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.

thank you so much peter um yeah so i think um we go straight into the um reiterated midterm outlook that peter mentioned earlier so um with regard to total product sales revenues other income And the fact that we really expect sales to double over the coming years and basically drive the company on the back of time for sustained profitability. When we look at our catalysts, and key news flow coming up in the short term. Chikungunya vaccine activities that I mentioned earlier include the upcoming approvals with the European Medicines Agency and Health Canada and visa, all of that expected this year. Then the initiation of the phase three immunocompromised individuals that we expect also to start in the first half this year. I mentioned the six-month safety follow-up period on the adolescent study and right after, therefore, the submission for label extension activities and the phase four clinical program to start at the end of this year, very early next year. Online, we have a whole bunch of key execution milestones coming up, and they all relate to the VALOR study. But also important, we expect the two-year antibody persistence data and booster results. It would be a very interesting set of data because it will show how the immune profile will look like after the first booster, so as to whether a vaccination against Lyme disease may be needed on an annual basis or whether there could be a longer vaccination schedule following initial booster. Additional news flows include, of course, new U.S. Department of Defense supply contracts or a contract for Xero in the second half of this year and a further advancement of our deep pipeline. With that, I would like to conclude this presentation and hand back to the operator to take your questions.

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Please stand by while we take our first question. And the first question comes from the line of Maury Raycroft from Jefferies. Please go ahead.

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We will now take our next question. Please stand by. The next question comes from the line of Max Herman from Stifel. Please go ahead. Your line is now open.

Great. Thanks very much for taking my questions. Three, if I may. So firstly, just on XCHIC and the launch metrics that you're measuring, obviously the first quarter sales were kind of not really expected to be significant. But I just wonder if you are seeing or what you're seeing in terms of maybe responsiveness from both clinicians and also from potentially what wholesalers might be taking in inventory and how that might work. Second question is obviously on Ixiaro and the batch issues that you had. Obviously, I don't remember this being commented on in your full year results. So I'm just kind of wondering when it happened. Has it led to any customers or clinics not being able to receive Ixiaro? So I wanted to know where it is in the supply chain. How has it impacted the supply chain? Whether there's a catch-up period available And then finally, just in terms of future pipeline, I think you talked about bringing a further phase three program in once the VLA15 program completed. I know you talked previously about an R&D day perhaps at the end of this year. to go through. I wonder what your thoughts were with that in mind and your MPV program with what you've seen with AstraZeneca and Icosavax with an RSV MPV program. So those are the three questions. Thank you.

Hi, Max. I counted four, by the way. Okay. But let me start off. Maybe I start off with Ixiaro. You know, we had last year quite a bumpy restart of Ixiaro manufacturing, right? I mean, the team had not produced Ixiaro for almost two years. um you know we switched back from covid manufacturing into xero um and um and so we had um we had quite a um you know i would say a number of batches that um that basically did not successfully complete um some of them um were recognized accounting wise in the full year financials some some dragged on into the quarter one We had a reported shortage, so there were some markets not receiving the anticipated and the full demand. No product that was ever in the market was affected by any issues. Now we are back on full supply and we have enough products successfully manufactured and in the supply chain so that we have been able to reiterate our guidance for the full year. So everything that we are seeing on total product sales now for the quarter is in line with our internal planning. And therefore, we are very confident that everything will work out. When it comes to xShake, yeah, well, I mean, we got CDC adoption a bit more than six weeks ago. So, of course, the first quarter is not a representative quarter, you know, in terms of what's going to happen. But what we are tracking in terms of launch performance is a combination metrics that help us inside an understanding and launch success. And there are a couple of points that includes that we monitor We include, of course, the wholesaler and the distributor stocking. So we have a set of wholesalers and distributors with whom we are working on XCR for a long time. And right now, we know that 100% of our wholesalers and distributors are stocked. um of course um then we are looking also at stocking at our most important customer accounts um and we have you know like everyone we we have a tier one g2 account and so on and here we are close to 100 stopped um then the next metric that we are currently monitoring is the reordering right so product basically being used and then um and then reordered And actually, for us, the medical part is equally important, and this means coverage. It's all about awareness. This is a brand-new disease. It's a brand-new product, so we need to make sure that there's enough coverage for XCHIC, and we have seen that this is drastically increasing right now. And we are very pleased with our U.S. commercial team and medical teams that are really building on all of that. And so these are the key parameters that we are monitoring. And yeah, we hope that with the next earnings, we will be able to report already a little bit about real consumption in the market and what's going to happen in terms of people actually getting ick-sick in their arms. When we talk a little bit about the pipeline, Yeah, so basically you mentioned a couple of points. Nothing has changed on the company's R&D pipeline strategy. Just to recap, we have a very significant number of promising candidates in our preclinical pipeline. However, we have stated in the past that we are looking to augment the pipeline with a clinical stage asset, either alone or in co-development. And we have said that this is an objective that we have given ourselves for the first half of this year. So now I would say over the summer, we still hope that we will be able to augment the pipeline while at the same time accelerating some of the activities that we are doing in preclinical, all of that. will exactly lead to what you mentioned earlier, Max, namely a program to enter phase three by the time hopefully Lyme will have successfully completed phase three. On HMPV, you know, specifically, we have stated already last year that we don't see an advantage of moving HMPV standalone into the clinic. Also, it would be ready for it. We have put this asset into the market. There is a very, very limited number of parties that could benefit from an RSV-HMPV combo. And we are still in the process of actually marketing this asset, but it's too early to talk about, you know, here a potential opportunity. And I hope with that I have been able to address your questions.

Yeah, maybe just a quick follow-up on Ixiaro. I think there was a mention of movement in Scotland from the manufacturing sector. I mean, I don't know whether that was to the new facility that you have constructed. So just whether any of the batch issues relate to what's been going on. Maybe you could describe a little bit better what's been going on in terms of the facility there.

Yeah, so basically we announced that we would use the new facility. in the future for XGK and Xero. But the tech transfer into the new facility is something that will happen during this year. Nothing that you have seen with regards to the batch write-off last year or very early this year had to do with these activities because this is something that we will do quietly over the course of this year. and then, you know, consolidate all activities on site, which will have a very interesting and favorable impact on cost of goods.

Great. I'll jump back in the queue. Thank you. Thank you.

Thank you. We will now take our next question. Please stand by. The next question comes from the line of Rajan Sharma from Goldman Sachs. Please go ahead. Your line is now open.

Hi, thanks for taking my question. A couple. So firstly, just on Exario. So now that you're back at full supply capacity and following the weakness in Q1, do you expect kind of a catch up in revenues in Q2 now that you have capacity back online? And then on ixtric, could you just help us understand kind of the steps and the process to the military engagements? And do you think that there's a potential that you could close a deal or potentially at least engage with military customers before your competitor is potentially approved in the first half of next year? And then second one on ixtric was just kind of if you could discuss the strategy to activate consumers that you've talked about. Is this an area that there could be a potential DTC campaign or does the commercial opportunity not justify that? Thank you.

Yeah, Rajen. So let me start off with Xero.

We believe that Xero will essentially grow as compared to last year. And this will include also a sort of catch-up, as you called it. Of course, lost travelers are lost travelers, but we expect a significant growth as compared to last year in terms of total product sales for Xero this year. As such, there will be certainly, you know, a very significant update to be seen for XARO later in quarter two, three, and four. Yes, we managed military engagement for XCHIC. and we are in very active discussions with military and we hope that we will be able to get XCHIC in a way onto the radar screen and for the Department of Defense There's significant need for it. We have also seen some small outbreaks that could be of relevance for DOD. And as such, we are positive about DOD's engagement in this regard. And DTC is, yeah, it may well be, but only with defined media. And we are currently working on that. I hope this helps clarifying your question.

No, that's very helpful. Thank you. You're more than welcome, Roger.

Thank you. We will now take our next question. Please stand by. The next question comes from the line of Evan Wang from Guggenheim Securities. Please go ahead. Your line is now open.

Thanks for the question. I guess with fixed check, can you provide any kind of details in terms of some of the launch stocking dynamics that we're seeing? I know you said the wholesale industries are kind of 100% stock now. Any color there would be helpful. And then second, you know, with Lyme, I know you're expected to report some of the two-year antibody persistence. What are you looking for there? And I guess how important is two-year persistence to, I guess, everything about the market opportunity? Thanks.

So the line was not great, but I will try to focus. I'll start with a little part of your question first. I think you were talking about antibody persistence for chikungunya, correct?

Am I right? Hey, can you hear me better now? Yeah.

So you were talking antibody persistence for chikungunya, correct?

No, for the Lyme program that you're referring to.

Okay, good. So sorry for that. Yeah, so basically remember the antibody persistence for the Lyme program. We have a cohort from the original Phase II study. This cohort got the three doses priming, It's a cohort from the study 221 of Lyme disease. They got basically then the booster shot after one year. This booster shot resulted in a very, very good anamnestic response. So basically the immune response was by a factor of three to four higher than the one after priming. Now we are monitoring this cohort one year later. So basically we're going to see how does it compare against the immune response we got after priming originally. And this may result in a situation where we say, well, you know, probably after two years, you don't need a booster. But this is something that we need to take a closer look at and need to see what we actually, you know, can interpret out of the results to come. But certainly, very interesting data package to come later this year. Yeah, when it comes to xShake, We cannot currently report on, you know, number of doses or what we have really put into the channel that would not be appropriate at this stage. But what we can say is that all of our key wholesalers and distributors do have Xshake available for sale. And this is the most important thing right now.

Thank you.

Thank you. We will now take our next question. Please stand by. The next question comes from the line of Samir Devani from RX Securities. Please go ahead. Your line is now open.

Hi, guys. Thanks for taking my questions. I've got a couple, I think. Just in terms of Brazil, if you get licensure there this this year. Can you just explain, will that mean that you will supply product from here or will you wait for the tech transfer to complete before product is supplied? I guess that's question one. And then maybe just another question on COGS for Peter. I'm just trying to understand, I think you booked things like 2.4 million COGS for services, but services is only 600k in revenue and also idle capacity cost of a million. Can you just explain why that hasn't been allocated to one of the products? Thanks very much.

Samir, so I take the first one on yes, it means exactly what you just said, namely we would supply product manufactured in Europe to Brazil, most likely into the private market. but possibly also by way of public business. And we will certainly also use our product in a pilot vaccination campaign that will address also the, what the, some of the phase four requirements. With that, I would like to hand over to Peter. Peter, you want to take the Cox question, please?

Yeah, thanks, Thomas, and hey, Samir. So on the COGS of services, the cost of services, so this is basically our contribution, you know, our people contribute to the Lyme trial. We report this at the cost of services. We receive a contribution, of course, from Pfizer, which we don't recognize as revenues right now. We put it on the balance sheet, and we expect to recognize this revenue later down the road. On the idle capacity, that's basically related to the Almeda site. As we said earlier on, we're in the process of tech transferring the products over there, but we don't produce yet, which is why we don't allocate it on the product.

Okay, let me just then to follow up on that. Does that mean those idle capacity costs, we should expect them to recur over the coming quarters?

Yeah.

Also on the... Yeah, okay. And then in terms of Brazil... How does that work in relation to the Instituto Butantan deal? Will you still be just receiving a royalty on sales to Brazil, or would that be separate until they are manufacturing product themselves?

Peter? So on Brazil, I mean, if it's products that are sold by Butantan, we would get a royalty, irrespective of who manufactures it.

So we would... Okay, so if you... Yeah. Right. Okay. Understood. Okay. Thanks very much.

You're welcome.

Thank you. We will now take our next question. Please stand by. The next question comes from the line of Ed White from HC Wainwright. Please go ahead. Your line is now open.

Hi. Thanks for taking my question. Just a follow-up to a prior question on COGS. There are so many moving parts here, as you mentioned, the new facility in Scotland and the lowering of the third-party sales. You had said in the presentation that in the midterm outlook, you expect gross margin improvement. Can you discuss what you expect to see in 2024? Yeah. Hey, Ad.

So this is – yeah, thanks for the question. And I agree with you. There are a lot of moving parts. As we said, we expect cost to improve in the midterm. We actually do think we will see an improvement in 2024, but we have not guided on cost of goods or specific expense items, which is why also, of course, I cannot give you a concrete number today, but we do expect to see an improvement here clearly.

Okay. Thanks, Peter.

Thank you. We will now take our next question. Please stand by. The next question comes from the line of Suzanne Van Vortuusen from Van Lanshot Kempen. Please go ahead. Your line is now open.

Hi there. This is Suzanne from Kempen. Thanks for taking my question. I have one on your midterm outlook, which was reiterated. Can you clarify whether the cash flow positivity from 2025, whether that's purely on Ixiaro, Ducaral, and Ixchic, and maybe some third-party sales, or should we also consider other potential income streams in there, such as potential milestones from Pfizer online? And my second question is for the Phase 1 Zika program. Can you remind us what the difference between the first and second generation candidate was, and help us understand what would you like to see in the phase one data immunogenicity-wise, whether this is a vaccine where you would also expect over 90% zero conversion or whether the target is lower. Any considerations? Thank you.

Hi, Susanne and Tom. I suggest that I let Peter answer the midterm outlook financial questions, but I'll start with Sika first. So what is the difference between first and second generation? Our first generation was basically the secret candidate that we just put on the Xero process. which is a small-scale single-accompanied cell culture-based inactivated whole virus process. We then changed this process to allow for large volume production for COVID, so still cell culture-based, but large-scale production at low cost of goods or lower cost of goods. And we introduced double adjuvantation, which means not only the antigen adsorbed to aluminum hydroxide, but also combined with an additional T cell adjuvant. This has given us, in COVID, superiority against even vectors. And we believe that longevity of the immune response, which has shown to be a challenge for Zika vaccines in the past, will be addressed. And secondly, we will hopefully reach immunological plateau, which we did not achieve or not see in the first phase one study pre-COVID. And so basically, that's what we want to do. To do with the SICA candidate, yes, I mean, zero conversion, definitely above 90% would for us be an important feature. With that, I hand over to Peter to answer your question on the cash flow positivity.

Yeah, hey, Susanne. So regarding the cash flow positivity from 2025, it's really in our commercial business. including XCHIC. So what we're saying is basically our full commercial business will be cash flow positives from 2025, and that excludes Lime. We do not expect any revenue flows in 2025 from Lime. The next revenue flows we expect from Pfizer is actually upon first commercial sales of Lime, which would be early 2027. Perfect.

Thank you very much.

Thank you. You will now take our next question. Please stand by. The next question comes from the line of Maury Raycroft from Jefferies. Please go ahead. Your line is now open.

Hi. Can you hear me now? Yes, I can hear you, Maury. Okay. Thanks for taking my question. Apologies for the technical difficulty earlier. I'll just ask two quick ones. For Ixtchik, for customers already actively protecting travelers, Can you talk about how many touch points you have in the United States and how many of those sites will there be in the EU for XCHIC once you're approved there? And can you talk about EU launch plans and rollout?

So basically, I will see whether we can find out how many touch points we really have because I don't know it out of the top of my head. But for the EU, it is very clear that We expect the product licensure ideally now in the summer with positive CHMP opinion then followed by EC adoption. And then, of course, we have the whole ONCL activities that will need to take place, which is why we originally, as you may recall, Marie guided that our anticipated launch date would be January 1st for the key, and you have in Europe the top five, you know, travel markets. For Chikungunya, a particular situation with regard to France, given that the French history with La Réunion means that the disease awareness around Chikungunya in Europe is probably highest in France. And that's why we may basically consider prioritizing front. Whether we will be able to accelerate launch ahead of January 1st, 2025 in Europe, we have to see. Of course, if licensure timelines do support it and regulatory activities do support it, we will do it. We are ready. We have a team that is very excited to get this vaccine to people as soon as possible. And that's all I can say at this point. And I will provide you with the number of touchpoints in the U.S. as soon as I get it from the U.S. team or from the commercial team. Yep.

Okay. Okay, that's helpful. Thank you. And then a quick follow-up on the U.S. DOD potential for chikungunya. I'm just wondering, have they committed to running a formal request for proposal there? Or is that part of the ongoing conversation? And when could we learn more about just the conversations with the USCOD?

It would definitely follow a different process, Maureen. Basically, we do not expect that they will launch a formal RFP, but the discussions are still ongoing. I just got from our team that there are more than 200 basically touch points at this stage in what we call the Tier 1 and Tier 2 accounts. But we will provide you with more details around that as soon as we get it.

Yeah? Okay. That sounds good. Thank you for taking my questions. You're welcome.

Thank you. This concludes today's question and answer session. I would now like to hand over to Thomas Lingerbach for closing remarks.

Thank you so much. Yeah, thanks a lot for your active participation today. Thanks a lot for your great questions. Thanks for following us, for your continuous trust, confidence in our work. We are excited about where we are. As I said, solid start of the year and clear prospects for this year and clear midterm exciting outlook With that, I wish you all a wonderful rest of the day and talk soon. Bye.