Valneva SE

Good day, everyone. Welcome to our report on H121 financials and general business updates. Well, the first half of 2021 has been marked by tremendous success on our R&D side of the business. We have nicely delivered against our key major R&D objectives. And of course, the most recent new slow probably at this moment in time, the most important one is related to our chikungunya vaccine. We are very proud to be the first company in the world that has successfully delivered a phase three for a chikungunya vaccine, which continues to be a significant unmet medical need. We made excellent progress on our other clinical assets on Lyme. We successfully recruited the the additional phase two study called VLA15221, which includes also now the full pediatric target group, which is a key prerequisite for having the entire target population taking part of the future field efficacy study. And for our COVID-19 vaccine, VLA2001, we have successfully completed the enrollment and are now proceeding with the serology testing. Despite of our commercial travel vaccine still being heavily adversely affected by the ongoing pandemic, we have a strong financial position and platform. We successfully conducted our US IPO according to plan with net proceeds of more than $100 million. And we have cash and cash equivalents today of more than 300 million euros. And this is something that will be further detailed as part of the financial report. Let me first talk about chikungunya. The primary endpoint of our study, VLA 1553301, was to measure seroprotection. Seroprotection is the amount of study participants that showed protective neutralizing antibody titers. We have agreed on a surrogate of protection. This surrogate of protection was developed together with the agencies and based on a passive transfer study in non-human primates and a few other supporting non-clinical experiments. We have shown 98.5% of subjects reaching those protective levels after a single shot, and this has been even better than one could have hoped in this regard, and it's really remarkable for such a type of vaccine. It is also important to note that we have seen a similar level of seroprotection in the elderly, not only in the younger adults, which, again, is a great result. It is also important to note on this slide, which is slide number six, that with 98.5%, we are well, well above the FDA non-acceptance margin, which was set at 70%. When you look at slide seven of the presentation, you see that our vaccine induces very high neutralizing antibody titers. We see a fantastic immunological profile across all age groups, including the elderly. Safety. With regards to safety, our vaccine shows a safety profile that is absolutely in line with what one would expect for such a type of vaccine. We evaluated safety in more than 3,000 participants who received the vaccine. We had an independent data safety monitoring board continuously monitoring the study, and they identified no safety concerns. The safety profile that we have seen in the phase three is consistent with what we have seen in the phase one. The majority of solicited adverse events were mild or moderate and resolved within three days. Around 1.6% reported severe solicitive adverse events, mostly commonly fever. Approximately 50% of the study participants experienced solicited systemic adverse events, most commonly headache, fatigue, and myalgia. Approximately 15% of the participants experienced solicited local adverse events, so overall, a good safety profile and also a very good safety profile in elderly. And, of course, we need to follow the study subject now for a further six months. And that's why the final analysis of the study will only be ready once this follow-up period has been completed. With regard to next steps, of course, we are working now towards the final analysis, which is expected within the next six months, as I just mentioned. You also know that we have in parallel a lot-to-lot consistency study running. This study is fully recruited, and the data is expected later in the year. The antibody persistence follow-up trial, VLA-1553 is ongoing, and they will be followed up annually for five years after single immunization because our hope is that with a single shot, this vaccine may protect for a long time, even up to five years, which of course would be tremendous. And we are now in active discussions with the agencies, primarily the FDA, to bring BLA-1553 to a potential licensure as soon as possible. So overall, very, very pleased with this outstanding result in an area not only of high unmet medical needs, but also by way of reminder, a disease area that allows the first one to achieve BLA approval to access a priority review voucher, which is probably the single largest short-term commercial return for this product candidate. Talking about Lyme, we are Still the only company that has an active Lyme disease vaccine program in advanced clinical development worldwide. The program got FDA fast-track designation granted. We reported good results from the Phase II trials to determine dose and schedule. As I mentioned earlier, we completed recruitment for the Phase II study VLA15221, including the PITS-5 and above. And this marks then the total target population that we're going to include in the pivotal field efficacy trial, which is about to commence next year. The vaccine contains six serotypes to protect against the most common serotypes of Lyme borreliosis in the Northern Hemisphere and follows a proven mode of action for Lyme disease vaccines. And as you know, we have an excellent partnership with Pfizer, with whom we are progressing this development forward. The details around the current state of play, the recruitment for the study VLA15221, which was recently completed, included 625 participants, 5 to 65 years of age. The trial triggered a milestone payment from Pfizer of about $10 million. The top-line results are expected in the first half of 2022, and we will also investigate a booster dose administered one year following the six-month dose. We expect the phase three pivotal efficacy trial to commence, of course, pending positive readout from the phase two study in 2022, and the clinical readout based on one tick season is projected by the end of 2023. And this will then allow for an initial submission for regulatory approval anticipated in H2 2024, assuming, of course, positive data. Let's move on to our COVID vaccine, VLA201, which is the only inactivated vaccine in clinical development in Europe today. You know that we have a partnership with the UK government. The UK government has ordered approximately 100 million of the vaccine doses, and the government is supporting us with development and manufacturing funding, and we continue to have an ongoing dialogue with the European Commission for European Supplies. The program acceleration enabled us basically to go based on our platform that we have established in Scotland with our iXiaro vaccine, and the commercial manufacturing commenced in January 2021. Our vaccine differentiates from other inactivated COVID vaccines in development, for example, those in China or India. because we combined our vaccine with a modern adjuvant, Dynavax's CPG1018, which is a toy-like agonist, supposed to increase T-cell immunity by shifting the immune response towards Th1. We have reported good Phase I, II clinical results and are now in the middle of our Phase III. As I mentioned, recruitment completed. of our study COV-Compare and now in clinical serology testing. The regulatory submission to MHRA is still planned in the autumn, so in the last quarter of this year, and then subject to data approvals and so on, we will be able to commence deliveries thereafter. The current study called COV-Compare VLA20301 is a randomized observed applied controlled comparative emergency trial in over 4,000 adults. We are the only company that targets to show effectiveness of the vaccine by immunological comparison against a licensed vaccine. And this approach is expected to reasonably predict the vaccine efficacy. We do this. by way of testing superiority of VLA201 in a two-dose immunization schedule, the 028. And we measure the GMT ratios in between the active comparator and our vaccine at two weeks after the second vaccination. The study is conducted in the UK, supported by DHSC and NIHR, with testing being conducted at PHE The protocol has been agreed with MHRA, and we have advanced discussions with other regulatory bodies on a similar approach. Top line data, I expect it early in the fourth quarter, and we expect to commence rolling submission with the MHRA in the coming weeks. And subject to the phase three data, we believe that the initial approval may be granted by the end of the year. We are also participating in the World's First COVID-19 vaccine booster trial in the UK where our vaccine is being used to booster people with a third dose who have been primed with other vaccines. And this could become a very interesting target product profile for our vaccine going forward. And additional studies are also planned including reduced booster dose, but also studies, for example, in elderly. And we are also studying other variants in order to be in a position to manufacture variant-based vaccines, because you may know that especially for whole virus inactivated platforms, there are a lot of examples how strain or variant shifts can be addressed, e.g. in the world of influenza. And with this update on our R&D activities, I would like to hand over to David.

Thank you, Thomas. So just to move on to slide 15 for those of you who are searching. And good morning to those of you in the US and good afternoon to those of you in Europe. Just before I hand over to Manfred to go through the financial results, as is usual this year, I'd like to say a few words regarding the broader business dynamics and indeed future guidance. Firstly, though, I'm at our Livingston site today. And many of you will know that the team here is working hard to produce our inactivated COVID vaccine and working around the clock to complete the new plant, which is just across the road from where I'm sitting right now. We've strengthened our teams globally. And in the context of today's call, I'd also like to mention that Josh Drum recently joined us as VP of Investor Relations. And Thomas and I will introduce Josh to many of you in the coming weeks and months, including hopefully some of those meetings in person. So, while today is very much about our chikungunya data, we have several strings to our bow, as you all know. We're reconfirming our core guidance, which is testament to the ongoing excellent execution and control of our R&D programs, combined with mitigating the effects of COVID on our travel vaccine business. And we've always been clear that we plan to invest fully in our unique and valuable R&D assets. So the level of R&D investment is consistent with that aim. So we would have been pleased to provide guidance on our COVID program, but that's still difficult for a couple of reasons that I'll just explain just now. Firstly, and as Thomas has alluded to, our Phase 3 trial recruited on time And the execution of that trial itself has been managed extremely well. So we're just waiting for the output of the serological testing and the subsequent data analysis. And clearly that data forms part of the rolling submission to the MDA and HRA that Thomas also mentioned. We've said before that phasing of the 60 million dose order to the UK government will move across also into 2022. And what we want to be able to do is to give meaningful guidance. We've also got ongoing discussions with EEC as most of you will know, and therefore for now we're not giving guidance that includes COVID. Rest assured we'll do that as soon as we have sufficiently robust information, and we hope that's not too far away. I think what's most important regarding COVID and indeed the other programs that we're executing very well is the fantastic work that many people are still doing to provide solutions to the ongoing challenges that COVID-19 presents us with, and that includes the execution of non-COVID R&D programs. Our neighbor will contribute to the COVID challenge and we'll give you more economic insight into that as soon as we can. And with that, I'd like to hand back to Manfred. Thank you.

Yeah, thanks a lot, David. I want to continue the finance section with providing more details on the product sales generated during the first six months of 2021. which in total amounted to 31.8 million euros. Sales of third-party products further gained momentum and, driven by both Ansipur and Radipur, contributed a total of 5.9 million euros to our H1 product sales. Xero sales to US Military were still related to the base year of the contract signed back in September 2020 and delivered about 22.3 million euros of sales during the first half of 2021. As you continue seeing the travel industry being impacted by COVID-19 related restrictions, sales of Tukulawa and Mixiara were during the first six months still quite compressed and in combination added about 3.5 million euros to our H1 top line. As you can see on the right slide, slide number 16, the overall product sales were quarter over quarter down by about 19% at constant exchange rates and almost all of our sales were delivered through our own commercial infrastructure. Gross margins on product sales ended up at 39.2%, impacted by compressed product sales, some idle capacity costs, and also continued need for write-offs of aging inventories. Next slide, please. On the next slide, I want to walk you through the H1 profit and loss statement. Here, I would first want to draw your attention to the total revenues, which remained only 1% below the first six months of 2020, with the reduction in product sales almost completely offset by our other revenues, which more than doubled from about 7 million in H1 2020 to about 15.7 million in the first six months of 2021, which is mainly a consequence of revenues added from the Pfizer collaboration for Lyme, higher revenues in the CTM unit in Sweden, and some incremental revenues related to the Chikungunya program for LMRC countries together with Instituto Butantan. Overall COGS increased from previous year as a result of idle capacity costs as well as inventory write-offs, while cost of services increased in line with the increase in our other revenues. R&D investments continued growing significantly and again more than doubled during the first six months of 2021 in line with our R&D portfolio progressing into later stage clinical development, but primarily impacted by incremental COVID-19 related R&D spend amounting to 46 million euros during the first six months of 2021. Marketing and distribution expenses declined moderately compared to the first six months of 2020. However, investment into launch, preparation, and market access related to our nicely progressing Chicken Gunja program have added 2 million euros of incremental sales and marketing spend in 2021. So excluding these additional expenses for Chicken Gunja, our marketing and distribution spend reduced by about 25%. G&A spend continued increasing materially, mainly driven by non-operational costs, mostly related to corporate projects, such as the US IPO preparation, combined with investments in support of our COVID program, as well as included some non-cash effects related to the company's stock option program. Finally, a few more words around the finance results, including taxes. This continued being positively impacted by foreign currency valuation gains, primarily related to the British Pounds denominated cash and balance sheet positions, which almost offset the increased interest charges related to our debt financing agreement with OrbiMet and Deerfield, as well as other interest charges related to our refund liabilities. And finally, EBITDA shows a total loss of 80.1 million euros, mostly driven by strongly increased R&D investments in the first half. Next slide. So this additional slide shows the impact of the COVID activities on the company's income statement, also showing that a considerable part of the EBITDA of the first six months is attributable to the COVID-19 related investment in R&D. From the total EBITDA of 80.1 million euros, about 53 million related to the COVID business. leaving about 27 million euros attributable to Vanita's core business, excluding COVID. And also the core business shows significant R&D spend of around 32.6 million euros, mainly driven by investment into the phase three of our Chikungunya program. Also important to note that still no COVID revenue has been recognized for the period ending June 30th. And then finally on the next slide, at last quarter we thought it would also be helpful to again give a few comments on the balance sheet statement per June 30, given some material movements continue impacting our balance sheet. So firstly we see our fixed assets taking a step up and meanwhile amounts to almost 75 million euros, which you can see on the property plant and equipment line. Inventories keep on increasing and meanwhile we hold about 125 million euro of inventories. which largely are COVID-specific. As expected, we saw our cash position further increase, driven by both the proceeds generated through the global offering of new shares, as well as further prepayments received from the UK government. Our cash position further increased and amounted to almost €330 million by the end of June 30, 2021. And on the liability side, I again want to highlight the continued increase in the contract liabilities which related to further cash considerations received from the UK government during the second quarter related to the COVID supply agreement. If you start supplying COVID vaccines to the UK government, we will gradually see the contract liabilities moving into the P&L. And with this, I want to conclude the finance section and hand back to Thomas to give us an update on the expected news flow. Thank you very much.