Bavarian Nordic Aktie

Good day, and thank you for standing by. Welcome to the Bavarian Nordic Q2 and Half Year Report for the 6 Months Period Ended 30th of June 2026 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, CEO, Paul Chaplin. Please go ahead.

Thank you, and welcome, everyone, to our half year conference call. Today, we've announced our Q2 results. And before I go into them, and then hand over the call to Henrik Juuel, the CFO, obviously, we've announced tremendous results today driven by very strong growth across the whole commercial portfolio. And before I get into those numbers, I just want to say these sort of numbers don't happen by chance. It's an endorsement of our strategy, but more importantly, it's an endorsement of our employees and their hard work and dedication, but also our partners around the world and our healthcare professionals who work together with Bavarian Nordic to really ensure that we improve the access to our life-saving vaccines.

So for the first half year, we have reported just over DKK 3 billion in revenue and an EBITDA margin of 35%. As I said, this really equates to a tremendous result. On Travel Health, we've seen a tremendous growth of 26% for the first 6 months compared to this time last year and actually 45% for the second quarter. And that's driven for the whole portfolio, but primarily driven by rabies and TBE, the first assets we acquired back in 2020, but also by a very successful launch for our chikungunya vaccine, Vimkunya. We have received additional approvals in both Switzerland and Canada for Vimkunya, and we have continued to launch in different countries and now have 15 countries where we've launched the product, and that launch plan will continue into the second half of this year. And I would say it's going faster than the original plan that we set out last year.

Importantly, these numbers are also contributed by our Public Preparedness business, which is exceeding our base business of DKK 1.5 billion to DKK 2 billion, and we already have contracts worth DKK 2.3 billion in the books for this year. And this strong performance that we've seen in the first 6 months is leading to an upgrade in our guidance, which Henrik will talk more about in the coming slides, but essentially, we're confirming the approximate upper range of DKK 5.7 billion in revenue and an EBITDA margin of around 30%. We are also coming off the back end of a very strong cash position. And because of that, we have decided to launch another share buyback program up to DKK 750 million. So as I said, very, very strong financial numbers, driven by very strong commercial performance across the board, and that is translating into improved access for people who want to receive our life-saving vaccines.

Turn to the next slide, Slide 6. So as I said, on Travel Health, we're really seeing a strong performance, 26% growth compared to this time last year, the first half of the year. And if we look at rabies, we are really seeing a strong growth, 40% growth for rabies. If we look at both U.S. and Germany, our key 2 markets, these are both above 20%, and we have very strong market share and maintaining that strong market share in both those key markets. But also there is outstanding growth in other markets, in Europe, with a 91% improvement compared to last year. And this, I have to say, comes down to strong brand performance and an endorsement of our strategy of turning these assets around. We are also obviously seeing continued outbreaks of rabies in the U.S., but I would say we're now moving into the fact that travelers are really much more aware of the devastating effect of rabies, and rabies is becoming one of the standard choices of Travel Health vaccines.

On TBE, we're also seeing strong growth compared to this time last year, and we're seeing a slight improvement in our market share in the key market in Germany. And importantly, and we've talked about this in previous quarters, we have extended the shelf life now to 24 months based on the latest data, and we believe that will have improvements moving forward in terms of our sales. While I'm focusing on this slide to really only talk about rabies and TBE, we shouldn't forget that we are also seeing performance with [indiscernible], our other assets within the Travel Health portfolio.

Turn to the next slide, Slide 7. On Vimkunya, we are still very much in the launch phase. And we, obviously, as I already mentioned in the first slide, we've seen additional approvals in both Switzerland, Canada. Switzerland, we've already launched, bringing the total number of countries where we currently launched to 15. And Canada, hopefully, we'll be launching later this year. We've also submitted a dossier with our partner, Eurofarma, in Brazil, which is the first stage, obviously, of bringing this product to endemic markets. We are in the guidance readjusting the Vimkunya sale guidance down to DKK 200 million for this year. And while we are seeing encouraging demand in Europe, particularly in Germany, with some other markets that we've launched, such as the U.K. In the U.S., we are seeing headwinds due to the lack of the publication of the ACIP recommendation.

This we've talked about before, and unfortunately, while we were hoping that would be already published, it is delayed, and this is causing, as I said, slight headwinds in terms of convincing certain distributors and wholesalers to buy the product. But as I said, encouraging sales in Europe and other territories, and we really believe Vimkunya will be a future growth story as part of our Travel Health portfolio.

Public Preparedness on the next slide. A number of years ago, we guided the market to say that our base business, the Public Preparedness, would be somewhere between DKK 1.5 billion to DKK 2 billion each and every year. And that was based on the 5 to 6 recurring customers or governments that we have around the world. And I must say, since we have guided on that range, we have exceeded the DKK 2 billion range every year. Now that is primarily because we've gone through a number of different mpox outbreaks, which have obviously impacted [indiscernible]. And this year, the original guidance was DKK 1.8 billion to DKK 2 billion, again, based on the customer base that we've built up. And we have recently announced a number of new contracts, one was with the U.S. government, another was with an undisclosed EU government. And that's meant that this year, we've already secured DKK 2.3 billion in contracts.

And today, we're confirming the upper end of the range, the revised range of DKK 2.5 billion. And this really is an endorsement that we are seeing repeat business from the customer base. And I think really, we should be anticipating that our base business is more around the DKK 2 billion moving forward. We've also seen some regulatory improvements. The EU has approved the younger indication. So MVA is now approved for 2 years old, 2 years-plus. And this is important because children are the main targets in Africa where the disease is endemic and for future [indiscernible] orders. And of course, it now means that MVA in Europe and hopefully, we'll expand that to the U.S. and other territories. It will be approved for 2-plus. And there are ongoing studies looking at breast-feeding women and in younger children, that could potentially support an indication for the whole population.

This is not only important for access, ensuring that everyone who needs this vaccine can get access to the vaccine, it also improves the indication of MVA and obviously makes it harder should there be any competition arising in the near term.

If you go to the next slide, just a few words on the pipeline. We have a lot of life cycle management activities. These are activities that we invest in to support our commercial portfolio. A large part of the R&D budget for '26 is to support our Vimkunya, not only the approvals, but the regulatory requirements. So we have a number of ongoing studies in children, also an efficacy study, which is taking a significant part of the R&D budget. We also have an ongoing study where we're trying to improve the manufacturing process for our MVA smallpox mpox vaccine. This will actually read out preliminary results later this year. We have a study funded by DOD for equine encephalitis, which is currently in Phase I, and we have submitted a proposal for additional funding to move into Phase III, and those discussions are ongoing with DOD.

And we have 2 other assets that are in preclinical. One is for Lyme and one is for EBV. And today, we're actually announcing that EBV, we'll actually be initiating the Phase I study later this year. We had originally said that, that study would start in '27, but we're bringing that forward. And on Lyme, we have further work on our Lyme candidate and have an improved candidate vaccine that will now go into clinical development in '28. Lastly, I want to spend just a couple of slides talking about Lyme, because we are actually incredibly excited about the new candidate that we've developed.

So if you go to the next slide, Slide 10. A little bit about Lyme. The number of cases of Lyme disease are increasing both in the U.S. and Europe. It is a tick-borne disease caused by bacteria. And in the middle part of the slide, you can see the endemic regions in the U.S. and Europe. And this is caused by a bacteria that has 6 different strains. And we've been working on a Lyme vaccine for a number of years now, and we have refined our candidate. That will now protect based on preclinical data against the 6 main strains that we see in Europe and the U.S., and it's based on a new vaccine platform that was developed which we're referring to as the self-assembling antigen particle, or SAP platform. It's a protein-based nonviral particular vaccine that is designed specifically to stimulate very high immune responses in people, and high immune responses translates into better protection.

So go to the next slide, Slide 11. If you look at the left-hand side, what we're looking at here is a positive control Lyme vaccine. This is based on a technology that's currently being developed in the clinic by others. And here, you can see what we're looking at is the ability of the vaccine to stimulate immune responses that kill the bacteria that cause Lyme. And with the positive control, there's no protection or activity after 2 vaccinations. And you can see, you actually need 3 vaccinations to see bacterial killing, and this is at a level that is protected.

The second part of that graph is our vaccine candidate. And you can see that with 1 vaccination, you get bacterial kill at a level that is protective. That's equivalent to 3 vaccinations of the positive control. And if you give 2 vaccinations, you're now in a completely different league in terms of the immune responses in the bacterial killing. And then on the right-hand side, this is a mouse model where you challenge with infected ticks to the 3 different strains of Lyme. And with the negative control, there's no protection, you can [indiscernible] bacteria. And with 2 shots of that vaccine, you get complete protection against all the 3 different strains that are evaluated in this study. So we have a vaccine candidate that, in preclinical models, is better than the current vaccines that are being developed, whether they're based on RNA or based on other technologies.

And that I'm showing you in this data, this data is actually highly durable, long-lasting, in the mouse model, which is something that's also a weakness of the current vaccines that are being developed. So we're extremely excited about our Lyme candidate. In animal models, it certainly looks better than what's being currently developed by others. We will spend most of next year manufacturing the material and having discussions with regulators and then move into the clinic in '28.

And with that, I will hand over the presentation to Henrik Juuel.

Thank you very much, Paul. So let's turn to Slide #13, where we start looking into some of the numbers. First slide here is about the commercial performance for the second quarter and the first half year of this year. So second quarter, we delivered very strong revenue performance DKK 2.034 billion, more or less equally split between our Public Preparedness business and our Travel Health business, and that took us to nearly DKK 3.1 billion for the first 6 months. So very strong performance during the second quarter.

And if we just talk about the individual business next year, Public Preparedness first, DKK 975 million for the quarter, very, very strong performance. Supply to different customers but with the U.S. government and here, the EU, our EU partner, being the biggest receivers of product in this quarter here. That takes us on a half year basis to nearly DKK 1.3 billion, and we are well on track to deliver on the DKK 2.3 billion that we have secured for the full year. And confident we can deliver on our upgraded guidance of DKK 2.5 billion for the Public Preparedness business.

If we then turn to our Travel Health business, very, very strong performance. We delivered 45% growth in the second quarter and 26% for the first half year. With these products, one have to be a little careful looking at individual quarters, so I prefer talking to the half year in this case here as products are, some of them and to a varying degree, they are seasonal, but the seasonal pattern does not always remain the same year-over-year.

If we start with our rabies business, very, very strong growth of 40% after 6 months, and I think mainly driven by significant increased demand both in Europe and in U.S. driven by these outbreaks, we have seen impacts from rabies, both in Europe but also from travelers coming back to Europe. So very strong demand. U.S. and Germany basically grew by 20-plus percent. And at the same time, we managed to maintain or gain market share in this business here. So a very strong performance.

Our Encepur business, we delivered 17% growth, which we are very pleased with. We came out of the first quarter actually with negative growth, but that was based on a very strong first quarter last year. So we are very pleased with the 17% growth in our TBE business. As some of you will recall from our last earnings call, we have been struggling a little with shorter [indiscernible] risk for shelf life on our TBE product, and that has meant that we had to work, I think, very intensively with the wholesalers and distributors in the market. And we are very happy that we can sit here today and our commercial team have done a fantastic job in maintaining our market share during this position and growing the business, the revenue by 17%.

And as we have said previously, the current 24 months shelf life is an improvement over the initial 18 months we got at the end of last year, and we are very confident that we will work our way back to the 36 months shelf life, most likely during next year. So very strong performance by the 2 products we acquired from GSK back in 2020. Vimkunya, we delivered significant growth, obviously, on an easy background as we only launched April last year, DKK 78 million for the first 6 months. And as Paul already alluded to, we have taken down our assumption for Vimkunya, and we are now expecting approximately DKK 200 million in revenue and not the DKK 250 million we guided for previously. And this is all explained by the short-term headwinds that we see in the U.S. due to the lack of the MMWR publication.

Other markets are doing as expected or even better. Vivotif also showing strong growth. That's our typhoid vaccine, 19% growth. And this is an area where we have started to see some of the measures we took by employing an external sales force to help us drive demand in new channels has worked out, and we are starting to see this product actually growing in the market. So all in all, DKK 3.92 billion revenue delivered for the first half year. So very strong and satisfactory results on the top line.

So let's turn to the next page, which is our profit and loss. And here, looking at the quarter, again, DKK 2 billion in revenue, a very strong gross margin of 61%, driven by a favorable product mix, half Public Preparedness, half Travel Health, a lot in the high-priced markets. So that is impacting our gross margin positively. But on top of that, we have also seen continued very strong performance by our operations team, meaning high success rates in our production, fewer batches being scrapped, et cetera. So very strong performance leading to a high gross margin.

Total operating costs, so that's DKK 482 million. It's lower than what we saw last year for the quarter. But for the half year, it's spot on at the same level we saw in previous years. Lower R&D costs simply due to the timing, primarily of our chikungunya trials. And then we see the SG&A costs being higher, mainly explained by some of the expansions we have done within the commercial area, taking business back from our previous partner and building up our presence in new markets. But on a total level, total operating costs unchanged.

So for the quarter, turning down to the bottom line EBITDA margin of 45%, very, very strong profit margin, far beyond, we can say, our full year expectations, but of course, also driven, first of all, by the high level of revenue, which is diluting the OpEx impact and the strong gross margins as well. So 45% and on a half year basis, taking us also to a very strong EBITDA margin of 35%.

So let's turn to the next slide, where I just want to talk a little about our cash flow and our cash position. So if we first look at the cash flow from operating activities first half year, negative by approximately DKK 400 million. But here, you have to remember that, that is impacted by the very final milestone we paid to GSK early in the year, DKK 70 million. And you will see that in the second quarter, we had none of that, and we are generating in that quarter alone positive cash flow from operating activities of DKK 351 million.

I just want to comment also on the cash flow from financing activities, where you will see for the half year, negative by DKK 464 million. And please remember that, that includes our share buyback where the majority of the previous DKK 500 million program was executed during the first half year. So for the quarter, net positive cash flow for the period, negative for the first half year, but I have mentioned the 2 big reasons for that. The underlying business is generating good nice cash flow. And that's cash flow leads us to a very strong cash position currently of DKK 2.3 billion, allowing us to launch another share buyback program of up to DKK 750 million while still maintaining our financial flexibility to pursue our M&A strategy.

The next slide is elaborating a little further on this. And in principle, nothing new on this one. Just wanted to remind everyone about our capital allocation policy. First priority is, of course, that we invest in our current business and our pipeline in all the organic growth that we can secure. Secondly, we work to generate an expanded financial flexibility. And that second element used to include prioritization of payments back to GSK and Emergent BioSolutions. They are all behind us now, we owe nothing to the sellers of these products. And then thirdly, the cash we might have at that point in time, we are prioritizing for synergistic M&A opportunities and returning money to shareholders.

So we will, at any given time, we will try to balance our cash position with the expected cash flow generation in the future, taking the maturity of our business development pipeline into consideration. And based on all of that, we will evaluate how much cash we need. And at the moment, that balance has led us to initiating the DKK 750 million share buyback program. And our target with all of these initiatives is really to optimize our capital structure, including a suitable leverage of the company in the future.

Let's turn to my final slide here, which is just to talk about the outlook. So based on our performance year-to-date, we are upgrading our financial expectations to the year. Our previous guidance at DKK 5.5 billion to DKK 5.7 billion. But with the current order book on our Public Preparedness business, we are upgrading that to approximately DKK 2.5 billion, which gives a total revenue of DKK 5.7 billion. We keep the Travel Health guidance for the full year unchanged at approximately DKK 3 billion. And then our EBITDA margin, we have increased from approximately 28% to expected approximately 30%, driven, of course, by the upgrade on our expectations to the top line, but also by the very strong first 6 months and the very strong gross margin we have seen first half of the year.

So with that, I will give the word back to the operator and ask to open up for questions.

[Operator Instructions] We will now take our first question from the line of Thomas Bowers from SEB.

Just kicking off with the Travel Health. So you stick to the around DKK 3 billion in your full year guidance. So implied second half year-over-year growth is now minus 20%, or you can say minus 10% when you adjust for the partner sales. So my question is, is this mainly lack of transparency? Or are you maybe facing some capacity issues here in the second half? Then second question on the EBITDA margin, you lift that by 2 percentage points since the last upgrade and only a very small JYNNEOS lift here in the numbers. So does this actually imply that you see a structurally better gross margin improvement from the tech transfer now?

And if I may add to that. So if we were to assume that JYNNEOS were around those sort of midpoint of your long-term target of DKK 1.7 billion, DKK 1.8 billion, how should we think about implied EBITDA margin for 2026? And then just finally, just in regards to the share buyback. You plan to start here in Q3, but can you maybe just elaborate a little bit on when you expect the program to be completed?

Do you want to take them?

Yes. Thomas, thanks for the question. So on Travel Health, I think what we need to remember there is that, as I also said in my presentation here, that these products are, to vary degree, seasonal. And the seasons are not necessarily repeated year-over-year. I think, let's take TBE as an example. If you look at TBE last year, 45% of the revenue of first half came in Q1. This year, we actually saw, sorry, in the, of Q2, 45% of the revenue first half year came in Q2. This time, it's 60%, more than 60%. So there is often a shift between the quarters over the years.

I think what we can say on our Travel Health is that we are extremely pleased with the current performance. And I think we have taken it as far as saying that if the current trend continues, we will exceed the DKK 3 billion, but we feel it's prudent to see how the third quarter pans out before we do anything further on the Travel Health business. We should also remember here that we have supply products, TBE products, our product into the market with relatively low shelf life, and there is a risk that some of that will come back. We don't know that until they actually expire in the autumn. So there's a slight risk there, nothing to be concerned about, but something we are managing. But it's, of course, all baked into our guidance for the full year. But of course, if current trend continues, we will exceed the DKK 3 billion.

On the EBITDA margin is what we are seeing now a structural improvement. I think that is a little too early to say. And I think here, we need to remember that we are now running TBE and rabies in campaign. We have been running our TBE manufacturing the first half of this year. And we, or our team, they have been extremely efficient. The success rate has been higher than what we anticipated, which means that you can actually absorb more costs into your production. Now we are shifting to rabies for the second half. So we can't just copy what we saw in Q1 and pace that into the second half of this year. I think what we can hope for is that the whole concept of campaign manufacturing is paying off so that you manufacture the same product for a longer period of time, but that is too early to say.

And that's why I don't think we can say yet that the good performance is a structural sustainable improvement. And on the share buyback, when are we going to launch that? I think it can be, it can happen any time basically. We have no reason to postpone this. There are just some practical things, and we need to agree with the Board the exact date, et cetera, and with the banks and everything, but that is going to happen very soon.

Yes. Sorry, it was, yes, I can see it's Q3, but I was asking when it can be completed. Is that just going to be before the AGM?

Yes. I think that's a good question. It really depends, of course, under the safe harbor rules, there's a limit to how much you can actually buy in the market. The last one, DKK 500 million took approximately 6 months to complete. We have seen today there's extremely good liquidity. Hopefully, the recent news will create some more liquidity in this year, but I would say around 6 months, 6, 7 months, it will probably take. So we anticipate that it will be completed before our AGM. And as we have announced, we are intending to cancel those shares, but that will require an AGM authorization as well. So the timing would fit pretty well with that.

We will now take our next question from the line of Hakon Hemme from Danske Bank.

First, can you provide some color on the TBE market? You grew 17% and your competitor, Ticovac, grew with similar rates in H1, while you state that the German market only grew 3%. So what other countries are driving this market growth? And on Vimkunya, can you, your revenue declined in Q2 compared to Q1 during this launch phase. So is the downgrade of the full year sales only due to the delay of the CDC ACIP recommendation? Or have any of your launches in Europe not delivered as expected?

Henrik, can you take TBE?

Yes. Yes. So let me, thanks, Hakon, for the question here. I think on TBE, you're right, when you look at the market growth and our market share, we're growing faster than the market, significantly faster with the 17%. And then you would argue, okay, then you should be gaining more share. We are gaining share in the market. There are also other markets in Germany where we don't have all the market details, they're also contributing. And one thing to be aware of with this market data is that it's not perfect. It gives a good indication about in which direction the market is moving. It's typically lacking in terms of time compared to the revenue we are recognizing.

Remember, our revenue, we recognize that when we sell into the wholesalers. So that means probably the last couple of months in the second quarter, it's not even included in the market, because it's sitting with whole data still. And the in-market data is based on really consumption, pharmacies and other dispensing units. So I think we should be a little careful looking too much of that. But of course, they give a good idea about the trend is the market growing, to what extent approximately and how the market is doing.

And then there was one on Vimkunya. Paul, do you want to take that one?

Yes. So on Vimkunya, I mean there's always a few dynamics when you're in launch phase, but essentially, we are seeing good demand in the EU, where we've launched. Germany was one of the first countries where we launched in the EU, and we're seeing strong growth and other countries where we're also launching. So really the change in the guidance is primarily due to the headwinds that we're seeing in the U.S. So I am confirming it is mainly the U.S. where we're seeing the headwinds due to the lack of publication. And while we have been successful in encouraging some distributors and wholesalers to purchase, we haven't been successful with everyone where they have very strict policies that they are awaiting the publication.

We will now take the next question from the line of Romy O'Connor from Kempen.

I have 3 questions. The first on Rabipur. So we saw quite some strong growth this quarter. And while you highlight the underlying market growth in the U.S. and Germany, can you help us bridge that difference? So how much is coming from underlying volumes or geographic contributions, et cetera? And thinking about the next half of this year, how much of the underlying rabies market growth do you consider is driven by the structural demand? Or do you think it's something that we can expect to normalize? And lastly, on the share buyback announced, how can we now interpret this in the context of continued M&A ambitions?

Yes. Okay. Thank you, Romy, for the question here. On Rabipur, I think some of the same factors play in as we just talked about with regards to TBE here. We are growing the product by 40%. The market has grown by 20-plus percent. Now other factors explaining up to the 40%. We are only commenting on U.S. and Germany in terms of market performance, but we are actually already seeing our other markets growing close to 100%. So they are actually starting to contribute to the overall growth in the market. And then secondly, I think what I believe we are seeing on rabies, and maybe that's to your other question as well, what's going to happen for the remainder of the year. I think, obviously, we don't know, but I think there seems to be a good and very strong momentum out there. So we are not expecting that to stop short term.

There is an extremely high awareness around the risk of rabies and therefore, very high demand for our vaccine. But I think what also happens typically when you see such an abrupt steep increase in demand is that there are other factors amplifying the growth. For instance, wholesalers, they start seeing that they need a higher safety stock. So the stock level with these will actually go up. So that is one impact that will help that is sort of amplifying the whole growth also helping us to explaining the 40% growth that we've seen for the first half year.

On the share buyback, let me see.

Impact on M&A.

Yes, impact on M&A. I think we have concluded that the DKK 750 million is actually a fine balance between securing what we need for potential M&As and then after that, handing back the money to the shareholders to give them a return for the investment. We are constantly looking at M&As, and we hope we will identify the right ones. We have no debt today. We can easily go out and borrow money for potential acquisitions. And then we still have a very strong cash position even after a stock buyback. So through a combination of debt financing and cash position, we believe that we can actually finance the opportunities that we are looking at.

[Operator Instructions] We will now take the next question from the line of [ Elina Shanti ] from Jefferies.

Firstly, I was wondering, could you please provide an update on the CEO search process? And more broadly, do you feel the company can execute a larger strategic transaction during this interim period? Or would you prefer to have a permanent CEO in place before considering any significant M&A activity? And then secondly, on Vimkunya, how do you see disease awareness progressing here? And is the focus primarily on educating physicians or travelers?

Yes. I guess I better take that one. So on the CEO search, that's with the Board. And the process needs to take as long as it takes because the Board needs to make sure that they get the right candidate. It's on public record, I contracted until the end of the year and everything is fine. In terms of M&A, I think, and again, I guess I can say this because I'm the outgoing CEO, I think there's not too much emphasis put on the change of the CEO. The CEO is indeed an important person, but in all fairness, while I would like to take all the credit for everything that we've done in terms of maybe TBE and the other assets, is the organization and the management team, they execute.

So half of CEO is an important role, an important position. I think it is overemphasized how important one individual is, particularly in an EU setting where we have a management, we have a Board and obviously we have the underlying management who, frankly, do all the heavy lifting. So do we have an [indiscernible] for M&A for sure. If we find one that is right, that fits the mandate we're looking for, which is a good commercial fit, we'll be announcing it. And regardless of whether I'm here, someone else is here, no one's here or whatever, it will play their role.

In terms of in Vimkunya, it's both, to be fair. So awareness is too out in the general population, making sure people are aware that there's a mosquito transmitted disease where they may be going on vacation. That also includes the South of France, for example, where most people think it's safe. But it's also for healthcare professionals who may not be as familiar with the disease and/or the severity of the disease. Because again, when people go to get a Travel Health vaccine, they are looking for the health care professional to guide them because often you need more than one vaccination. And if it's an out-of-pocket expense, you really have to decide which one are you going to take.

In my presentation, I mentioned that I think rabies is becoming more and more of a standard travel vaccine because of the severity. And I think it's important that not only are the public aware of Vimkunya and the dangers but healthcare professionals are also educated on the severity of that disease. So it's on both.

Our next question comes from the line of Thomas Bowers from SEB.

So first, just on [ JYNNEOS ]. So you have secured DKK 800 million for '27 already. I'm just curious about sort of this relative to sort of a normal underlying basis. Now it's difficult to answer. But are you getting a little bit more confident in reaching at least the midpoint of the DKK 1.5 billion to DKK 2 billion, given there's somewhat uncertainty with new [indiscernible] contract timing. And then just on, I'm not sure if I missed it in the prepared remarks, you didn't mention something on it, Henrik. But just on Valneva and Dynavax. So of course, aware that they are fully terminated now. But that revenue you lost in here, during the first half year, do you have any idea on how much you sort of have recovered on those? I think it was around DKK 100 million for first half '25. So any idea on how much you have gained here since then?

I'll take the JYNNEOS.

Yes.

So on JYNNEOS, Thomas, I think, as you know, it all depends how, what we normally see in terms of what we're booking for next year. I think because it all depends on when the order comes in and when the discussions happen. I think where we're getting is more and more comfortable, as I said, for many years now, we've been saying DKK 1.5 billion, DKK 2 billion base business. I think we're becoming more and more comfortable that we're going to be in the region at the upper end of that around the DKK 2 billion mark.

When we guided DKK 1.8 billion to DKK 2 billion this year, we didn't have all that secured, obviously. And we've actually been able to increase the guidance twice now in response to more orders coming in. So the orders will come in when they come in. I think it's encouraging. There's already DKK 800 million in the book. But to be honest, I would already be confident sitting here that we would be securing around the DKK 2 billion, whether we had that or not. So I think the analysts yourself and others as well as the market should get more and more comfortable with that DKK 2 billion-ish base business moving forward.

Henrik?

Yes. Then to your other question, Thomas, on the partner products, you're right that we lost approximately DKK 100 million compared to last year. So that was primarily the Japanese encephalitis product that we were promoting primarily in Germany. But then on the other hand, we took our own products back in certain markets. And we have, that has actually helped us, first of all, the price that we can recognize on the revenue is higher as it's no longer transfer price to our partner, it's the full price to the wholesalers. So there is a positive price impact there. And secondly, we have actually managed to grow the business in these markets beyond the level that our partner could do at the time when they were promoting it.

So I think it's too early to say that we have, it's a net gain because we lost EUR 100 million from the Japanese encephalitis, but we have actually seen a very positive impact of taking our product back in other markets, and it has helped us gain the necessary scale to enter into these markets so that we have an organization in the U.K., in France, in Canada today, these markets that were served by our partner previously. And we can use that as a platform also to launch Vimkunya and other products. So it's, while we are sad to see EUR 100 million disappearing out, this is a win for Bavarian Nordic that we are taking the business back.

Thank you. [Operator Instructions] There are no further questions at this time. I would now like to turn the conference back to Paul Chaplin for closing remarks.

Yes. Thank you. Thanks, everyone, for your time in joining and all the questions. Have a great day. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.

Good day, and thank you for standing by. Welcome to the Bavarian Nordic first quarterly report, Q1, for the 3-month period ended 31st of March 2026 conference call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, CEO, Paul Chaplin. Please go ahead.

Thank you, operator, and welcome, everyone, to Bavarian Nordic's Q1 results for 2026. Together with me is Henrik Juuel, and I will walk through some of the key highlights and activities for the first quarter and then hand over to Henrik, who will go through some of the more detailed financial results.

So if you all turn to Slide 4, we've had a solid start to '26. Revenues just over DKK 1 billion with a 16% EBITDA margin. And as I said, I'll leave it to Henrik to walk through some of the details of the financials.

However, before I go into some of the practicalities, I just need to remind everyone that on Travel Health, it's a very seasonal business. So sometimes our quarterly results don't really reflect the business that we're expecting over the entire year. And typically, for Travel Health, Q1 is more of a light quarter with Q2 being a heavier quarter.

And on Public Preparedness, really quarterly results, it's driven all by government contracts and the delivery schedules according to those contracts. So we can either have a light or a low quarter depending on those contracts. And some of that explains -- and Henrik will get into it, when you look at Q1 in '26 and compare to '25, last year's Q1 for different reasons, for stocking and all the rest of it was slightly higher.

Having said all that, we have had a great fantastic start to the year, a 14% growth in our Travel Health business, and I'll come back to that, but it's driven by rabies, the continued rollout of our Vimkunya vaccine for chikungunya, and TBE. Vinunya, as I said, the rollout continues of the launch. We have recently got the approval in Switzerland, and we've launched in -- we continue to launch in new countries such as Belgium and Netherlands. And we're seeing good demand in some of the countries that we launched in last year.

On Public Preparedness, we recently, after Q1, this Monday, announced a new order from the U.S. government, and I'll come back to that in more detail. But that has led to an increase in the '26 guidance, increasing the Public Preparedness up to potentially DKK 2.5 billion from the DKK 1.8 billion to DKK 2 billion and an increase in the EBITDA margin up to 28%. As I said, I'll come back to more of the details on Public Preparedness. So really a strong start for the year, already a hike in guidance based on the Public Preparedness, the new contract and strong continued demand in Travel Health.

If we go to the next slide, talk a little bit about the Travel Health, as I said, a 14% increase in Q1. On rabies, we're really seeing strong demand, continued strong demand in the 2 key markets in the U.S. and Germany with a 23% and 29% growth in Q1. And really, this strong growth that we're seeing with rabies is really due to, unfortunately, an increase in the number of deaths last year in the U.S. and a number of different cases of travelers coming back infected and again, unfortunately, succumbing to the infection. And I would say rabies is really getting into the category now of a standard travel vaccine. And what I mean by that is there are a number of vaccines for travel that are considered pretty standard when people turn up at their GP or travel clinic.

On TBE, we saw a 12% growth in the overall market. And although there was a decline compared to last year, as I said, this is more related to a stocking situation by wholesalers in '25, which we didn't see in this year. But we are completely on track in a normalized year for TBE. And as I said, we typically see stronger growth or stronger demand in Q2.

Another thing to mention that's not on the slide is Vivotif, which is our vaccine against typhoid, which we acquired back in '23. Unfortunately, the typhoid market, we really have not seen a rebound of that market since post-COVID as we have in other travel sectors. And one of the reasons we saw for that -- for Vivotif was that we weren't really addressing one of the markets -- previous markets, which were GPs, which prescribed the vaccine in the U.S. So last year, we took action and had a contracted sales force really targeting that sector. And this year -- this quarter, I should say, we've seen a 12% growth in Vivotif, and that's really showing signs that the actions that we're taking is really beginning to show signs or shoots of growth.

So if we go to the next slide and talk a little bit more about Vimkunya, really, we are on track with our launch. And if anything, I would say our original plan last year, post approval, has been accelerated. So we've now launched, I believe, in 14 countries, U.S., throughout Europe and also the U.K. and as I said, recently added Belgium and the Netherlands. In Germany, we're seeing strong demand. And hopefully, we will begin to see that strong demand in the other territories that we're rolling out. Of course, part of the launch is to raise awareness of chikungunya. So it will take time, but we are beginning to, as I say, see a very successful rollout.

One area which is not going as well as we would like is in the U.S. And unfortunately, this is related to some headwinds related to the recommendation. While the recommendation was achieved last April, this is still not being published by the CDC. And unfortunately, some wholesalers are not buying the product and stocking until this publication. So that is slowing the demand that we were expecting in the U.S. But as I said, in other areas such as Germany and elsewhere, such as the U.K., we are seeing nice demand.

As I said, in Switzerland, we've got recently -- we got the recent approval, and we plan to launch in Q2. And we're also expecting an approval from Health Canada in the first half of this year. So again, continued regulatory approvals and continuing on the planned launch for Vimkunya, and we stand by our projected guidance for this vaccine in '26.

If you go to the next slide, often, we're getting a lot of questions lately around our Travel Health portfolio and the -- with the current geopolitical situation, whether there's an impact on travel. What this slide is showing is that travel in most areas of the world continues to grow, albeit at a slower rate than we've seen post-COVID. So you could -- there is an argument to say that, that growth is slowing down. We, however, have not seen any impact regarding our travel health portfolio in terms of geopolitical situation. But of course, it's obvious that there could be impacts if the situation continues, airfares and all the rest of it increase. But as I said, right now, we've seen no impacts. We're seeing solid growth. And as I said, right now, travel is still growing, albeit at a slower rate.

If we go to the next slide. On Public Preparedness, I want to talk a little bit about the recent order from the U.S. government. So this is under our -- what we refer to our freeze-dried contract that was awarded in 2017. If you look at the graph, the red graph at the bottom to the left of this slide, this came with an original order for 11.5 million doses of our freeze-dried version. At that point in time, we had not developed the freeze-dried. So there was also of that almost USD 540 million, there was about $140 million to perform clinical study, to do a tech transfer from a contract manufacturer. There was $300 million to fill the bulk, and there were some bulk orders in that $540 million.

With the latest order that was announced on Monday, the $97 million, BARDA are now completing the order for the 11.5 million doses, really showing their long-term commitment over what is almost 10 years to develop, to tech transfer and to acquire 11.5 million doses of the freeze-dried version. It's a great example of a private -- of a public-private partnership because BN also invested in our own manufacturing line here in Denmark, and it's a great success story.

What it also shows is that under this contract, the U.S. government has ordered additional bulk and additional doses to address the mpox outbreak of '22. And we've received orders of greater than $1.2 billion since 2017 under this contract, which again really demonstrates the strong partnership between Bavarian Nordic and the U.S. government.

Of that $97 million order that we received on Monday, the majority is for additional bulk to replace bulk that was used for the mpox order, and that will be revenue recognized this year. And that led to the increase in guidance that I've already stated, and I'm sure Henrik will walk through.

So within that increased guidance to up to DKK 2.5 billion, we now have secured contracts for DKK 2 billion, and that really represents the upper range of what we call a normalized year, but we still expect additional orders between DKK 300 million to DKK 500 million in the remainder of the year, again demonstrating that our Public Preparedness is a steady base business moving forward.

If we go to the next slide, a few words quickly on the pipeline. In terms of R&D, the majority of our R&D spend this year is really on what we refer to as life cycle management activities, primarily chikungunya. We have a number of post-market commitments which have been initiated, a pediatric study to expand the label to include children, a booster study looking at the longevity of the immune response and also an efficacy study. We're also in the midst of a Phase II study, which will support the transition from an egg-based production to a proprietary cell line that we've developed. And that initial data or interim data will read out later this year. We also have a program fully funded by the DoD for equine encephalitis. And indeed, there is a public request for information regarding future Phase III studies for such an indication, which we have responded to. And we also have some early-stage programs for Lyme and EBV that will be coming through in the years to come.

So with that, I will hand over to Henrik, who can walk through the more details on the financials.

Yes. Thank you, Paul. So we are now on Slide 10, talking about the commercial performance for the first quarter. So we delivered total revenue for the first quarter of DKK 1.058 billion, comprised of DKK 294 million from our Public Preparedness business and DKK 721 million from our Travel Health business.

The Public Preparedness business, Paul already alluded to it. We can have strong quarters, we can have less strong quarters. It really depends on the supply schedules linked to the individual contracts that we have with governments. When we compare to last year, we have to remember again, the comparison quarter-to-quarter is not that meaningful. Secondly, '25 was a year where we were impacted positively by an ongoing outbreak, and we saw revenue in Q1 '25, including sales to UNICEF, RescEU, BARDA, et cetera.

So that is the reason that we see a lower revenue of the Public Preparedness business this quarter this year, but it is exactly as expected. And as Paul alluded to, we already -- given the order we got from BARDA announced recently, we have upgraded our guidance for the full year and our expectations to this part of the business.

If you look at the Travel Health business, DKK 721 million. 6% up compared to last year, if you just look at the numbers as they are here, but 14% growth in -- when we exclude the discontinued partner revenue. And if you look on some of the individual product lines here, it's clearly driven by continued strong demand for our rabies vaccines. U.S. grew by 23%, the market. The German market grew by 29% and us being the market leaders in both U.S. and Europe, we will also see growth rates beyond the 20%.

On Encepur, DKK 171 million. That is when you look at the numbers here, 16% down compared to prior year, but this is really explained by inventory fluctuations at wholesaler levels. If we look into the market data, then we can see that Germany actually grew by 12%, and we gained 1% market share during the period, which means that we are selling more in the market than we did same quarter last year.

First quarter '25 on TBE was impacted by very early order patterns from the wholesalers, and we actually saw a 60% increase in the first quarter last year, whereas this year is, to some extent, impacted by the low shelf life we entered the quarter with from the regulators and which has caused us to be a little hesitant in supplying short shelf-life products into the market, which at the end, drives down inventory levels at the wholesaler level. So nothing to be concerned about. It is not reflecting the performance in the market and Encepur is still expected to be one of the growth drivers for our business on a full year basis.

Vimkunya, we delivered DKK 41 million, obviously, against close to nothing first quarter last year when we only just launched. So we continue to be on track. Paul already alluded to where we are doing better than anticipated and where we are still facing some challenges, but we are holding on to our expectations for the full year of DKK 250 million in revenue.

Vivotif, we are starting to see positive growth, and we are seeing the impact of some of the investments we have done to reestablish this business here. So that is quite a positive message.

So all in all, DKK 1.058 billion in revenue, which is fully in line with our expectations and fully in line with our ambitions for the full year as well.

On Slide 11, let's have a look at the full profit and loss. We talked about revenue. Gross profit (sic) [ gross margin ] ended at 45%, which is impacted by several factors. I think, first of all, as you will recall, we have said previously, in the first months of the year, January, we typically have a shutdown of our manufacturing site for maintenance, which will mean that we are absorbing less of that cost to inventory, and it will mean idle costs going into production costs.

Then we have also previously talked about the provision we did last year on our tick-borne encephalitis, Encepur, due to the short shelf life during the first quarter as we got even more convinced that we would be able to increase the shelf life, we reversed some of that provision valued at DKK 29 million. So that was a positive impact on our gross profit for the quarter. We have also in our report this time mentioned that now we got the 24-month shelf life, and therefore, we could release more of this provision, which will happen in Q2 with an amount similar to what we saw in the first quarter.

Finally, I think the underlying production is going extremely well. We have to say, we are seeing very good performance on our sites, good success rates and good yield outcomes of manufacturing, which is really reflecting the fact that we are getting more and more into routine manufacturing of these products here. So 45% is quite as expected for the first quarter, and we are obviously talking a higher level for the full year.

If we look further down, R&D cost, DKK 175 million, very much in line with the first quarter of last year. The big items in this spend here is really the chikungunya trials that we are conducting at the moment, and it is the -- our cell line development -- MVA cell line development that is going on as well. SG&A costs up compared to last year and explained by the continued investment behind the launch of Vimkunya, but also the impact that we see from expanding into more markets that has happened over the last 12 months.

Bottom line, DKK 165 million, corresponding to an EBITDA margin of 16%, so fully in line with our expectations. We knew and we also did communicate that Q1 would be a light quarter due to the seasonality of our Travel Health vaccine and the simple timing of the Public Preparedness orders. So right now, with -- after the upgrade, we are targeting 28% EBITDA for the full year.

On the next slide, cash flow and balance sheet. I would just mention a couple of highlights here. Cash flow from operating activities, negative by DKK 752 million. This is impacted by the fact that we -- during the first quarter, we paid the final milestone to GSK, which lowered the accounts payable and therefore, impacted cash flow from operating activities. So we paid more than DKK 500 million to GSK, and we have now paid all the milestones to both GSK and Emergent BioSolutions.

If we look a little further down, then we see cash flow from financing activities that is mainly explained by the share buyback that is ongoing. We have a few days ago, we could -- announced that we completed the second tranche of the DKK 500 million share buyback. So to date, we have bought back approximately DKK 350 million of shares.

And to the right, I will just highlight our current cash balance, approximately DKK 2.3 billion in cash. That was by the end of the first quarter. At that time, we still had approximately DKK 100 million of the share buyback still to be done. So approximately DKK 2.2 billion post the share buyback is what we have in terms of our cash position.

Let me turn to the final slide and just remind you of our outlook for 2026. So right now, after the order we got from BARDA, we have lifted our expectations to the top line. We are now expecting revenue between DKK 5.5 billion and DKK 5.7 billion and an EBITDA margin that we have increased from 25% to approximately 28%. Travel Health remains unchanged in the assumptions here. It's really the Public Preparedness business, which we have increased by DKK 500 million. So now expecting between DKK 2.3 billion to DKK 2.5 billion. And out of this, we have already secured DKK 2 billion in revenue.

So we knew we entered into this year with an assumption that from a Public Preparedness perspective, it would be what we call a normalized year. I think we can still say it's a normalized year from the view that it's not impacted by mpox outbreaks. But the continued interest from governments in buying our vaccines for stockpiling has actually taken our revenue beyond the revenue level we normally associate with a normalized business, which is DKK 1.5 billion to DKK 2 billion. So again, with the current outlook, which we are fully on track to deliver against, this looks to be another good year for Bavarian Nordic.

And with that, I will give the word back to the operator, so we can open up for questions and answers.

[Operator Instructions] Our first question comes from the line of Thomas Bowers from SEB.

A couple of questions from my side here. So maybe just to kick off with Encepur. So can you give us any color on whether to expect growth even maybe above the underlying market growth for the rest of the year now with the shelf life extended to 24 months? So basically, meaning should we be looking at wholesalers to maybe normalize inventory levels already here starting Q2, Q3? Or will that maybe be something that we should expect closer to the season start next year?

And then a question on Vimkunya. So assuming this publication, MMWR publication will take, let's say, another 3 or 6 months or maybe going into '27. Will that have any impact on your ability to reach those DKK 250 million for the year? Or will a publication here in the rather near term even maybe be a potential upside scenario for -- given the current guidance?

And then lastly, just on Public Preparedness. So with the BARDA options now fully utilized, how should we think about sort of visibility, timing, cadence of potential new contracts or frameworks with the U.S. government? And also maybe how should we think the new cell line opportunity into this mix, of course, assuming the positive readout of the Phase II.

Yes. Maybe I can start here, Thomas. Thanks for the question. So on Encepur, I think everything else equal, yes, you would -- you should see wholesalers stocking back into the market. But of course, end of the day, it's really a matter of the demand. As you will read in our report, we have actually have gained 1 percentage point market share and the market grew by 12%. So ideally, we should see that wholesalers stocking back. But we also have to be very well aware of the fact that this is very much a quarter 2 business. So that the question is, well, how much inventory do they want to sit with after the season.

So let's see. I think it is still our -- very much our ambition is to gain market share in this business here. So that means we should follow the market growth, which was 12% right now, and we should also gain -- slowly but surely gain market share back from Pfizer. So we should be growing eventually stronger than the market that we're seeing right now. And on the Vimkunya?

Vimkunya. Should I take that one? So there's a number of headwinds or there are two main headwinds in the U.S. for chikungunya or Vimkunya. One is the publication of the recommendation in MMWR. The other is that the recommendation in the U.S. is really only for people traveling to areas with current outbreak. And there, again, the issue there is that the CDC website is not being updated with the current outbreaks. So these are two things that need to be addressed, and we're working on them.

I would say that a publication of the recommendation can take anywhere from 12 to 18 months. So while we're stating that it hasn't been published and having an impact, it's still not late, so to speak. So our assumptions of the publication that it would be made during this year. So I think the DKK 250 million that we've been guiding is with an assumption that the publication would happen during '26, which obviously could still happen. So as I said, we still stand by that guidance.

And then as I said, on the flip side, we're seeing stronger-than-anticipated demand in certain territories in Europe, such as the U.K., which I know is not Europe, but not -- the U.K. and Germany. So I think while it's a mixed bag of some headwinds and some positivity, I think overall, we stand by the guidance for the year.

Then on BARDA, you were referencing timing and visibility of new contracts. The sole source notification has been addressed and published. So we're awaiting an RFP to be issued, and in that, obviously, it will give some visibility on what the U.S. government is thinking. The current contract expires next year in September. So I think we're still on track to see an RFP being published and a new contract. With quail, as we've talked about before, our cell line, it could open up a new business opportunity in that with a higher yield and output, it's really designed to incentivize governments to increase their stockpiles and to increase their order volumes. But I mean, these are the discussions that we're having with the U.S. government. So let's see.

Our next question comes from the line of Romy O'Connor from Kempen.

Two questions from me. The first on Public Preparedness. So is the year-on-year decline that we see for the Public Preparedness business only driven by the phasing of contracts? Or have you seen any contributions from the private market? And also, if you can comment there what -- to what extent is the private market contribution?

And on Travel Health, are you able to give a little bit more background on what your expectations are for general dynamics there for the remainder of the year, also seeing that the guidance has not moved. Is this assuming everything remains as normal per se?

Yes. Let me take a stab at those. Travel Health, yes, we haven't changed our guidance. In the presentation, we're flagging obviously what may or may not occur with the geopolitical risks. Right now, we see no impact. We're seeing growth in the Travel Health portfolio. And our assumption is that we will continue to seek that growth throughout the year and deliver on the guidance.

Just a couple of things on the Travel Health portfolio as well. Rabies isn't all about travel. There's a post-exposure market that will not -- presumably not be impacted by the geopolitical situation. And Encepur as well is really while we group it as a travel vaccine, it's really vaccine for the endemic regions, which is going to be presumably also isolated from any downturn in travel.

And then on Public Preparedness, the -- it really -- as I think both Henrik and I stated, Public Preparedness is all about the contracts that we currently have and the delivery schedule. So quarterly comparisons or yearly comparisons don't make a lot of sense. So really, we're on track to deliver the guidance as we've just upgraded. We have contracts for secured for the DKK 2 billion, and we do anticipate another DKK 300 million to DKK 500 million in contracts throughout the year. And again, the timing just depends on that delivery schedule.

Our next question comes from the line of Rune Dahl from DNB Carnegie.

A few questions from my side as well, please. On the BARDA contract, the DKK 500 million that you're upgrading the guidance with in 2026 was clearly not expected and the exercised options could therefore have been done in '27. Will this have any implication on the '27 guidance? And put it another way, can you still reach a normalized year in Public Preparedness in '27 without the order from U.S.?

And then the second question on the pipeline progression. So you delayed both the Lyme disease and the EBV vaccines because you want to reach a 25% EBITDA margin. Now you're guiding 28%. Why have you not progressed the pipeline?

And then thirdly, given that you, with the contract, get more cash, what would it take to increase the share buyback program given that you only have DKK 150 million left of the current program?

Yes. Let me take at least two of those. So let's talk about the contract. So your question relates to yes, the BARDA order, was it all anticipated for this year or something to next year? And then what -- does it have an impact on '27?

So it's a mixed bag. So for '27, obviously, we were expecting the option to complete the 11.5 million dose order. So we knew part of the option that was exercised actually last year, we wouldn't be able to complete it this year. So we're only manufacturing a certain number of doses this year. So that option last year, together with the filling option of the new order would have been revenue for '27. Now to complete that filling, we always knew we were going to need more or additional drug substance. And there, it's fair to say that maybe that drug substance order has come earlier than we anticipated. So -- but that would have been on top of what we were anticipating already for '27.

So your question is, does it impact the '27 revenues? And can we still believe that we'll have a normalized year? One, it's far too early for me to answer that with any great confidence. As you know, it depends on the contract. But we say our standard year is DKK 1.5 billion to DKK 2 billion based on the broader number of customers that we currently have. So we're in a situation where we're not just relying on BARDA and Canada as we were before '22, we have a broader customer base. So as we sit here today, I would say that our anticipation is that we will still have a normalized year for '27.

Then EBV and Lyme, yes. So why haven't we progressed as we've increased our EBITDA guidance. Well, R&D and programs moving into the clinic, unfortunately, take time. So even if we could move those programs forward because we're increasing our EBITDA margin this year, there would obviously be increased costs running into next year. And without the visibility of where we are next year, it's a little bit too risky to initiate those clinical studies, which, as I said, would incur costs over the next 2 to 3 years. And then, Henrik, do you want to...

Yes. Thanks for the questions, Rune. Let me answer the one regarding the cash and the impact from the order that we got. You're right that this order we got from BARDA was not anticipated in our guidance for the full year, clearly not, and it will provide us with additional cash by the year-end.

Some media has accused me today for not prioritizing the shareholders, which I don't think is fully fair. We are in the middle of a share buyback program as we speak, and it cannot run faster than it does as we only allowed on the safe harbor rules to buy at a certain pace compared to the general trading in this year. Will this mean more share buybacks? Again, on the -- our capital allocation policy, we are making it very clear that we are not a bank. We do, however, have an M&A strategy. And if we, during the year, can identify an attractive target that we believe will be able to provide a very competitive return to the shareholders, we will go after that. If we don't, then we will do more share buybacks. Obviously, we will not be sitting on the cash.

And just getting more cash, you can ask yourself, has the likelihood of additional share buybacks increase with this? Yes, it has, everything else equal. Of course, more cash, the higher likelihood is that there will be more share buybacks. But this is something that we will evaluate during the autumn, see where is the business heading, what are our M&A opportunities. We would like to do a transaction this year, but we do not have very mature leads. So if that doesn't happen, then of course, we will return more money to the shareholders as well. I hope that answered the question.

[Operator Instructions] And our next question comes from the line of Tobias Nissen from Danske Bank.

I just want to touch on Thomas' question on Vimkunya and the guidance again. Do you believe that the stronger-than-anticipated growth you are seeing in Germany is enough to like say, offset a potential delay to the publication in MMWR into next year?

And then just on Encepur and the timing and the shelf life, what have you seen at the underlying wholesaler level since you got the extension to the 24 months? And do you believe that this will be a tailwind for the remaining of the year? And continuing on Encepur, you did this inventory provision in Q4 and then did DKK 29 million here in the first quarter and guiding for a similar level in Q2. Do you see further upside to this as you go through the year? And could it also -- what is the tailwind here to the EBITDA guidance?

And then lastly, on the phasing of this Public Preparedness, also considering the new order from BARDA, how do you see this phasing over the year?

Yes. Let me take a stab at some of those. Vimkunya, yes, so as I said, I think where we sit here right now, we're still confident on the guidance for the overall year. We've been very transparent and clear there are some headwinds in the U.S., but we're seeing a higher demand. We are also rolling out into new countries during the year, and we rolled out late last year into other countries. So it's a bit early to really see what that demand signal is. But if some of those come through with the same demand that we're seeing in the U.K. and Germany, then as I said, we're still confident that we can meet the overall guidance.

On Public Preparedness and the new order, I think we said that the majority of that, that $97 million refers to bulk that is being used to replace what was used for mpox. I think we're seeing that will be spread over for the remainder of the year, but primarily Q2, Q3. And then I think, Henrik, do you want to...

Yes. And on Encepur, at the moment, and I think that we already talked a little about the inventory levels at wholesalers of our Encepur vaccine is low. So everything else equal, once we start supplying fresh products into the market, we should move beyond the market growth as wholesalers will stock up. It is, however, not in our control, of course, exactly what inventory level they will hold, but that could be -- definitely be a scenario.

And then on the provision we did last year, we have -- or we are planning to release another DKK 29 million approximately in the second quarter. Could there be more? Potentially, yes. But I think the -- we have said previously that we approximately accrued for DKK 100 million provided for that last year. But the remaining parts, whether that will be released really depends on the demand end of the day. Still with 24-month shelf life, some of these batches will expire early '27. So it really also depends on the demand, how much we sell and then how much the wholesalers will buy. But potentially, if there's a strong demand and if wholesalers are stocking up again to normal levels, there could be a little more of the provision released in Q3 or Q4. So I hope that answered your questions, Tobias.

There are no further questions at this time. So I'll hand the call back to Paul for closing remarks.

Yes. Thank you. Thanks, everyone, for joining and for the questions, and have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.

Good day, and thank you for standing by. Welcome to the Bavarian Nordic 2025 Annual Report. [Operator Instructions] Please be advised today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, CEO, Paul Chaplin. Please go ahead.

Thank you, and welcome, everyone, to today's presentation, which is an update on our results for last year, 2025. Today, you'll hear from me a few slides from myself, and then I will hand over to Henrik Juuel, the CFO. So if you turn to Slide 4, we reported very strong results last year, DKK 6.2 billion in revenue with a 28% EBITDA margin. And this is the result of very strong performance of both arms of our commercial business on Travel Health, but also on public preparedness. On Travel Health, we saw a 30% growth last year, which is a very strong performance across the whole portfolio, but also related to the launch of our Chikungunya vaccine. On public preparedness, in '25, we were at the back end of an outbreak of mpox and we saw more than DKK 3.1 billion in revenues, which is approximately DKK 1 billion above the upper end of our normal base business.

So as I said, very strong performance from both parts of our commercial business in '25. In addition, we sold the Priority Review Voucher valued at DKK 810 million. And if we included this in the EBITDA, this would bring the EBITDA to a 41% margin. Some events that have happened since -- in this year, which are of noteworthy is we've announced 2 agreements, one with Eurofarma for the distribution of our Chikungunya vaccine in Brazil. And earlier this week, we announced an extension or an expansion of our strategic partnership with the Serum Institute of India to produce our Chikungunya vaccine.

And both of these are related to improving the access of Vimkunya in those regions. Today, we also announced the second tranche of our share buyback, and I'm sure Henrik will coming back to more of that in the future slides. And last week, we announced that after a long tenure at Bavarian Nordic, unfortunately, I think it's 27 years, I have decided for different reasons to step down later this year, but have agreed with the Board that I'll be staying until the end of the year or until a replacement has been found. The outlook for '26, Henrik will go into much more detail. But here, we're guiding for total revenue of DKK 5 billion to DKK 5.2 billion with an EBITDA margin of 25%. This is made up of another strong year of growth for Travel Health of DKK 3 billion and public preparedness of DKK 1.8 billion to DKK 2 billion, reflecting coming out of the public health crisis for mpox and reflecting a more normalized year for public preparedness.

We turn to the next slide, talk a little bit more about the Travel Health. As I said, last year, we saw a 30% growth. This is primarily due to our rabies and TBE vaccines, where we saw a 34% and a 20% growth, respectively, during the year. We see an outstanding performance of rabies, and I'll come to some of the reasons for that in the next slide. But in the U.S., we saw a double-digit growth and an improvement in the market share up to 78%. In Germany, we saw a remarkable growth of 48% in the market, but also a 6% improvement in the market share to 97%. So strong performance in both of the 2 key markets for rabies. Similarly, for TBE, we saw 20% growth and an improvement in the market share in Germany from 28% to 31%. So really a very strong performance, brand performance for both products, but also a strong market growth in both areas.

And moving forward, we still stand by the projection of a 10% to 12% annual growth in Travel Health, but of course, starting from a much higher standpoint than we had originally reported at the Capital Markets Day. If we go to the next slide, why are we seeing such strong growth in rabies? Well, in Europe, we've seen cases, fatal cases, unfortunately, of travelers returning from North Africa to the U.K., France and Spain. And these have obviously hit the media and raised the profile of the dangers of rabies. In the U.S., we're seeing -- or the CDC are tracking what looks like 15 likely outbreaks of rabies in 12 different regions of the U.S. And last year, we saw an increase in the number of deaths in the U.S., which is 6 deaths up until September of last year. So these outbreaks, the unfortunate deaths, which are higher than typically seen has really raised the profile of the importance of or the dangers of rabies, both in the U.S. but also in Europe.

And this is one of the underlying reasons we're seeing a very strong growth in the market. And obviously, we are the market leader benefiting most from this increase. So if you turn to Slide 7, last year, we saw the first approvals of Vimkunya, our vaccine against chikungunya, both in the U.S. and in Europe. And that led to an outstanding launch performance in '25. We had launched in the U.S., I think, within 4 weeks of the approval, which is, I would say, a gold standard performance within the industry. And we launched in, I think, almost 14 countries by the end of the year. We exceeded the guidance in terms of revenues for the guidance of DKK 75 million. And in terms of volume, we saw a very successful launch, which is associated in terms of volume greater than some of the recent vaccine launches for travel vaccines. So very happy with the performance in '25. It is setting ourselves up for continued growth in '26, where we are guiding for DKK 250 million, which is a significant growth.

We are seeing very strong demand in the markets that we've launched. And Vimkunya, our chikungunya vaccine will be a key driver of future growth within the Travel Health franchise in the coming years. If we turn to the next slide, Slide 8. In public preparedness, as I said, in '25, we were coming on the back end of the public health emergency that was declared by WHO and Africa CDC for the outbreak of mpox in Africa, and we saw stronger demand or as we've often referred to it as spike demand over our base business, seeing more than DKK 3.1 billion in revenues during '25. What we are anticipating in terms of '26 is a more normalized year, guiding for DKK 1.8 billion to DKK 2 billion. And of that, we've already secured DKK 1.4 billion of that revenue to various different contracts that we have in hand. So again, a very strong year is planned for '26. In addition to our activities, we also have a number of ongoing clinical studies which are supported in part by CEPI, both in children, in infants and also in pregnant women.

And hopefully, these studies will enable the expansion of the label, which already includes adolescents and adults in certain territories to also include infants and children, which essentially will hopefully lead to an expansion of the label for the entire population. We move to the next slide. So on public preparedness, we often refer to our base business of being DKK 1.5 billion to DKK 2 billion, but we anticipate there will be spikes in that base business from time to time, either associated with outbreaks of mpox or as we've seen historically, one-off larger orders from governments. And on Slide 9, what we're showing you here is a map of the recent cases of mpox. And what we've seen is a 67% increase in the cases of mpox reported already in '26 in Europe. And if you just look at Spain, there are 53 cases in Spain since January '24, but almost 50% of that is in '26.

So -- and in France, similarly, 10 cases since '24, but 6 of those are already within this year. And this indicates that mpox has not gone away, while it may not be part of the news flow for good reasons. there are still cases, and there does seem to be an uptake in the number of cases already this year. And of course, we are really the only supplier of an effective safe mpox vaccine globally. If we go to the next slide. In terms of pipeline, we have a number of different trials ongoing for our chikungunya vaccine. These are trials related to commitments that we made to the regulators as part of the approval. So we have an efficacy study ongoing and a study in children. The pediatric study will hopefully lead to a broadening of the indication.

We also have a study for MDA, our smallpox, mpox vaccine, where we are moving to making a change in our manufacturing away from eggs into a proprietary cell line. This is a Phase II study that was initiated last year and will be completed or the top line data will be reported later this year. We have an ongoing Phase II study for equine encephalitis, which is a vaccine fully funded by DoD. And we have preclinical assets, both for Lyme disease and Epstein-Barr Virus, which for priority reasons, we now plan to move into the clinic next year. So a lot of ongoing activities in terms of the pipeline, many of which are associated with life cycle changes or supporting the commercial assets. And with that, I will hand over the presentation to Henrik Juuel.

Thank you very much, Paul. So let's start with an overview of the commercial performance for the fourth quarter of '25 and full year '25. So we had a very strong finish of the year with revenue -- total revenue of close to DKK 1.5 billion, comprised of nearly DKK 800 million on public preparedness and more than DKK 600 million from our Travel Health business. So worth noting here is really in particularly the Travel Health business which in the fourth quarter of last year delivered 61% growth. So looking at the full year, let's finish on public preparedness first. We delivered DKK 3.1 billion, exactly what we had guided for in November when we refined our guidance to DKK 3.1 billion. From that business, as Paul explained earlier, this is more than DKK 1 billion above the upper end of our normal base business within public preparedness.

Travel Health ended close to DKK 3 billion, 30% up on a full year basis compared to '24 and driven by very strong performance by Rabipur, RabAvert and Encepur. And Paul already talked about the reasons behind that, basically driven by both strong market growth, but also very strong brand performance for both products. So nearly DKK 3 billion on Travel Health, which was above our latest guidance provided in November, where we said DKK 2.85 billion so driven by this very strong finish of the year. It's also worthwhile mentioning Vimkunya here. We delivered DKK 85 million in revenue for the full year against our latest guidance of DKK 75 million. So again, somewhat above the latest guidance and a very good start in a launch year. So DKK 6.2 billion and DKK 44 million total revenue for the full of '25. So let's turn to the next page and look at the full P&L again for the fourth quarter and full year of '25.

So if we focus on the full year basis, the 9% growth and the DKK 6.2 billion in revenue we just talked about, production cost of nearly DKK 3.2 billion, leaving us with a gross margin of 49%, somewhat lower than what we saw for the first 9 months, driven by the low gross margin we saw in the fourth quarter, where we delivered 39% and which I think demands a little explanation here. So what we did during the month of December or Q4, we made a provision on our tick-borne encephalitis product Encepur based on the current discussions with the regulators, we got on our own manufactured version of the vaccine, we were -- got 12 months shelf life. With the product we acquired from GSK and that was produced by GSK, we have 36 months shelf life. And of course, we have an anticipation that we can increase the shelf life. We just need to provide the necessary documentation and data points to the authorities.

So we've made a provision assuming that we could get the shelf life up to 18 months from the current 12 months. And based on that, you can do a simple calculation and see, okay, some of these vaccines, if we stay with 18 months, we will simply not be able to sell before they run out of shelf life. So a significant provision was made from that in Q4, but we managed to contain it within our current guidance due to the generally very good performance within our manufacturing area for the full year '25. And I would say with that, the -- if we manage to agree on a longer shelf life than 18 months, then obviously, in '25 -- sorry, this year in '26, we will have an upside when we reverse the provisions. On the other hand, if we do not get to 18%, but end with something lower, there's a small downside. We find the downside very unlikely, and it's more likely that we will have an upside during '26 as we anticipate to agree with the regulators to get a longer shelf life approved.

So 49% is where we ended the full year on gross margin. R&D costs ended at DKK 780 million. Originally, when we guided for '25 back in February last year, we said we anticipated to spend approximately DKK 900 million. But we also late in last year, alluded to there might be upsides that we could make some savings for different reasons, one of them being that we are awaiting this efficacy trial on Vimkunya to be run in an outbreak session and that outbreak has not happened yet. So DKK 780 million, so we spent less than what we had originally guided. SG&A at DKK 1.275 billion spent last year. So quite a significant increase over '24, driven by deliberate decisions, first of all, to put money behind the launch of Vimkunya, but also to expand our network of sales entities in the process of taking the business back from our partner in Europe, Valneva. And then we also made a decision to expand our sales force in Germany to take advantage of the market growth on tick-borne encephalitis.

So with total operating cost of DKK 2.55 billion, we get to an EBIT of DKK 1.8 billion. And that is when we include the income from the voucher, that's the DKK 810 million net income from the sale of the Priority Review Voucher. And then if we convert to EBITDA, which is the measure that we guide on, you will see at the bottom there, DKK 2.5 billion in EBITDA. And if we exclude the voucher, we're talking about DKK 1.7 billion in EBITDA. So very strong financial performance last year. And if we just quickly compare to our latest guidance, we said that we would land approximately at DKK 6 billion. We are delivering more than DKK 6.2 billion. So delivering better than guided on top line. And on the EBITDA margin before the voucher, we guided 26% and delivered 28%. And the difference here is really driven by the lower spend on R&D, but also on the very strong finish of the year, delivering additional revenue. So very strong performance.

And I think it's -- if we compare to the original guidance provided in February of last year, we're ending exactly in the midpoint of that guidance, both on revenue but also on the EBITDA margin. If we then turn to the next slide, quickly on our cash flow and on our balance sheet here, strong cash flow, obviously driven by the profit from the business and again, with a good contribution from the sale of the Priority Review Voucher. Investment activities negatively impacted by the milestones we paid back to both Emergent BioSolutions, but also GSK from the acquisitions we did previously. Here, we spent DKK 1.1 billion, and the rest of the impact on investment activities really comes from placement of our cash into securities. Cash flow from financing activities was negative DKK 114 million, and that was impacted by the first tranche of the share buyback we did of DKK 150 million, partly offset by proceeds from a warrant exercise that happened last year.

On the right side of this slide here, you see selected balance sheet items. And I would just point to the current cash balance. So cash and cash equivalents of DKK 3.3 billion by the end of December last year. At that time, we had not paid the last milestone to GSK, but that has happened here during Q1. So that means if you -- everything else equal, after that payment, we have approximately DKK 2.8 billion of cash available. We have also this morning announced the second tranche of our share buyback this time, DKK 200 million that we anticipate to complete within the next 1 to 2 months. So again, strong financial position with a good cash position and obviously no debt at the moment.

Let's turn to the last slide, elaborating on our outlook for '26. This outlook is unchanged compared to when we announced our preliminary '25 numbers and our outlook as well. So we are for this year guiding revenue between DKK 5 billion and DKK 5.2 billion and an EBITDA margin of approximately 25%. So from Travel Health, we are anticipating approximately DKK 3 billion. And on the surface, that looks very much like what we delivered in '25. But remember here that from 1st of January this year, we do no longer have the partnership with Valneva, meaning that we are not going to record any sale of the Japanese encephalitis vaccine. We are also getting out of the agreement with Dynavax on the hepatitis B vaccine. That agreement will end in April. So if you subtract the partner business that is no longer in place, then actually this guidance here corresponds to a 10% growth.

And if you look at it in constant exchange rates, we're actually looking at a guidance that corresponds to 14% growth in '26. So a growth rate in our Travel Health business fully in line with the midterm financial targets that we set at the Capital Markets Day back in '24. On public preparedness, as Paul says, right now, I think '26 looks to be the first normalized year in 5 years. We've had 4 years now impacted by various outbreaks, either in Africa, Europe or U.S. and '26 right now looks to be more of a normalized year. And here, we are guiding, you can, I would say, at the upper end of that normalized year, DKK 1.8 billion to DKK 2 billion in revenue and DKK 1.4 billion of that has been secured already in contracts. So with that, I will give the word back to the operator and ask for questions.

[Operator Instructions] We will now take our first question. This is from Romy O'Connor from Van Lanschot Kempen.

I have 2 questions. The first, maybe more of a clarifying question on the public preparedness outlook. So the base business is now guided for DKK 1.5 billion to DKK 2 billion until 2027. So I just want to know, especially with the increase in reported cases, can we really expect this normalization to happen, especially what we have seen since, I don't know, 2023? And then the second question is, in the annual report, you mentioned strong focus now on organic growth for the year. I just want to understand your capabilities for M&A for the next few months and what your current bandwidth is?

Yes. Thank you for the questions. So your first question related to public preparedness. I think in our guidance, which we have DKK 1.8 billion to DKK 2 billion, it reflects obviously contracts that we've already secured either last year or actually since we've announced the guidance of DKK 1.4 billion and contracts or opportunities that we are working on that we believe will come through, obviously, this year. It obviously doesn't include any so-called spike business that we may see if indeed some of the early indications point to that there may be something brewing in Europe or other territories. It does not include anything of that. So this is a more normalized business, although it's at the upper end of our normalized business, but it does not take into account if there is any additional outbreaks of mpox or if there is a larger order that we're not aware of coming in the next 12 months.

The other question related to, I guess, our bandwidth and our appetite maybe on M&A. Our strategy, as you know, is on growth, obviously, to grow both parts of the commercial business, our Travel Health portfolio, but also public preparedness. But it also includes M&A as we obviously have a very successful track record of acquiring assets and turning them around. I would say that part of the strategy is still very much a focus for the management and the Board, and we are searching and looking for assets that we could acquire.

We'll now take our next question. And this is from Thomas Bowers from SEB.

A couple of questions here. So first, just in regards to the shelf life related provision you have. So how should we think about the potential impact or tailwind for '26? Or is this more potential for '27, given that you may have to take a little bit longer to get to that 36 months of shelf life? And maybe also, can you just remind me where are you currently with Rabipur on shelf life compared to the former Glaxo-produced material? And then on Vimkunya. Firstly, what is the exact FDA deadline for initiation of the outbreak trial in Thailand? And assuming that we don't see any outbreaks, what's the, you would say, the waived deadline or for the FDA here?

And is the study definitely waived by the FDA if the outbreak happens? And then maybe just quickly also on Vimkunya, maybe the margin focus. So in order to improve margins, so of course, economies of scale here is important. But is there anything in the current setup also with the contract fill/finish that you're using that Vimkunya sort of in the mid to -- or near to midterm will actually be starting to become accretive for your current EBITDA margin level? Or do you need to make decisions, for example, with the fill/finish in order to improve margins significantly above the current level?

Thanks, Thomas. Let me take a stab at these answers and Henrik, please, you can jump in if I don't address it all. So your first question was on the shelf life. So let me take a step back. So in the tech transfer for Encepur, obviously, we had to transfer both the drug substance, the bulk manufacturing, but also the fill/finish. And in that plan, we knew that by the time we filed with the authorities, we would have limited shelf life. And obviously, everything to do with the tech transfer is demonstrating comparability to the product that you're transferring from so to the GSK material. So when we discussed with the authorities late last year, we had limited stability data of the products that we had manufactured at the end. And that led to this limited shelf life recommendation.

But obviously, since then and every month, we get more and more data, more batches being manufactured. And we anticipate that, that shelf life will be extended as and when we get more data. Now that doesn't mean to get the 3-year shelf life, we need 3-year data, but because you can do projections. But to do projections, you need more robust number of data points. So we anticipate on the positive side that we will see shelf life extensions during this year and maybe we'll be back to the 36 months maybe in early next year, but that all depends on data. In terms of -- you also asked on Rabipur, there, we have the same shelf life for the BM material as the GSK material, and that just relates to how much data we had at the time when we filed. So I hope that answers those questions.

Then on Chikungunya, you asked about the efficacy trial. This is a trial design that was agreed with the regulators as part of the approval process. And here, we have to enroll a number of subjects in a region that may have an outbreak. So it's a design where we enroll subjects in the anticipation that there will be an outbreak in that region. If there is no outbreak in that region, once we've enrolled all the subjects and collected the data, we'll end up with no efficacy data. That's just the way the trial is designed. And in that case, we would then have to open the dialogue again with the regulators on what is then the requirement with the regulators and some of that discussion is already ongoing. Whether that's an additional efficacy study or an effectiveness study, there are different possibilities and dialogues that we're having with the regulators. Then the other question related to margin improvement on Vimkunya. You're right, a big part of how we'll improve the margin on Vimkunya is related to volume.

And obviously, when you launch a product and you know you're in this phase where you're raising awareness and all the rest of it, of course, it is an expensive vaccine to produce. So volume will cause a reduction in the margin in the years to come. In addition to that, we are making improvements to the process. We've already made improvements to the process, which we filed with the regulators, which we're hoping for approvals of later this year within the first half of this year. And we continue to look at making further improvements also in both the bulk manufacturing, but also the drug product manufacturing. And they will have margin improvements in the years to come. So Henrik, do you want to add anything?

No, I think that was a good summary. And I think it's continuous work on improving the COGS on Vimkunya. And it's quite normal that you start with a quite immature manufacturing process that more or less comes directly out of the laboratories and then you start working on process improvements. And as the filling part is done with the CMO, it's quite expensive in low volume. So we will drive better margins on Vimkunya through process improvements and volume benefits.

[Operator Instructions] We have a question coming through. And a question from Thomas Bowers, SEB.

That was quick for the follow-up. And I just wanted to talk a little bit about the governance. So what sort of profiles and competencies are you sort of prioritizing when you are looking to expand the Board? And maybe it's not a question for you, but maybe if you can give some color on the thoughts there.

Yes. I think you've answered your own question there, Thomas. I think that's a question maybe for the Board. There is a process ongoing right now to identify some new Board members. And I believe the plan is that those successful candidates will be announced as part of the announcement related to the general assembly.

Okay. Then a question that I hope you can answer then. So just in regards to the ACIP recommendation, which you got almost a year ago. So is there any news on the MMWR publication? And then secondly, just in terms of your prioritization on Lyme and EBV. So should we expect a material step-up in R&D spending from '27, given that you have postponed those into first half -- sorry, into '27? And is there sort of a reason beyond cost saving that you actually are delaying the projects?

Yes. I can answer these questions. So on the ACIP recommendation, there really isn't any news on the publication or the status of the MMWR. And therefore, we are continuing to talk to various different distributors on how to move forward. I think there is a recognition that the world is changing and that we can't simply just wait around for the MMWR. As you know, some suppliers really want to see that publication before they will start buying the vaccine. I think we're seeing movement now that people are recognizing that this may take longer than normal. So we have no real news on where that will be in terms of the publication.

In terms of the pipeline assets, you're right, there's a balance here in prioritization and ensuring that we're delivering the EBITDA margins that we have stood by, the minimum 25%. We obviously, right now, have an R&D budget that is securing the activities, the regulatory requirements for chikungunya, but also the trial related to moving away from eggs to our proprietary cell line for MVA. As and when those activities come to an end, it will free up funds that we can then focus our activities into other R&D activities, whether that's Lyme, EBV, but we'll look at it.

So really, what I'm trying to say is we are prioritizing our finances based on the promises that we've made to the market in terms of the EBITDA margin, and that will dictate when and how we can move some of the assets into the clinic. I would also say that while we've paused the clinical start of both Lyme and EBV, it does allow us to perform additional preclinical studies in both those areas that may be beneficial when we do decide to move into the clinic.

We will now take the next question. A question from Romy O'Connor, Van Lanschot Kempen.

I'm still here. Just one final question on Vimkunya. So guidance surpassed what we expected for 2025. I just want to maybe get some more color on what we can expect this year. Do we expect the DKK 250 million guidance as purely a base, especially in the light of competitor withdrawals from the market?

Yes. Maybe I can take that one. So yes, we are guiding a significant increase from last year where we ended with DKK 85 million, and now we're guiding DKK 250 million. And that is, of course, it's primarily coming from the countries where we already launched, where we expect to see a continued strong momentum and basically market growth where we are the only player more or less in most markets. But then we're also anticipating launching in more countries. We are awaiting approval in Switzerland. We are waiting an approval in Canada, and we still -- there are still a couple of countries in Europe where we do not have launched yet. So I think this is, as we see it, a typical launch sales profile when you launch into a market that is nonexisting, you will see quite a steep uptick in the beginning. And we are seeing a good demand in the market than DKK 250 million, I think we believe is doable, but also, of course, a very significant growth that we need to deliver upon.

And there are no further questions at this time. So I will now hand back to Paul Chaplin for closing remarks. Thank you.

Thanks, everyone, for joining and your interest and all the questions. Have a great day. Thank you.

Thank you. This concludes today's conference call. Thank you for participating, and you may now disconnect. Speakers, please stand by.

Good day, and thank you for standing by. Welcome to the Bavarian Nordic Third Quarterly Report for the 9-month period ended 30th of September 2025 Conference Call on Webcast. [Operator Instructions] Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Mr. Paul Chaplin, CEO. Please go ahead.

Thank you, and hello, and welcome, everyone, to Bavarian Nordic's Q3 results. Before I start, I just want to make sure you've seen our forward-looking statements on Slide 2. On Slide 3, on today's call, you have myself, Paul Chaplin, and I will walk through the key highlights of the first 9 months and talk a little bit about the excellent progress that we've been -- that we've made. And then I'll hand over to Henrik Juuel, the CFO, who will walk you through the commercial performance and the financials.

So if you go to Slide 4, it really has been a fantastic first 9 months of the year. We've recorded close to DKK 4.8 billion in total revenues, which is a 32% increase compared to this time last year, which is a fantastic result and one that is really due to a strong performance across the whole portfolio, both Travel Health and Public Preparedness, and that has resulted in an EBITDA margin of 31%. We've had probably the strongest quarter for our Travel Health business, which is an endorsement of our strategy. And as I'm sure we have many new investors on today's call, I want to just take a few minutes walking you through the graph on the bottom right-hand corner of Slide 4. This shows the financial performance over the last 5 years. And before 2020, Bavarian Nordic was really an R&D-focused company. We had our government business, which we now call public preparedness, and I'll talk more about that. But essentially, we were a loss-making company coming to our shareholders frequently for capital raises.

In 2020, we took the bold step on our growth journey to commercialize the business, and we bought 2 assets our rabies and tick-borne encephalitis vaccines, which started our commercial journey. And despite COVID, which obviously had an impact on travel, on travel vaccines, we were able to grow that business. And in '22, we sold more doses of rabies and TBE than any other previous owner. And that's exactly the strategy that we implemented. We thought that we could purchase what I call unloved assets that weren't performing well in previous owners' hands. And with our dedication and focus, we could turn them around. And that's exactly what we've done with rabies and TBE, and that actually are the golden jewels that are really driving the performance for travel health that we have today.

In '23, we also added 3 more assets from another company, which complemented our Travel Health portfolio. And one of those was a chikungunya vaccine in Phase III, which is now approved as Vimkunya, which we're launching this year and is also adding not only to the performance in the first 9 months of this year, but is a key driver for the future growth. On top of this, we also had our Public Preparedness business, and I'll talk more about that in the coming slides. But basically, what we've seen over the last 5 years is a complete transformation of Bavarian Nordic from a loss-making R&D-focused company to a profitable vaccine company that is having a huge impact on the global stage in terms of public health.

Before I move on, I also want to take note, and I'll leave more of the details in terms of the guidance to Henrik later. But we have refined our guidance today. And I just want to address one comment that I've already read that this is a lowering of our guidance. This is actually not the fact because at the beginning of the year, when we provided the guidance, we had a range for both revenue and EBITDA. This is related to our public preparedness business. And I'll come back to why there's a range, but essentially, this is government contract business where you either get a contract or you don't.

And therefore, we had a range. We refined that range during the year. And today, we are recognizing that with 1.5 months left, we have secured -- we have the business that we've secured, which is DKK 3.1 billion which means together with Travel Health and other income, we're at the DKK 6 billion range. While that's at the lower end of the guidance, it is still within guidance. And I would say DKK 3.1 billion in terms of Public Preparedness, I have to remind you, is DKK 1 billion above our annual -- normal annual base business of DKK 1.5 billion to DKK 2 billion. So it's an exceptional year in terms of Public Preparedness, and we are still standing by our revised and high increased guidance for Travel Health of DKK 2.75 billion. So a very strong first 9 months, and I want to actually take this opportunity to thank all the employees for a tremendous effort. It's really down to their focus and dedication that time and time again, I'm allowed to talk on a quarterly basis of our strong financial performance.

If we go to Slide 5. On Travel Health, as I said, it's probably the strongest quarter since we've built up this portfolio. We've seen a 23% increase in sales compared to this time last year. And our 2 flagships, rabies and TBE, as I said, these were purchased back in 2020. We've really turned them around. Rabies has gone from strength to strength. We've seen both an improvement in the growth in the market, but also in terms of market share. In the U.S., we've seen a 4% improvement in market share compared to this time last year. And in Germany, we're really seeing a strong growth, a 53% growth in the first 9 months of this year compared to last, which is an outstanding performance.

On TBE, again, we have stopped the decline in market share in key markets like Germany since we bought these assets, and we're actually beginning to now see an improvement in market share, particularly in Germany. So we're incredibly happy with the performance that we're seeing in terms of Travel Health, and we believe there is future growth in the months and years to come.

If you go to Slide 6. Within our portfolio of Travel Health, we have a vaccine against chikungunya. And chikungunya is a mosquito-transmitted disease. And until very recently, there were no vaccines or treatments available. The vaccine -- our vaccine was part of an acquisition that we acquired in '23 and was approved earlier this year. And subsequently, we've launched our chikungunya vaccine Vimkunya in 10 different countries. So we have had an aggressive launch plan, and we've stuck to that schedule. And we're beginning to see an uptake in the sales of the vaccine, which is great to see. And we're on target to meet the DKK 75 million in the first launch year, which is a very strong performance in our first launch year.

We filed for further approvals in Canada and with Swissmedic in Switzerland, and we expect those approvals to be coming next year. And we've already begun some of the post-marketing commitments for expanding the label, and we have a pediatric study and an efficacy study all in progress, which, as I said, are commitments that we've made to the different regulators in the U.S. and Europe. So chikungunya or Vimkunya really represents a future growth potential. Yes, we have to educate and prepare the market, but we believe that this market has the potential to grow to $500 million annually within the next few years, and that's for travel alone. So a great future business opportunity.

We turn to the next slide on Public Preparedness. And I want to spend a little bit of time talking about Public Preparedness and what it actually is and why it is different to Travel Health. And the best way of walking you through that is to talk about the revenue graph that's again on the bottom right-hand corner of this slide. And Public Preparedness is actually one vaccine. It's based on a vaccine against smallpox. Smallpox is a disease that has been eradicated. But unfortunately, there is concerns by many governments that smallpox could either reemerge through deliberate release in a bioterrorism attack. It is also closely related to another emerging disease called mpox, formerly known as monkeypox. And we've had a long-standing collaboration with the U.S. government in the development of our vaccine, which is now approved in many countries around the world.

And if you look at the graph at the bottom right-hand corner, in 2020, we really had 2 customers, one major customer, which is the U.S. government, where we've secured more than DKK 2 billion in both development and acquisitions over the number -- over the years and Canada. So we had 2 customers. This changed in '22 when there was the first outbreak of mpox. And here, we really saw, and you can see a spike in activity in '22 and '23, where we supplied more than 15 million doses of our smallpox mpox vaccine. And coming through that first outbreak, we were left with more customers. So we now have the EU, both HERA, which is a new organization, but also other funding mechanisms in the EU, such as rescEU. We had other EU nations like France. So going from 2 customers to a handful of customers. At that point, we said our base business moving forward would be DKK 1.5 billion to DKK 2 billion annually, but we would see these spikes from time to time in revenue due to either future outbreaks of mpox or one-off large orders from different governments.

Then in '24, we also had another outbreak or a larger sustained outbreak of mpox in Africa, and that also led to a continued spike, which has flowed over into '25. So in this year, we are guiding to secure DKK 3.1 billion in revenue, which is, as I said, about DKK 1 billion higher than our base business of DKK 1.5 billion to DKK 2 billion. So with Public Preparedness, it is not as easy to guide accurately in terms of growth or the future revenues simply because it's all down to government contracts. Some government contracts can take many years to negotiate. And unfortunately, I've been involved in government contracts, which we thought were coming through that fell down at the very last minute. So it is a little bit more unpredictable than a traditional vaccine sales like with Travel Health. But as I've said, we have since '22, been guiding with a base business of DKK 1.5 billion to DKK 2 billion. But obviously, since '22, we've been recording revenues much higher due to the 2 spikes that I've explained.

In terms of where we are, we are obviously secured contracts of DKK 3.1 billion already this year. We're well on our road to securing. In terms of the first 9 months this year, we've exceeded the DKK 2 billion already in the first 9 months, and we're well on track to secure the guidance for the rest of the year. We have secured contracts for next year for a total of DKK 1.1 billion. So we're well on our way to securing our base business of DKK 1.5 billion to DKK 2 billion moving forward. We have ongoing clinical studies that are funded through a collaboration with CEPI, both in a pediatric study, which will hopefully support a label extension to include children in addition to the adolescents and adults that we already have.

So if we move on to Slide 8, just to talk a little bit about the pipeline. One area is what we call MVA cell line. This is actually a trial that was initiated a few weeks ago, and this is moving away from the egg-based production that we currently have to a proprietary cell line that we've developed. The trial that has started is comparing the safety and immunogenicity of the vaccine produced in the different processes. And this is really an initiative that we've taken, which will greatly improve our manufacturing capacity so that not only can we deal with an mpox outbreak as we have since '22, but we would, with partnerships, also be able to deal with a much larger global outbreak either of mpox, [indiscernible], even smallpox. And it also makes us much more robust for any competition that may come later down the road.

Other activities in the pipeline relate to chikungunya. These are post-marketing commitments that we have with the regulators, pediatric study, expanding the label and also an efficacy study and other activities are either funded through DoD or early stage such as Lyme and EBV, which is still preclinical.

And with that, I will hand over the presentation to Henrik Juuel.

Thank you very much, Paul. So on Slide #9, just a few more words on the commercial performance for the period. So we delivered for the 3 quarters in Q3 here, we delivered close to DKK 1.8 billion, and that corresponded to an overall revenue growth of 32%. So very significant growth, supported by both our business mix, 50% growth on our Public Preparedness business and 22% on our Travel Health business.

If we take the Public Preparedness business, Paul already alluded in detail to this one here. And so that has really been about, first of all, securing orders and executing on these orders this year. So targeting the DKK 3.1 billion for the full year. So strong growth on that front for first 9 months as well compared to prior year. On Travel Health, it is really our Rabies and our TBE business that has been driving the strong growth we have seen both for the quarter but also for 9 months, 22% overall growth, 23% from our Rabies business, 18% from Encepur And I think for both products, I think we can say here, it's driven by both strong market growth, but also strong brand performance and actually market share gains for both products. So very strong performance.

Vimkunya, our new vaccine against chikungunya as we launched earlier this year. We are so far very pleased with the performance. We have in a very short time managed to launch in 10 countries, after the Q3 in the Nordic countries, Italy and Spain as well. So we have in record time, I would say, we have actually made quite a wide launch possible. From the start of the year, we guided on Vimkunya DKK 50 million to DKK 100 million, and we are now refining that to the midpoint. That's DKK 75 million, and we have so far delivered DKK 42 million after 9 months. So going very well and in accordance with our expectations.

Vivotif, our typhoid vaccine, we are -- on a 9-month basis, we are seeing a positive growth. We have been struggling somewhat with this product, but we are finally starting to see positive growth, and it's being driven by initiatives taken to gain market share. Unfortunately, the typhoid market has been down by approximately 7% these 9 months compared to prior year, but we have actually year-to-date managed to compensate for that market decline by gaining market shares. Third-party products at the end, these are the main driver of that one is our Japanese Encephalitis product that we have a partnership with Valneva that comes to an end by the end of this year and our partnership on hepatitis B vaccine, HEPLISAV-B with Dynavax comes to an end as agreed April next year. So all in all, very strong growth on both parts of our business, 32% for the quarter and actually the same for the full 9 months. So performance that we are very pleased with.

On the next slide, we are looking at the full P&L, where we start with the revenue we just talked about DKK 1.8 billion for the quarter. We have a gross margin of 50%, which is significantly up compared to the same quarter last year. This is driven by volume, obviously, the higher volume, the more busy we are in the production area, the more efficient we can be and the easier it is to absorb all the costs to the products being manufactured. But it's also explained by what we call other production costs, which is typically cost -- it could be cost of idle capacity. It could be cost of scrap. It could be caused by less efficient yield coming out of manufacturing. So we have been successful in all these parameters. And therefore, we are seeing a gross margin of the 50% versus 43% last year.

R&D cost varies a little from quarter-to-quarter. You will see that we are actually spending less than last year, both for the quarter and for the 9 months. This is mainly due to timing of some of the committed studies we have on chikungunya that is progressing.

And on SG&A, you see quite a substantial increase. It's mainly or very largely explained by the launch efforts we are putting behind Vimkunya, the chikungunya vaccine and also by Bavarian Nordic entering into new markets. We have, during the last 12 months, established ourselves a commercial presence in a number of countries, including Canada, it's U.K. and it's France, which, of course, will give us further opportunities to drive growth going forward.

If you look further down the P&L, that gives an EBIT of DKK 1.2 billion nearly. Then we have included in that one other operating income of DKK 810 million, which comes from the sale of the priority review voucher that was recognized in the third quarter. Further below, you can see the EBITDA margin, excluding the other operating income, that is DKK 515 million, which corresponds to an EBITDA margin before special items of 29%. So on a 9-month basis, that takes us to an EBITDA, excluding other operating income of nearly DKK 1.5 billion or an EBITDA margin of 31%. So again, strong performance, all in line with what we have communicated previously and in line with our expectations.

On the next slide, a quick overview of the cash flow and balance sheet. We saw positive cash flow from operating activities for the 9 months, driven, of course, by the positive profit that the business delivered, but also impacted by the proceeds or the income we earned from the sale of the priority review voucher. Cash flow from investment activities, here, we recognized actually the last milestones that we paid to Emergent BioSolutions and GSK for the acquisitions we did previously. They were recognized here, not all of them paid yet, though.

And then finally, cash flow from financing activities is the sum of the share buyback we did previously in the year and then employee warrant exercise that was executed as well. So all in all, a net positive cash flow for the period of DKK 500 million approximately which obviously improves our cash position, which you can see on the table to the right. We do today have a cash position of close to DKK 3 billion. I have to say here, though, that our accounts payable are somewhat inflated at the moment as we still owe DKK 70 million to GSK, and we also owe royalties on the voucher we sold to NIH and taxes to be incurred in connection with the voucher. But a strong cash position of close to DKK 3 billion.

Then one slide on our outlook here. As we talked about already, we have refined our outlook. We have confirmed the outlook within the range that was previously communicated. So right now, we are looking at a guidance without an interval as we are so close to the year-end. We do not operate in an interval for the Public Preparedness business any longer, but are expecting DKK 3.1 billion. We confirm the upgraded guidance that we issued in connection with Q2 for the Travel Health business. So that is now DKK 2.750 billion. And then we have some other income adding up to a total of DKK 6 billion. So a confirmation of all previous guidance, but a refinement now being so close to year-end.

We are anticipating an EBITDA margin for the full year, excluding the impact from the voucher of 26% and including the voucher, it will be approximately 40%. The 26% is sensitive to how the last 2 months here pans out when it comes to the R&D projects running at the moment. And depending on how they end, there is an upside here that it could be closer to the 27%. But given the current plans, I think we are guiding 26%, and that's most likely where we will end. We have not guided for '26, obviously, but what we have stated here is that we have previously announced an order to BARDA of USD 143 million. Most of that goes into '26. We also announced recently the HERA framework agreement where there is a commitment of 1.1 million doses, where of 750,000 is impacting next year. So if we add the commitments we have so far, we right now have an order book worth DKK 1.1 billion for '26. And we will, of course, keep communicating to the market when there are material orders being added to this order book.

The next slide is simply just a slide we brought to sort of round off the process that we have just been through. I don't want to read out every word here, but basically, it has been a longer process with the takeover attempt on Bavarian Nordic. And we just feel it's important to understand that the company was not for sale. We were approached with an offer, which the Board of Directors rejected to start with later in the process, there was an offer where the Board basically judged that now it is at a level where we have to ask the shareholders -- the shareholders has voted. The offer did not succeed. So that is the situation. And we, of course, we acknowledge that and we respect that decision by the shareholders, and we remain an independent listed company, and we continue to execute on the growth strategy that was in place even before this process started.

I think we are very pleased to be today to be able to report these numbers here, and we are very grateful to our organization who have actually demonstrated that they have maintained a focus on the business while this process has been running. That has been extremely important to us. We have even seen in our engagement surveys that the company or the employees have really stayed engaged in the company. So thanks to the organization for that. Without that, we wouldn't have been able to deliver these fantastic results that we're seeing here today.

And in order to -- to make sure that the market is well informed about the strategy that we talk about, we have called for -- and we call it an investor information meeting on December 11 during the morning. More details will be announced. It will be in Copenhagen. There will be a possibility to attend in person, but it will also be live streamed and recorded. And yes, basically, the agenda will be about give an update on the business and a recap of our growth strategy. But as I said, more details will follow. We will issue a press release once we have the details in place.

So with that, I will give the word back to the operator and open up for Q&A.

[Operator Instructions] we are now going to proceed with our first question. The questions come from the line of Romy O'Connor from VLK.

I have 2, if I may. The first being on your thinking about reaching the DKK 75 million for Vimkunya. I'm just wondering what steps you're now taking given that there's only 1.5 months left in the year? And also maybe a bit on the launch steps of into Canada? And then secondly, just maybe a little bit of color on the bid outcome. I was just wondering what your thinking is by future business development or M&A? And yes, what's your thinking now in terms of focus on value creation into the coming months?

Yes. Thank you for the questions. The first one related to Vimkunya and the projections of DKK 75 million. It's true there's only 1.5 months left for the year, but we only reported to the first 9 months. So we haven't reported some of the months that we've already gone. So we have launched according to plan. We are seeing good traction in a number of countries, slower in others due to some of the national recommendations, but we are confident that with the launches that we've made and the traction that we're seeing that we will be able to meet that target.

I think your second question related to the bid outcome and our future growth strategy. I think it's clear, it's important to stress again that our strategy that we put in place back in 2020 was a growth strategy. It was to grow the portfolio of the assets that we purchased over a number of years to grow public preparedness, but it also included additional M&A. I think in my introduction to the presentation today, I tried to highlight the successful history that we've had of not only acquiring assets, but turning these, what I call unloved assets around and also bringing in manufacturing. It's a capability that very few others have demonstrated, and I think it's a key strength. And I think what we want to do is when the opportunity arises is to continue that M&A journey and bring more commercial assets on board. And that's a strategy that we've had in place since 2020. We've been successful at it, and we will continue to execute on it.

We are now going to proceed with our next question. And the questions come from the line of Thomas Bowers from SEB.

A couple of questions. So firstly, just on shareholder returns. Can you give us any color on the current plans for any share buybacks now that we are out of this M&A process? So I think that you were talking a little bit about share buyback of excess cash. So anything that could sort of reflect the PRV sale you did here in the summer?

And then second question, just on JYNNEOS. So just wondering the delta between the previous guidance range, so looking at that DKK 3.7 billion at the high end of the range. So we have around DKK 600 million delta compared to the DKK 3.1 billion guidance. So I'm just curious, normally, you only guide for something that you are sort of where you are in negotiations with governments or potential customers. So those DKK 600 million, is that something that we should expect could simply or likely move into 2026 and of course, not part of that DKK 1.1 billion? Or is there something else that we need to be aware of in terms of those -- of that delta?

And then maybe just a question on Travel Health, super, super strong momentum, surprises me every time. And now looking at your guidance for '25, so you're sticking to that DKK 2.75 billion. Of course, there as you hit up with some of the [ typhoid ] vaccines. But you are now DKK 400 million short of reaching that DKK 2.75 billion. And looking at the numbers, so you're sort of implying that [indiscernible] should be flat or even slightly decreasing for the remainder of the year. So is there anything here that I'm sort of not seeing? Or are you just maybe a little bit conservative given it's normally a weak quarter, of course?

And then maybe if I can squeeze in number 4 here, just on the R&D phasing, can you provide any color on the scenarios from Vimkunya? So we know that this outbreak in Thailand is pending or potentially ongoing. So is there any think that indicate that this should shift into '26? And what could be the R&D spend cost reduction range, so to say, for the '25. So you're guiding still for DKK 900 million. So I'm just understanding whether it's going to save you DKK 100 million or where we are here. Yes, I'll stick to that. I can repeat if...

Some of them. But let me take the JYNNEOS guidance. And then maybe, Henrik, I'll let you take the other one. So on JYNNEOS guidance, a few years ago, we would only really guide on Public Preparedness on contracts that we had in hand. And that reflected the fact that we had very few customers. So we didn't have the confidence a few years ago to guide broader I would say that has changed over the last number of years that we're guiding, obviously, with contracts that we know we have in hand, plus what we also think that we can secure within the next 12 months. So it's not actually only things that we're negotiating, it's things that we believe that we can secure.

I mentioned in the presentation that sometimes, unfortunately, part of the unpredictability of the part of this business is that it's with governments, right? And even though you can be very -- one day, you're incredibly confident that you're going to secure a contract, there may be a change in a political leader or the government may change, and it completely stops overnight. So it is unpredictable. What I would say is where we guided is where we thought the range would be. That's why we gave a range.

Already in Q2, we stressed that DKK 3.1 billion was secure, but that we thought we could secure more. You've seen that we have announced an agreement with HERA. That could have come earlier in the year potentially that could have led to more revenues this year, but it's now pushed into next year. Obviously, that doesn't account for the whole DKK 600 million that you're referring to. But I would say what the guidance reflects is that some contracts came later than we anticipated and some contracts were still unsure whether we can secure. I hope that answers that question. And then Henrik, maybe.

Yes. Let me try the other 3, Thomas. I think, first of all, on the share buyback thing, I think what we have communicated previously is that our capital allocation policy, priority #1 there is to pay back the milestone payments to GSK and Emergent. That's soon behind us. It is not yet though. We still owe EUR 70 million to GSK, which we expect to be paid early Q1. Number 2 priority, of course, is to invest in the business, and that means R&D, it also means sales and marketing to grow the top line. And then I think third priority would be to look into our M&A strategy and eventually consider returning money to the shareholders. It's very clear we are not a bank, and we are constantly evaluating that situation. So what is the current need? What do we have on the balance sheet? Is that appropriate for the plans we have? If not, then we will return money to the shareholders. At this point in time, so that as this is a continuous evaluation, I cannot give you any more update right now. But of course, we evaluate the situation constantly.

On Travel Health for the fourth quarter and our outlook, we are still guiding the DKK 2.750 billion. And here, I think you need to remember that some of our travel vaccines are seasonal vaccines. We sell in all quarters, but some quarters are better than others. So typically, the fourth quarter is not the strongest quarter. So we are still targeting DKK 2.750 billion for the full year. And on the R&D phasing, we are still targeting the DKK 900 million in R&D for the full year to a large extent driven by the Vimkunya committed trials that we have to do. I'm just alluding to that, there could be some of it phased into next year. And typically with the clinical trials, I think a lot of the steps you go through there, the timing can change. So some of it could slip into next year of the R&D spend. If that happens, then, of course, it could impact our EBITDA margin positively this year. But let's see, the plan is still DKK 900 million. And we're only raising this as it's a little out of control with the exactly at what pace these trials they run.

[Operator Instructions] we are now going to proceed with our next question. And the questions come from the line of Lucy Codrington from Jefferies.

Just regarding chikungunya then. In terms of the U.S. launch, I was wondering how important is the MMRW publication when it comes to launching in the U.S.? And then maybe a bit niche, but in similar lines, have you thought about the potential substitute that the New England Journal of Medicine and Public Health Group have talked about replacing the MMRW? And any thoughts on that at all?

Yes. Thank you. Yes. So this is a tricky one. So yes, in the U.S., post approval from the FDA, you need an ACIP recommendation, which we're very fortunate that we have for chikungunya. And that recommendation, as you then say, is then published in the MMWR, which is a publication from CDC. And many of the distributors actually want to see the publication, even though it's recommended and it's posted on the website before they will start to purchase. And obviously, the situation where we're in is the MMWR has not been published. And it has, as we said, has slowed down the traction, I would say.

The one thing I would also give as another example is that when we launched JYNNEOS in the private market in the U.S., the same situation. We had a recommendation from ACIP, but actual fact, the MMWR was only published earlier this year. And what we did in that situation was that we were able to convince the distributors that they could start to acquire the product before the publication, and that was successful. And I would say we're in that phase right now. We've convinced some already to go ahead with chikungunya, and we're still convincing others. So it has certainly slowed down the traction, but it's something that we've already had experience of with JYNNEOS.

And again, one of the main arguments for that is there's always been sometimes a lengthy delay between the recommendation and the publication. And right now, it's very uncertain with ACIP and CDC what would the time will be. And as you say, that is leading to many others talking about alternatives and whatever, but we'll have to just see how that develops.

[Operator Instructions] We are now going to proceed with our next question. And the questions come from the line of Thomas Bowers from SEB.

Just a quick follow-up here for me. Just on the sales and marketing cost spike you can say here in the third quarter related to mostly Vimkunya, of course. But should we see this as sort of a new baseline going forward? Or is there some one-off expenses in that Q3 S&M number that we should be aware of just to sort of have an indication on how we should model at least going forward?

I think that there's certainly an element of one-off in there because typically when you launch a new product, you will be in a launch phase that will require promotional costs for a period of time. So it's for a period of time, but such a launch can easily stretch over like, let's say, 2 years perhaps. And then you will see at least the promotional spend part of it to normalize again. But right now, I think we are spending money establishing the awareness of chikungunya and Vimkunya in particular, in the markets. It's a nonexisting market in most places we go into. So therefore, there is a need to build the awareness. But it will normalize after a couple of years where you can no longer argue you're in a launch phase.

That does conclude the question-and-answer session. I will now hand back to Mr. Paul Chaplin for closing remarks.

Thank you, and thanks, everyone, for joining the call and for your interest and the questions. Thanks, and have a great day and a good weekend.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a good day.