Valneva SE

Hello, and thank you for joining us to discuss Valneva's first quarter 2024 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 three months ended March 31st, 2024, which were published earlier today, available within the financial reports section on our investor website. I'm joined today by Velneva's CEO, Thomas Lingelbach, and CFO, Peter Buehler, who will provide an overview and update on our business, as well as our key financial results for the first quarter. There will be an analyst Q&A session at the conclusion of the prepared remarks. Before we begin, I'd like to remind listeners that during this presentation, we will be making forward-looking statements, which are subject to certain risks and uncertainties that could cause the 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 also listed on our company website. Please note that today's presentation includes information provided as of today, May 7th, 2024, 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, Josh. Good day, everyone, and welcome to this call on our first quarter's key financial results and business updates. We had a solid start into 2024, and I'm pleased to present some of our key highlights. We made tremendous progress on the pipeline. Of course, Chicken Gunja, we got the favorable ACIP recommendation. CDC adoption, and we see now first commercial revenues kicking in, and I will provide more updates on that. On Lyme disease, the phase three study, Valor, is progressing according to plan, and we expect the completion of all primary vaccinations very soon. We started as anticipated the Zika virus vaccine program, advanced the new second generation candidate into phase one, which is another key milestone on our R&D pipeline. With regards to the financials, Peter, of course, will give us an update on the full financial report. But of course, we got the PRV net proceeds in. We reported a quarter one net profit of close to 60 million and more than 175 million euros in cash. The product sales of 32.1 million are in line with our internal plans and hence we have reiterated our full year guidance. We significantly extended the cash runway with the recent update to the debt financing agreement and we have reiterated and are reiterating our strong midterm financial outlook. We believe that this company is solidly funded with significantly lower expected cash burn going forward, especially since we expect to complete our payments to Pfizer very soon. Our operational business is considered sufficiently funded. Of course, as we said in the past, excluding debt repayment until the lime commercial revenues are expected to enable sustained profitability. By way of reminder, we discussed a lot about our strategy, but on page six of the presentation, you see again the three silos, the pillars, how we call them, that underpin our strategy to become a globally recognized vaccine company. On the one hand side, driving commercial growth. Here, we're going to capitalize on our existing commercial business now augmented with our new vaccine, XCHIC, and we expect to unlock the value of this first and only chikungunya vaccine on the market, but building awareness, building markets, expanding global reach, and all of that will enable the commercial business to turn cash flow positive already from 2025 onwards. The second pillar to capture R&D upsides. We would like to continue investing in new vaccines that address high unmet medical needs, leveraging our proven R&D engine and strategic partnerships, and focus on vaccines that make a difference, either first, only, or best in class. Our key expectation is that we will have another asset ready to enter phase three post successful LIME readout of its phase three. So overall, the third pillar marks the maximization of our integrated business model. We believe in what some people call this hybrid model, building continuous value from R&D and commercial execution. Support, of course, the timely Lime approvals and achieve sustained profitability with potential Lime commercial revenues from partner Pfizer. When we look at chikungunya, we're very proud that we managed this third vaccine in the company's history from bench to successful licensure. It's the world's first and only chikungunya vaccine right now. And it is clearly a differentiated vaccine. We expect to benefit by being first to market with a potentially best-in-class vaccine here. We believe we have a differentiated and competitive product characterized by a strong and durable immunological response following a single injection. And we see no difference in the immunogenicity profile between younger and older adults. The vaccine has been generally well curated amongst the more than 3,500 adults and more than 700 adolescents evaluated for safety thus far. Looking a little bit at the timeline on the launch activities right now, shown on page 9 of the presentation, We basically started by building HCP awareness and stock distribution channels. This is something that we have been working on for a while. We then got the ACRP approval and the CDC acceptance. We ensure now that the customers are building respective stock and we build payer coverage. Then, coming soon, we expect to activate the customers and to engage with military. In terms of next steps, we are supporting our customers who are already actively protecting travelers. We activate consumers to seek travel health consults, and we ensure military officials understand the risk, impact, and threat levels associated with chikungunya. We will, of course, continuously monitor the outbreaks and threat levels, given that we are talking about an outbreak disease here, and we want to make sure that we are ready in case of outbreaks coming up and adjust our plans accordingly. In terms of regulatory approvals, page 10 of the presentation, we started with the U.S., Canada, and Europe are well on track. and we expect review completions and possibly positive opinions mid of 2024. The Brazil filing for Ixchic is ongoing. And this could be the first potential licensure in a Chikungunya endemic country still this year. While in parallel, we are transferring the process in order to enable also a locally produced product, which we call VLA 1555. to get licensed in Brazil. We will then continue with additional LATAM and LMRC countries and also other markets where we target countries with established travelers or endemic markets. In terms of additional studies and additional activities, You all know that XCHIC is FDA approved for adults under the Accelerated Approval Pathway, but we have a very robust clinical program to support continued approval, label extensions, and updated product profiles. We talked a lot about the post-marketing effectiveness phase four with the observational effectiveness study in participants above 12 years of age in Brazil and the pragmatic randomized controlled effectiveness and safety study in adults in an endemic country where we expect around 20,000 people to participate. This will start at the end of this year, very, very early next year. All preparation activities are well underway. In terms of label expansion, we have two very important studies ongoing. First of all, the study in adolescents, VLA-1553-321, which is a randomized controlled study in adolescents 12 to below 18 years of age. We reported positive initial results. The six-month follow-up data are imminent. And on the basis of that, we will file for label extension to allow this vaccine to be also then approved for everyone above 12 years of age. In parallel, we have initiated the study phase two study in children 1 to 11 years of age, well underway, more than half of it recruited. And here, same thing, we will gradually over time expand and extend the profile. And then, of course, we are talking about a vaccine with a unique profile in terms of durability of protection. And hence, we will continue monitoring the antibody persistence. And we expect later this year, the 36-month time point, just by way of reminder, we expect this vaccine after single shot to protect for at least five years, if not longer. And we will monitor for five years. And there is also a study in immunocompromised adults starting very soon. And as part of the phase three profiles, we will also address this famous topic about early onset of immunity. When we turn over to the Lyme vaccine, BLA15, partnered with Pfizer, I don't need to repeat again all the key features of this vaccine, but just by way of reminder, it is the world's leading vaccine candidate against Lyme disease. It's the only program in advanced clinical development It is a multivalent recombinant protein-based vaccine targeting the six most prevalent serotypes in the Northern Hemisphere. And it's working based on an established mode of action. In terms of next steps, study Valor, which is our phase three efficacy study, we expect full completion of the primary vaccination series. So on slide 14, this would mean both cohorts cohort one, as well as core two primary vaccination completed, then cohort one booster completion, and then, you know, everything geared up towards readout at the end of the tick season 2025, so towards the latter part of next year. So everything is working well and we are very much excited about this program and the potential to really deliver on a vaccine solution that can make a change to people's lives. Talking about Zika, page 16 of the presentation, you remember that this is an optimized second generation vaccine candidate. This is currently the only active one against Zika. And it is leveraging a platform that we originally developed for Xero, then further optimized for VLA 2001. The company's inactivated whole virus COVID candidate or COVID vaccine. And so it is designed for large volume. excellent tolerability safety profile and potentially with dual-activation addressing also a very broad and durable protection profile. We are currently looking at market opportunities, we are looking at funding opportunities And we are watching and monitoring the epidemiological development in the world quite carefully, given that we see currently a lot of signs for Zika coming back. And we will decide, of course, on next development steps later this year or early next year as we are going into the respective data readout points. Of course, we have a very significant number of exciting preclinical things ongoing, and we expect, as we announced earlier, to provide more pipeline updates over the summer. And with this general update on our R&D and launch activities around xCHIC, I would like to hand over to Peter to provide us with the financial report.

Thank you, Thomas. And good morning and good afternoon to all of you. Now let's look at the financial review for the first quarter of fiscal year 2024. Product sales reached 32.1 million euros and remained stable compared to the first quarter of the prior year. Xero sales reached 16.6 million euros, 4% below last year. The downside was related to supply constraints that are now resolved. Ducoral sales grew double-digit and reached 11.3 million euros compared to 10.2 million euros in the first quarter of last year. The increase in Ducoral sales is primarily driven by the continued recovery in the private travel market. Ixtric sales in the United States reached 200,000 euros. And as a reminder, at the beginning of March, the U.S. Center of Disease Control and Prevention, CDC, accepted the ACIP recommendation for Ixtric. Third-party products decreased by 8.9% to 4.1 million euros compared to 4.5 million euros in the first quarter of last year. The decrease is a result of anticipated supply constraints of one of our commercial partners. As mentioned during our full year 2023 earnings call, we expect third-party product sales to decrease over time with a positive impact on the company's cross-margin. Foreign currency effect had no impact on the year-over-year sales performance. Now moving on to the income statement. Total revenues reached 32.8 million euros versus 33.5 million euros in the first three months of 2023. The small decrease in other revenues is related to lower revenues recognized on R&D collaborations. Looking at expenses, we observe an increase in cost of goods and services versus prior year of around 1.7 million euros or 8%. The increase in cost of goods is primarily driven by a write-off or failed Ixiaro batches. With this write-off, Ixiaro's gross margin reaches 52% compared to 58.7% in the prior year's first quarter. Ducoral gross margin is broadly in line with prior year. Research and development expenses decreased by €1 million to €13.1 million in the first quarter of fiscal year 2024. In the first quarter of last year, we reported higher R&D costs related to our COVID-19 vaccine. Also, ixtric-related R&D costs decreased following US licensure in the fourth quarter of 2023. These savings were to some extent offset by expenses related to the ongoing tax transfer to our new Almeida manufacturing unit in Scotland. Marketing and distribution expenses in the first quarter reached 11.3 million euros compared to 9 million euros in the first quarter of last year. This increase is due to higher spend in our U.S. commercial organization and particularly to the launch of our chikungunya vaccine, ixtric. G&A cost increased by 1.6 million euros to reach 11.7 million euros in the first quarter of 2024. The increase is driven by higher recruiting cost, increased of increased costs for share-based compensation and expenses related to digitalization and automation. In the first quarter of 2024, we sold the priority review voucher obtained upon approval of our chikungunya vaccine, ixtchik, in the United States. This resulted in a net revenue of 90.8 million euros after deduction of all transaction costs and amounts owed to third parties. The operating result of the first quarter is reported at 67.2 million euros compared to an operating loss of minus 16.6 million euros in the first quarter of the prior year. The significant improvement of our operating result is of course driven by the sale of the PRV. Net finance and income tax expense is reported at minus 9.3 million euros compared to expense of 1.6 million euros in the prior year. The higher cost is related to foreign exchange losses of 2.5 million euros, while in the prior year we reported an FX profit of 3.2 million euros. Interest expenses increased by roughly 2 million euros driven by the increased amount of the loan facility. With this, profit for the first quarter of fiscal year 2024 reached 57.9 million euros compared to a loss of 18.1 million euros in the prior year. Now moving to slide 20 to review our guidance for the fiscal year. We reiterate our product sales guidance of 160 to 180 million euros for the fiscal year 2024 with a target to double this level of sales by 2026-27. Other elements of our guidance, as illustrated on slide 21, include total revenues of 170 to 190 million euros and other income of 100 to 110 million euros driven by the sale of the PRV reported in the first quarter. We also reiterate our midterm guidance issued during the full year 2023 earnings call. In particular, we expect XGIC sales to exceed 100 million euros in year three of launch. This concludes the final section of this call, and I would like to hand back to Thomas for the upcoming catalysts.