Bavarian Nordic A/S

CSE:BAVA

Earnings Call Analysis

Robust Revenue Growth and Confident Full-Year Guidance

Bavarian Nordic's Q1 reflected the seasonality of travel and lumpiness of public preparedness. Revenue rose to DKK 831 million, driven by a 20% increase in the Travel Health segment. Despite a temporary rabies vaccine stockout in Europe, strong U.S. demand bolstered market share. The company anticipates full-year revenues of DKK 5-5.3 billion and EBITDA of DKK 1.1-1.35 billion, with significant orders expected. Cash flow benefited from a reduction in accounts receivables, maintaining a solid cash position despite upcoming obligations. Regulations for chikungunya vaccine filings are on track, supporting an exciting launch in 2025.

Navigating the Seasonal Landscape

The earnings call stresses that the first quarter is typically slow, reflecting the seasonality in travel and public health orders. With the latter usually gathering in the second half of the year, current numbers demonstrate the organization's commitment to aligning with this pattern. Management remains optimistic about a strong resurgence in travel health products, especially in Q2 and Q3, which historically represent peak quarters.

Strong Demand in Travel Health Sector

Bavarian Nordic reported significant growth in its travel health business, with revenue reaching DKK 447 million—an increase of 20% compared to last year. The notable growth of the Encepur vaccine was highlighted, particularly in the German market, where demand surged by 37%. This increase suggests a shift in consumer behavior and a return to increased travel, providing a positive outlook for the full year.

Public Preparedness and Orders Filling Up

In the public preparedness division, revenue amounted to DKK 344 million, primarily from contracts to supply vaccines to Canada and orders through the EU's rescEU initiative. The company successfully secured a large order worth EUR 65 million set for delivery next year, filling the order book for 2024 and positioning itself strongly for future revenue.

Financial Performance Insights

Bavarian Nordic reported gross profits of DKK 265 million, but observed a lower margin due to an unfavorable product mix and higher production costs stemming from water damage at its Kvistgaard facility in Denmark. Total operating costs for the quarter reached DKK 394 million, leading to a positive EBITDA of DKK 22 million, reporting a 3% EBITDA margin. Management anticipates improved margins as production normalizes and demand increases.

Strategic Actions and Forward-Looking Statements

Management reiterated its revenue guidance for the year at DKK 5 billion to DKK 5.3 billion, with expected EBITDA between DKK 1.1 billion and DKK 1.35 billion. Specifically, they are targeting DKK 2.7 billion to DKK 3 billion from public preparedness and DKK 2.1 billion from travel health, showcasing solid confidence in meeting these targets despite challenges faced.

Launch of Jynneos and New Opportunities

The recent launch of Jynneos as a vaccine for mpox in the U.S. is positioned as a significant opportunity within the company's portfolio. This launch allows access to at-risk populations through various channels, indicating a diversification of revenue streams and positive future outlooks in vaccine offerings.

Navigating Supply Challenges

Despite strong market demand, Bavarian Nordic faced temporary stockout situations, notably in the U.S. and German markets. Moving forward, the company is enhancing its manufacturing capabilities with plans for tech transfer of rabies vaccine production. The resolve of these stock issues, combined with regulatory approvals for expanded production, should position the company for increased market penetration.

Competitiveness and Market Positioning

The company's performance in the rabies market shows a commendable 71% market share in the U.S. and growth of over 40% in ex-factory sales. However, market challenges persist, with fluctuations in availability affecting sales dynamics. The management's focus on establishing a robust supply chain, particularly for rabies vaccines, remains crucial for sustaining market advantages.

Long-Term Growth Vision

Looking ahead, Bavarian Nordic's strategies encompass not only improving production efficiencies but also aiming for new product launches—like the chikungunya vaccine anticipated for 2025. Continuous negotiations with health authorities and an emphasis on research and development efforts underscore the organization’s intentions to capture broader market opportunities.

Conclusion: Confidence Amidst Challenges

In summary, Bavarian Nordic is confidently navigating its current challenges while positioning itself favorably for growth. Strong demand in its travel health sector, strategic public preparedness contracts, and expansion in product offerings like Jynneos highlight a robust operational framework. Investors can look forward to an interesting year ahead as the company strives to meet, and even exceed, its financial objectives despite the inherent seasonality and operational hurdles.

Earnings Call Transcript 2024-Q1

[Operator]

Good day, and thank you for standing by. Welcome to the Bavarian Nordic Q1 presentation. After the speaker's presentation, there will be a question and answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Rolf Sørensen. Please go ahead.

[Rolf Sorensen, executive]

Yes. Thank you, operator, and good afternoon to everyone. And welcome to the Nordic quarterly announcement. With me -- my name is Rolf Sørensen, VP, Investor Relations. And with me, I have the usual team, President and CEO, Paul Chaplin; and Executive Vice President, Chief Financial Officer, Henrik Juuel, that will walk through slides and answer questions as they come in afterwards.

Before we start our presentation, I'll just walk through the disclaimer quickly. This presentation includes forward-looking statements that involve risks, uncertainties and other factors, many of which are outside our control that could cause actual results to differ materially from the results discussed.

Forward-looking statements include our short-term objectives and opportunities, financial expectations for the full year as well as statements concerning our plans, objectives, sales, future events, performance and other information that is not historical information. We undertake no obligation to topically update forward-looking statements to reflect subsequent events or circumstances after the date made, except as required by law.

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

[Paul Chaplin, executive]

Yes. Thanks, Rolf, and welcome, everyone, to our Q1 presentation. If you turn to Slide 3. So Q1 is typically a slow quarter in terms of our commercial sales due to the seasonality of travel. And on public preparedness, typically, our orders are in the second half of the year due to the long lead times in terms of manufacturing and when we receive the orders. So our Q1 numbers reflect that today as well.

However, having said that, we see very, very strong demand on travel health, and I'll get into more of that in the coming slides, but that bodes extremely well for the rest of the year as typically Q2 and Q3 are our strongest quarters.

In terms of the operations, we've had an extremely busy first 3 months. We've launched Jynneos as an mpox vaccine in the U.S., and this is a whole new opportunity that I'll allude to in the coming slides.

We've also received our third order from the rescEU fund, which is already filling up the order book for next year. And as I said on travel health, despite -- as well as strong demand for our commercial assets, we're making great progress on filing for our approval for our chikungunya vaccine, which we're on track really to launch next year.

So if we go to the next slide, Slide 4. So as I said, we've seen very strong demand for all our vaccines in our travel health portfolio. And I'll go through them -- the highlights on this slide. In rabies, we're almost a victim of our own success in that the demand that we've been seeing over the last 18 months is only increasing and is continuing. In the U.S., we saw the market grow by 17%.

However, in Europe, despite this strong demand, we were unable to meet that demand, and we're in a temporary stockout situation. We knew that stockout situation going into the year, and it's primarily due to the manufacturing setup we have, while we're in this period of relying on GSK to supply.

The reason that creates some uncertainty in terms of supply is that there's a long lead time in which we have to order product. So the products that we're selling today we've essentially ordered 1.5 years ago. And unfortunately, 1.5 years ago, we didn't accurately predict strong demand that we're seeing and the rebound in travel, which has occurred much faster than we and other people in this industry predicted.

The good news there is that we're making extremely good progress on the tech transfer of our rabies manufacturing to be in. And in fact, we've already received the first regulatory approvals for the filling of our rabies products, which we expect to be completed in the coming months. And by year-end, we will have hopefully all the regulatory approvals for end-to-end production of rabies at BN, which means that we will have greater flexibility in the future to meet the market demand and turn up manufacturing or turn down manufacturing depending on that demand.

On TBE, we've seen an extremely strong quarter with a 44% increase compared to this time last year, and that bodes well. As I said, typically, Q1 is a quieter quarter. We have to see whether this strong demand in Q1 translates into Q2 or moves into Q2, which is typically the stronger quarter, but it certainly bodes well for meeting the guidance on our Travel Health portfolio.

Cholera and Typhoid assets that we acquired last year are performing according to plan. And so we're very happy with the overall performance of our Travel Health portfolio during Q1.

Go to the next slide. On chikungunya, this year is all about moving forward and completing the regulatory filings both to the U.S., the FDA and also the European Union. And we're on track. So we have initiated the rolling submission to the FDA, and this will be completed in June. That allows us to start planning the launch already for next year.

On the EMA side, the European Union, we have accelerated approval that was crafted in February, and we're on track to complete that submission in June later this year.

Both of these submissions, as I said, will allow us to continue our preparations for the launch in '25, and we're extremely excited about this opportunity because we have clearly a differentiated product from the competition, both in terms of an improved safety, a faster onset of protection, which we think bodes well for the launch and providing this as an incredibly new opportunity in our Travel Health portfolio from next year and on.

If we go to the next slide, on public preparedness -- of course, if you look at the numbers in Q1 and compare it to last year, they are lower. But really, this is a business that you can't really compare quarter-to-quarter or year from year in each quarter because the business is lumpy in terms of when we receive the order. We typically don't have products on stock. And therefore, the order is placed into our manufacturing schedule, and that typically takes 12 to 15 months to complete. So typically, orders that we receive in 1 year are delivered more likely than not in the second half of the following year.

So we remain on track for our guidance for '24. The events that have happened in Q1, as I said, excitingly, we've secured a large order from the rescEU fund, which is a new fund under the EU, which is a third order we've now received, in EUR 65 million, which will be delivered next year. So it's great to see that we -- with our broadening of our customer base are securing orders already for next year.

With -- Swissmedic approved Jynneos earlier this year. That was a follow-on from orders that we received for mpox last year, but it just goes to show that it's yet another broadening of the customer base that we have for our mpox/smallpox business. And importantly, we've launched Jynneos in the U.S. into the private market. This is really a whole new commercial opportunity, which will allow us to sell Jynneos through different channels, giving access to risk populations that really need access to this vaccine, while also in parallel, continuing the stockpiling orders that we had historically seen with BARDA. So with that, I will pass on the presentation to Henrik.

[Henrik Juuel, executive]

Yes. Thank you, Paul. So let me take you through some of the financial results for the first quarter. So please turn to the commercial performance slide. So total revenue for the first quarter of this year ended at DKK 831 million comprised of DKK 344 million from our public preparedness business and DKK 447 million from our travel health business.

The public preparedness revenue was secured through some of the contracts that we have previously announced. So that is supplying vaccines to Canada. It is to the EU, under the rescEU set up, and it is the start of supplying some of the free strike doses to the U.S. government. So DKK 344 million in revenue from our public preparedness business for the first quarter.

Travel Health business, Dirk 447 million, so that's up 20% compared to last year. And obviously, driven by [indiscernible] that were not included last year as we only closed the transaction with Emergent mid of May '23. But it's also driven by, as Paul mentioned, a very significant growth from Encepur, our TBE vaccine. And here, we basically -- we saw the German market growing by 37%, and we have also lately increased our market share to now 27% of the market.

As Paul also alluded to, I think the second quarter will be an interesting quarter to monitor here. But I think definitely, it bodes well for the full year expectations to our TBE vaccine. Our rabies business delivered close to the same level as last year, 3% down, delivering revenue of DKK 235 million. Behind this number, there are very different market performances. We have seen extremely strong demand basically across all markets, but commercial performance has varied significantly depending on the availability of vaccines in the markets.

So the U.S. market grew by 17% in the first quarter, and we actually managed to increase our market share by 1 percentage point. So we now have 71% of the market. And our ex-factory sales of vaccines increased by more than 40% in the U.S., so very strong performance in the U.S.

Unfortunately, we knew we were entering this year with limited supplies, given the extraordinary high increase in demand we have seen in the last quarters, driven by increased travel again. And we have had a temporary stockout in the German market. That has now been resolved, but it did mean that the total market dropped by 27% in the first quarter.

And we took a hit on our market share. We have gained most of that back again, and we are now sitting with a market share in the German market of 88%, and we have resolved the stockout issue in Germany and can supply the market again according to demand.

I would just like before we turn to the next slide and say that this -- the revenue level here is fully in line with our plans, and we are sticking to our guidance of DKK 5 billion to DKK 5.3 billion for the full year. So fully in line with the plans, the travel health business is a seasonal business, and the public preparedness business is just a lumpy business where you typically see large revenue associated with few orders.

So let's turn to the next slide, where we look at the profit and loss for the quarter, DKK 831 million revenue, we already talked about that. That has given us a gross profit of DKK 265 million for the first quarter, a relatively low gross margin compared to previous quarters and explained by 2 things.

Basically, number one, obviously, different product splits. If you compare it to first quarter '23, there is approximately Dirk 500 million revenue difference coming from the public preparedness business, which is a highly profitable business.

And the second explanation is that our other production costs, which is typically where the costs associated with idle capacity and has been relatively high for the first quarter '24. One of the reasons has been that we unfortunately had an incident with the water damage in our manufacturing in Kvistgaard in Denmark, which meant that the facility was not operating for a couple of weeks, and that incurred some costs -- not real cost, I would say.

That was very limited, but it means that we cannot absorb the indirect costs. The depreciations of the machinery and the buildings and the people working in the factory will hit your P&L rather than go to inventory for products manufacturing.

We have also on production costs, remember, this time included the impact of taking over the manufacturing site in Bern. And as we have previously mentioned, this facility is not running at full utilization. There are lots of opportunities to improve that over time, but that does also impact the production cost for the first quarter of this year.

If you look at the total operating costs, DKK 394 million. Obviously, R&D is impacted by a lower activity level within our clinical operations. Sales and distribution costs have increased as we are now launching Jynneos into the private market in the U.S. And we have also taken over to support the Travel Health business, a few people from Emergent going into the sales organization.

Admin cost for the period is up compared to first quarter of last year, but that is all explained by the inclusion of the acquisition we did and some integration costs we are still incurring during the integration of the acquisition. If you look down the P&L, you can see we're ending up with a positive EBITDA of DKK 22 million, equivalent to 3% EBITDA margin.

But on this one here, I would also say that we are sticking to our full year guidance, and I will come back to that on one of the next slides here.

So all, again, fully in line with plans. Obviously, water damage was not planned, in our plans, but these are things that we can handle, and we can definitely compensate with other means financially.

So let's turn to the next slide and have a quick look at the balance sheet and our cash flow for the period. So cash flow from operating activities was positive by DKK 435 million, and that was primarily driven by a very significant reduction in accounts receivables.

Remember, we had a very busy fourth quarter last year and in particular in December. We have revenue recognized a lot, and we have basically been collecting the money during the first quarter for that revenue. So that has contributed quite significantly to the -- an improvement in working capital.

Cash flow from investment activities, minus of DKK 1.045 billion. That is simply just a placement of our surplus cash into securities until we need them. And then all of this turns into net cash flow for the period. That's negative by DKK 621 million. But remember here, again, that's only due to the placement of cash into securities.

To the right, you can see we continue to have a very solid cash position close to DKK 2.3 billion in net cash. But again, here, I would like to remind you that we have an obligation to pay the consideration both to GSK and to Emergent BioSolutions. That is approximately DKK 2.5 billion. And I think by now, we can soon say that it has to happen within the next 12 months.

We are anticipating to pay the last milestones to these 2 companies at the latest during the second quarter of next year. So a strong cash position, putting us in a good position to honor our commitments to both GSK and Emergent BioSolutions over the next 12 months.

Next slide. As I already said, I think we stand fully by our financial guidance for the full year, guiding revenue of DKK 5 billion to Dirk 5.3 billion and an EBITDA of DKK 1.1 billion to DKK 1.350 billion. The results from the first quarter, I think, is fully in line with plans. And if you break it down, you can see public preparedness. We are guiding still between DKK 2.7 billion and DKK 3 billion. No change there. And on the Travel Health, we are still guiding DKK 2.1 billion for the full year.

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

[Operator]

[Operator Instructions] . And now we're going to take our first question, and it comes from the line of Michael Novod from Nordea.

[Michael Novod, analyst]

Michael from Nordea. A few questions. Maybe we start with Jynneos and so we're trying to cut through the noise on sort of timing of orders and then look at the part that is unsecured, so you have DKK 1.6 billion secured. That means you have sort of DKK 1.1 billion that is unsecured.

How confident are you on exact timing of that? And is it related to 1, 2, 3 larger orders? Maybe you can elaborate a bit on that.

And then secondly, also on Jynneos, maybe you can give a bit of sort of early signs. I know it's very early, but on the private launch in the U.S., how are you sort of tracking? What are the progress? What steps have been taken to secure sort of the right commercial access?

And then, lastly, on overall travel demand, you said around TBE, you've had a solid start. You need to show they can sort of continue into Q2. What are you seeing because the TBE season has been very strong. So isn't that sort of a leading indicator for how this is going to develop in the coming quarters?

[Paul Chaplin, executive]

Yes. Thanks, Michael. So on the Jynneos orders and the unsecured orders, so I would say the unsecured orders are a mixture. So we've already received smaller orders already during Q1, and we anticipate those smaller orders to still come through.

But I think it's clear that the majority of the unsecured orders would be 2 or 3 larger orders that we're anticipating. We are very confident that they will come through. The issue with government is always on timing and the exact timing of when they've all materialized.

So of course, one of the questions that I'm sure will come, when in the year is it too late to receive an order because then you can't deliver? On that, I would say typically, that would be true. But as we are confident in these orders, we're actually building up the inventory.

So one of our customers orders bulk, as you know. And that -- we're building up bulk inventory. So that order -- bulk orders could come extremely late in the year and will be high.

In terms of drug product, that's a slightly different -- slightly more tricky answer because to build up inventory of final fill vials is tricky because if the order doesn't materialize, you've then got vials with an expiring shelf life and then you're trying to sell inventory with a reduced shelf life, which is tricky.

The good thing for us is that we have orders for next year for final doses, which allows us now to build up an inventory of final doses so that if those orders or when those orders materialize, we can also secure them.

So I think the answer to your question is we're very, very confident that we can stick to the guidance. Yes, we still need some orders to come through. We're working on them. We think they will materialize in time for us to deliver and revenue recognized.

The other question related to the launch and where are we. It is too early to say how many doses are actually -- we know how many doses that we're supplying into the various tracks, but it's a bit too early to say how many doses are actually being sold.

However, things have gone extremely well. I think to go from a recommendation late last year to a launch by the 1st of April is very fast. And I have to congratulate all my employees who were involved in that. There are a number of things logistically that we had to put in place because part of it will be contracting. The pharmacy chains will be one at -- one source of access for the population, and they are now in place.

The other logistical exercise that we had to manage was the U.S. government has been supplying health clinics in various states with 3 doses from the stockpile. And we've had to work hand-in-hand with the U.S. government on that transition. That transition is now over in the sense that the only doses that are being supplied into the U.S. market is now through the very Nordic channels.

So everything has gone according to plan. It's been a tremendous amount of work, but we think the groundwork is now in place. Of course, a big part of the success of this launch will be disease awareness, which, of course, we're working on in parallel.

The third question. Do you want to take that, Henrik?

[Henrik Juuel, executive]

Yes, I can take that. Then Michael, you had a question regarding the growth we have seen in the TBE market and to what extent that's an indicator for the rest of the year.

We do see the significant growth that we have seen in the first quarter, 37% in the German market, probably driven by a mix of, first of all, an earlier peak season this year. And you can -- then you can argue, will that eat into the second quarter, which is normally the high quarter? Yes, probably to some extent. But we also see that's an effect from continued endemic expansion. So generally higher demand.

So therefore, I don't think we can take the full growth here and yet say that this is how -- the kind of growth you will see in the next following quarters. But for the full year, we are definitely anticipating a material significant growth in the TBE market driven by an overall increased demand.

[Operator]

Now we're going to take our next question. And the question comes from the line of Peter Verdult from Citi.

[Peter Verdult, analyst]

It's Peter from Citi. I think Mike sort of touched on the most pertinent questions.

Paul, just sorry to labor the point, just I think the key issue here is to get the comfort on the uncontracted revenues.

So just to be clear, it's all the difference between your earlier comments about long lead times. That all relates to the Travel Vaccines business and the fact that you're still not producing yourself.

So just to be clear, you've built up the inventory. Could I push you on the uncontracted? Are you basically saying that should the U.S. come in and replenish bulk, is that you done and dusted? Or are you reliant on other key contracts?

[Paul Chaplin, executive]

Yes. Thanks, Peter. So it's true. Typically, we don't have inventory for mpox/smallpox. And when we receive orders, we then place that order into the manufacturing system, and that can take 15 months before doses start coming out of the factory, and we can deliver. That's the normal process.

Then there is the anticipation of orders because we are in very close dialogue with a number of different customers. And there, we start building up inventory because quite frankly, to put it frankly, most governments don't really care when they place an order, if they're placing an order for a stockpile. If they get those doses at the end of the year, the beginning of the year or even going into next year. That's not the longest concerns because those doses are going to be in the stockpile for eight years.

So in those situations where we're in late-stage discussions and we are confident that those orders are going to be placed, we will build up inventory. That is true for this year. It is not only the U.S. I don't have to say it is the U.S., but the U.S. is our biggest customer. That's true. But it's not one order that is the difference. It is several orders from different -- obviously, different governments, but it's no more than 3 or 4. And we're still extremely confident that we will secure those orders.

[Peter Verdult, analyst]

And Paul, if I may, just last one from me. If we get to Q2 results in August, and there's still no contracts signed, is that when you start to get less confident? Or how long can you lead to still make these revenues?

[Paul Chaplin, executive]

Well, as I said, the fact that we're building up inventory, we can definitely go beyond or we can get -- so the difference in the uncontracted sales will come from the inventory we're building up over the course of this year. So as I said, in terms of some customers, it can almost come in December, and we're still going to be fine. I really don't want to get that close, to be honest. But that's the reason we're building up inventory because if we didn't, we would basically need those orders already. We're confident.

[Peter Verdult, analyst]

I'll go back in the line. Thanks a lot.

[Operator]

We're going to take our next question. And the next question comes from the line of Suzanne van Voorthuizen from Van Lanschot Kempen.

[Unknown Attendee]

It's [indiscernible] on behalf of Susanne. Again, on the public preparedness, so the part of your revenue guidance for 2024 is based on this, on those contributions. So I was wondering if you see any risk there for further reduction of those contributions?

[Paul Chaplin, executive]

Yes. So we have, probably for the first time, really included uncontracted styles in our public preparedness business in our guidance. And that is simply because we are -- we were confident when we set the guidance that there were a number of orders that would come through and materialize this year. We are still on track for that to happen. We stick by the guidance because our confidence hasn't waned, and we believe those orders will come through.

As I said, as we're building up inventory, those offers can actually come quite late in the year. And so we're on track to meet guidance.

[Operator]

[Operator Instructions] And now we're going to take our next question. And the question comes from the line of Peter Welford from Jefferies.

[Peter Welford, analyst]

Two sort of slightly longer-term questions, please, if I can, Paul. Firstly, just with regards to confidence in the U.S. government potentially longer term, establishing a larger stockpile of the smallpox/mpox vaccine. Any change at all in your thinking in regards to the likelihood of whether or not a transition could or could not occur?

And, I guess, any signs from the U.S. government as far as change in this? Or do you think it's likely to be more of a step-by-step process as we got to see with the orders recently?

And then secondly, just your appetite to potentially look to bringing in more products. You've obviously just completed a deal integrating that at the moment. You still got a lot of milestones to be paid out during the course of this year and next. Just -- are you now in an integration phase? Or should we think that you're still opportunistic to potentially bring in other opportunities still if those could arise?

[Paul Chaplin, executive]

Yes. Thanks, Peter. I'm just trying to think of what is the best way of answering your long-term question. So there's a couple of things that have happened over the last -- actually during Q1. So last year, the U.S. government asked the Academy of Science to set up the team to look at smallpox -- whether there was sufficient funding, whether it's still an area that needed additional acquisitions of either antivirals or vaccines. And it was a program that we were invited as all smallpox companies were invited to present.

The conclusions came out, I believe, in March, which was really that smallpox remains one of the highest threats to the U.S. population. And that they encourage the U.S. government to purchase more safer, smallpox vaccines. So that was a very, very positive outcome from that independent think tank that was commissioned by the government to look into smallpox.

In addition to that, what's happened very recently is that Emergent BioSolutions has announced that their long-term contract is basically been half for the future acquisition of [indiscernible]. So you have a think tank telling the government that they should purchase more smallpox vaccines, particularly the safer version. You have the U.S. government reducing the contracts with Emergent BioSolutions.

I think both of those things are pushing in the one direction that they do need to increase their stockpile, but that their focus is really changing toward Jynneos. And we -- again, as everything with the U.S. government, it will take time. But those discussions, we have very fruitful discussions with the U.S. government in terms of the order beyond what we currently have, which is for the freeze-dried 13 million doses.

I think on M&A, I think the 2 things to be said on that. Yes, we are extremely busy still on integrating our assets and ensuring that we execute the strategy -- our growth strategy in terms of our commercial assets. And if we were to be able to pick and choose the time, we will be not looking to do any further acquisitions for the foreseeable future.

But everything in M&A happens when the least you expect or when you at least want it. I think we have a growth strategy. And if opportunities arise, we would seriously have to have a look. But as I think Henrik pointed out very nicely, despite the fact that we have a very strong cash position right now, that cash is accounted for. So we have to live within our means as well.

So that's a bit of a mixed answer. Yes, we would like to do things, but we have to live within our means. And right now, our focus is really on execution.

[Operator]

[Operator Instructions] There are no further questions. I would now like to hand the conference over to the management team for any closing remarks.

[Paul Chaplin, executive]

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

[Operator]

That does conclude our conference for today. Thank you for participating. You may now all disconnect. Have a nice day.