Valneva SE

Good day and welcome to our quarter one financial results and corporate update call. Pleasure to be with you again today. Yeah, so basically the quarter one has again been marked by excellent progress on our clinical programs. We have been able to report further positive phase two results for our Lyme vaccine candidates, including quite exciting first pediatric data, first ever in the world of Lyme vaccine development. And on COVID-19, our program VLA 2001, we received MHRA conditional marketing authorization in April, NHRI emergency use authorization, including First vaccination in Bahrain. And the EMEA rolling review process is still ongoing. We had hoped that to conclude in a similar way that we were able to conclude MHRA, but the process is still ongoing. On Chikungunya, we recorded final positive pivotal phase three data. And we initiated the pre-submission process with the U.S. FDA. And again, I'm going to go more into the details of the program. With regard to our top line and cash position, we have recorded total revenues of 21.8 million euros in quarter one 2022. We had actually first sales from first COVID shipments into Bahrain. And we see some positive signals in the travel vaccine market. And again, Peter will detail it a bit further. And our cash position remains strong at 311.3 million euros at the end of March. With that, I would like to go into the details of the programs. on our Lyme vaccine. By way of reminder, as you know, we are working on a multivalent Lyme vaccine candidate. It is the only Lyme disease program in advanced clinical development today worldwide. FDA path track designation granted, exclusive worldwide partnership with Pfizer. And we have gone through a number of phase one, phase two trials, to determine final dose and final schedule. And with that, we have been able to determine also dose and schedule for the phase three, which we expect to commence in the third quarter of this year. The vaccine is based on a multivalent recombinant subunit approach, covering the six different serotypes prevalent in the northern hemisphere, so that the vaccine is designed to protect against Lyme disease on both sides of the Atlantic. And the vaccine, as we reported many, many times in the past, is based on a validated and proven mode of action. Specifically on the news regarding pediatric data, or first pediatric data, the third phase two study that we conducted, study VLA15221, included 625 participants aged 5 to 65 years of age. We saw both in the adult as well as in the under-18 year, which we call pediatric participants, a very strong immunogenicity profile, and we reported the 18-plus data already in February, and now the 5 to 17 in April. In the participants, 5 to 17-year-olds, of course, as expected, the vaccine was found to be more immunogenic as compared to adults. And we even saw that we could already obtain a good level of immunogenicity after two doses of the final dose schedule that we have determined, namely a three-dose schedule. which will certainly have a value in a later post-initial licensure setting and when it comes to recommendations and uptake. The phase three study is still planned to start in the third quarter this year. Please keep in mind we are talking about three-dose priming, months zero, two, and six. In order to have our study cohort fully vaccinated for the tick season 2023, we got to start in the latter part of this year. This is a study that would include participants all the way from five years on and apply, as I said, the three-dose primary vaccination schedule. The clinical readout is achieved after one season already is projected by the end of 2023, or a six-season later should it not be feasible earlier. The phase restart will trigger a $25 million milestone payment by Pfizer to Valmiva. Moving on to chikungunya, you also are well aware of the fact that our chikungunya vaccine candidate called VLA-1553 is the most clinically advanced chikungunya vaccine program worldwide. It is the only program on the planet today that has shown positive pivotal phase 3 data, final positive pivotal phase 3 data, And we have complemented that also with the lot-to-lot data. At this point in time, we are still in the follow-up period, so this means we have reported top-line data at this point only. We have also initiated the Adolescence Case Retrial. This is a post-marketing activity, so we will seek initial licensure in everyone 18 years and above, and then supplement and extend the label later post-initial licensure. This development is being conducted in Brazil. You know that we have a grant with TIPI and a partnership with Instituto Butantan for two reasons. Number one, to help conducting those studies, which are, of course, conducted under IND, but also to make the product available to low-medium income countries at a certain point in time. On the program, we have literally all regulatory benefits that you can think of at this point in time, Brexit therapy, fast-track, EMA prime designation, and of course, as we have expressed many, many times, the first company to achieve VLA approval will potentially be eligible for a priority review voucher. And here, Valneva is certainly in the pole position. By way of strategic reminder, we see this vaccine providing an excellent fit both within our existing commercial and manufacturing infrastructure in a market that we see clearly exceeding half a billion annually over time, of course. You know, what is the outlook? We have initiated the pre-submission activities with the FDA. I mentioned already that we completed the final phase three data readout, basically confirming what we saw already earlier, namely an excellent zero response rate, close to 100%. And we saw positive flow-to-lot consistency data. We wait for the follow-up. Then, you know, antibody persistence study is ongoing. We expect a subset of respective participants to be followed for up to five years because we hope, of course, that our vaccine will protect for a long time after a single shot. And I mentioned the adolescent phase three trial that we already initiated. With all that, we are really gearing up towards FDA submission process, BLA submission process in the second half of this year. BLA 2001, our COVID vaccine candidate, it is still the only inactivated old virus COVID-19 program in the clinics in Europe as we said at the beginning partially already approved. It builds on our manufacturing technology but combines this conventional approach with a modern agonist which is supposed to drive the immune response stronger towards PH1. We received, as mentioned, MHRA conditional marketing authorization and, of course, the emergency use authorization from the Bahrainian NHRA. And as I mentioned during my introduction, EMA rolling review is still ongoing. I think we have reported in the past at this moment in time We have one major supply contract with the European Commission, up to 60 million doses, of which a bit less than half of that is supposed to still be delivered this year, subject to product approval, of course, and some of the deliveries that we have done already to Bahrain. The basis for licensure is the immunocompatibility. We showed superiority against AstraZeneca's product and a significantly more favorable tolerability profile. We also reported very positive top-line hemologous booster data, showed in vitro neutralization against Omicron and Delta and other variants of concern. And we are in the process of extending our label gradually, which is expected post the initial licensure of the vaccine. It's being shown on page 11 of the presentation, initial licensure, primary immunization 18 to 55. In the UK, we got 18 to 50. But then, of course, as soon as we have Data available from our elderly study that was conducted in New Zealand, including booster follow-up, we expect to extend the label towards 50 or 55 plus. We reported last night that we initiated a heterologous booster study. We understand that this is, of course, important that our vaccine can also use in people that got primed before, be it through mRNA, multiple vaccinations, and or natural infection. So this is the study that will, in the proper setting, evaluate that. And we are very glad that we have finally been able to initiate the study. Not so easy these days in the environment of COVID. So all the, what we would call the adult-adolescent activities, so two to 70 years of age, those activities have all been initiated, or at least the first part has been initiated, second part is about to be initiated, and this will, of course, take longer to get respective data in children because we had also now to conduct, to move outside of Europe in order to get the necessary sample size and the necessary participants to the respective studies. With that general business update, I would like to hand over to Peter, who's going to provide you with the financial report.

Thank you, Thomas, and good morning or good afternoon to everyone. Let's go straight into the financial review of our first quarter of fiscal year 2022. Our total revenues reached €21.8 million, down €1.4 million, or 5.9%, versus the first quarter of 2021, while our total product sales are broadly in line with prior year. As previously communicated, we shipped the first doses of VLA 2001, our whole-virus inactivated vaccine against COVID-19, to the Kingdom of Bahrain in March. This accounted for almost 25% of our product sales in the first quarter. Moving on to slide 14, where you will see that the composition of our product sales has changed versus prior year. Ixiara sales are significantly down versus prior year, and this is purely driven by lower sales to U.S. military. This decrease was anticipated according to the planned shipment schedule. As the footnote of this slide indicates, Ixiara chest bag sales outside of U.S. military performed much better than one year ago and almost quadrupled. For Ducoral, we can also report a significant recovery of our business, with sales reaching 2.5 million euros compared to 100,000 euros one year ago, or a total of 2.4 million euros for the full year of 2021. The increase in sales of Ixiara outside the U.S. military and Ducoral is a result of a recovering travel market, which presumably also includes some inventory replenishment in the distribution chain. Third-party products, more than double versus prior year, reaching sales of 5.6 million euros. The main drivers for this increase are higher sales of the Bavarian Nordic products, Ensipur and Rabipur, across primarily UK, France and Austria, where we started to distribute these products at the end of fiscal year 2020. And finally, as already mentioned, we are able to report the first sales of our COVID-19 vaccine with the shipment to the Kingdom of Bahrain. Moving on to slide 15 and looking at the P&L. We already covered product sales. Other revenues decreased by 20% versus prior year to reach 5.6 million euros. This line primarily includes revenues from the FISA R&D collaboration for lime, as well as manufacturing services provided to third parties. Looking at our cost, you can see that each expense line is significantly down versus the prior year. Overall, this decrease is to a large extent attributed to a release of provisions for share-based compensation at the related social security cost. The cost of phantom share programs for certain employees, as well as the cost of social security on our equity plans, depend on the development of Valdeneva's share price. In total, in Q1 of 2022, we recognized an income of 11.7 million euro that was offset against the different expense lines. This compares to a cost of 4.8 million euros in Q1 of 2021, so a year-over-year comparison, we have a positive delta of 16.5 million euros. Excluding that special effect, our Q1 cost would be broadly in line with prior year. Financial expense and income tax is reported at 7.6 million euros compared to an income of 3.4 million euros in Q1 of 2021. The difference is due to foreign exchange gains reported in the prior year, while in this year's first quarter, we had to report the foreign exchange loss. The total loss for the period of 26 million euros is 1.7 million lower than in the prior year, while EBITDA reached 13.3 million euros compared to 28.3 million euros in prior year. Here again, the main driver of the difference relates to the provision release related to share-based compensation. Slide 16 provides a waterfall reconciliation of the operating loss of Q1 2021 to Q1 of 2022. This illustration shows clearly that the variance is by and large due to the release of provisions related to the share plans. Slide 17 shows our P&L for Q1 with the separation of the COVID business versus the rest of the group. Looking at our COVID business, cost of goods exceeds sales, which is mainly driven by ramp up cost as we start commercial manufacturing. We invested 21 million euros in R&D for COVID, following an R&D investment of 114 million for the full year of 2021. So as you can see, we continue to invest significantly into the development of our COVID vaccine. The R&D spend in the first quarter includes clinical trial costs, as well as costs related to tech transfer to our manufacturing partner. Again, all cost lines are positively impacted by the previously mentioned income derived from the share-based compensation, which essentially explains the positive R&D expense for our business, excluding COVID. Finally, before moving to the guidance, I would like to comment on our cash situation. As reported in this morning's press release, we closed the quarter with a total cash of 311 million euros compared to 236 million euros one year ago and 347 million euros at the end of 2021. With this very strong cash position, we have the necessary financial resource to execute on our plans in 2022. The reported cash position at the end of March does of course not yet include the increased financing arrangement with Deerfield and Orbimed. With this, Let's move on to guidance on slide 19. We maintain our full-year total revenue guidance in the range of 430 to 590 million euros. The distribution of total revenues by category may, however, differ from the figures announced in February, given the uncertainties on the timing of product deliveries. This concludes the financial section of this call, and I would like to hand back to Thomas for the upcoming catalysts.

Thank you so much, Peter. Yeah, on page 21 of the presentation, you see a summary of the upcoming catalyst and our expected news flow in 2022. So very few changes compared to when we spoke last. Online, of course, the most important one is now that we have delivered on all our I would say, clinical endpoints and expectations in the phase two. We expect, of course, the phase three trial initiation in the third quarter this year. On chikungunya, we expect the final lot-to-lot phase three data following the follow-up period till this quarter, and then, as I mentioned, the BLA submission in the second half of this year. On COVID, we, of course, are still waiting for the regulatory approval specifically for the EMA. You know, we have reported earlier that we have now responded again against the respective list of questions received. So we are Still, at this point in time, confident that what we have submitted at this point in time may be deemed sufficient to grant a conditional marketing authorization of positive CHMP opinion this quarter. And, yeah, we may see additional regulatory approvals, of course, in other jurisdictions and territories, and we are working on further supply and potential purchase agreement and and we are working on the additional clinical studies the one that we announced yesterday evening for example the others that I showed you on the slide that are designed to support the label extension post initial licensure so a lot going on a lot that we expect for this year many things that get us all excited. Of course, it is a lot of execution challenge around that, but we feel that there's significant news flow and upside coming in the rest of the year. With that, I would like to hand back to the operator to take your questions.