Bavarian Nordic A/S

CSE:BAVA

Earnings Call Transcript 2022-Q1

[Operator]

Good day, and thank you for standing by. Welcome to the Bavarian Nordic First Quarterly Report Q1 for the 3 Months Period ended March 31, 2022. [Operator Instructions] Please be advised that today's conference is being recorded, Monday, May 9, 2022. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Rolf Sass. Please go ahead.

[Rolf Sorensen, executive]

Yes. Good afternoon. Thank you, operator, and welcome to this Q1 presentation of Bavarian Nordic's first quarter results. And as usual, I am here together with the team President and CEO, Paul Chaplin; Executive Vice President and CFO, Henrik Juuel.

And before we start our presentation, just want to briefly to walk through this disclaimer. This presentation includes forward-looking statements that involve risks, uncertainties and other factors, many of which are outside of our control that could cause actual results to differ materially from the results discussed. Forward-looking statements include statements regarding our short-term objectives, opportunities, financial expectations for the full year and cash position as of year-end as well as statements concerning plans, objectives, goals, future events, performance and other information that is not historical information. All such forward-looking statements are expressly qualified by these cautionary statements. We undertake no obligation to publicly update or revise forward-looking statements to reflect subsequent events or circumstances after the date except as required by law.

And with this, I will hand the presentation over to you, Paul.

[Paul Chaplin, executive]

Thanks, Rolf, and welcome, everyone, to the Q1 update. So if you turn to slide 3, I just want to walk through a little bit of background on Bavarian Nordic. So in the last 2 years, Bavarian Nordic has truly transformed into a commercial company. And of course, the journey continues as we have a big ambition to become one of the largest pure-play vaccine company by 2025. So up until now, we have 4 commercial products and to sell and distribute we've built-up an excellent commercial infrastructure, both in the US and in Europe, and that allows us to drive strong growth and have a strong financial position. And you'll see that we've recorded at the end of Q1, a cash position of DKK 2.9 billion. So we're in a very strong financial position to continue the transformation and move towards our vision to become this largest pure-play vaccine company.

Obviously, what we've achieved to-date has built the foundation where we can add new products. We obviously also this year, will be selling and distributing 3 additional products for other companies in certain territories, but we want to continue to add to our commercial portfolio through our internal growth. And this year, in '22 is a year of investment as we are investing in the future growth in 2 in-house programs, one for RSC and one for COVID-19, both of which will have enter Phase 3 during '22.

We will be completing the investment in our manufacturing here in Denmark, which will allow us eventually to bring our 2 new products for rabies and TBE in-house and we will be finalizing the tech transfer of our freeze-dried Jynneos to our new state-of-the-art facility this year, and this will allow us to unlock the current option with the US government for almost $300 million, which will be revenue recognizing in the years ahead in '23, '24 and '25. So it's truly a year of investment. It's one that's been planned, and it's one, obviously, through the successful completion of RSC and COVID-19 will allow us to fulfill our vision to become the largest pure-play vaccine company by 2025.

If we go to the next slide, just some of the key highlights from an extraordinarily strong quarter in terms of our pipeline progression. On RSV, we saw a breakthrough designation from the FDA, which means after a review of our data to-date, the FDA has concluded that this program is likely to meet a high unmet medical need in terms of preventing RSV infection in the elderly. It will also allow us to have expedited review and allow us to further accelerate the regulatory process for this program. Later in the quarter, we secured a license agreement with Nuance Pharma, who will distribute and sell our RSV vaccine only in China and selected Asian markets and this is part of our partnering strategy to ensure that we can sell and distribute this product when we launch. And then in April, we initiated the Phase 3 trial as planned, which will enroll 20,000 subjects this year and will read-out in the first half or mid of next year in '23.

Our ABNCoV2 or COVID-19 vaccine candidate has also seen a lot of activity in this quarter. We've reported additional Phase 2 data, which I'll come to later in the slides. And we are on course to start our Phase 3 program. However, as I'll come to in later slides, the regulatory environment is changing, which may change some of the timelines in terms of initiation, but we're still confident that we'll be able to report the data and continue the filing process later this year.

In terms of the sales of our commercial products, I know Henrik will be coming back to that, but we've seen some positive growth of our rabies business, albeit coming from a low point in Q1 and our TBE franchise is a sluggish start with a decline in the market, but the main quarter for TBE is Q2. So we're hopeful to see some sort of a rebound later this year.

And we've added to the executive management, Russell Thirsk, who is a highly experienced individual coming out of GSK, and I'm sure he will be a strong contributor to the team moving forward.

So if we go to the next slide, slide 5, let's talk a little bit about ABNCoV2. Again, I'm frequently asked why you continue to develop a vaccine, aren't you too late? We already have vaccines on the market. And my answer to that is, yes, it's true. We have vaccines on the market that has allowed us to come out of lockdown. However, the data from those vaccines is clearly showing that the level or the durability of protection is quite short and wanes even within 6 months. So it's really not even providing protection for a full flu like season.

And therefore, there is an unmet medical need for better vaccines, giving you longer-lasting protection. And we believe with ABNCoV2, which is based on a viral-like particle technology that is designed specifically to stimulate strong B-cell responses that we will address the durability issue and have an improved vaccine. To-date, we've reported Phase 2 data that shows exactly that, that this vaccine, which is designed specifically to stimulate B-cells is generating very strong antibody responses to all the variants of concern, including Omicron to levels that have been reported to be associated with high levels of efficacy, greater than 90%. So we're really now geared up to start the Phase 3 and really evaluate this vaccine in a head-to-head comparison with an RNA-based COVID-19.

Up until 3 weeks ago, we were about to start a study, which we've reported before, which was utilizing national booster programs where we would get access to the comparator vaccine in these national programs because we had previously been told that member states in the EU and in the US could not provide the vaccine directly to companies. That situation has now changed or I should say, is changing in the EU at least and that we've had indications that member states in the EU has the potential to provide vaccines to companies. And under that development, we really have to change the trial design and truly do a randomized head-to-head comparison with the RNA-based vaccine.

This however is seen by us as a very positive development. A randomized controlled study is a lot easier to conduct, been trying to enroll subjects in a national booster program. Many of the national booster programs are coming to a halt in Europe and it was challenging to find sites that we could enroll. So we see this as a positive development. However, in this -- just as we were about to start the other study, this development comes. So it will have an impact. We're hopeful that, that impact will not be that great and we're still very, very confident that we'll be able to read-out the results later this year. And if allowed by the regulators continue to file the rolling BLA by the end of the year.

So let's move to the next slide, and let's talk about some of the latest data. Just to trying to explain this data. As you know, in the Phase 2 study, we evaluated 2 doses, 50 and 100 micrograms. And we've previously concluded that both doses gave very highly comparable results. And what we're showing you here is both groups combined and the neutralizing antibodies that were generated 2 weeks post booster against the various variants of concern. So the last cluster is the Wuhan strain, which obviously is the original strain and then the various different variants of concern, both fold increase in the GMP.

And you can see that similar to other vaccine candidates that have reported neutralizing titers against it if there's a concern, it goes that Wuhan and Alpha are very, very similar. Then you get Delta, Beta, and the lowest response is always against Omicron. And that is true with our data set. However, it should be noted that while Omicron were generating the weakest antibodies against Omicron, it's still at levels that have been associated with efficacy above 90%. So we're very, very happy with this data set. It's showing the concept that we're developing a vaccine as a universal booster. And we will be entering Phase 3 very shortly and the comparator will be against an RNA vaccine against the Wuhan variant as we've agreed with the regulators.

So let's turn to the next slide, slide 7, talk a little bit about RSV. So RSV is often a disease that goes unmissed or unrecognized by many investors and the community. However, RSV causes as many deaths in the elderly annually as influenza. However, what many people also don't realize is that the burden of disease is much higher for RSV than flu. And what I mean by that is the stay in hospital, if you are hospitalized is longer and the mortality post being hospitalized is higher if you've been hospitalized with a severe RSV infection than you've been hospitalized with flu.

So there's a huge unmet medical need for a prophylactic vaccine that will prevent infection in the elderly and in risk adults. We have a completely differentiated approach in our vaccine candidate that has shown some excellent immune responses in Phase 2. And last year, we reported on some exceptional efficacy in the human challenge study of almost 80%. So an exciting candidate one that clearly meets the criteria to be evaluated further in Phase 3. And as I said, in April, we began enrolling in the Phase 3 study, which will enroll 20,000 subjects, both in Germany and in the US and will read-out in the first half of next year. As I said, it also has a breakthrough designation from the FDA, which again is confirming the excellent data set that we have, and we've already begun to think about launch with a partnership with Nuance Pharma for China and selected Asian countries.

So with that, I'll pass over -- no, one more slide, slide 8. Just one last word. So we are investing a lot in '22 and part of that is also completing the investment in our manufacturing facility in Denmark, which is going on-track, on-budget. And when this is completed, it's later this year, it will allow us to truly start the physical tech transfer of our rabies and TBE vaccines, which will be able to manufacture at this site by '24. It will also allow us in parallel to manufacture other MVA-based products such as Jynneos or Ebola vaccine or RSV vaccine for launch. So as I said, it's a great investment that's going according to schedule, and it's really building-off the center of excellence in terms of manufacturing of viral-based vaccines.

And with that, I will now hand over to Henrik.

[Henrik Juuel, executive]

Thank you, Paul, and good afternoon, good morning to all the listeners. So let's turn to slide number 10. I will start with a quick overview of the revenue generated during the first quarter of '22. So in total, we delivered revenue of DKK 320 million, which was 40% lower than prior year, which included a significant revenue related to our BARDA business and which you know most of you is quite sort of chunky business that happens in some quarters, not all quarters. But let's have a quick look at the individual lines here. Our Rabies business Rabipur/RabAvert delivered total revenue of DKK 117 million, up 45% compared to prior year and driven by extremely strong market performance, both in the US and in Germany, which I'll come back to on one of the next slides. In contrast to this, Encepur delivered DKK 69 million, so 30% down compared to prior year due to a still unfortunately depressed TBE market in Germany. And here, we should also remember that we are comparing against a strong first quarter of last year where we saw 8% positive growth, which gave us optimism for the TBE market coming back.

During the first quarter, we also delivered DKK 30 million revenue in our Mvabea or Ebola vaccine to Janssen. This was a finalization of the order that we executed upon last year. So no more revenue is expected on Ebola for this year. We delivered the first revenue on the 2 products that we have an agreement with Valneva, so that's IXIARO and DUKORAL products that delivered a total revenue for the first quarter of DKK 14 million. And then we also saw a nice milestone revenue being recognized from the agreement we signed with Nuance Pharma for China and selected markets on RSV, [USD11.5] million translated into DKK 83 million. And finally, we had a little contract work mainly related to the qualification of the fill and finish facility and the BARDA contract. So in total, DKK 320 million for the first quarter.

If we turn to the next page, then let's spend a little time. This is a build. I will just show all the builds here. Talking a little about our Rabies business. And if we first start looking at the markets, the US market showed strong growth, 22% compared to the same quarter of last year and getting to a level close to the pre-COVID-19 levels. So continued strong growth in the US market and we are nearly looking at a market that is back to pre-COVID levels.

If you look at the German market, that was really a market that was severely hit by COVID-19 as people were not traveling to exotic destinations. However, we have, during the last 3 quarters, seen strong growth from a low level, though. But I think here in the first quarter, it's actually a 257% growth. So despite that it comes from a low level, the growth is material enough to have an impact on our total numbers. And therefore, you also see strong Nordic revenue on the rabies business, DKK 117 million, so up 45% and really driven by both the US and the German markets. We have on the market share basis, the US market share ended at approximately 64% after the first quarter, which is in line with the level we saw prior to our competitor facing a stock-out situation in the autumn of 2020. So really strong performance in the Rabies markets by our team.

Next slide. Again, this is a build slide. So this slide talks about the TBE market where Europe is representing most of our business -- sorry, Germany is representing most of our business here. And unfortunately, what we saw here in the first quarter is that sort of the depressed situation we have seen in the last quarters in the German market for TBE continued and we basically saw a market being down by 23% compared to the same quarter last year. Based on our intelligence in the market, I think what we are seeing right now is that there is, again, access to physicians is there. We suffered from that in the past as physicians were occupied with the COVID-19 vaccinations. That is not so much the problem any longer. Now it's mainly coming from a weak demand from patients. There's some indications of some temporary vaccination fatigue amongst people who have been vaccinated one, 2, 3 or even 4 times with COVID. There is, at the moment, relatively poor public press covers of TBE. And I think this is unfortunately a trend that cuts across many vaccines in the space. It's not only TBE.

I think if you look into some of the big vaccine companies like GSK and Pfizer and you look into the performance of their vaccines in Europe, you will see the same tendency that the vaccine market is unfortunately still depressed in Germany. We are however still optimistic that this market will come back relatively soon. We have, as Paul alluded to, expectations to the second and third quarter are the most important quarters for us in the TBE business. So hopefully, we will see some signs of the markets coming back here in the second quarter already. Our performance in Germany on Rabies shows that there is pockets within the vaccine space with good growth already. So we remain optimistic that also for the TBE market, we are going to see growth soon.

On the next slide, that is just to remind you about the marketing and distribution partnerships that we have concluded. The 2 bottom ones, IXIARO and DUKORAL, we made the partnership with Valneva and we have already launched these 2 products in Germany and in Switzerland and delivered the first DKK 40 million in revenue during the first quarter. Then we have the third one, HEPLISAV-B, which we have in-licensed from Dynavax and which we are planning to launch here in the second quarter in May, this month, actually, to be more precise. And this is going to be launched in Germany only. But it is a quite exciting launch as this is a real first-time launch of this product in the market.

On slide 14, a quick overview of the total profit and loss. As already presented, revenue of DKK 320 million. We had total production cost of DKK 292 million, leading to a gross profit of DKK 28 million, a relatively low gross margin, partly due to the planned shutdown of the bulk facility, which means we have less production costs being absorbed by the manufacturing of revenue-generating products.

Research and development costs ended at DKK 105 million, so somewhat lower than the same period of last year and primarily explained by the fact that we manufacture to hold the RSV Phase 3 material in the first quarter last year. SG&A costs came in at DKK 115 million, so below last year's level and primarily due to lower distribution costs and commercial costs.

Adding net financial items and tax, et cetera, it takes us to a net profit for the period of negative DKK 272 million or EBITDA of a loss of DKK 94 million. Remember, EBITDA is the level that we guide on. So these 2 or this slide here includes 2 of the parameters that we guide on revenue and EBITDA. And based on these results, which are overall in line with our own expectations, we are confirming our guidance for the full year on these 2 parameters.

Next slide, a quick overview of the cash flow and our balance sheet. So net cash flow for the period was a negative of DKK 192 million. We saw positive contribution from operating activities of DKK 24 million, driven by improved working capital, primarily with lower receivables during the quarter. Then we saw a negative contribution from investment activities of close to DKK 300 million, where that more or less equally split between investments in plants, the expansion of our bulk facility and the other part going into investments in intangible assets which includes our tech transfer process of Rabipur/RabAvert and Encepur and our development of the COVID-19 vaccine that we are capitalizing. Finally, we had a positive contribution from financing activities of a net of DKK 75 million and is primarily explained by another DKK 80 million we got from the Danish Ministry of Health as part of the agreement we signed last year.

To the right, we see some selected balance sheet figures. And I will only for now focus on our net cash position. So that is the DKK 2.594 billion when we have excluded all debt. If we add back the current engagement with the European investment bank that takes us to a current cash and cash equivalent position of DKK 2.947 billion, which brings us in a very strong position to continue pursuing our strategy and all our plans, including the Phase 3 trials that we either have or will initiate very soon.

So if we go to the next slide, I already mentioned that we have confirmed or maintained our balance on the revenue and EBITDA and I can say the same on the cash position based on the previous slide. So that is we still have a guidance in terms of revenue of between DKK 1.1 billion and DKK 1.4 billion. We are guiding earnings before interest, tax, depreciation and amortization. We are guiding here a loss between DKK 1 billion and DKK 1.3 billion and we are guiding a cash position by the end of the year of between DKK 1 billion and DKK 1.2 billion.

To the right on this slide, you see our usual overview of key activities and key milestones for the remainder of the year. I will just highlight a few of the most important ones. And obviously, if you look on RSV, we already initiated the Phase 3 enrollment. So the next important milestone is, of course, to complete enrollment, which we are planning to do by the end of '22. COVID-19, next major important milestone will of course be the initiation of the Phase 3 trial. And as Paul alluded to, we are still targeting to complete or have the first data readout from this COVID-19 trial and if the regulatory bodies allows it, start rolling submissions already this year.

If you look further down, I already mentioned at key important commercial milestone will be to have a successful launch of HEPLISAV-B in Germany, which should be initiated here during the months of May.

So just final remarks. Overall, we are happy with the financial results we have seen. And therefore, we are in a position where we can maintain our guidance for the full year despite all the uncertainties in the world at the moment.

So with that, I will ask the operator to open-up for questions.

[Operator]

[Operator Instructions] And your first question comes from the line of Gil Blum from Needham & Company.

[Gil Blum, analyst]

Maybe a broader one, considering trends that we've seen both in Rabies and TBE. What do you think are the attitude of the average European towards COVID right now? I would say that in the US, there's a bit of a reading through COVID, but I would appreciate your commentary around this. Thank you.

[Paul Chaplin, executive]

Yes, I can take that. Well, I can speculate if you want. So I think as Henrik alluded to, there seems to be a little bit of fatigue, vaccine fatigue, but I don't know whether there's a better word for it in Germany, at least where we're seeing a slower-than-normal uptake, not only of our vaccines, but others are reporting the same thing. So I think there is some fatigue out there. And I think in Europe, at least, all the lockdowns have essentially come to an end and we're all back moving around and people tend to forget about COVID when the sun is shining and things are getting back to normal.

I do believe, however, it was the same last year, this time last year. And then, of course, Omicron emerged, and there was obviously a need for everyone to get a third booster. And I feel the sentiment will be very similar as last year. We're all happy and we've forgotten about COVID. But as we get near the autumn, I would imagine the number of cases will increase, particularly as the data is showing that the third booster really wears-off before 6 months. So I would imagine that whether there's fatigue or not, we're going to need to get revaccinated in the autumn.

[Gil Blum, analyst]

Thank you, Paul. That's very helpful. Maybe I have a follow-up question. Just remind me, what do we think the primary endpoint going to be for the pivotal study of your COVID vaccine. Thank you.

[Paul Chaplin, executive]

Yes. It's to demonstrate non-inferiority of the peak neutralizing titers against Wuhan between ABNCoV2 and mRNA competitor.

[Gil Blum, analyst]

Okay. So it's not -- and will it include like secondary endpoints such as rate of hospitalization and things like that.

[Paul Chaplin, executive]

Well, it's a smaller study, while obviously, we'll be looking at hospitalization and real cases of COVID, it's not powered for that. So it's purely an immunogenicity endpoints. Obviously, there are secondary endpoints. Safety, of course, is a key one, but also looking at the immune responses to other variants of concern. But the primary endpoint, which will allow for registration even non-inferiority immune endpoint to comparator, RMA.

[Operator]

Your next question comes from the line of Peter Verdult from Citi.

[Peter Verdult, analyst]

Just one for Paul really on the timelines, the Phase 3 timelines. The [indiscernible] still be in a position to file this year a sensible base case or would you can see that there's -- it is optimistic and that the risk on the timelines are slipping is quite high. Just wanted to get a sense with the change that you're having to deal with the trial design, where the risks are, And similarly as you get ready -- as you with the RSV program, prevalence rates we're seeing enrollment rates, does that still give you, how much confidence you have you'll be having that data? I mean I think so one of your competitors, the timeline slips, some somewhat for their Phase 3 readouts. So it's just the confidence around the timelines on the pivotal Phase 3 programs. Thank you.

[Paul Chaplin, executive]

Yes. Thanks, Peter. So on COVID, as I said, this latest regulatory development is relatively new, unfortunately. So that's the unfortunate side of it. We were literally about to start the previous study. I call it previous because we have to adapt. And the reason we definitely have to adapt is that the approval that we had with the regulators was that they were happy for us to conduct -- to enroll in a national booster program only if we could not get access to a comparator. So as soon as the door opens, it looks like we can now get access to a comparator. The regulators have clearly stated, then you have to do a fully randomized study to the comparator.

The good news, as I said in the presentation, that is a simple study to conduct potentially even faster. And that's why I'm saying that any slight delay we have in the staff, I think, will lead to a faster study. The other thing just to raise your own confidence that we are confident is that I've said several times, we were working in parallel on both approaches, both are randomized study design, but also going in with the national booster program. Obviously, for many months now, we have thought the national booster program was the approach but we actually have draft protocols and things that we've already discussed with the regulators for the randomized approach. So I think we can catch-up relatively quickly.

But as I said, it is a relatively recent development. So we're very firm on exactly when we will start that study and we're still in dialogue with a number of member states to actually get access to the vaccine. So we are confident that we should still see data readout later this year. As I said, if the regulators to allow it, we'll start to [indiscernible].

In terms of RSV, obviously, we've only just started enrollment, which is a critical phase. Enrollment is going okay, and the site openings is going okay. So we're on track as we stand. But as I said, we're only one month in. There is competition, as you know, there are a number of competitors also conducting RSV studies. And even those -- some of those that started last year have expanded their study and are also enrolling. We've taken that into consideration in the site selection. So yes, we remain confident that we will enroll 20,000 this year and that we -- hopefully, the data readout next year is dependent that we see the total number of events that we need to read out. But if that's the case, I do believe we'll have data next year.

[Operator]

[Operator Instructions] Your next question comes from the line of Peter Welford from Jefferies.

[Peter Welford, analyst]

I've got 4 questions for Henrik, please. Firstly, just on the timing of the booking of revenues from Jynneos on US government and Canada. Should we assume that the bulk of these happened at the very end of the year given the manufacturing and what's or is this unrelated to what's going on there? And it could happen during the earlier quarters of this year.

Secondly then on Encepur in Germany. You mentioned vaccine fatigue and then sort of unwillingness. Is this something you're considering actively addressing. I guess, I'm thinking with regards to marketing, perhaps some campaigns to get out there to address the potential, lack of willingness by people apparently to go forward to it or is this something a more general aspect that you basically going to wait for the next season at this point in time.

Thirdly then, just on the outlook. Obviously, you've had the milestone from RSV from Nuance Pharma and also FX, obviously, is moving much more in your favor like 10% or so of the dollar versus the original guide. Are we there for a situation where we should be thinking about some of the weaknesses and things like Encepur, et cetera, give you the confidence actually that sort of offset here or should we be thinking more that given the milestone and given FX that realistically the upper-end of your guidance is more sensible at this point now?

And then just finally on COVID. Coming back to the primary endpoint, I understand obviously the choice of primary endpoint a standard, but is it potentially under consideration to perhaps do a slightly larger study and also look at some of the other strains, the secondary endpoints. I'm thinking particularly Omicron. Would it be viable to consider trying to show superiority, given obviously, we know that the existing mRNA vaccines don't necessarily induce strong immunity against some of the new strains. Is it possible to try and tease-out some sort of benefit? I guess I'm just thinking from your perspective coming late to the market. This seems potentially like an opportunity where you could actually use this study to your advantage at this point or is it just realistically too costly and too big to be able to achieve those sorts of measurements. Thank you.

[Henrik Juuel, executive]

Yes. Thanks, Peter. Let me take the first couple of questions here. First of all, timing of the revenue from Jynneos. We have in our guidance included Canada for approximately DKK 200 million. And then we have DKK 100 million less the orders from last year. So that's DKK 300 million in total. The order to BARDA, the DKK 100 million cannot be executed until we have opened the bulk facility again. So that will be in the fourth quarter. And the Canada order, I think we are expecting most of that to happen in the second half of the year. So most part of our smallpox revenue, the DKK 300 million will take place in the second half of this year.

In terms of Encepur, Germany, what can we do to help the market turnaround, and this is something we can address in terms of marketing, et cetera. I think we are basically doing everything we can here. But I think we should also remember that we have approximately 30% of the German market strong, strong market share, some 70% of the market. They should really be turning this market around, and they will be gaining most from it. And according to our own intelligence, they are doing what they're supposed to do.

But what we are lacking right now is there's not much communication from national authorities in the market, which there usually is with people in sort of national campaigns are reminding people about the peak season kicking in and the risks of not being vaccinated, et cetera. That's probably where more can happen. And we are, of course, doing our best to push for this to happen again. I think the good thing is that we are seeing, as we said, pockets of vaccine markets developing well. We saw our own rabies market in Germany showing fantastic growth. So we do see this as a temporary phenomenon and are optimistic that the TBE market will also return in the near future.

In terms of our outlook, you're right, we haven't changed our outlook, despite we got the Nuance milestone payment, which was not in our original guidance. On the top line, we have helped on forex. We have stronger dollar. That's correct. But we simply believe with the uncertainties that we are seeing in today's world that it was just a tad too early to change anything in terms of our guidance. We are little uncertain about, of course, how Encepur will develop despite we are optimistic. So I will assume that we will have a close look at this again in connection with our second quarter report. But for now, I think we have concluded that it's a little too early with all the uncertainties we are seeing in the world at the moment to change the guidance.

And on the ForEx, remember also that the currency might help us on the top line. Unfortunately, not so much on the bottom line as say, a lot of the clinical trials that we're investing in are in US-dollar denominated. And then I think there was a question one to you, Paul, on the primary endpoint of COVID.

[Paul Chaplin, executive]

Yes. So thanks, Peter. Yes. So the primary endpoint really is locked-in, in the regulators. And when I say regulators, [indiscernible] also the FDA have been pretty insistent that the primary endpoint should be only against the Wuhan strain, which is the only strain any vaccine has shown efficacy against or at least the RNA vaccines. And to go for superiority claim there, one, we probably won't get away with it, that is an end point. But don't forget against Wuhan, we're looking at 95% efficacy. So it's going to be very difficult to trump that, to be honest. Having said all that, of course, the secondary endpoints, we will look at variants of concern. And while secondary endpoints may not be allowed in the so-called label claim, of course, if we can generate superior data, that may well be used by other bodies such as ACIP, who you know, make the final recommendation in the US anyway. So we are trying to address some advantages that we may think we have over the RNA in terms of the overall trial design. As I said, the primary endpoint is really locked in.

[Peter Welford, analyst]

Sorry, just a follow-up. I understand totally on the [indiscernible]. My question was just on the last point now, which is given what you see with Omicron and the neutralizing antibody titers that you generated. So when you think about the sizing of this study, are you thinking about potentially sizing appropriately to get a possible superiority for [NABs] against Omicron because I would imagine the trial size to achieve that is probably not massively, but fairly significantly larger than the trial size required to just show non-inferiority against Wuhan on the primary endpoint immunogenicity?

[Paul Chaplin, executive]

I think you've answered the question. So exactly, that's the problem. This trial size would be significantly larger. It will take longer, and then you may still miss that endpoint. So I think the risk, the expense and the timing risk is too great to go for such a trial design.

[Operator]

Your next question comes from the line of Michael Novod from Nordea Equities.

[Michael Novod, analyst]

First, a question on RSV. Maybe Paul, you can explain a bit on sort of the importance of the T-cells, especially regarding hospitalization, which is the primary endpoint in Phase 3. Also with the data in mind on nirsevimab we saw earlier. Just to get a feeling on how you actually differentiate or how you believe you differentiate also versus other data readouts coming out rather soon, probably.

And then secondly on the Rabies business, can you explain the big jump? Did you get some contract wins in the US during the quarter, during the end of last year to sort of explain the significant jump also in revenues compared to the market?

And then lastly, third-party revenues, you're starting to book more and more. Maybe Henrik, could detail a bit on what sort of level we should expect just for modeling purposes in 2022?

[Paul Chaplin, executive]

Yes. I'll take the first one. Thanks, Michael. Yes. So one of the big differentiating factors is indeed to T-cells, as you mentioned. When we were developing this RSV candidate vaccine, we only really saw full protection in animal models when we had all 5 antigens from RSV expressed in our MVA. And what we see in preclinical studies is that T-cells play a very major role in clearing the virus. That's also seen in the clinic and there's a number of publications that point to that fact.

So when you look at some publications looking at the human challenge model, neutralizing antibodies in the blood do not correlate with protection in that model. The 2 parameters that do correlate, however, is IgA from nasal swabs, which is a special type of antibody in mucosa and memory T-cells in the lung. Also there's a publication looking at a group of elderly subjects and looking at factors which were correlated with fact whether they've got RSV in a normal season or they didn't there. Here again, neutralizing antibodies in the blood did not correlate with being protected from RSV. But what did correlate in protection was whether you had a strong T-cell response before the RSV season, again indicating that T-cells play an important role.

And you brought up the therapeutic antibody data recently that was published, I think it was in the [indiscernible]. That was a very interesting publication because that therapeutic antibody in children showed very high efficacy from mild RSV symptoms. But when you look at hospitalization rates, severe disease of RSA, there's absolutely no difference between placebo and the therapeutic antibody. And what I conclude from that and all the other bits of data I've just said is that T-cells play a really important role.

And in the absence of T-cells, such as a therapeutic antibody, you don't prevent the hospitalization in the severe disease, you're only preventing mild disease. And we're the only vaccine in Canada that generates a very strong broad T-cell response against multiple RSV antigens. So time will tell, but it is a differentiating factor. And there is a lot of data pointing that we have a very good vaccine design.

[Henrik Juuel, executive]

Yes. Okay. Thanks, Michael. Let me take the question on the rabies first. I think yes, we showed extremely strong growth, 45% in total. But it's actually not explained by any particular contracts or such in the US. But it is really, I think, the abnormal growth is really explained by what we see in the German market. The German market grew by 257% and it comes from a very low base. But here we should remember that we have more than 90% of that market in Germany. So we are having a huge benefit of the market coming back. And actually, if you look at the total growth in absolute terms in our rabies business, it's more or less equally divided between US and Germany. And then, of course, we did see a nice growth in the US, but it's actually from the 22% we saw in the US and to the 45% that is actually explained by the significant growth in Germany, given our strong market share there still.

So then I'm afraid I missed your second question. You wanted some input on revenue to be able to model for '22, which product did you talk about.

[Michael Novod, analyst]

No. It was more the third-party revenues that you're booking, so from partnering products. It was more to get a feeling of that and you've also started to book additional products for the rest of the year. Just to get a feeling of where we are sort of in terms of the share of revenue pool?

[Henrik Juuel, executive]

We haven't guided anything there yet, and it's still a relatively new business to us. So I do not feel comfortable starting guiding on that, in particular, not on HEPLISAV-B, which is a totally new launch. It's quite an exciting launch, of course, total market value of DKK 20 million to DKK 25 million for the German market, but we hopefully come in with a strong product. It's so far the only 2 dose-only hepatitis B vaccine coming into the market. And in terms of the other 2 products from Valneva, I can't really guide on that. It's a little too early, and it's also 2 products that have been heavily impacted by COVID-19. And we need to see perhaps some of the positive trends we have seen on the rabies business also was spill-over to other travel vaccines, but that's a little too early to say unfortunately. So I'm afraid I can't help you much more as we have very few data points on these new products here.

[Operator]

[Operator Instructions] There seems to be no further questions at this time. Please continue.

[Paul Chaplin, executive]

Thank you. So thank you everyone, for attending the Q1 update and for the questions and your interest. Have a great day.

[Operator]

That does conclude our conference for today. Thank you for participating. You may all disconnect.