Bavarian Nordic A/S

CSE:BAVA

Earnings Call Transcript 2021-Q4

[Operator]

Good

day,

and

thank

you

for

standing

by.

Welcome

to

the

Bavarian

Nordic

Annual

Report

2021

Conference

Call.

At

this

time,

all

participants

are

in

a

listen-only

mode. After

the

speakers'

presentation,

there'll

be

a

question-and-answer

session.

[Operator Instructions]



Please

be

advised

that

today's

conference

is

being

recorded.

[Operator Instructions]

I

would

now

like

to

hand

the

conference over

to

your

speaker

today,

Rolf

Sørensen.

Please

go

ahead,

sir.

[Rolf Sass Sørensen]

Yeah.

Thank

you,

operator.

And

good

morning

to

some

of

you

and

good

afternoon

to

the

rest

of

you,

and

welcome

to

this

full

year

presentation

2021

of

Bavarian

Nordic.

And

as

usual,

I

have

with

me

here

the

A-team,

President

and

CEO,

Paul

Chaplin; and Executive

Vice

President

and

CFO,

Henrik

Juuel.

And

before

we

start

our

presentation,

I

just

want

to

quickly

go

through

the

forward-looking

statements.

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

financial

preparedness

as

of

year-end,

as

well

as

statements

concerning

our

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

made,

except

as

required

by

law.

So,

with

this,

I

will

hand

the

presentation

over

to

Paul

Chaplin.

[Paul Chaplin]

Thanks,

Rolf.

And

welcome,

everyone,

to

our

investor

call. If

you

turn

to

slide

3,

I'd

like

to

start

with

just

a

few

high

level

observations

before

I

move

on

and

talk

about

the

great

progress

we

made

in

2021

and

the

exciting

steps

we

have

ahead

of

us

during

this

year.

So,

back

in

2020,

when

we

expanded

our

commercial

portfolio

with

the

acquisition

of

our

two

new

products;

one

against

rabies

and

one

against

TBE,

we

said

at

the

time

that

we

wanted

to

build

up

our

commercial

infrastructure

to

drive

profitable

growth,

but

at

the

same

time,

we

came

out

with

a

vision

that

by

2025

we

want

to

be

one

of

the

largest

pure-play

vaccine

companies.

And

to

do

that,

we

had

to

broaden

our

commercial

portfolio

and

bring

more

products,

either

through

our

R&D

innovation

or

through

additional

M&A.

Last

year,

we

were

lucky

to

be

able

to,

through

capital

raises,

raise

money

from

our

investors

who

wanted

to

support

us

in

this

endeavor

to

become

one

of

the

largest

pure-play

vaccine

companies

and

through

funding

through

the

Danish

Government.

We're

now

in

a

rather

privileged

position

that

through

these

huge

advances

that

we've

made

in

our

pipeline

during

last

year

we're

in

a

position

that

we

can

make

strategic

investments

in

two

blockbuster

indications

that

will

springboard

us

to

achieving

our

vision

of

becoming

this

pure-play

vaccine

company

by

2025.

The two

programs

that

we'll

be

investing

heavily

in

in

2022,

I'll

come

back

to

in

more

details,

but

that's our

innovative

RSV

program

that

would

be

entering

Phase

3

and

our

COVID-19

program,

ABNCoV2,

which

is

funded

through

the

Danish

Government.

Both

these

programs

have

generated

really

exciting

data

during

2021

that

I'll

remind

you

of

in

the

coming

slides

and

have

really

met

the

threshold

to

invest

and

move

forward

to

launch

in

the

coming

years.

In

addition

to

these

R&D

investments,

we

will

continue

to

invest

in

our

manufacturing

infrastructure

that

will

allow

us

to

bring

our

commercial

assets,

the

manufacturing

of

our

commercial

assets

in-house

and

will

set

the

ground

stone

for

us

to

be

able

to

manufacture

life-saving

vaccines

in

the

future.

So,

we

are

transitioning

to

a

really

exciting

stage

in

Bavarian

Nordic

where

we're

investing

in

our

strategic

assets

to

secure

future

growth.

And

when

we

came

out

with

the

desire

to

move

to

a

commercial

entity

with

profitable

growth,

we

did

indicate

that

there

would

be

temporary

periods

where

we

may

be

loss-making

as

we

would

have

to

make

significant

investments

to

be

able

to

achieve

the

vision

of

becoming

one

of

the

largest

pure-play

vaccine

companies.

So,

if

we

go

to the

next

slide,

slide

4,

2021

was

a

remarkable

year

in

many

respects

and

will

probably

remembered

most

for

the

two significant

advances

we

made

in

our

pipeline.

We

reported

fantastic

data

for

ABNCoV2,

our

COVID-19

vaccine,

which

also

coincided

with

funding

from

the

Danish

Government,

which

has

now

secured

our

ability

to

move

this

program

to

launch,

which

hopefully

will

happen

next

year.

On

RSV,

we

also

reported

efficacy

data,

which

is

highly

competitive.

The

US

authorities

have

recognized

our

excellent

data

with

a

breakthrough

designation,

and

we're

now

gearing

up

to

move

into

Phase

3

following

the

generous

support

of

our

existing

shareholders.

On

the

commercial

side,

yes,

we

still

hit

headwinds

due

to

COVID-19

on

some

of

our

sales

activities

for

different

reasons.

Our

rabies

is

a

travel

vaccine

here

in

Europe,

which

has

been

heavily

impacted

due

to

the

travel

restrictions.

And

on

TBE,

there

was

a

restriction

or

availability

to

physicians

in

Germany,

one

of

our

key

markets.

However

fortunately,

last

year

we

were

able

to

secure

revenues

from

our

smallpox

and

Ebola

business

that

really

allowed

us

to

fulfill

and

achieve

our

guidance

for

2021.

So,

if

we

go to

the

next

slide,

slide

5,

I

want

to

talk a

little

bit

about

the

investments

that

we

have

made

and

will

continue

to

make

in

our

manufacturing

site

here

in

Denmark.

It

really

has

expanded

over

the

last

few

years.

We've

completed

the investment

in

a

state-of-the-art

fill-finish

facility.

The

first

commercial

product

was

transferred

and

we

manufactured

our

first

doses

of

our

smallpox

vaccine,

which

we

invoiced

last

year

to

the

US

Government.

We

continue

to

do

tech

transfers

into

that

facility,

both

for

our

rabies

products,

our

Rabipur/RabAvert

and

also

our

freeze-dried

smallpox

version.

We

are

currently

expanding

the

bulk

facility

to

allow

us

to

take

in

Encepur

and

Rabipur

in

the

coming

years.

And

due

to

that

expansion,

we've

had

to

actually

close

the

facility

for

approximately

a

year,

started

last

year

and

it

will

be

opened

again

later

this

year

in

the

autumn.

And

that

actually

has

an

impact

on

our

ability

to

continue

to,

obviously,

manufacture.

So,

we

will

not be

able

to

manufacture

bulk

for

the

US

Government

during

2022 or

Ebola

orders

for

our

partner

Janssen,

which obviously –

and

Henrik

will

get

to

that

in

the

coming

slides –

has

impacted

guided

revenue

for

2022. However,

all

these

investments

are

going to

allow

us

to

manufacture

our

commercial

portfolio

in-house

and

is

the

cornerstone

and,

I

would

say,

the

foundation

to

allow

us

to

become

one

of

the

pure-play

vaccine

companies

in

the

coming

years.

If

we

go

to

the

next

slide,

as

I

said,

we're

in

a

rather

privileged

position

in

that

we've

got

two

extremely

exciting

assets,

both

in

blockbuster

indications,

which

are

ready

for

Phase

3.

As

I

said,

through

the

support

of

our

investors,

but

also

through

funding

from

the

Danish

Government,

we

have

the

funds

to

execute

on

these

Phase

3

programs

and

bring

these

products

to

market.

Both

these

products

are

in

blockbuster

indications.

They

will

through

these

investments

secure

future

growth

and

allow

us

to

bring

true

life-saving

vaccines

to

the

market.

This,

however,

does

mean

that

we

have

to

make

significant

investments.

And

we'll

be

investing

close

to

DKK

2

billion

in

R&D

in

the

coming

year,

and

that,

of

course,

has

a

massive

impact

on

our

guidance

for

this

year.

The

revenue,

as

I

said,

is

slightly

lower

than

it

was

last

year

due

to

the

facility

closure,

and

obviously,

our

R&D

investments

are

increasing

by

four-fold,

which

means

we

are

in

a

temporary

loss-making

period.

But

as

I

said,

these

investments

were

planned

and

will

allow

us

to

secure

the

future

growth

in

the

years

ahead.

So,

if

we

skip

a

couple

of

slides

and

move

to

ABNCoV2.

I

often

get

the

question,

what

is

the

future

market

for

COVID

now

that

society

is

opening

up

again,

the

sun

is

shining

and

we're

all

feeling

much

better

about

our

life

moving

forward.

And

I

would

remind

all

of

you

that

asked

me

that

question,

I

was

asked

the

same

question

this

time

last

year,

that we

were

too

late,

there

was

no

real

need

for

a

new

vaccine

and

then,

unfortunately,

as

the

year

progressed,

we

all

realized

with

the

emergence

of

Omicron

that

we

were

going

back

into

lockdown

and

we

all

needed

a

new

booster.

The

data

that

is

being

generated

through

the

booster

programs

around

the

world

is

already

beginning

to

indicate

that

the

neutralizing

titers

or

the

efficacy

is

waning

six

months

later

and

most

people

are

predicting

that

we

will

need

another

booster

later

this

year

and

most

people

believe

that

with

current

batch

of

vaccines

that

we

will

probably

be

moving

to

annual

boosters

particularly

for

risk

groups

and

elderly

subjects.

And

that's

one

speculation that

that's

how

the

market

will

develop

into

a

flu-like

market

where

elderly –

unfortunately,

that

probably

includes

myself –

and

risk

groups

will

be

vaccinated.

However,

there

could

be

other

vaccines

to ABNCoV2

that

give

you

longer-lasting

protection,

and

that

market

will

then

develop

into

more

of

a

shingles

[indiscernible]



(00:12:21) market

where

elderly

and

risk

populations

need

regular

boosters,

but

more

likely

every

three

to

five

years.

And

how

that

market

develops

we'll

only

be

able

to

tell

you

as

the

data

is

generated.

But

it's

certainly

a

huge

unmet

medical

need

for

improved

vaccines

and

there's a

huge

commercial

opportunity

that

lies

ahead

of

us.

If

we

go

to

the

next

slide,

we

have

already

reported

some

of

the

Phase

2

data

last

year.

And

if

I

just

remind

you

of

the

trial

design

at

the

bottom

left,

there

were

three

groups; two

groups

that

were

seropositive,

meaning

they've been

previously

vaccinated

that

received

a

single

booster

of

either

100 micrograms

or

50

micrograms –

and

we've

already

reported the 100

microgram

data

and

shown

that

data –

and

there

was

a

seronegative

group

that

received

two

vaccinations

of

100 microgram

four

weeks

apart.

We

have

now

completed

this

study

and

reported

the

data

a

few

weeks

ago.

And

essentially,

we

see

in

the

booster

indication

very,

very

strong

booster

responses

against

all

the

tested

variants

of

concern,

and

I'll

show

that

data

in

coming

slides.

No

real

difference

between

50

micrograms

and

100

micrograms;

both

showing

very

strong

booster

responses.

For

various

reasons

that

I'll

get

to

in

the

coming

slides,

we

have

selected

the

100 microgram

dose

to

move

forward

into

Phase

3.

And

we

believe

we've

met

the

threshold

now

to move

into

Phase

3,

as

we

have

secured

the

Phase

3

trial

design

with

the

authorities,

and

we

believe

we've

met

the

data

threshold

to

move

forward.

So,

if

we

go

to

the

next

slide,

slide

10,

this

is

a

reminder

of

the

data

that

we've

already

shared

with

all

of

you

with

the

100 micrograms.

This

is

a

booster

indication,

given

a

single

vaccination.

It's

a

bit

busy.

But

if

you

look

at

the

far

left

graph,

the

overall

response,

here

you

can

see

that we

see

a

strong

booster

response

to

titers

that

are

typically

indicative

of

protective

titers

greater than

90%.

And

the

fold

increase

and

the

titer

increases

vary

depending

on

the

starting

titers,

which

are

the

next

three

graphs,

but

the

overall

picture

doesn't

really

change.

We

can

boost

the

memory

response

induced

by

either

previous

RNA

vaccine

or

adenovirus

vaccine

to

extremely

high

protected

levels

with

a

single

vaccination

of

ABNCoV2.

If we

go

to

slide

11,

again,

this

is

a

reminder,

we

see

very

strong

booster

responses

to

all

the

variants

that

we

evaluated,

including

Delta,

which

isn't

included

on

this

slide,

which

again

is

a

differentiating

factor

to

the

existing

batch

of

vaccines.

They

vary

greatly

in

their

ability

to

generate

strong

neutralizing

titers

to

all

variants.

ABNCoV2

appears

to

be

able

to

do

that.

We

are

still

moving

ahead.

We're

generating

data

against

Omicron.

The

reason

why

we

believe

we

can

move

forward

with

the

decision

for

Phase 3

is

simply

that

Phase

3

is

design is

a

non-inferiority to

an

RNA-based

vaccine,

based

on

the

original

Wuhan's

isolate.

If we

go

to

slide

12,

this

is

the

data

between

the

two

different

doses; the 100

micrograms,

which

I've

already

shown

you;

and

the

new

data,

the 50

micrograms.

You'll

see

that

the

responses

look

incredibly

similar

in

terms

of

the

titers

that

are

generated;

again,

titers

associated

with

very

high

levels

of

efficacy,

greater

than

90%.

There

was

no

difference

in

the

safety

profile

between

the

two

doses.

So,

no

advantage

to

go

to

a

lower

dose

regarding

safety.

There

were

no

differences

in

the

responses

against

the

variants

of

concern

we've

evaluated.

So,

again,

the

same

results that

I've just shown you.

However,

a

sub-analysis

looking

at

the

time

since

the

booster

vaccination –

since

the

last

vaccination

with

RNA,

or

the

initial

starting

titer,

really

imply

that

the

higher

dose

trended

towards

higher

neutralizing

titers.

And

it's

for

that

reason

we've

decided

to

move

ahead

into

Phase

3

later

this

year

with

100

micrograms

dose.

Slide

13.

This

is

the

third

group,

which

is

people

that

are

seronegative,

has

not

been

previously

vaccinated,

and

they

received

two

vaccinations

at

week

0

and at

week

4.

And

just

as

in

the

Phase

1,

we

saw

extremely

high

titers

after the

second

vaccination,

again,

to

titers

greater

than

90%

efficacy.

So,

again,

confirming

the

data we

reported

last

year

in

Phase

1 for people

that

are

seronegative.

So,

ABNCoV2

is

really

performing

at

all

levels;

strong

booster

responses,

very

high

titers,

similar

titers

to

all

variants

of

concern

and

in

the

seronegative,

really a

strong

vaccine

with

two

shots.

If

we

go

to

slide

14, if

we

talk a

little

bit

about

the

Phase

3,

as

I

said,

we've

been

in

discussions

with

most

of

the

regulators,

particularly

in

Europe.

And

we

have

a

Phase

3

design

that

we've

agreed,

which

will

be

a

non-inferiority

study

comparing

the

neutralizing

titers

stimulated

by

ABNCoV2

to

an

mRNA-based

vaccine. The

Phase

3

manufacturing

is

advancing

as

planned.

The

bulk

or

drug

substance

is

already

manufactured.

And

in

fact,

the

first

doses

were

also

filled

and

finished

this

week

at

our

facility

in

Denmark.

So,

we

are

completely

on

track

and

online

to

initiate

the

Phase

3

study

in

the

first

half

of

this

year,

with

data

being

reported

later

this

year

and

beginning

to

file

for

approval

by

year-end.

So,

we

should

be

seeing

pivotal

results

later

this

year

with a

view

that

launch

will

occur

in

2023.

Again,

if

we

just skip

a couple

of

slides

and

move

to

slide

16,

change

now

and talk

about

our other

blockbuster

indication,

which

is

RSV.

As

you

know,

we've

been

developing

this

vaccine

for

a

number

of

years

now.

We've

completed

a

number

of

different

clinical

studies

that

we've

published

and

reported.

We've

shown

excellent

efficacy

in

the

human

challenge,

and

that's

on

the

back

of

showing

very

strong

immune

responses,

broad

immune

responses,

both

antibodies

and

T

cells.

And

this

data

is

so

impressive

that

the

FDA

have

granted

Breakthrough

Designation,

which

means

we

can

get

fast

track

and

priority

review.

And

as

I

said,

we're

now

moving

forward

with

a

Phase

3

design

that

we've

also

had

discussions

and

approval of

with

the

regulators.

One

other

thing

I

would

like

to

say

on

the

summary

slide

is

that,

of

course,

while

we

have

the

financial

freedom

right

now

to

advance

this

Phase

3

program,

we

are

looking

for

commercial

partners

and

we

will

continue

to

do

so.

However,

having

the

cash in

hand

means

that

we

can

take

our

time

and

find

the

right

partner.

There

are

some

territories

in

the

world

where

we

may

need

to

get

moving

sooner

rather

than later,

where

additional

clinical

studies

might

be

required

to

work

together

with

a

partner

in

certain

territories

like

Japan

for

example.

So,

there,

you

may

see

that

we

do

partnering

deals

in

certain

territories.

We

may

also

be

looking

for

a

global

partner.

But

as

I

said,

it

is

also

open

that

there

may

be

different

partners

in

different territories

of

the world.

Going to

the

next

slide,

slide

17,

this

is

just

a

reminder

of

the

efficacy

data

we

reported

last

year.

This

is

from

a

human

challenge

study.

We

showed

a

significant

reduction

in

the

viral

load, which

was the

primary

endpoint,

and

we

showed

an

ability

to

prevent

RSV

symptoms

to

almost

an 80%

efficacy

in

these

subjects.

So,

really

impressive

efficacy

data

for

a

vaccine

that

already

has

a

very

impressive

dataset

in

terms

of the

immune

responses

and

certainly

fulfills

the

criteria

for

moving

to

Phase

3.

So,

if

you

go

to

the

my last

slide,

slide 18,

the

Phase

3

design

that

we've

agreed

with

the

authorities

will

be

in 20,000

subjects, 10,000

receiving

our RSV

vaccine

and 10,000

receiving

placebo.

Right

now,

it

looks

as

if

we

will

be

enrolling

both

in

the

US

and

Germany,

and

we

plan

to

initiate

this

study

in

the

first

half

of

this

year.

As

I

said,

this

is

a

significant

investment,

but

it's

one

that

has

met

the

criteria

based

on

the

dataset

that

I've

walked

you through

and

it

really

is in

a

blockbuster

indication.

And

although

competition

is

hot,

the

market

is

significant

and

multiple

RSV

vaccines

are

most

likely

needed.

And

we

truly

believe

with

the

data

that

we've

generated,

we

may

have

an

advantage

as

our

vaccine

is

a

very

strong

inducer of

T

cells

and

T

cells

is

widely

reported

as

being

the

component

of

immune

response

that

prevents

severe

disease.

So,

a

really

exciting

year

ahead

where

we're

investing

in

two

pivotal

studies

that

will

springboard

us

to

our

vision

to become

one

of

the

largest

pure

play

vaccine

companies.

And

with that, I'll hand over to Henrik Juuel.

[Henrik Neilsen Juuel]

Thank

you,

Paul.

And

I

think,

as

usual,

we

will

start

with

taking

you

through

the

commercial

performance

for

2021.

So,

on

slide

20,

you

will

see

a

breakdown

of

our

total

revenue

for

2021.

We

achieved

consolidated

total

sales

of

close

to

DKK

1.9

billion,

exactly

in

line

with

our

guidance

for

2021.

As

Paul

alluded

to

previously,

we

did

face

continued

headwinds

against

Encepur,

Rabipur

and

RabAvert

markets

due

to

COVID.

I

will

come

back

to

that

in

more

detail.

But

as

you

will

see

on

the

table

to

the

right

here, we

benefited

from

our

diversified

portfolio

with

JYNNEOS/IMVANEX,

our

smallpox

business

and

our

Ebola

business

in

particular

being

much

more

resilient

to

sort of the

COVID

situation.

So,

if

you

see

our

smallpox

business

that's

JYNNEOS/IMVANEX,

we

had

a

total

revenue

level

of DKK

734

million

for

2021.

So,

it was

a

good

year.

Behind

those

numbers,

we

have

approximately

DKK 90

million

of

revenue

to

a

handful

of

European

markets

and

the

rest

really

comes

from

both

manufacturing

of

bulk

to

the US

government,

but

also

the

first

liquid-frozen

finished

product

filled

at our

own

site

in

Kvistgaard.

So, DKK

1.9

billion

approximately

in

line

with the

guidance

and

slightly

ahead

of

the

level

we

saw

in

2020.

On

the

next

slide,

let's

dig

into

some

of

the

details

on

the –

first

of

all

the

rabies

vaccine.

So,

if

we

start

with

the

upper

left

part,

we

look

at

the

US

rabies

market,

this

is

a

market

that

has

during

COVID

been

impacted

both

on

the

post-exposure

and

the

pre-exposure

part,

but

we

have

actually

seen

some

signs,

good

signs

of

recovery.

And

if

we

look

at

the

full year of

2021,

we're

actually

looking

at

a

growth

rate

of

13%

compared

to

2020.

So,

good

growth

and

some

good

signs

in

the

last

quarters

here

promising

well

for

the

future

to

come.

But

of

course,

if

you

look

at

the

fourth

quarter of 2021

in

isolation,

we

see

we

are

still

behind

the

pre-COVID

market

levels.

So,

there

is

some

catching

up

to

do,

but

good

signs

of

recovery.

Then,

next

is

Germany,

which

we

use

as

a

good

proxy

for

the

market

performance

in

Europe.

In

Europe,

I

think

the

rabies

vaccine

is

a

pure

travelers'

vaccine,

and

therefore,

have

been

extremely

hard

hit

by

COVID-19.

And

we

have

actually

seen,

if

you

just

do

the

year-over-year

comparison

again,

a

decline

of

55%.

But

if

you

look

at

the

details,

you

will

also

see

that

the

second

half

of

2021,

we

are

starting

to

see

signs

of

recovery

also

in

Germany,

however,

from

a

very

low

level

of

course.

And

when

we

look

at

the

minus

55%

compared

to

2020,

a

lot

of

that

is

of

course

explained

by

the

first

quarter

of

2020, which

was

before

COVID

really

had

an

impact

on

the

rabies

business.

So,

also

signs

of

recovery

in

the

German

markets,

but

coming

from

a

very

low

base

obviously.

So,

to

the

right

on

this

graph,

we

just

look

at

our

performance

of

DKK 506

million

for

the

full-year,

19%

down

compared

to

last

year,

and

that

is

of

course

explained

by

the

continued

impact

from

COVID,

US

market

being

the

exception

to

the

decline

we

have

seen.

And

then,

it

is

also

explained

by

the

expected

market

share

drop

in

the

US

where, over

the year

2021,

our

market

share

changed

from

75%

to

70%,

which

was

in

line

with our

own

expectations,

as

this

is

caused

by

a

competitor

being

back

after

stock-out

situation.

We

still

hold

a

higher

market

share

than

prior

to

the

stock-out

situation.

On

slide

22,

if we

look

at

the

TBE

vaccine

market,

the

TBE

business

is

entirely

a

European

business.

It's

an

endemic

vaccine.

So,

it's

not

as

such

impacted

by

traveling.

But

unfortunately,

what

we

have

seen

is

that

the

market

has

still

been

impacted

by

COVID,

as

in

particularly

in

Germany

but

also

some

of

the

other

key

markets

the

physicians

have

been

occupied

with

COVID

vaccinations

and

there

hasn't

been

the

same

kind

of

access

to

vaccinations

as

we

saw

pre-COVID.

So,

therefore,

in

Germany,

we

have

seen

a

drop

in

the

market

compared

to

2020

of

13%.

And

if

you

look

at

just

quarter-by-quarter

back

to

2020,

we

are

still

5%

behind

last

year

and

12%

behind

the

pre-COVID

level.

So,

there is

definitely

some

catching

up

to

be

done

here.

We

delivered

DKK

363

million

in

total

revenue

for

the

year,

which

is

20%

below

the

prior

year,

explained

by

the

market

declines

and

some

wholesaler

and

partner

inventory

movements.

I

think

on

the

positive

side,

I

think

during

this

turbulent

time,

we

have

managed

to

remain

pretty

stable

market

share

around

31%

in

Germany.

On

slide

23,

an

overview

of

our

full

P&L. As

said,

total

revenue

close

to

DKK

1.9

billion

and

in

line

with

our

guidance.

Production

cost

of

approximately

DKK

1.3

billion,

and

here,

I

need

to

mention

that

this

includes

inventory –

or

provisions

for

inventory

write-downs

caused

by

COVID-19.

Some –

or

most

of

that

provision

really

covers

expected inventory

write-offs

in

the

future,

given

what

we

have

on

stock

and

the

orders

that

we

have

placed

with

GSK.

R&D,

DKK

399

million,

so

up

from

last

year

and

really

explained

– up

from

2020,

I

should

say,

sorry,

and

the

increase

explained

by

the

investments

in

RSV already

last

year,

where

we

manufactured

the

clinical

trial

material,

and

we

also

started

pre-spending

on

the

Phase

3,

so

we

could

be

ready

this

year.

SG&A

costs,

DKK

485 million,

below

the

2020

level and

mainly

explained

by

lower

distribution

costs.

That's

a

consequence

of

us

taking

over all

the

markets

from

GSK.

Adding

all

of

this

up

gives

an

EBITDA

of DKK

75

million

against

our

guidance

of

DKK

70

million

for

2021,

so

slightly

better

than

what

we

had

guided.

Slide

24,

cash

flow

and

balance

sheet.

On

the

cash

flow

side,

net

cash

flow

for

the

period

ended

positive

at

DKK

300

million

approximately,

which

was

composed

of

negative

cash

flow

from

operating

activities

primarily

explained

by

a

negative

net

profit,

but

also

some

increases

in

working

capital

following

a substantial

revenue

that

we

recognized

in

December

and

where

we

will

receive

the

money

here

during

the first

quarter.

Cash

flow

from

investment

activities

includes

many

items.

For

instance,

payments

– continued

payments

to

GlaxoSmithKline

that

follows

along

with

reaching

certain

milestones;

continued

investments

in

our

manufacturing

and

also,

let's

say,

transfer

of

Rabipur/RabAvert

and

Encepur;

and

then

also

capitalized

costs

related

to

our

COVID-19

vaccine.

In

this

amount

for

the

investment

activities,

approximately

DKK 1.7

billion

of

net

investment

in

securities

is

also

included.

That

is

us

placing

our

cash

in

safe

securities.

Cash

flow

from

financing

activities

is

of

course

heavily

impacted

by

the

capital

raise

we

did

in

2021.

It's

also

impacted

by

the

funding

agreement

we

did

with

the

Danish

Ministry

of

Health.

We

did

receive

DKK

160

million last

year

out

of

the

total

agreement

of

DKK 800

million.

So,

again,

ending

up

with

net

positive

cash

flow of

DKK

300

million,

but

really

I

think

you

should – to

understand

what

capacity

we

have

and how

liquid

we

are,

you

should

really

add

back

the

investments

we've

done

in

securities,

approximately

DKK 1.7

billion.

To

the

right

is

our

selected

balance

sheet

figures.

In

respect

of

time

here,

I

will

focus

on

our

cash

situation

at

the

end.

So,

if

you

look

at

the

line

securities,

cash

and

cash

equivalents, DKK

3.7

billion.

That

includes DKK

500

million

from

a

repo

transaction

with

the

bank,

which

should

really

be

excluded

when

trying

to

understand

the

cash

position

against

the

guidance.

So,

that

takes

us

to

DKK

3.2

billion

against

a

guidance

of

DKK

3.1

billion.

So,

slightly

ahead

of

what

we

guided

for

2021.

Our

outlook

for

2022,

as

Paul

alluded

to,

I

think

these

are

numbers

that

are

heavily

impacted

by

the investments

that

we

are

making

in

the

future

and

in

our

pursuit

of

our

vision

to

become

one

of

the

largest

pure

play

vaccine

companies.

We

are,

for

2022,

guiding

revenue

in

the

range

between

DKK

1.1

billion

and

DKK

1.4

billion.

The

midpoint

of

this

interval here

really

assumes

a

partial

return

to

normality

for

the

TBE

market

and

the

rabies

market,

and

a

somewhat

slower

return

to

the

normality

for

the

European

rabies

market

where

this

is

a

pure

travelers'

vaccine.

We

have –

in

this

revenue

guidance,

we

have

not

included

any

orders

that

have

not

been

confirmed

with

the

US

government,

which

means

that

what

is

included

is

an

order

we

already

received

of

DKK

100

million

approximately,

and

then

also,

as

previously

announced,

our

order

with

the

Public

Health

Agency

of

Canada

amounting

to

DKK

203

million.

So,

no

additional

orders

to

BARDA

is

included

in

our

revenue

guidance.

And

as

Paul

also

said,

quite

in

line

with

our

plans,

we

had

to

shut

down

the

bulk

facility

in

Kvistgaard

starting

the

autumn

last

year,

and

that

will

end

in

the

autumn

of

2022,

which

means

that

our

ability

to

manufacture

bulk

both

for

our

smallpox

business

but

also

for

our

Ebola

businesses

is

quite

limited

for

2022.

I

think

even

if

we

manufacture

bulk

for

any

of

these

two

business

areas,

it

will

happen

so

late

that

we

would

not

be

able

to

revenue

recognize

it

in

2022.

So,

that

explains

part

of

our

revenue

guidance

for

2022.

Also,

I

have

to

say

that

we

have

included

also

in

the

revenue

guidance

limited

revenue

from

our

partner

agreements

with

Valneva

and

Dynavax.

As

we

have

announced

previously,

we

have

– earlier

this

year,

we

have

launched

two

traveler

vaccines

from

Valneva,

Ixiaro

and

Dukoral,

and

we

are,

later

during

this

first

half year,

going

to

launch

Heplisav-B

from

Dynavax.

[ph]



That

work

(00:35:19) is

going

to

be

a

real

launch

of

a new

product

in

Europe.

We

have

not

included

any

potential

income

from

RSV

partnering

in

our

financial

numbers

as

well,

and

as

Paul

alluded

to,

we

are

still

pursuing

a

strategy

of

finding

commercial

partners

to

our

RSV

assets.

Our

heavy

investments

in

R&D,

which

is

approaching

DKK

2

billion

or

more

than

4

times

a

normal

year

for

Bavarian

Nordic,

of

course

impacts

our

EBITDA

significantly.

We

are

capitalizing

the

investments

in

R&D

for

ABNCoV2.

So,

that

will

not

appear

on

the

R&D

line

once

we

have

a

full

P&L

for

2022. But

still,

it

is

more

than

DKK

1.2

billion

that

will

be

visible

on

the

R&D

line

for

the

full

year

of

2022.

So,

quite

heavily

impacted

by

the

investments

in

R&D

when

we

look

at

the

EBITDA

guidance

of

where

we

are

guiding

a

loss

between

DKK

1

billion

and

DKK 1.3

billion.

We

do

hold

a

very

strong

cash

position,

thanks

to

the

capital

raises

we

did

last

year

and

the

support

from

the

Danish

government

really

enabling

us

to

pursue

our

strategy

and

invest

in

the

future

and

still

leave

a

good

cash

position

by

the

end

of

2022

of

DKK

1

billion

to

DKK

1.2

billion.

Next

slide,

slide

26,

is

the

final

slide

just

to

give

you

a

quick

update

on

some

of

the

key

strategic

objectives

for

2022.

And

Paul

actually

already

talked

to

most

of

these.

And

of

course,

some

of

the

very

important

ones

will

be

both

RSV

and

COVID-19.

We

are

soon

going

to

start

Phase

3

on

these

two

very

important

assets

targeting

potential

blockbuster

markets.

So,

on

RSV,

we

will

initiate

the

Phase

3

during

first

half

this

year

and

complete

enrollment

by

the

end

of

the

year.

And

in

parallel,

we

will

continue

to

prepare

for

commercial

launch,

which

both

involves

being

prepared

from

a

manufacturing

site

regulatory-wise,

but

also

from

a

commercial

perspective.

On

COVID-19,

same

thing,

we

are

soon

going

to

initiate

the

enrollment

into

a

Phase

3

study

and

we

will

be

able

to

report

the

data

in

the

second

half

of

2022,

same

time

prepare

for

the

regulatory

submission

and

start

preparing

for

commercial

launch.

Again,

this

involves

scaling

up

manufacturing,

be

prepared

to

supply

commercial

goods

and

also

be

prepared

from

a

commercial

perspective.

And

again,

we

continue

our

work

on

the

freeze-dried version

of

our

smallpox

vaccine,

JYNNEOS,

which

eventually

will

unlock

the

option

we

have

with

the

US

government

of

$299

million

that

we

will

be

able

to

revenue

recognize

over

the

next

years.

Within

the

manufacturing

side,

I

think

this

is

all

about

continuing

the

transfer

of

our rabies

and

TBE

vaccines

into

our

plant

in Kvistgaard.

And

specifically,

for

2022, I

think

one

of

the

key

targets

would

be

to

complete

the

qualification

of

the

packaging

of

these

products.

We

will

also

complete

the

investments

in

the

expansion

of

the

bulk

facility,

so

that

that

is

ready

for

transferring

the

manufacturing

of

the

bulk

of

these

products

for

the

future.

Within the

commercial

area,

it's

all

about

defending,

gaining

market

shares

for

our

commercial

products

and

continue

improving

the

awareness

of

Bavarian

Nordic

among

the

key

stakeholders

in

the

market.

And

then,

as

I

already

mentioned,

we

have

already

assumed

marketing

and

distribution

responsibility for

Ixiaro

and

Dukoral

from

Valneva

and

we

are

going

to

launch

Heplisav-B

in

Germany

in-licensed

from

Dynavax.

So,

with

that,

I

will

just

end

up

by

saying

that

this

is

really

going

to

be

a

pivotal

year

for

Bavarian

Nordic.

First

time

ever

are

we

going

to

run

two

significant

Phase

3

trials

in

parallel

targeting

potential

blockbuster

markets.

And

by

this,

I

think

we

are

really

fueling

our

vision

to

become

one

of

the

largest

pure

play

vaccine

companies.

I

think

with

that,

I

will

give

the

word

back

to

the

operator

and

ask

you

to

open

up

for

Q&As,

please.

[Operator]

Thank

you.

[Operator Instructions]



Your

first

question

today

comes

from

the

line

of

Thomas

Bowers

from

Danske

Bank.

Please

go

ahead.

Your

line

is

open.

[Thomas Bowers, Analyst, Danske Bank A/S]

Yes.

Great.

Thank you

very

much.

I

think

I'd

kick

off

with

a

couple

of

JYNNEOS

questions

here.

So,

first

of

all,

I

understand

that,

you

can

say,

the

freeze-dried

BLA

has

been

postponed

until

2023.

So, I'm

just

wondering

if

you

can

add

a

bit

of

color

on

the

reason

behind

this.

I

understand

it's

related

to

FDA

inspection.

So,

the

reason

behind

the

change,

and

maybe

even

more

importantly,

does

it

sort

of

change

how

we

should

think

of

BARDA

revenue

under

this

$299

million

US

contract?

So,

of

course,

primarily

timelines

and

potential

revenue

recognition

impact

for

2023,

now

I

guess

we

should

expect

FDA

approval

to

happen

not

before

2024.

And

then,

just

in

addition

to

this,

you

already

have

produced

a

lot

of

bulk

material

ahead

of

the

freeze-dried

approval.

So,

this

revenue

that

you

do

not

recognize

in

your

2022

guidance

yet,

so

is

this

potentially

additional

bulk

contracts

or

is

it

something

related

to

the

freeze-dried

instead,

so more

related to maybe

some

milestones?

So,

just

wondering

if

there's

any

potential

for

revenue

recognition

on

top

of

this

DKK

100

million

you

have

included

in

your

guidance

from

BARDA?

And

then

lastly,

just

maybe

as

a

reminder –

maybe

I

just

forgot.

But

just

on

the

potential

DOD

contracts,

is

there

any

immediate

hurdle

steps

that

still

needs

to

overcome for

this

actually

to

materialize

at

some

point?

Thank

you.

[Paul Chaplin]

Yeah.

Thanks,

Thomas.

Let

me

start

with

the BLA.

So,

yes,

I

think

we

provided

a

little

bit

more

of

an

update

in

the

material

that

the

freeze-dried

JYNNEOS

probably

now

looks

like

the

approval,

as

you

just

highlighted,

will

be

pushed

out

to

2024.

The

change

is

driven

basically

by

the

fact

that

the

FDA

wants

to

do

one

inspection

both

for

the

liquid,

which

we

already tech

transferred

but

also

the

freeze-dried.

So,

we've

had

to

adjust

some

of

the

freeze-dried

activities

to

fit

in with

when

the

FDA

anticipates

to

be

here, because

they

want

to

see

some

actual

activities

while

they're

here.

So, that's

the

main

reason

for

the

change.

Will

that

have

an

impact

on

our

ability

to

revenue

recognize?

Well,

it's

a

little

bit

like

all the

bulk

and

the

previous

liquid-frozen

doses

that

we

received

and

revenue

recognized

last

year, it

has

no

impact.

So,

we

will

be –

if

the

option –

that's

the

other

slight

caveat.

If

the

option

is

exercised,

we

will

be able

to

revenue

recognize

as

we

manufacture.

So, it's

going

to

have

no

impact

if

the

option

is

exercised,

the

fact

that

the

FDA

approval

will

be

pushed

out

to

2024.

Let

me

take

the

DOD contracts.

Last

year,

we

included

revenue

for

manufacturing

approximately

1

million

doses

of

liquid-frozen,

which

was

on

a

new

line

in

Denmark,

and

that

is

destined

for

the

SNS

we're

storing

ourselves

right

now.

But

that's

where

DOD

will

take

the

doses

for

any

military

that

are

being vaccinated.

That

doesn't

mean

that

we

don't

anticipate

new

orders

to

come

through.

But

with DOD,

they have

been,

like

everywhere

else

in

the

world, a little

paralyzed

by

COVID

and

there

has

been

delays

in

their

transition

to

JYNNEOS for

the

military.

[Thomas Bowers, Analyst, Danske Bank A/S]

Okay.

[Paul Chaplin]

I think your

third –

yeah.

Your

third

component

was –

I

think

it

was

related

to

could

we see

any

additional

revenues

beyond

what's

already

included

in

the

guidance?

I

think

that's

what

you

were

asking.

[Thomas Bowers, Analyst, Danske Bank A/S]

Yeah.

[Paul Chaplin]

And

I

think

basically

due

to

the

shutdown

of

the

facility

and

the

very

limited

period

of

manufacturing,

that

is

very,

very

unlikely

simply because

even

if

we

received

an

order,

the

revenues

would

be

pushed

out

into

the

following

year.

[Thomas Bowers, Analyst, Danske Bank A/S]

Yeah. So, that

means orders

would

likely

be

for

bulk

material

rather

than

potential

front-end

loaded

milestones

or

anything

like

that,

that

you

have

maybe

previously

received

from

BARDA?

[Paul Chaplin]

Yeah,

all

liquid.

Yeah.

[Thomas Bowers, Analyst, Danske Bank A/S]

Yeah,

yeah. Yeah,

sorry.

And

then,

maybe

just

lastly

if

I

can

squeeze

in

one

last

here,

so

just

on

the

encephalitis

vaccine

candidates

that

you

were

quite upbeat

on

a

few

years

ago

and

that

of

course

also

have

been

impacted

by

COVID,

I

assume.

But

is

there

anything

that

sort

of

points

to

any

new

information

that

we

could

anticipate

here

in

the

next,

let's say,

12

months'

time,

any

potential

advantages

to

advance

this

into

a

late-stage

project

also,

of

course,

looking

at

potential

contracts

for

this?

[Paul Chaplin]

Yeah.

I

think

that

whole

funding

from

the

US

government

has

been

impacted

and

delayed

completely by

COVID.

We

actually

have

no

indication

even

from

BARDA

or

NIH

if

and

when

they're

going

to

pick

that

up

again

because,

as

I said,

still

their

primary

focus

right

now

is

still

on

COVID.

[Thomas Bowers, Analyst, Danske Bank A/S]

Yeah,

sure.

Okay,

great.

Thank

you very

much.

[Paul Chaplin]

Thanks.

[Operator]

Thank

you.

Your

next

question

comes

from the

line

of

Gil

Blum

from

Needham.

Please

go

ahead.

Your

line

is

open.

[Gil Blum, Analyst, Needham & Co. LLC]

Good

morning

and

good

afternoon,

and

thanks

for

taking

our

questions.

So,

maybe

a

couple

on

COVID

first.

In

your

pivotal

non-inferiority

study,

will

there

be

longer

term

follow-up,

maybe

to

help

us

understand

how

immunity

wanes

when

you

compare

the

Bavarian

Nordic

vaccine

to an

mRNA

one?

[Paul Chaplin]

Yeah.

Sorry.

I

thought

you're

going

to ask

another

question,

but

that's

fine.

Long-term

follow-up,

yes,

there

will

be

a

long-term

follow-up

included

in

the

protocol.

There

actually

is

six

months

follow-up

in

the

Phase

2.

If

I

just

take

the

Phase

2,

there

are

some

complications,

in

that

if

you

remember

in

the

Phase

2,

we

ran

the

study

in

Germany

and

we

were

enrolling

subjects

late

last

year.

And

in

Germany,

there

was

a

requirement

that

you

needed

a

booster

shot

to

have

a

vaccine

pass,

which

you

needed

to

go

to

restaurants

and

all

the

rest

of

it.

And

so,

some

of

the

subjects

we've

lost

that

even

though

they

were

enrolled

in

our

study,

they

subsequently

went

and

got

a

booster

shot

of

whatever.

So,

obviously,

the

long-term

follow-up

is

negated.

The

good

thing

is,

is

that

the

German

authorities

now

recognize

ABNCoV2

from

the

experimental

vaccine

is

sufficient

for

a

vaccine

pass for

individuals

in

Germany.

So,

we've

addressed

that

issue.

However,

how

that

will

impact

the

long-term

data

from

Phase 2

we'll have

to

wait

and

see

when

we

get

the

data.

In

terms

of

the

Phase

3,

there

will

be

a

follow-up

and

there

will

be

a

comparison.

But

whether

that

is

really

part

of

the

filing,

because

obviously

we'll

be

filing

by

the

end

of

the

year, is

another

thing.

But

it

will

be

subsequently

filed

as

a

follow-up

during

the

review.

[Gil Blum, Analyst, Needham & Co. LLC]

All

right,

that

makes

a

lot

of

sense.

Maybe

also

a

financial

question

on

that

end.

So,

we're

going to

have

pivotal

data

second

half

of

2022

and

potential

ramp-up

in

production

for

COVID

vaccine.

Is

this

taken

into

account

in

your

financial

guidance?

[Henrik Neilsen Juuel]

Yes.

I

think

our

whole

– this

is

Henrik. Hi,

Gil.

I

think

the

whole

COVID-19

project

is

assumed

in

our

guidance.

So,

in

parallel

to

all

the

clinical

activities,

we

are

working

with

a

contract

manufacturer

to

scale

up

the

manufacturing

of

the

product

which

eventually is

filled

at

our

own

site

in

Kvistgaard,

Denmark.

As

Paul

said,

we

already

filled

the

first

batch

for

the

clinical

trial.

So,

everything

needed

to

basically

take

the

product

to

hopefully

an

approval

next

year

is

included

in

our

guidance.

[Gil Blum, Analyst, Needham & Co. LLC]

Okay,

excellent.

And

maybe

a

last

one

on

the

RSV

competitive

environment.

Considering

the

pivotal

study

is

going

to

start

this

year,

what

would

you

consider

a

potential

key

differentiator?

There's

quite

a

few

vaccines

being

developed

right

now

in

RSV.

[Paul Chaplin]

Yeah.

There's

a

few.

So,

I

think

the

biggest

differentiator

for

our

approach,

which

differs

from

everyone

else,

is

that

we

have

a

[indiscernible]



(00:50:07)

T

cell

component

to

the

vaccine,

and

we've

shown

in

Phase

2

and

in

the

efficacy

trial

very

strong

T

cell

responses

to

all

five

proteins

we've

included.

The

reason

I

flag

that

as

a

differentiator

is

that

the

literature

is

pretty

clear

that

antibodies,

which

is

primarily

the

approach

of

all

our

competitors,

are

important

in

the

upper

respiratory

tract

infections,

the

milder

infections.

But

in

the

lower

respiratory

tract

infections,

which

are

all

the results

– which

are

all

the

endpoints

for

Phase

3,

it's

believed

T

cells

play

a

much

more

important

role.

In

actual

fact,

some

of

the

data

that

was

just

recently

reported

on

a

therapeutic

antibody

from

Sanofi

and

AstraZeneca

is

quite

telling,

in

that

children

treated

with

the

antibody,

there

was

a

reduction

in

mild

symptoms,

significant,

a

70%-something

efficacy

against

mild

symptoms.

But

again, in

hospitalization, there

was

absolutely

no

difference

between

the

vaccinated

group

and

the

placebo

group,

which

again argues

are

antibodies

really

the

sole

answer

to

severe

disease?

We

don't

think

so.

And

we

think

that would

maybe

give

us

a

differentiating

factor.

[Gil Blum, Analyst, Needham & Co. LLC]

Okay.

So,

just

to

make

sure

I

understand

and

clarify

this

for

myself

as

well,

a

part

of

the

data

that

will

be

given

at

the

end

of

the

study

will

include

the

rate

of

hospitalizations

and

that

could

potentially

be

a

differentiator of

itself?

[Paul Chaplin]

So,

the

primary

endpoint

of

our

Phase

3

and

everyone

else's

Phase

3

for

RSV

is

a

reduction

in

hospitalizations

caused

by

lower

respiratory

tract

infections,

which

is

basically

the

most

severe

infections

of

the

lung

that

cause

a

hospitalization

that

would be

confirmed

to

be

RSV.

That's

the

endpoint.

It's

not

mild

symptomatic

disease.

It's

severe

disease

leading

to

hospitalization

that

we

need

to

see

a

reduction

in

in

the

vaccine

group.

[Gil Blum, Analyst, Needham & Co. LLC]

Right.

Thank

you

for

the

clarification

and

thanks

for

taking

our

questions.

[Paul Chaplin]

Thank

you.

[Operator]

Thank

you.

Your

next

question

comes

from

the

line

of

Michael

Novod

from

Nordea.

Please

go

ahead.

Your

line

is

open.

[Michael Novod, Analyst, Nordea Bank Abp]

Yeah.

Thanks

a

lot.

It's

Michael

from

Nordea.

A

couple

of

questions.

Maybe

one

for

Henrik

first

on

the

sort

of

trajectory

for

both

Rabipur/RabAvert

and

Encepur

going

into

next

year.

I'm

fully

aware

that

it is

going to

be

the

majority

of

your

revenues,

but

maybe

just

a bit

more

clarity

on

the

exact

split

on

those

two

products.

And

then,

on

ABNCoV2,

so

how

do

you

think

about

the

potential

advance

procurement

orders? Do

you

still see

the same

possibilities for

this or

has

the

market

changed

given

we

are

sort

of

circling

more

through

the

pandemic?

And

how

do

you

see

potential

orders

from

sort

of

the

more

exotic

regions

of

the

world?

We

have

seen

that

COVID-19

remains

a

significant

issue

in

many

of

those

parts

of

the

world.

And

then

lastly

on

RSV,

what

is

the

reason –

maybe

it's

just

me that

has

misunderstood

the

previous

comments.

But

what

is

the

reason

that

Australia

or

the

Southern

Hemisphere

is

not

included

in

the

trial

anymore?

It

seems

to

be

only

US

and

Germany

you're

going to

enroll.

Thanks.

[Henrik Neilsen Juuel]

Okay.

Thanks,

Michael.

Let

me

take

maybe

the

first

two

questions

and

we

can

start

with

ABNCoV2

and

potential

advance

purchase

agreements.

First,

I

can

say

that

we

have

not

assumed

any

advance

purchase

orders

in

our

guidance

at

all.

But

it

is

of

course

something

that

we

are

going

to

pursue.

It's

a

good

question

you're

raising,

is

the

market

prepared

to

do

these

advance

purchase

agreements

or

not.

We

will

see,

but

we

will

definitely

pursue

this

when

we

feel

that

we

have

progressed

the

development

of

the

vaccine far

enough

to

have

those

discussions.

Then,

on

[ph]



the

EnRa

(00:54:24)

name

for

our

Encepur

and

then

rabies

business,

we

have

not

-obviously, we have

not

guided

for

any

specific

split

between

these

products.

But

let

me

elaborate

a

little

on

what

our

thinking

is

in

terms

of

the

markets

that

these

vaccines

are

operating

in.

I

think

if

you

take

first

the

TBE

market,

which

is

probably

the

most

difficult

market

to

predict

where

it's

going,

because

in

principle,

I

think

the

TBE

market

should

not

be

impacted

by

COVID-19,

but

it

did

anyway

last

year –

in

the

second

half

of

last

year

due

to

the –

as

you

know,

the

physicians

being

occupied

with

COVID

vaccinations.

So,

in

principle,

the

TBE

market

could

come

back

full-scale

this

year,

that

would need

to

happen

very

soon

if

that

is

the

case,

or

you

could

have

the

same

situation

as

last

year

really

depending

on,

for

instance,

in

a

market

like

Germany,

what

their

booster

vaccination

plans

are

when

they

are

done

with

their

current

booster

vaccination

campaigns.

So,

what

we

are

assuming

there

is –

in

our

guidance

is

that

we

see

some

progress

towards

normality,

but

definitely

not

back

to

normal

yet

in

2023

on the

TBE business.

And

on

rabies,

again,

two

very

different

markets,

where

the

US,

we

have

already

seen

good

signs

the

last

couple

of

quarters

and

we

are

approaching

the

pre-COVID

level,

and

we

do

believe

that

that

trend

is

going

to

continue

for

2022.

And

I

think

our

job

there

of

course

is

to

hang

on

to

our

market

share

of

approximately

70%

in

that

market.

When

it comes

to

the

European

rabies

market,

we

have

seen

nice

growth

the

last

couple

of

quarters.

But

as

you

know,

it

comes

from

a

very

low

level

[ph]



as the

(00:56:26)

current

market

in

Europe

is

approximately

one-fourth

of

what

it

was

pre-COVID.

So,

depending

on

really

the

degree

and

the

speed

of

normalization

in

Europe

and

maybe

also

[indiscernible]



(00:56:41)

uncertainty

with

the

war

between

Ukraine

and

Russia

[indiscernible]



(00:56:46) probably

a

little

uncertain

when

people

are

going

to

travel

in

larger

scale

to

the

exotic

destinations.

But

our

assumption

has

been

that

we

also

see

stepwise

movements

toward

normalization

on

the

European

rabies

market.

So,

I

think without

giving

you

an

exact

split,

I

hope

it

made

you

a

little

more

insightful

in

terms

of

our

thinking

about

how

the

markets

will

develop.

[Michael Novod, Analyst, Nordea Bank Abp]

Sure.

[Paul Chaplin]

Yeah.

Let

me

take

the

RSV

question.

You're

right.

You're

very

good.

You

spot

these

little

things.

We

dropped

the

little

flag

from

Australia

from

the slide.

The

main

reason

for

that

is

the

incident

rate

in

Australia

right

now

is

quite

low.

Now,

whether

that

is

because

it's

a

seasonal

effect

or

whether

it's

because,

as

you

know,

within

Australia,

they're

still

very

much

or

have

been

in

quite

strict

lockdown,

we

don't

know.

But

when

we

did

the

evaluation

with

the

CRO,

we

were going

to

need

an

awful

lot

more

sites

in

Australia

to

really

allow

us

to

see

the

sort

of

events

that

we

wanted

to

see

in

terms

of

the

hospitalization.

And

again,

when

we've

now

looked

at

the

more

thorough

analysis

of

Germany

and

the

US,

we

believe

we

have

a

much

better

chance

of

seeing

the

number

of

events

that

we

need

in

the

timeframe

that

we

need

this

year.

So,

yeah,

it's

nothing

more

dramatic

than

the

assessment

of

the

country,

the

[indiscernible]

(00:58:25) we

were

looking at,

and

we've

decided

to

focus

on

Germany

and

the

US.

[Michael Novod, Analyst, Nordea Bank Abp]

Okay.

Thanks

a

lot.

[Paul Chaplin]

Thank

you.

[Operator]

Thank

you.

Your

next

question

comes

from

the

line

of

Boris

Peaker

from

Cowen.

Please

go

ahead.

Your

line

is

open.

[Boris Peaker, Analyst, Cowen and Company]

Good

morning

or

good

afternoon,

I

guess, for

you

guys.

I've

just got

a

follow-up

on

COVID

vaccine.

I'm

just

curious

if

COVID

becomes

endemic,

and

every

year

– let's

say

every

six

months,

we

get

a

new

strain,

do

you

think

you'd

have to

run

a

clinical

trial

in

each

case

to

show

that

your

vaccine

works

against

the

specific

strain

or

is

there

regulatory

way

to

get

an

approval

broadly

and

not have

to

redo

it

every

six

months

to

a

year?

[Paul Chaplin]

Yeah.

Thanks,

Boris.

It's

a

good

question.

Obviously,

right

now,

I'm

sure

you're

aware

that

[ph]



this

batch

(00:59:26)

vaccines

have

not

really

– the

only

approval

that

they've received

is

based

from

the

efficacy

against

Wuhan

when

they

did

the

field

trials.

And

yet,

those

are

the

vaccines

that

are

being

used

as

boosters

against

currently

Omicron.

And

to

be

honest,

the

real

world evidence

shows that they're pretty

effective at

preventing

severe

disease

and

hospitalization

even

against

Omicron.

What

is

also

clear

from

the

current

[indiscernible]

(00:59:56) vaccines

is

the

level

of

neutralizing

antibody

definitely

differs

between

the

different

variants.

I mean,

on

the

latest study

that

I

saw

only

a

few

days

ago

that

after

the

booster

shots,

the

decline

against

Omicron

is

[indiscernible]



(01:00:13) decline

against

Wuhan.

So,

there

are

variances

against

the different

variants.

And so,

the

answer

is

I

don't

know. However,

what

we're

going

toward

is

an

approval

based

on non-inferiority

to

Wuhan,

which

is

the

only

efficacy

marker

for

any

COVID

vaccine,

and

to

show

that

we

get

broad

neutralizing

titers

against

all

the

current

variants

of

concern.

But

you're

right,

how

the

regulatory

world

is

going

to

adapt to

the

current

situation

of

moving

out

of

pandemic

as

we

are

into

an

endemic,

we'll

have

to

wait

and

see

how they

[indiscernible]



(01:01:01).

[Boris Peaker, Analyst, Cowen and Company]

Got

it.

And

my

second

question

is

I'm

just

curious

also

on

the

COVID

vaccines.

So,

your

design

is

to

show

non-inferiority.

And

I

understand

it's

sufficient

from

the

regulatory

perspective,

but

I'm

just

curious

with

mRNA

vaccines

being

the

dominant

variant

of

vaccines

used

out

there,

if

all

you

show

is

non-inferiority, do

you

think

that's

commercially

sufficient

to

gain

traction

or

do

you

think

new

modalities

of

vaccine

– and

I'm

talking

more

broadly

about

anybody

else

developing

new

modalities

outside

of

mRNA –

will

ultimately

have

to

show

superiority

to

mRNA

to

really

gain

significant

traction?

[Paul Chaplin]

So,

we're

talking

about

non-inferiority

[ph]

of the peak responses (01:01:50)

I

think

where

we

could

have

a

differentiating

factor,

which

isn't

part

of

the

primary

end

point

of

the

Phase

3,

one

could

be

on

durability.

And

we

all

know

based

on

the

data

that's been

published of

the

mRNA

vaccines,

whether

that's

a

platform

thing

or

whether

that's

COVID

thing,

really

struggling

to

generate

a

robust

[indiscernible]



(01:02:13)

short-lived

protection.

So, we

could

have

a

longer,

more durable

response, which

could

be

a

differentiating

factor.

And

the

other,

as

I

said,

is

a

greater

response

against

the

emerging

variants

[indiscernible]



(01:02:30) more

durable

responses.

And,

thirdly,

anyone

who's had

several

RNA

vaccines

know

they're

quite

[ph]



iatrogenic.

So,

they (01:02:42)

could be

differentiators

on the

safety

profile

compared

to

RNA

vaccines.

And,

lastly,

you've

got

the

storage

[indiscernible]



(01:02:53)

be

still

a

major

issue

of RNA

vaccines,

or

at

least

[indiscernible]



(01:02:59).

[Boris Peaker, Analyst, Cowen and Company]

Great.

Thank

you very

much

for

taking my

questions.

[Operator]

Thank

you.

Your

next

question

comes

from

the

line

of

Peter

Verdult

from

Citi.

Please

go

ahead.

Your

line

is

open.

[Peter Verdult, Analyst, Citigroup Global Markets Ltd.]

Thank

you.

I'm

Pete

Verdult,

Citi.

I've

got

a

few,

but

some

are

very

quick,

so

forgive

me.

Just maybe

a

follow-on,

Paul,

from

the

previous

question

just

in

terms

of

how

problematic

or

not

executing

the

ABNCoV2

trial

in

this

current

environment

is

or

will

not

be?

I

realize

that you're

just

looking

for

non-inferiority

and

neutralizing

antibodies,

but

given

the

hospitalization

rate

is

so

low,

is

that

problematic

or

timelines

could

maybe

problematic

in

the

current

environment?

Second

question,

I

realize

you're

being

conservative

when

you're

saying

that

you're

only booking

confirmed

orders

in

your

initial

guidance.

I

believe

there's

a potential

$100 million

smallpox

US

Government

contract

out

there.

Should

we

assume

that that

is

an

abundance

of

caution

on

your

part

or

is

that

more

sort

of

up

in

the

air

as

to

whether

you

will

or

not secure

that

contract?

Last two

for

me,

quick

one,

just whether

you'd

be

willing

to

quantify

the

inventory

write-offs

that

you

took

in

2021?

And

then,

last

one,

there's a little bit of a

debate

in

the

market

today,

the

revenue

pressures

you

cite

are

clearly

temporary,

but

is

there

an

implication

in

terms

of

potentially

having to

tap

the

equity

markets

once

more

to

achieve

your

vision

given

the

investments you're

making?

Thank

you.

[Paul Chaplin]

Yeah.

Thanks.

Let's

try

and

walk

through

those

questions.

So,

I

think

the

first

question

related

to

the

access

to

the

comparative

vaccine

to

do

the

Phase

3

for

ABNCoV2.

And

no, I

think

we've

been

flagging

for

some

time

that

that

could

be

an

issue

given

that

those

vaccines

currently

not

commercialized

from

a

true

traditional

sense,

but

are

sold

directly

to

governments

and

direct

access

is

problematic.

That's

one

of

the

reasons

that

in

parallel

to

a more

standard,

randomized

clinical

study,

we've

also

been

in

dialogue

with

the

regulators

that

what

if

we

can't

get

access

to

a

comparator,

how

we'd

be

able

to

do

a

comparative

study.

And

there

we

have

had a

positive

feedback

and

we

are

able

to

conduct

the

study

in

a

slightly

different

way

where

we

can

tap

into

national

vaccination

booster

programs.

And

of

course,

now

the

onus

is

on

us,

together

with

the

CRO,

to

find

countries

or

regions

of

countries

that

are

lagging

in

their

vaccination

boosters,

where

we

can

tap

into

the

booster

program

and

do

the

comparator

study.

And

that's

exactly

what

we've

been

working

on.

We've

been

working

on

both

paths

in

parallel,

but

we

are

confident

that

we

should

be

able

to

do

that.

I

think

there

was

a

question

related

to

JYNNEOS

and...

[Henrik Neilsen Juuel]

Yeah,

perhaps

I

can

take

that

one.

Just

on

JYNNEOS,

Peter,

I think

I

heard

you

talk

about

a

potential $100

million

order.

I

think

as

we

said,

we

have

only

included

confirmed

orders

in

our

guidelines

for

2022.

And

the

only,

I can

say,

additional

order

that

is

out

there,

which

is

still

at

an

option

level,

that's

the $299 million

on

freeze-dried.

I'm

not

sure

where

that $100

million

comes

from,

but

I

think

what

we

are

expecting

once

the authorities

start

exercising

that

option

is

probably

that

it

comes

in

tranches.

It

could

be

of

like

$100

million,

but

I think

even

if

they

exercise

that

option

this

year,

it

should

be

executed

next

year.

So,

I

think

it's

the only

thing

I

can

think

of in

relation

to

that

$100

million.

And

in

terms

of

the

other

markets,

what

if

there's

a

higher

demand

in

the

market,

I

think

[indiscernible]



(01:07:13)

the

upsides

that

we

might

have,

of

course,

is

related

to

our

commercial

business

that

is

on

the

rabies

and

the

TBE

business.

I

think

if

the

market

grows

faster than

what

we

are

expecting

in

our

guidance

here,

I

think

we

have

the

products

to

follow

the

market

basically.

As

I

said

earlier

in

our

presentation,

we

have

made

the provisions

for

potential

inventory

write-offs.

That

is

not

because

these

are

out of sales

side

right

now,

but

they

might

become

in

2022 or

2023

and

these

products

can

still

be

sold.

So,

we

have

a

buffer

to

follow

the

demand

should

it

surge

faster

than

what

we

had

expected.

[Paul Chaplin]

And then,

I think

there's

a

question

asked,

do

we

have

plans

to

go

back

to

the

capital

markets?

And

I

think

the

answer

to that

is

definitely

not.

[Peter Verdult, Analyst, Citigroup Global Markets Ltd.]

And

then

thank

you

for

the

clarification.

Just

on

the

inventory

write-offs,

can

you

give a

ballpark

quantification,

please?

[Henrik Neilsen Juuel]

So,

yes,

I

think

it's –

the

number

is

DKK

172

million

included

for

2021.

So,

quite

a

substantial

amount.

Some

of

it

was

included

already

in

the

first

nine

months,

the

rest

in

the

fourth

quarter.

So,

DKK

172

million

was

a

provision

we

made

for

potential

write-offs

of

the

rabies

and

TBE

products.

A

lot

of

it,

of

course,

driven

by

the

significant

market

decline

in

Europe

on

the

rabies

business.

[Peter Verdult, Analyst, Citigroup Global Markets Ltd.]

Thank

you.

[Operator]

Thank

you.

Your

next

question

comes

from

the

line

of

Peter

Welford

from

Jefferies.

Please

go

ahead.

Your

line

is

open.

[Peter Welford, Analyst, Jefferies International Ltd.]

Hi.

Thanks.

Two

quick

questions

left.

Just

firstly

on

our RSV.

If

we

look

at

the

data

that nirsevimab published,

and

also

I

take

your

point

on

the

lower

respiratory versus

upper

respiratory,

but

I

guess,

if

we

look

at

the

size

of

the

Phase

3

studies

that

these

vaccines

are

conducting,

it

still

seems

possible

that

with

antibodies

you

could

end

up

with

a

statistically

significant

difference

in

hospitalizations

driven

by

an

antibody

response.

And

so,

I

guess

curious

if

you

could

give

us

your

take,

statistics

aside,

what

is

a,

I

guess,

firstly,

regulatory

approvable;

and

secondly,

clinically

meaningful

reduction

in

hospitalizations

that you

would

be

required

for

an

RSV

vaccine.

And

then,

secondly,

just

on

the

outlook.

If

I

take

your

TBE

sales

–

sorry,

together with

the

rabies sales

for

this

year

and

then

add

on

the

Canada

order

of

DKK 200

million

and

the

US DKK

100

million, you're

already

getting

just

above

the

bottom

end

of

the

guidance

for

revenues.

So,

it

seems

as

though

the

revenue

outlook

is

assuming

pretty

modest

increases

in

TBE

and rabies

and

also

no

contract

revenue

from BARDA

or

anything

booked

this

year.

And so,

I

guess,

two

questions.

Firstly,

is

that

right?

And

secondly,

is

it

fair

to

assume

that

contract

revenue

will

be

[indiscernible]



(01:10:23)

minimal

this

year

compared

to

prior

years?

Thank

you.

[Henrik Neilsen Juuel]

Yeah.

Maybe

I

can

start

with

that.

The

contract

revenue,

yes,

will

be

relatively

low.

You

will

see

since

2020

to

2021,

it

has

declined.

And

that

has

very

much

in

the

past

been

driven

by

the

agreement

we

have

with

BARDA

on

supporting

us

on

our

CMC

and

qualification

activities

on

the

fill

and

finish

facility,

but

also

the

Phase

3

on

the

freeze-dried.

So,

that

is

sort

of

waning

off

and

that

will

continue

that

way.

So,

we

are

not

anticipating

much

in

terms of

contract

work.

And

I

think

as

I've

said,

I

think

if

you

add

up

our

numbers,

I

think

you

can

say,

we

are

– probably

with

the

market

sort

of

starting

to

move

towards

normality,

I

think

that

that

reflects

sort

of

the

midpoint

in

our

guidance.

And

those

are

the

assumptions

I

alluded

to

earlier

when

I

described

sort

of

how

we

see

the

individual

segments

of

the

markets

develop.

So,

Paul,

then

there

was

one

on

RSV.

[Paul Chaplin]

Yeah.

It was

a

good

question,

actually.

What

level

of

efficacy

probably

could

lead

to

approval?

Again,

without

going

into

any

stats

or

what

our

assumptions

are,

I

think for

RSV,

of

course,

there's

currently

no

vaccine.

So,

I

would

say

it's

probably

in

the

region

of

the

65%,

70%

level.

[Peter Welford, Analyst, Jefferies International Ltd.]

That's

great.

Thank

you very

much.

[Operator]

Thank

you.

Your

next

question

comes

from

the

line

of

Suzanne

van

Voorthuizen

from

Kempen.

Please

go

ahead.

Your

line

is

open.

[Suzanne van Voorthuizen, Analyst, Kempen & Co. NV]

Hi,

guys.

Thanks

for

taking

my

question.

I

have

two.

The

first

one

is,

how

confident

are

you

in

the

timelines

for

the

Phase

3

with

ABNCoV2,

with

the

start

in

H1

and

the

data

in

H2?

Is

the

start

of

the

study

really

imminent

or

is

this

more

towards

summer?

And

is

the

data

more

like

a

fall event

or

more

towards

year-end?

Any

color

will

be

appreciated.

And

my

second

question

is

a

follow-up

on

the

differentiation

point.

And,

yeah,

how

to

facilitate the

commercial

proposition?

The

durability

factor

will

take

more

time

before

that

becomes

clear

from

the

long-term

follow-up,

I

guess,

but

regarding

the

feature

of

ABNCoV2

being

more

variant-proof,

how

do

you

plan

to

build

that

case

further

from

the

Phase

3?

Are

you,

for

example,

planning

to

include

some

secondary

endpoints,

analyzing

the

responses

against

a

range

of

variants

and,

yeah,

really

in

a

head-to-head

comparison

to

the

mRNAs,

or

how

are

you

thinking

about

that?

[Paul Chaplin]

Yeah.

Thanks.

Thanks

for

questions.

So,

let's

take

the trial

design.

So,

the

primary

endpoint is

non-inferiority

of

the

peak

neutralizing

titers

to

a

comparator,

which

will

be

an

mRNA-based

vaccine.

However,

there

are,

of

course,

secondary

endpoints;

of

course,

safety

being

one,

but

we'll

also, yes, we'll

look

at

variants

of

concern,

currently

we all

know

what

those

are,

and

any

new

variants

that

come

through

during

the

trial,

and

they

will

also

be

compared

to

the

comparator.

You

mentioned

also

durability, that

will

be

done

as

a

secondary

endpoint.

But

again,

as

I

said

already

to

one

of the

previous

questions,

that's

not

likely

to

be

part

of

the

main

file

because,

again,

getting

to

your

timing,

we

are

confident

as

we

sit

here

now

that

we

will

be

starting

the

study

in

the

first

half

of

this

year.

We

will

report

data

in

the

second

half

in

time

to

allow

us

to

start

regulatory

submissions

by

year-end.

I

think

that's...

[indiscernible]

(01:14:27)

[Suzanne van Voorthuizen, Analyst, Kempen & Co. NV]

Got it. All right. No. Thanks a lot.

[Paul Chaplin]

All

right.

Thanks.

[Operator]

Thank

you.

Your

next

question

comes

from

the

line

of

[ph]



Stuart

Berry

(01:14:40)

from

[indiscernible]

(01:14:41).

Please

go

ahead.

Your

line

is

open.

Yes.

Good

afternoon.

[indiscernible]



(01:14:48).

A

few

questions.

Firstly,

in

your

annual

report,

you're

mentioning

that

you

hope

to

be

able

to

come

up

with

a

better

value

proposition

compared

to

currently

marketed

COVID

vaccines.

Could

you

spend

some

more

– or

shed

some

more

light

on

what

kind

of

proposals

these

are?

That

would be

my

first

question.

[Paul Chaplin]

Yeah.

So,

getting

back

to

the

differentiating

factors,

so

can

a booster

with

ABNCoV2

be

more

durable

or

can

we

move

away

from

boosters,

which

looks

like

every

six

months

or

from

a

year

to

something

a

bit

longer,

maybe

three,

five

years?

That

data

obviously

takes

time

to

generate

and

won't

be

available

at

the

time

of

the

launch.

But

certainly,

one

of

the

differentiating

factors

that we're

after, based

on

the

science

of

the

VLP

versus

what

we're

beginning

to

understand

with

RNA.

And

so,

that's

one.

The

other

one

is

the

breadth

of

response.

I

think

from

the

Phase

1,

which

was

performed

by

the

EU

consortium

and

our

Phase

2,

we

are

seeing

quite

compelling

data

that

we

see

very

strong

responses

to

all

the

variants

that

we've

tested

to-date.

Again,

we

haven't

tested

Omicron,

but

we

tested

all

the

other

variants,

including

Beta,

we

actually

know

has

very

low

responses

from

RNA-based

vaccines.

So,

it's

quite

compelling

already

that

we

seem

to

have

a

very

broad

protective

response,

which

of

course

we

need

to

build

on

in

the

Phase

3,

and

as

I've

mentioned

already,

continue

to

test

any

other

variants

that

come

through or

emerge through.

So,

those

are

the

main

differentiating

factors.

I said

a

third

one

could

possibly

also

be

the

safety

profile,

but

again, we

need

to generate

that

data.

We

have

too little data now to be

making

those

claims.

And

the

last

one

really

is

the

storage

and

shipment

temperature.

There

are,

as

you

know,

some

vaccines

that

have

a

very cold storage

and

shipment

that

I

think

will

be

a

disadvantage

when

other

vaccines

like

ABNCoV2

come

through

that

can

be

stored

at

room

temperature.

Okay.

So,

in the

value

proposition

you

are

speaking

of,

we

should

not

expect

you

to

include,

for

example,

a

more

competitive

pricing?

[Paul Chaplin]

Yeah,

I

mean,

we

haven't talked

about

pricing.

I

mean,

the

pricing

right

now

is

pretty

stable

for

nearly

all

vaccines

that

are

emerging

in

terms

of

COVID-19.

How

that

pricing

will

change

as

the

market

changes?

Right

now,

it's

very

much

a

government

business.

Will

that

change

most

likely

to

more

of

a

private-type

market?

And

in

fact,

a

lot

of

people,

a

lot

of

analysts

are

predicting

actually

the

prices

to

increase. But

again,

we

will

keep

an

eye

on

price

as

and

when we

get

nearer

to

the

market.

And

I

think

the

good

thing

for

us

is

that

we

can

be

very

competitive

on

price

with

the

technology

that

we

have.

Okay. My

last

question.

Based

on

your

experience,

do

you

expect

there

will

be

a

need

for

a

tailored

Omicron

vaccine

booster

during

the

course

of

this

year?

[Paul Chaplin]

Short

answer,

no.

And

if

I

give

the

explanation

for

that,

the

real-time

data

for

the

current

batch

of

vaccines,

which

we

know

generate

lower

titers

to

Omicron

than

compared

to,

for

example,

Wuhan,

have

shown

that

they've

been

very

effective

at

preventing

severe

disease

and

hospitalization

and

have

allowed

society

to

control

that

variant.

So,

that's

one

piece

of

evidence

that

would

suggest that

it

doesn't

make

a

lot

of

sense.

The

other

one

is

that,

of

course,

as

data

already

from

some

RNA-based

vaccines

with

Omicron-specific

constructs,

which

seem

to

be

not

any

more

immunogenic

than

the

original

Wuhan

strain,

which

again

argues

against

the

cost

of

developing

a

new

variant

when

in

fact

it

doesn't

look

like

there's

any

real

benefit.

Again,

there

could

be

differences

here

if

we're

talking

about

durability

or

if

a

new

variant

comes

with

even

more

mutations

than Omicron

that

seems

to

escape

the

Wuhan

immune

responses,

to-date

that

hasn't

happened.

Thank

you

so

much.

That

concludes

my

questions.

[Paul Chaplin]

Thank

you.

[Operator]

Thank

you.

There

are

no

further

questions.

I

will

hand

the

call

back

to

you.

[Paul Chaplin]

Thank

you.

And

thanks,

everyone,

for

taking

the

time

to

join

the

call

and

for

all

your

questions

and

interest.

So,

have

a

great

weekend.

Thanks

a

lot.

[Operator]

Thank

you.

This

concludes

today's

conference

call.

Thank

you

for

participating.

You

may

now

disconnect.