induction of T-cells at all. In the post-challenge, one of the interesting things is the animals that had a stronger protection, or at least really significantly reduced the viral load stronger, had a very low T-cell response, meaning that it really looked like it was just the neutralizing antibodies that were clearing the virus or infection.
Okay. Thanks a lot.
Your next question comes from the line of Peter Welford from Jefferies.
Hi. Yes. Thanks for taking my questions. I've got a few. Firstly, just sticking with COVID-19 for a minute. Just so we can understand on this, firstly on the German study that you're doing, the phase II. Am I right in understanding that's a single dose? Am I right in understanding in volunteers who have either already been vaccinated, and is that with any vaccine, or alternatively prior infection. I guess just trying to understand, are you going to be doing antibody testing pre-enrollment of patients in that, or what are the sort of enrollment criteria to determine that? Presumably then you'll be measuring neutralizing antibody titers to your dose. Second question, just on the manufacturing of this vaccine. We've heard from a variety of different companies talking about the pros and cons of the different technologies and manufacturing.
I guess from your perspective, could you talk a little bit about how you manufacture this vaccine and the ease, particularly the protein part, the ease with which you can manufacture the various protein fragments that are needed for this. Equally, do you have the option to use this technology beyond COVID-19 from AdaptVac or is it solely at the moment COVID-19 and anything beyond that would require a separate negotiation?
Just on swinging a bit different than Henrik, I may just be being really silly here, and I'm not understanding. Could you just run through, just with regards to cash investment, how this works for a minute? I'm a little bit confused as to what this DKK 650 million does not include because we have the milestones to GSK, I think you talk about roughly the same as last year. There's then also the investment in COVID-19, which could be up to DKK 200 million. The CapEx in the facility, which I think you talk about, you know, in total could be DKK 650 million over the year. Could you just- you said all these add up, I get to more than DKK 650 million.
Could you just explain to exactly which number are included in the DKK 650 million and what we should be considering to be investment this year? Thank you.
I'll try to answer your COVID question. If the phase II that we plan to run will be in people that have already vaccinated, and it will be a single-shot non-adjuvanted and we will be looking exactly to your point, how strong that boosting in response is in terms of neutralizing antibodies, everything actually, but looking at whether you get a broader neutralizing response against the various variants. Unlike the monkeys, where we only look at SARS-CoV-2, we'll be looking at the other frequent circulating variants that are currently around. In terms of the inclusion criteria, you know, with Fulcrum together, the protocol and actually still plan, have those discussions.
We want to keep it as simple as possible so we can go as fast as possible. We'll probably just need proof of vaccination. Obviously, they will have pre-bleed and titers done. That won't be part of the screening. On manufacturing, as I tried to explain, there are two components. There's the bacterial capsid, which is currently produced in E. coli. It's a relatively simple manufacturing process, although nothing is simple with manufacturing, but it is in bioreactors, very simple, very high-yielding process. You could produce very large quantities of that and have it stored. The recombinant protein for this vaccine is currently produced in insect cells, but other manufacturing processes like yeast could be used. Again, the process is a relatively simple one. Then you combine the two products together, and the purification's also relatively simple.
Although we are trying to see whether we can have a universal boost giving broad responses, if that wasn't the case and you really needed to make new vaccines against new circulating variants, I believe this platform is as fast as RNA, particularly if you've got quantities of the capsid already stored. You had a question about the license from AdaptVac. Is it only for SARS? That is exactly the case. It's for SARS only currently. If we wanted to expand that, obviously, that's a new discussion with AdaptVac. I think I covered everything you asked.
Yeah. No, thanks, Peter. This is Henrik.
Yeah.
To your question on investments, I think our total investments anticipated for 2021 amounts to DKK 650 million. Approximately half of that relates to the expansion of our bulk facility. Let's just call that DKK 325 million then. To finalize that, which ends in 2022, that number happens to be DKK 650 million, and I think that can create a little confusion, of course, because the full investment over the next two years to expand our bulk facility is expected to be DKK 650 million. For 2021, total investments is as well DKK 650 million. Half of that goes to the bulk facility, DKK 325 million. Another DKK 150 million-DKK 200 million is related to the tech transfer project ongoing. That's a mix of capitalized expenses and some equipment that is required for that. Then there is a chunk of other investments, typical maintenance type of investments.
I hope that clarified it. I think these 2x DKK 650 million can confuse the picture a little.
Sorry, to be clear then, when we consider overall then the cash flow, you've got the DKK 650, but then on top of that, we need to consider the payments to GSK of roughly DKK 394 if it's similar to this year. On top of that, then the capitalized R&D for the COVID-19 vaccine.
Correct. I think when we issued the guidance, we have laid that out under the cash position assumptions, but you're right.
Yeah. That's great. Thank you.
Thank you.
Once again, if you wish to ask a question, please press star and one. Your next question comes from the line of Alex Cogut from Kempen. Your line is open. Please ask your question.
Hi. Thanks for taking my question. Hi, can you hear me?
Yes.
Yes.
All right. I was just wondering, with respect to your COVID vaccine, how are you looking to fund the phase III? Is it more towards government contracts, or do you expect some corporate partnerships? Ultimately, where do you expect the demand to come from for your candidates?
Yeah. Hi. In terms of funding, I think there are a number of sources, and we're not bound by any of them, to be honest. We're open to any sort of funding that we can achieve. I think, last year, the E.U. countries made a decision that they would not really fund the development of the vaccines but would have advanced pre-purchase orders. That, I think, in my opinion, has backfired because the E.U. is not as advanced in the queue for the vaccines as other countries who have actually invested in the development as well as in the advanced pre-purchase orders. I think that has caused a change in attitude. Currently, we have seen a change in attitude, that there are a number of governments approaching us, interested in potentially funding the development of the next generation COVID vaccine. It could be a government.
It could be, again, our usual friends across the pond, the U.S. government and BARDA. Having said that, it could also be a corporate sponsor who is also interested in a universal booster. Where will the demand be? If I and other people are right in that COVID is not going to be eliminated, and that there will be new variants and persistent disease, that means there is going to be a need for persistent vaccinations and boosters. Some of the existing vaccines that are already approved, there are articles out there, so it's not really my own opinion. There are articles out there questioning whether, for example, the adenoviral-based vaccines can actually be used as frequent boosters. If that turns out to be the case, they can't because of vector immunity, then the three main players that are currently supplying vaccines would be out.
The other thing is, as I said, based on the data currently that we have, this is a very strong immunogenic candidate that we have that could really create a very strong boost response. What we're seeing currently with the first-wave COVID vaccines is that they're highly effective, which is fantastic, but they are actually inducing very low levels of neutralizing antibodies. How durable those antibody responses are, we don't know. If they wane off as quickly as some data is suggesting, you are going to need frequent boosters. I think the demand really is a booster vaccine.
Understood. That's very clear. Thank you. With respect to your RSV program, how do you expect the human challenge data to still inform the design of the phase III? With respect to the phase III trial design, how big of a trial do you expect to need considering potential behavioral changes that could lead to still a lower RSV season in 2022 and 2023?
Yeah. To your point about the phase III design, the reason we postponed the initiation of the phase III this year is simply because of the rates of RSV are extremely low due to the social distancing and lockdowns last year, and we anticipated it may happen again this year. We are going to keep an eye on the RSV rates, obviously, because we need to make a decision, do we go next year or not? To your point, we're looking at 12,000 to 14,000 subjects with certain assumptions of efficacy and certain assumptions of attack rates. Obviously, if the attack rate of RSV remains very low, we probably can't be conducting the study in the same way we had to postpone.
It's all about keeping an eye on the rates of RSV this year and making a judgment call. Is it the right time to go or not? In terms of what do we expect to see and how could it affect the phase III design. We're looking hopefully for a significant reduction in the viral load in the blood post-challenge compared to the placebo. That would give us an indication of the level of efficacy that we could expect to see in the field. Without that indication, you are basically making an assumption in your statistical design for your phase III. After the human challenge, if it's positive, of course, which we anticipate, we will get a stronger indication. Are we looking at a 50% efficacy? Are we looking at a 60% efficacy or something higher?
That can help design the study, even making it smaller or larger, which is obviously one of the components, is how good your vaccine is. That's what we hope.
Great. Thank you for the color.
There are no further questions at this time. Please continue.
Okay. Well, thank you everyone for your time and for the questions, and I hope you have a great weekend.