Bavarian Nordic A/S (OTCPK:BVNKF) Q2 2022 Earnings Conference Call August 24, 2022 8:00 AM ET
Company Participants
Rolf Sass – Investor Relations
Paul Chaplin – President and Chief Executive Officer
Henrik Juuel – Executive Vice President
Conference Call Participants
Thomas Bowers – Danske Bank
Gil Blum – Needham and Company
Peter Verdult – Citi
Boris Pecker – Cowen
Michael Novod – Nordea
Operator
Good day and thank you for standing by. Welcome to Bavarian Nordic Half Year Report Second Quarter for the six months period ended 30 of June 2022 Conference Call. At this time all participants are in listen-only mode. After the speakers’ presentation there will be a question-and-answer session. [Operator Instructions] Please be advised that this conference is being recorded.
I would now like to hand the conference over to your first speaker today, Rolf Sass. Please go ahead.
Rolf Sass
Thank you, operator. And good morning to some and good afternoon to the rest of you. And welcome to this Q2 quarter from Bavarian Nordic. I can honestly say that this may be the busiest, most exciting, surprising and most exciting quarter we have seen in a very, very long time here in Bavarian Nordic. And may I just remind you that the purpose of this call is to answer the most questions we can with in the timeframe to analysts and investors.
And in the room we have as usual our President and CEO, Paul Chaplin; and Executive Vice President, Henrik Juuel. That will walk through the presentation and afterwards we have the Q&A Session.
Before we run through the presentation I will just briefly go through these 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/or other information that is not historical information. All such forward-looking statements are expressly qualified by these cautionary statements and any other 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 over the presentation to you Paul.
Paul Chaplin
Thanks Rolf. And welcome everyone to our Q2 update. If you move to Slide 3, I just want to make a few opening statements before I walk through some of the key events of the first half of 2022.
So this year was always going to be extremely challenging. We knew most likely we would continue to face COVID headwinds on sales of our rabies and TBE. It’s also a year of very strong investment. We were investing in our manufacturing infrastructure expanding bulk manufacturing to allow us to bring our two new vaccines, rabies and TBE. While after that investment, we would then be able to also produce a smallpox, monkeypox and other vaccines in parallel. We were engaging in two tech transfers internally on our new fill and finish line one for freeze-dried Jynneos and the other also for rabies. And in parallel, we were doing a tech transfer for the fill/finish ventricle.
On top of that, we were planning and are investing DKK 2 billion in R&D, the single largest investment in R&D in our history. And that was to bring RSV and ABNCoV2 into Phase 3. Two very exciting assets that could potentially meet huge unmet medical need and would add to the future growth opportunities of the company and align us with our vision of becoming one of the largest pure play vaccine companies in the world.
And as I’ll show you in the coming slides, we’ve made fantastic progress on most of those activities. But of course, everything that we’re going to talk about today has been overshadowed by monkeypox, which emerged within an extraordinary international outbreak since May.
And I have to say I’m extremely proud of all of the employees who have really rallied and have gone more than the extra mile to try and ensure that they deliver our vaccine, which is the vaccine that everyone wants to all countries that need this vaccine to address the current international outbreak.
So with that, let’s move to the next slide, Slide 4 and let’s just talk about some of the key highlights in the first half of the year. If we take RSV we’ve made great progress on this program. We have both PRIME status and Breakthrough Therapy Designation in Europe with the FDA. We’ve done a license agreement with Nuance Pharma for China and selected Asian markets already gearing up preparing for the successful launch of this product. And we’ve initiated Phase 3 and we remain on track to enroll the 20,000 subjects by year end.
On our COVID-19 candidate ABNCoV2, as you know, we had to change gears a little bit in terms of how we were going to approach the registration due to the regulatory landscape. I think we’ve managed to navigate that extremely well. We now have all the regulatory approvals in place, and we’re still in line to start the Phase 3 trial later this month.
On rabies and TBE, we’ve really seen a tremendous turnaround in the first half of this year. On rabies, I think, the rebound of rabies has gone much faster than we had originally anticipated. In the U.S. we’re already ahead of pre-COVID levels. And in Germany we’re seeing a strong rebound. On TBE, despite the disappointing start to the year, in Q2 we have seen positive growth numbers and really the first signs that we’re coming out of the COVID cloud, but I will allow Henrik to talk more about these two markets.
And then as I said on top of what was going to be a challenging and busy year monkeypox came along. We’ll talk more about that in the coming slides that we have completely changed gears within the company in terms of what we’re doing in manufacturing since May, until the end of next year, and probably going into the best part of next year we are only going to be manufacturing Jynneos in next, we’ve scaled up, and we’re looking to expand capacity by working with others.
If you go to the next slide, Slide 5, so the monkeypox outbreak [indiscernible] before this year cases of monkeypox have been recorded in the UK, U.S., Israel and, I think, in Singapore from travelers. Isolated incidences that were quickly controlled through public health measures and the use of actually Imvanex in certain instances. This is an unprecedented case in that we’ve got more than 40,000 cases standing 96 countries which has never been seen before outside of the endemic areas in Africa. WHO in the 23 July declared this as an outbreak of public health emergency and the U.S. in early August declared it a national emergency just highlighting the seriousness of the current outbreak.
We’re beginning to see some slight differences. So in United Kingdom, which is one of the first countries to notify cases early in May, we’re beginning to see a decline in a number of new cases, which is extremely encouraging. However, in other parts of the world we’re seeing a growth of cases. If we take Brazil, since the last update it’s more than doubled the number of cases. And unfortunately in Brazil, 77 infected children have been confirmed between the ages of 0 and 17. So, I think, that gives you a picture that in many parts of the world rapidly growing, however, in some of the countries, which recorded the earliest infections due to various reasons. It looks as if the number of cases are in decline, which is extremely encouraging.
Go to the next slide. We’ve had an extremely busy summer on some of the regulatory issues. But if I – if you go to the bottom right hand corner of the slide, I’ll talk a little bit about manufacturing. So our bulk facility has been approved by both the FDA and EMA since 2010. And they – those approvals still remain in place.
In terms of fill/finish, we transferred to fill/finish activities from a contract manufacturer in Germany last year to our new fill/finish line in Denmark. That line was inspected and approved by the Danish Medicines Agency last year, but was still awaiting FDA inspection and approval, and the final approval from EMA.
So in early May, when the first case is appeared and we were – we opened contract negotiations with various governments, the early doses that we supplied were made based on in Europe at least batch exemptions were countries accepted the exemptions to the various batches. But since the summer, our facilities now approved both by the U.S. and the EU. So we’re good to go.
In terms of the various approvals Imvanex was approved in 2013, but only for the smallpox indication. That’s now been expanded to the summer to include monkeypox similarly in Canada, where it’s under the trade name Imvamune is approved in 2013, smallpox, but this is already expanded in 2020 to include monkeypox as I’m sure, Jynneos, which is approved in the U.S. in 2019, already had the monkeypox indication along with smallpox.
So with all these regulatory advances, which happened in almost record time I would say, we now have full approvals for manufacturing and the full approvals for the indication of those smallpox and monkeypox in all major jurisdictions.
So if you go to the next slide, to talk a little bit about supply, as I said, we have done everything in our power to ensure that the limited supplies we had on stock, we were able to meet the demand that we received from all around the world. And in meeting that demand the way we’ve achieved that is by offering a certain amount of doses in the near-term, and then fulfilling the demand over the coming months as we ramp up production.
So we have been able to ensure access of Jynneos, Imvanex to more than 70 countries across America, Europe, Asia and Oceania with agreements with PAHO and HERA, we are giving access to a big broad range of countries in Europe, Latin America, and the Caribbean. It is also clear, however, that while we’re doing an awful lot in terms of manufacturing, and I’ll come back to that in the coming slide, we need more capacity. And the only ways that we can achieve that in short-term is through partnerships and licenses. And I’ll come back to that in some of the future slides.
Of course, we always get a lot of questions on how many doses and what have you delivered. I think to give some guidance on that we have secured borders for around nine million doses. And some of that is split between 2022 and already in 2023. We will skew more towards 2023. Most of those orders are for what I call the here and now doses that people desperately need to control the current outbreak situation that we’re facing, what that the world is facing.
However, there are indications with certain countries that the discussion is also moving to larger quantities, which are clearly for stockpiling. And we’ve already made the announcement of a relatively large order in the EU. And this is basically the largest order that we’ve ever received for Imvanex outside of the U.S. and that gives you indications that there is a growing demand, and we would expect probably more orders to be fulfilled by the time we come out with guidance for 2023.
If we go to the next slide, this is a fairly busy table, but it’s just trying to give you an overview of the current recommendations in various countries of the vaccine that they’re recommending. I would say everyone is recommending MVA, which is our vaccine. A few territories are also recommending second generation vaccine, such as ACAM2000. And again, pretty much across the Board, the vaccine is being recommended for close contacts, but also in a prophylactic setting, the so-called PrEP indication for healthcare workers also high risk individuals.
Various dose sparing strategies have been employed around the globe. And while Bavarian Nordic did not set policy, we are here to support our customers with the data that we have. And for example, in the UK, they rapidly move to a single vaccination. Others such as France and Canada and Germany are delay in the booster vaccination. And early August, the U.S. decided to go a different track, which was to try and extract five doses from one vial and administer a much smaller volume intradermally, which is under the skin. This is based on relatively limited data but nonetheless is being rolled out.
In Europe, last week, I believe it was, there was also a guy that came out suggesting that this could be a suitable approach in a temporary measure, as a vaccine supplies are low, but also highlighted that there was very little data to support the stability of smaller volumes in a vial extracting the five doses and the like. So that is an overview of how the vaccines are currently being utilized around the world.
So if you go to the next slide, and talk a little bit about manufacturing, one of the questions that I’m always getting is how can it take so long to manufacture a vaccine. And just at the bottom of this slide, obviously you have to produce the bulk vaccine, and then you need to convert that by fill – filling in for glass vials, packaging and in both cases, you need to ensure the quality of the vaccine are doing an array of so called release tests or quality tests.
You can see the process from the beginning to the end takes approximately six months, which is a long time, but to try and explain that. For the bulk vaccine, there is in excess of 30 individual tests that have to be formed on the vaccine. One of those tests takes approximately 80 days. So and if that test fails, for whatever reason, you need a repeat, you can do the math yourself that takes a long time. So it really, I’m ensuring the quality of the product that takes so long before we have to analyzing manufacturing.
In addition to this manufacturing, when this comes to scale up, it can take 12 months before you start manufacturing few of the raw materials. So if you are planning to be operating at one batch a week and then there is a national emergency in terms of the monkeypox outbreak, and you want to scale up the four batches a week, you are scrambling to make sure that you’ve got the raw materials to do that in a relatively short period of time. Having said all that, these are challenges that we are very familiar with have overcome in the past.
And as I said, what we’ve managed to do since May is we were operating at one batch a week in terms of fill/finish, we’ve doubled that capacity. We’ve partnered with Grand River, a contract manufacturer in the U.S., which will initially double and manufacturing capacity, and could potentially further increase that once the tech transfer is complete.
We’re scaling up on the bulk production again doubling our capacity going from two batches to four batches a week, which will be in place by the end of this year. And we’re not finished yet. It’s clear that we need even more capacity to meet the demand moving forward into 2023, we are looking to expand both bulk manufacturing and fill/finish capacity by partnering and talking to others.
So on Slide 10, on ABNCoV2, I mean, the only thing I really want to say here is obviously the registry environment change. We had to change our Phase 3 design in record time, I would say, and we have all the regulatory approvals in place. And we do plan to start this study, which will be comparing the safety and immunogenicity of ABNCoV2 to an approved COVID vaccine. And that enrollment will start this month. And we’re still on track to have the readouts by year-end.
Similarly, on the next slide on RSV, we’ve initiated the study enrollment is proceeding according to plan, we’re on track to complete the 20,000 subjects enrolled and vaccinated before year end. As you know, we’ll have a readout in the first half of next year and we are on track for that and we remain extremely excited about the opportunity of our RSV candidate. And as I said, time is coming that we’ll find out whether this differentiated approach works for next year.
And with that, I will hand over the presentation to Henrik Juuel.
Henrik Juuel
Thank you very much, Paul. So let’s jump directly into an update on our commercial and our financial performance for the second quarter and the first six months of this year. And we start on Slide number 13, where we have at the breakdown of our revenue take hold in Kroner. Paul already alluded to host the strong performance of the rabies markets that we have seen during the second quarter, extremely strong market development that actually led us to a growth for our revenue by 85% compared to last year, very strong growth in the U.S. market that meets that we are already now seeing a U.S. rabies market that is at a slightly higher level than what we saw back in the second quarter of 2019 pre-COVID. We’ve also seen an extremely strong development in the European rabies market strong, very strong growth that I would come back to.
We are not yet at the pre-COVID level, but, I think, we are seeing a very strong growth there as well. The TBE or Encepur revenue for the second quarter ended at DKK 144 million, so likely below last year’s level. But the very positive thing here is that we are seeing momentum coming back. We have seen a quarter with positive growth in the market following several quarters of decline. So again, also very positive trend on the TBE market.
And then of course, driven by monkeypox, we have recognized DKK 117 million in revenue from the sale of smallpox, monkeypox vaccines. So that is revenue all recognized in June. And it’s really just the first part of, let’s say, executing on all the orders we have secured during this monkeypox outbreak. Remember the outbreak started in May, so we are actually extremely proud that we managed to already ship out doses in the months of June.
Altogether for the quarter that gives revenue of DKK 537 million, so 45% higher than the second quarter of last year. And for the first half, it is DKK 857 million slightly below the level of first six months last year, all explained by a different facing of our smallpox vaccine in 2021. And something that we will definitely catch up during second half of this year.
Turning to the next slide. So here we are looking at the rabies business, and again, the upper left corner, here shows the development, the market development in the U.S. market, as you can see here up 26% year-over-year, so very strong performance. And we are actually now at a level higher than what we saw in 2019 prior to the COVID-19 outbreak, so very strong the market performance in the U.S.
In Germany, which is our other big markets, rabies market, we have seen extremely strong growth, more than 400% growth year-over-year, but of course, this is a pure travel as a vaccine market. So it was also extremely hard hit by the COVID situation. And we are still approximately 40% below the pre-COVID market size level. But again, more than 400% growth in the market where we are the clear market leader will approximately 95% markets here. This also has a significant impact on our business.
So, I think, in generally speaking on the rabies market, we are seeing travel and picking up faster than what we have originally anticipated. And that of course has a very positive impact in particularly on our rabies business. So to the right, DKK 234 million, as we said, 85% up traded by strong market performance. We have kept our markets here at around 65% in the U.S., which is pretty much in line with the level that we saw prior to the compensation facing stockout situation.
And then I also have to, of course, say here that we have also had some positive impact by the very strong dollar development, approximately DKK 20 million of the growth in the first half year, we can subscribe to a stronger dollar this year compared to last year.
So next slide, we are looking at the TBE market and that’s a pure European market. That’s the only place it is endemic at the moment. And we are using Germany as the proxy for the development in Europe. Here, we also, as I said earlier, have seen a very strong market development, actually 38% up compared to the second quarter 2021 and extremely strong performance following several quarters where we saw the market decline.
And this growth was actually strong enough to bring the first half year into a positive growth territory growing by 13%. So very strong growth and a good signal that we are also getting out of this COVID situation for the TBE business as well, but still some way to go approximately 20%, 25% below the full pre-COVID levels. The numbers to the right slightly below last year’s level with DKK 144 million in revenue, this is the despite deposits in market development and is caused by inventory movements at wholesalers, but also at partner levels. This is typically what happens when demand search is so quick, that means that the wholesalers are basically emptying their inventory and will need to replenish that in some of the following quarters. Our markets here in the key market of Germany remained stable around the 30%.
So next slide, just a few words on our in-licensed products where we have three; we have the recently launched HEPLISAV-B, it’s a Hepatitis-B vaccine that we have in-licensed for the German market from the U.S. Company Dynavax. It was launched in May, and we have seen good revenue already during the second quarter that is of course mainly to fill up the whole supply chain. So it’s a little too early to say how we are doing from a commercial perspective. But definitely from a logistic perspective, I think, we are – we have had a good start.
Then we have the two products in-licensed from Valneva. We have the DUKORAL Cholera vaccine and we have IXIARO Japanese encephalitis vaccine that are in-licensed for both the German and the Swiss market. And here, I think, we have in particularly for the IXIARO, we have seen a very strong development these first six months. And again [indiscernible] vaccine that has been positively impacted by the picking up of traveling that we seen in the market. So strong performance and together across these three products here, we have – so strong performance and together across these three products here, we have recognized more than DKK 50 million in revenue for the first six months. So also a nice additional contribution, and remember, I think, this is, you can say being launched without any material significant additional resources as we are basically using the commercial setup that we have in place in post Germany and in Switzerland.
On the next slide, we have a full P&L, [indiscernible] DKK 857 million. We already talked about that one. Production costs for the first half year of DKK 723 million driven by of course, the revenue, but again also impacted to some extent by the plant shutdown of our bulk facility, which has now reopened again. R&D development costs DKK 290 million so significantly up compared to last year and explained by the ongoing RSV Phase 3 trial that is of course consuming some cash. Then on SG&A, DKK 253 million in line with the level we saw last year as well. So at the, the bottom of this table, we see an EBITDA showing a loss of DKK 212 million.
On the next slide. In terms of our cash flow for the period, I’m now talking to the table to the upper left. So the net cash flow for the period was negative of DKK 307 million driven by negative cash flow from operating activities, to some extent offset by improved working capital position. We saw a negative impact from investment activities and this includes investments in the expansion of our bulk facilities, so we can manufacture Encepur and Rabipur in the future, on our side in Kvistgaard. It also includes the money that we invest behind the tech transfer of these two products as well. Cash flow from financing activities, positive contribution of DKK 301 million, and mainly explained by support from the Danish Minister of Health through our ABNCoV2 project.
To the right, I don’t want to take through all those details on the balance sheet, but just highlight here that by the end of June, we had securities, cash and cash equivalence of nearly DKK 3.3 billion. If we deduct all the debt that we have that gives us a net cash position of DKK 2.4 billion, and if we add back the real debt not our repo position, I think, this brings us – gives us a cast availability of DKK 2.8 billion. So a really strong cash position that enables us to continue investing as we planned for this year.
My final slide, this is one I have been really looking for. I’d like to share with you, of course we have – I think, on the guidance side been quite busy over the summer here as well. And as we have closed more and more orders related to the monkeypox situation, we have also adjusted our guidance 6 times, actually over the last couple of months. Remember the original guidance that we issued in March reflected the investment here that Paul talked through in his introduction; we spent nearly DKK 2 billion in R&D this year. And we also were challenged a little by the fact that we, we had to shut down the bulk facility to do the expansion of the work in Kvistgaard.
That facility has now reopened, but that these things together really meant that we came out with a guidance of relatively low revenue levels and a loss of more than DKK 1 billion. So now we have adjusted 6 times as I said, and we are guiding today expected revenue between DKK 2.7 billion and DKK 2.9 billion, and EBITDA getting closer to a breakeven between [indiscernible] to DKK 300 million and a cash position better than DKK 1.7 billion. So while the monkeypox orders clearly have had a huge impact on these guidance, I also have to say that the current performance of our commercial business in [indiscernible] but also the first signs of the TBE business gaining momentum again, has also contributed to our adjustment of the guidance.
So with this gardens, I think, we are extremely excited about the first half of this year. It is a fantastic opportunity for Bavarian at the moment to really make a difference show what we mean by our vision, but also take advances of course, also of the commercial opportunities and the financial opportunities that we see in the market today.
So with that we will open up for questions and answer session.
Question-and-Answer Session
Operator
Thank you. Now we’re going to take our first question, please stand by. And the first question comes to line of Thomas Bowers from Danske Bank. Your line is open. Please ask your question.
Thomas Bowers
Great. Thank you very much. A couple of questions here. So firstly, just on the monkeypox vaccine. So can you make comment a little bit on how the dose order backlog looks like for 2023 now in total with all also combined small orders that you haven’t announced?
And then second question just on Encepur/Rabipur. So how do current inventory levels at wholesalers and pharmacies look like right now compared to what you saw at the pre-COVID levels? And can you maybe add a bit of color on how you see the sales development going in here to the first part of the third quarter?
Then thirdly, just on your 2022 guidance just to clarify the exchange rate that you use is that still 695 [ph] and how much of the monkeypox revenue in H2 is, it’s actually going to be paid in U.S. dollars?
And then maybe just if I can squeeze in a last question just on those sparing, so, you can say once the inventory levels of the vaccine – monkeypox vaccine starts to sort of improve here during the next couple of months, maybe here. And do you actually expect the EUA to actually be removed immediately or is there sort of a risk that this will continue? Thank you.
Henrik Juuel
Hi Thomas, this is Henrik. Thanks for the questions. I think of the dose order backlog, I think, that the closest we can get to give you an answer is actually what Paul said earlier in his presentation here. I think if you look at the orders that we have closed today, that is we are talking approximately 9 million doses going across 2022 and 2023. And if you look at the expected delivery times, they are skewed somewhat towards 2023, which basically, I think, you can interpret us. We have actually now secured more business already here in August for next year than what we have used to upgrade our guidance this year.
I have to say though that the exact split between 2022 and 2023 is extremely sensitive to the final delivery schedules. We could have some orders that we are planning to deliver in November, December that could happen in January, February or the other way around. The good thing of course is that we are not talking any loss business. It’s simply a matter of logistics, so to split between 2022 and 2023, extremely sensitive to these things here.
On your other question, the Encepur/Rabipur are wholesale inventory levels, we do not have a, you can say full inside into the exact inventory levels that they hold. There are many wholesalers out there, but it is clear and particularly with a product like Rabipur, when you have a sudden uptake like this, it will eat into the inventory levels that the wholesalers. So my expectation is that they are running at low inventory levels right now. It takes typically some quarters for the wholesalers to adjust, and then they will start adjusting their own forecast. So we are running, I think, at relatively low inventory levels with the wholesalers that is our best estimate at the moment.
The U.S. dollar in our guidance is reflecting the current levels of the U.S. dollar. We have seen in the first half year the only real income we have had there in the U.S. dollar is the half of our business. So it did help us with approximately DKK 20 million from a stronger U.S. dollar this year. Clearly additional business to the U.S. government later this year will also benefit from that. But if you look at our full P&L we should also remember that we have very expensive RSV study in U.S. dollar as well. So we will see some of that being eaten up further down to P&L.
But still, I think, with our current business and expectations in U.S. dollar, we actually see that it’s a net positive to our business. The stronger U.S. dollar, which we couldn’t say early in the year where we did not have these monkeypox onus. So that’s very, very fast to.
I think there was a question also…
Paul Chaplin
Yes. No, I can say that one. Yes. So the dose bearing into the model approach is a temporary approach. So in Europe, it actually successfully written as a temporary measure, while vaccine doses are low and in the U.S. it’s governed by the EUA, which is only in place once there’s a while, there is a declared emergency. So if and when the emergency is over, this is on the temporary measure and it will revert back to how the vaccine is recommended on the label.
Thomas Bowers
Okay. So by defining the emergency, is that also due to the lack of vaccines or is it also due to general emergency as we see now – run right now with the outbreak?
Paul Chaplin
No, it’s due to the emergency, not necessarily caused by the lack of vaccines but the number of cases of monkeypox.
Thomas Bowers
Okay. Got it. Great. Thank you very much.
Operator
Thank you. Now we’re going to take over next question, please stand by. And the next question comes to line of Gil Blum from Needham and Company. Please ask your question.
Gil Blum
Good afternoon, everyone, and thank you for taking our questions. So maybe an organizational question first. So will recognition of previously contracted demands be delayed because the bulk that’s currently that was produced for those doses is now being used for near-term orders?
Paul Chaplin
Yes. I can take that. Yes. So – just so that we’re all on the same page, there is a substantial amount of bulk inventory that the U.S. has purchased over the last few years that equates to approximately 15 million liquid doses or around about 13 million freeze-dried doses. We’re already eating into that inventory with a 5.5 million liquid doses that’s already been placed. So that bulk would need to be replaced to fulfill the options that already began to be awarded earlier this year, which is to create a stockpile of 13 million freeze-dried.
So yes, it will impact the timing maybe of the freeze-dried depending on what additional orders we get we receive from the U.S. But as I said, the option to start manufacturing freeze-dried was $119 million that was awarded, if I remember rightly in early June that has not been touched and it’s still sitting there. And that is part of the larger option of $299 million. But the exact timing is freeze-dried [indiscernible] now is a little unsure because, of course, we’ve also pushed out the tech transfer [indiscernible] as we’re manufacturing, Jynneos liquid. But we do anticipate that any bulk that is utilized in the current manufacturing of liquid will be replaced and that we will at some point with the manufacturing of freeze-dried.
Gil Blum
Okay. That’s very helpful. Can you provide any commentary on any differences for per dose pricing across company contracts? Are there differences?
Paul Chaplin
So pricing, well, first of all, I would say no because we use the same approach for everyone. There are, however, differences in price based on the volume that’s been ordered and/or potentially the longer-term commitments that [indiscernible] has shown. So those are the two factors that could create a discount, so to speak, on price, but the same mechanisms are used for all customers.
Gil Blum
All right. And maybe longer-view question in our discussions with KOLs, it seemed that due to the unprecedented size of this outbreak monkeypox might be something that’s going to stick around with us, maybe into the future. Is the company also viewing this current outbreak in those terms?
Paul Chaplin
I missed the last part of the question, sorry.
Gil Blum
I was asking is Bavarian Nordic also viewing monkeypox as something that’s going to be long-term with us similar to how COVID is probably going to be long-term.
Paul Chaplin
I mean, that is one scenario, of course, that it will remain at a certain level within the community. I would say even if it doesn’t remain at a certain level, I think, this is yet again, another wake up call to the worldwide community that you can’t simply ignore an infectious disease in one part of the world, because it will eventually cross borders. And kind of like I said, there have been warning signals for the last four years with travelers returning from Nigeria that this was on the cards.
So, I think, even if through vaccination, public health measures and all the rest of it, we as society get on top of the outbreak, it’s just a matter of time until it returns.
Gil Blum
Great. And maybe that last one on COVID there has been a lot in the news recently that the potential filings for approval of Omicron-specific and other variant-specific vaccinations by the fall could that potentially affect enrolment in your Phase 3 study? Thank you.
Paul Chaplin
Yes, it’s a good question. The early indications are from the sites that we have contracted we don’t believe so, but as I mentioned in the presentation, it’s not the first time we’ve been hit with challenges in the regulatory landscape. So it’s something that we certainly keep an eye on. But at the moment we don’t believe so, because as you may have seen, we will be recruiting fairly rapidly to get to the end point of the study. But it is a concern that you raise and flag, and it’s one that we’ll keep an eye on.
Gil Blum
All right, excellent. Thank you for taking all of our questions.
Operator
Thank you. Now we’re going to take over next question, please stand by. And the next question comes to line of Peter Verdult from Citi. Your line is open please ask your questions.
Peter Verdult
All right. Full positive high level management bandwidth, I mean, monkeypox I’m sure is keeping [indiscernible] on these large [indiscernible] programs. So I’m just making sure that there is enough bandwidth to execute and [indiscernible] just on supply when we last [indiscernible] supply 15 million, 20 million doses [indiscernible], let’s talk a little bit about the capacity.
Paul Chaplin
Yes, I think, you broke up a little bit there, Pete. But, I think, I heard the gist and if I don’t, then you can come back and correct me. One, I think, was related to the bandwidth. And I think you are completely right when you say that we are extremely busy. And I mentioned that in the presentation. I think the areas that have really been impacted by monkeypox, obviously is in manufacturing, where we’ve had to short notice change all our plans to re-gear, to manufacture Jynneos. However, they had a busy year and instead of being busy on other things, they are now extremely busy on one product, which is Jynneos/Imvanex. So, I think, we can and we will manage with the caveat, as I said, we do need to expand our capacity through partnerships.
I think the good thing is, is that in terms of the R&D the clinical development our two Phase 3 programs, while the folks there are also extremely busy, they have not really been impacted by monkeypox. So it’s almost like we can compartmentalize the two activities and move forward ahead with all the different programs. So we remain confident that we can live up to all our plans.
I think the second part of your question related to capacity, I think, and I think I heard you mentioned 15, 20 million doses next year. As I said, that number really comes from scale up in drug substance to bulk, where we’ll be at four batches a week – where we lost four batches – where we will be up four batches a week with the current capacity that we are anticipating in terms of fill finish with the partnerships that we’ve already announced.
Operator
Dear speakers, please be advised, Peter’s line has been disconnected.
Paul Chaplin
Yes.
Henrik Juuel
Okay.
Operator
Are you happy to take another question?
Paul Chaplin
Yes.
Henrik Juuel
Yes, please.
Operator
Thank you very much. Now we’re going to take the next question. And the next question comes to line of Boris Pecker from Cowen. Your line is open. Please ask your question.
Boris Pecker
Yes. Good morning. So my first question on Jynneos. Can you tell us what are the raw materials? And I guess more importantly, if you were to run your manufacturing facility at capacity for let’s say the next year or two, do you have the raw material supply to support that? Or is that a limiting factor?
Paul Chaplin
Yes. Thanks, Boris. So one of the raw materials, it’s an egg-based production. And of course, if you’re going to go and double your capacity, you’re going to be using to have a lot more eggs and there’s lead time to get the flocks up and running. The good thing is, as I said on that one, we obviously had been planning to be operating at two batches a week next year. And we’ve already been in dialogue about scaling up our capacity and things like that.
So I think we can manage some of the other raw materials or single use plastic items, which are like gold dust in the industry. But again, I think, through our network and support from certain governments, we will also be okay on that. So we may not have secured everything, but we are confident that we can be operating at four batches a week, but the turn of the year.
Boris Pecker
How many – I’m just curious how many eggs are required to make a single dose of Jynneos?
Paul Chaplin
A single dose or a batch? I don’t know what.
Boris Pecker
Whichever way you want…
Paul Chaplin
Yes, yes. No, a batch is – it’s not like flow. So it – I think and I’m probably going to be wrong, whatever I say, but I would ever stab at 5,000 eggs a batch.
Boris Pecker
How many? 1,000?
Paul Chaplin
5,000.
Boris Pecker
5,000. Got it. Great. And my last question just on financials. So you reported some sales of third-party products. What is your arrangements for these third-party products and how should we think about their margin?
Henrik Juuel
Yes. Thanks, Boris. Yes, we have recognized DKK 53 million for the first six months. And the way it works with these is that we have the rights to promote these products in two of them in both in Switzerland and Germany and the HEPLISAV-B product in Germany only. And we basically buy the products from the manufacturer. And then we earn a certain margin. I cannot be specific on the margin as per agreement with our partners. But and is – it is obviously lower than the margin that we earn on the other products.
But the good thing is that we are here leveraging the synergies in our organization, as we can carry these products through the existing commercial organization. And for instance, in Germany, it means that we are now going through the doctors with actually with five vaccines in the back, which also has that added benefit that our sales organization, they have something new to talk about all the time and they have a good excuse to go into the clinic and meet the our customers.
So it is – it’s a good business. It’s DKK 53 million. I think we off to a good start. We are seeing in particular IXIARO benefiting from traveling, picking up again, just like we see in our rabies business as well.
Boris Pecker
Great. Thank you very much for taking my question.
Operator
Thank you. Now we’re going to take the next participant, please stand by. And the question comes from the line of Peter Verdult from Citi. Peter, your line is open.
Peter Verdult
Hi, it’s Pete here again. Sorry about before. I think I got disconnected. It happens again. We’ll give up, but Paul, I heard your answer to the first question. My remaining question, and I apologize if one of – both of them have been asked already while I was off the call, but when we last sat down together, Paul, I think you intimated that if you executed to your plans, you might be in a position to supply 15, 20 million doses from your Danish plant next year. Any update on that number? Is that still sort of the aspiration?
And then secondly, just on stockpiling and preparedness, the U.S. has got up to 200 million doses of ACAM2000 that they’re not using. Are you sensing that there’s a willingness to replace or create a separate stockpile there? And I realize you can’t name countries, but can you at least give an indication of how many other major countries you feel are thinking about monkeypox, not just here and now, but in terms of long-term preparedness and potentially stockpiling. Thank you.
Paul Chaplin
Yes. So the second part of your question that is it our aspiration? Yes, certainly, 15, 20 million is what we can manufacture. Of course, we need to secure orders for that before we do it, but that’s certainly what we believe we can squeeze out of our facility next year. The question about ACAM and the U.S. government, I mean, I think, again, this is me speculating because it is not on the basis of any contract – any confirmed or firm discussions, but I believe whenever you are facing an outbreak like we are with monkeypox, it does make people rethink about their requirements.
Now, the U.S. has been clear for decades on having a smallpox stockpiles requirement. I think the current outbreak in my opinion has highlighted that they don’t have enough Jynneos. And I think it will lead to a rethink of how many doses of Jynneos they really want both as a smallpox stockpile but also for the continued control and/or preparation for the reemergence of monkeypox.
I would say, the majority of the discussions that we have right now are still of what I would call the here and now, which is doses that we currently need. There are a handful of governments, I would say, that are showing indications that they’re thinking in terms of moving beyond the here and now to, okay, we better be better prepared, because it’s been clear within the community that those governments that have doses on stock have been better prepared than those governments who have been scrambling to get doses. So yes, we’ve seen the shift, but I’ll take it a handful of countries right now.
Peter Verdult
Thank you.
Operator
Thank you. Now we’re going to take our next question – please stand by. And the next question comes from the line of Michael Novod from Nordea. Your line is open. Please ask your question.
Michael Novod
Thank you very much. Just a few follow-up questions. So, first of all, through a potential bulk manufacturing partner, can you talk about which kind of structure you’re looking for? Would that be sort of traditional CMO or larger pharma company and given the complexity of doing tech transfer on bulk? How fast do you think that could be done if you sign it during – such a deal during next couple of months?
And then secondly, to the third-party revenues for IXIARO, DUKORAL and HEPLISAV-B, what kind of levels should we sort of be looking at just for sort of housekeeping to the modeling for the full year of 2022. And is that a sort of a mid-single-digit growth area going forward? Is it a high single-digit? Is it high double digit? What is sort of the benchmark rate, which you use for growth going forward? Thanks.
Paul Chaplin
Yes. Thanks, Michael. I’ll take the first one. So that was related to what sort of partnerships are we looking for? I think as I said, there are two things that we need. One in the short-term, we definitely need a higher capacity particularly on fill and finish. And that’s because certain governments already have a large stockpile of drug substance, and we will be creating quite a large amount of drug substance over the coming months.
So the immediate need, I think, is on fill/finish. And we are in discussions with both traditional CMOs, but also vaccine manufacturers whether that’s large pharma or not. In terms of bulk, there are some discussions about transferring bulk and to your point, that is not going to be as easy as fill and finish, not that fill and finish is easy, but it will be harder. And I think that falls into the next bracket of do we need to consider medium, longer term solutions for drug substance? I don’t think that is a short-term fix.
Michael Novod
But could we see the – but could it be something that you would be doing sort of near-term in order to be sure that when and if there’s need for more broad capacity, then you can also respond to that.
Paul Chaplin
There are discussions on drug substance. Yes. And we’re not rolling it out, but, I think, we’re just aware and you raised it yourself that the complexity of the drug substance with an egg-based process is going to take a bit more time. But to your point, the soon you start, the soon you finished, right. So we are in discussions, both on filling on drug substance.
Michael Novod
Okay.
Henrik Juuel
Yes. Okay. Hi, Michael. This is Henrik for your questions here. Let me try to answer your question on the processing. As you know, this – you’re talking about three products here and they actually, I think, if we were hard to give you some input on the gross potential, I think, we have to take them one by one, basically. And if you look at – if we take the small one first, DUKORAL. I think first half year is approximately – it’s a single dig, it’s DKK 1 million. So not a huge income from DUKORAL. And the growth on that one is probably also limited.
If we then take HEPLISAV-B, which was launched here in May, I think, it’s still a little too early. And what we see in the numbers right now is mainly pipeline filling. Of course, we have expectations that this product, which is superior to sort of competing product in the market as it’s a one dose only – sorry, it’s a two dose versus three dose business, I think. Yes. And so we have high expectations that we will take markets here, but it’s a little too early because what we see right now is mainly filling up the supply chain.
Then we have IXIARO, which is more than half of the revenue we have recognized this year and with its really benefited from sales or traveling picking up again. And I think without having all the insight into the – to this product here as it’s a partner product. I think just benchmarking it to our hardly focus business in Germany, which has a similar strong growth, that business is still sort of 40% below the pre-COVID level. So I do believe that there are still a good growth potential in IXIARO, but of course, that assumes that the travel will continue to pick up and grow even beyond what we see today. So there should be a good growth potential from IXIARO. And also HEPLISAV-B, once we start seeing the end market data and we can demonstrate if we can actually take markets here.
Michael Novod
Okay. Thanks lot.
Operator
Thank you. Dear speakers, there are now further questions. I would now like to hand the conference over to our speakers for closing remarks.
Rolf Sass
Yes. Thank you. And thank you everyone for your time and attention and the questions and have a great day. Thank you.
Operator
So that concludes our conference for today. Thank you for participating. You may all disconnect. Have a nice day.
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