Valneva SE

Thank you for joining us to discuss Velneva's nine-month 2023 results and corporate update. It's my pleasure to welcome you today. In addition to our press release and analyst presentation, you can find our consolidated financial results for the nine months ended September 30th, 2023, which were published earlier today, available within the financial reports section on our investor website. As always, I'm joined by Valneva's CEO, Thomas Lingelbach, and CFO Peter Buehler, who will provide an overview and update of our business, as well as our key financial results for the first nine months of the year. There will be an analyst Q&A session at the conclusion of the prepared remarks. Before we begin, I'd like to remind listeners quickly that during this presentation, we'll be making forward-looking statements, which are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. You can find additional information about these risks and uncertainties in our periodic filings with the Securities and Exchange Commission and with the French Market Authority, which are listed on our company website. Please note that today's presentation includes information provided as of today, November 9th, 2023, and Valneva undertakes no obligation to revise or update forward-looking statements, except as required by applicable securities laws. With that, it's my pleasure to introduce Thomas to begin today's presentation.

Thank you so much, George, and good day. Welcome to our nine-month financial report and general business update. Let me start with our R&D highlights. We are progressing full steam towards potential licensure of the world's first chikungunya vaccine, where we still see the PDUFA date towards the end of this month. On Lyme disease, the phase three study Valor with Pfizer continues. Cohort one completed the first six seasons, and current cohort two is nicely enrolling. As previously discussed, we have reinitiated the Zika vaccine development and anticipate a clinical trial start early next year. On the commercial business, with total product revenues of more than 100 million euros, we have seen an almost two weeks increase on non-COVID sales as compared to prior year period. And as such, we are on track to meet our 2023 sales guidance of 130 to 150 million euros. We remain to have a strong cash position with cash of €171.3 million at the end of September. Let me go straight to chikungunya. As you know, this is our product candidate called BLA-1553, a live attenuated vaccine candidate under FDA priority review. It is the first chikungunya vaccine that reported positive phase III data at all trial endpoints. We submitted the BLA. In the meantime, also filed with the European Medicines Agency and Health Canada. And the vaccine has very distinct features. We demonstrated long-lasting high-zero response after a single shot. We see already 100% response after 14 days and a favorable safety profile, regardless of prior infections, as recently reported as part of the study in children in Brazil. We are preparing for launch. We are investing in making sure that we can supply the product as early as possible. And as previously described, BLA 1553, especially from a traveler's perspective, fits perfectly within our existing commercial infrastructure, but also in the industrial infrastructure. By way of reminder, we see different markets on that, non-endemic, meaning travelers, military, and outbreak preparedness in the Western world, and endemic use in LMRC, where we have partners with CIPI and Instituto Butantan. You may remember that, of course, the single largest short-term reward on this development program is the potential award and sale of the PRV upon VLA approval. which we have still included in our financial projections, the level of roughly $100 million. The ongoing study in Brazil in adolescents, we reported already the positive initial safety data and final immunogenicity and safety data on the so-called Part A is still expected this month. With regards to the development outlook, we continue to work collaboratively with FDA to align on our post-approval phase four program. And we have additional studies ongoing, meaning antibody persistence study that we will really follow through for at least five years. And the two-year time point is still expected towards the latter part of this year. And the adolescent trial data is expected to support the potential label expansion in licensure Brazil, but also supported to really add on to the existing licensure processes, especially with the European-made medicines agencies. Anticipated future trials will include co-vaccination, pediatric special population, and as mentioned, phase four effectiveness. Turning on to Lyme, page number eight, This is our multivalent recombinant protein-based vaccine candidate addressing Lyme disease. It's the only Lyme disease program in advanced clinical development today. It's exclusively worldwide partnered with Pfizer. And we have the phase three well underway, which is sponsored by Pfizer and supported by positive results for three phase two clinical studies including the first pediatric and elder lessons data, including prime boost and anamnestic response data. It is, as we have reported multiple times, hexavalent or six-valent vaccine that addresses the most prevalent serotypes causing Lyme disease in the Northern Hemisphere. And that's why this vaccine really targets people living in risk areas of Lyme disease on both sides of the Atlantic. It is a rather de-risk program since it follows established modes of action for Lyme disease vaccine candidates that were shown earlier on. It's FAST-TRACK designated by US FDA. The phase three efficacy study, we have shown it in the past, 9,000 participants in the final target population, meaning everyone about five years of age. Randomized one-to-one vaccine against placebo in two-to-one in between North American and European sites. Primary endpoint, rate of confirmed Lyme disease after two consecutive tick seasons, meaning after prime boost. And secondary endpoint includes the rate of Lyme disease after the initial first Lyme season, meaning primary vaccination, or in other words, three primary doses. and then other secondary endpoints as defined in the SIN3 protocol. We have two cohorts. As mentioned before, the cohort one is entirely enrolled, is now expecting the next booster shot prior to the season 2024, and the enrollment of cohort two is well underway. If everything goes to plan, Pfizer aims to submit regulatory applications in the United States and Europe in 2026. In terms of trial updates, we have two studies that are currently ongoing. The Valor vaccine efficacy study, as I just described, and basically here we expect the last subject out towards the end of tick season 2025 when the first initial readout is expected. In parallel, there's also a pediatric safety study ongoing with the first subject achieved in December last year. The enrollment was completed in the summer of this year. It's more than 3,000 children there, and we target completion by the end of this year. then there will be the follow-through period as well. Turning to Zika, page 11 of the presentation, we have decided to reactivate this development of a Zika virus vaccine candidate following the theme and our experience on vector-transmitted diseases, but also diseases that may be developed under an accelerated approval pathway. Zika viral disease remains a significant, a very significant unmet medical need. And we believe that given this special target population for a potential Zika vaccine that our technology leveraging the proven and licensed platforms for ICSIARO on the one hand side, but also the COVID vaccine by the year 2001 may provide an excellent vaccine solution for this disease. And as mentioned before, we plan to reinitiate phase one early next year based on updated formulations that we have. Looking overall at the pipeline of Valneva, page 12, you see we focus strongly on the two late-stage assets that we just mentioned, put Zika back into the active clinical development program, We continue to evaluate partnerships for our HMPV candidate that successfully completed the preclinical proof of concept and are currently focusing our preclinical resources mainly on the Epstein-Barr virus. And with that overall business update, especially focusing on R&D, I would like to hand over to Peter.

Thank you, Thomas, and good morning and good afternoon to all of you. Now let's look at the financial review for the third quarter of fiscal year 2023. Product sales reached 106.1 million euros and grew 42.6% over the same period in the prior year. At constant currency, product sales grew 45.8%. The strong growth is driven by all product lines, with Xero growing at 119.4% over prior year or 126.7% at constant currency. Ducoral at 142.7% at constant currency, and third-party products at 61.1%. This excellent sales performance is primarily driven by the recovery of the private travel market, but also by price increases across the board. COVID-19 vaccine sales at the end of September are unchanged from the end of June and relate to a pre-existing contract with the Kingdom of Bahrain. Moving on to the income statement, total revenues reached 111.8 million euros versus 249.9 million euros in the first nine months of 2022. In the prior year, Valneva had recognized significant other revenues derived from its COVID program, which explains this decrease. Looking at expenses, we observed a significant decrease in cost of goods and services from over 200 million euros in the nine months of 2022 to 74.8 million euros at the end of September 2023. Prior years, cost of goods and services were heavily impacted by one-off items related to the wind-down of our COVID-19 program. The gross margin of both Ixiaro and Ducoral is still below pre-COVID levels, but improved versus the first half year. Cost of goods are adversely impacted by Ixiaro batch write-offs in our Scottish manufacturing sites, and high sales volumes in indirect markets, where our average selling price is lower than in direct markets. In addition, cost of goods include a total of 9.3 million euros related to the launch preparation of the company's chikungunya vaccine candidate. Research and development expense decreased from 75.4 million euros in the first nine months of 2022 to 42.2 million euros in the current year. That decrease is exclusively driven by the lower spend on Valneva's COVID vaccine program, At the same time, the cost rated to the Zika vaccine candidate increased as the company has been working to its re-initiation of a clinical development program. Marketing and distribution expense increased significantly year over year from 13.1 million euros to 33.9 million euros. The increase is mainly related to higher pre-launch costs for our COVID-approved chikungunya vaccine candidate that more than tripled versus prior year. In addition, prior years spent had a positive impact related to employee share-based compensation. G&A's expense increased from 23.3 million euros in 2022 to 35.1 million euros in 2023. In the prior year, all expense lines had a favorable effect for a total of 30.5 million euros related to employee share-based compensation driven by the share price development. The increase in other income from 7.5 million euros to 17 million euros is mainly related to the recognition of the grant received from Scottish Enterprise. The company's operating loss is stable versus last year at negative 57 million euros. Net finance and tax income expense is reported at negative 0.1 million euros versus negative 42 million euros in the prior year. The lower cost is related to high unrealized exchange losses in the first nine months of the prior year. Total loss for the year reached negative 69 million euros, 30 million less than in the prior year. Finally, we reported cash and cash equivalents at September 30th, 2023 of 171 million euros compared to 289 million euros at the end of December 2022. This position includes an additional $50 million drawdown on the existing credit facility with Deerfield and Orbimed and takes into account significant payments made to Pfizer in relation to the phase three line study, Valor. Now moving on to slide 17 to review our guidance for the fiscal year. We reiterate our guidance for revenues and other income communicated earlier this year. We expect product sales to reach between 130 to 150 million euros and other income to reach between 90 and 110 million euros, assuming a sale of the Chikungunya PRV in the fiscal year 2023. We reduce our guidance on R&D investment to 60 to 70 million euros versus 70 to 90 million euros previously. This concludes the finance section of this call, and I would like to hand back to Thomas for the upcoming catalyst.