Valneva SE

Hello and thank you for joining us to discuss Valneva's first half 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 six months ended June 30th, 2024, which were published earlier today, available within the financial reports section on our investor website. I'm joined today by Valneva's CEO, Thomas Lingelbach, and our CFO, Peter Buehler, who will provide an overview and update on our business, as well as our key financial results for the first half. 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 listed on our company website. Please note that today's presentation includes information provided as of today, August 13th, 2024, and Balneva 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, Josh. Good day, everyone. It's a pleasure to present to you, together with my colleagues, the great achievements that we have been able to deliver on in the first half of this year, most notably in R&D and strategic development. Peter will develop the financials more in detail, but product sales of 68.3 million euros included first recognized sales for ixtric. and we're overall in line with our anticipated supply and sales phasing, and hence we have reiterated our set of full-year financial guidances. The successful sale of our priority review voucher and the deferral of our loan reimbursement in the first quarter allowed us to maintain a solid cash position, and now that we completed for the Lyme disease program, we anticipate a significantly lower cash burn towards the latter part of the year. We achieved major things in R&D, as I mentioned at the beginning. And the first one, of course, the new Shigella vaccine. Most recently, we entered into a strategic partnership to accelerate the development of the world's most advanced tetravalent Shigella vaccine. Additional approval in Canada and Europe were obtained even from planning. which allows us to launch in first markets in the last quarter of this year and we have pending approvals in the uk and brazil we are very grateful that we have been able to extend our partnership with tippy who awarded us a new more than 40 million grand to support product access post marketing and label extension trials for exchange We reported positive phase three H6 data in adolescents, which will all be used to support our label extension submissions in the second half of this year. We also published two-year antibody persistence data in Lancet, which are also expected to support further label extensions. And as you know, this study is going on for roughly five years. We completed the enrollment in Phase 2 study of ixchic in children 1 to 11 years of age, completed the primary vaccination in our Phase 3 Valor study for Lyme disease, and hence we are fully on track for the first readout at the end of 2025. And as you know, and as reported already at the last quarter, we initiated the phase one for our second generation Zika vaccine candidate with data expected in the first half of this year. Let me draw your attention to page number six of the presentation, which is a recap of our NEVA strategy. You know that our aim is to become a globally recognized vaccine company in line with our vision, contributing to a world where no one dies or suffers from a vaccine-preventable disease. Our strategy is based on three pillars. On the one hand side, driving commercial growth. Here we see clearly XJIC and the possibility to unlock the XJIC value by building awareness and market, capitalizing on the bundling effect with existing travel business and expanding globally, reaching more LMIC territories via strategic partnerships. And this commercial business is expected to become cash flow positive from 2025 onwards. The second pillar is our R&D. And here we would really like to capture R&D upside and provide upside to our investors by leveraging our proven R&D engine and existing strategic partnerships. We continue to focus on vaccines that can make a difference. As you know, technology agnostic, striving for first only a best in class solutions. and execute efficiently to general meaningful clinical catalysts. The new example, Shigella, is a vaccine where we expect phase three to enter once Lyme hopefully will be successful. The third pillar is really the maximization of our integrated biotech model. You know, we are one of the very few pure play vaccine companies that have a fully integrated model from research to sales. and we build on continual value from R&D and commercial execution. Of course, we support the timely LIME approvals, and on the back of that, we may achieve sustained profitability with potential VLA15 commercial revenues from our partner, Pfizer. When you look at our pipeline, you see that the introduction of the Shigella program through the strategic alliance with Limatech has helped us really to build a very coherent pipeline with strong and advanced clinical candidates. Of course, with Lyme as the number one in our pipeline and clearly the most attractive value player. Then Chikungunya with ongoing clinical activities, be it phase three, be it phase two pediatric, be it phase three adolescence, and also phase four. With Shigella, which I'm going to develop more in detail, but with a first phase two CHIM study, controlled human infection model and pediatric studies to begin in the second half of this year. And then with Zika, which could be a very nice plug and play within our existing travel vaccine portfolio. And as reported in the past, our key focus areas in preclinical are circled around EBV and various enteric disease programs. When we look at ixchic, the world's first and only chikungunya vaccine licensed today, we have really a very unique product here. We expect to benefit by being first to market And we believe we have a differentiated and competitive product characterized by very strong and durable immunological response following a single injection. And very importantly, we have shown that there is no difference in immunogenicity between younger and older adults. The vaccine has been generally well tolerated amongst the more than three and a half thousand adults and more than 700 adolescents evaluated for safety so far. When we look at the US launch success and where we are right now, we made some recent achievements. We launched the unbranded traveler campaign to build consumer awareness, the DHA, IHD, adopted the CDC recommendations and published the chikungunya virus and vaccine guidances. And we are continuously growing our customer base, distributors and customers reordering ixchic already. What's coming up? Of course, this is a quite challenging endeavor because we are talking about a brand new disease. Brand new vaccine, so we are investing significantly in building awareness, building recommendations, building adoption. And as next steps, we see really the publication of the chikungunya vaccine recommendations in MMWR, which is still pending. Continue working with CDC to raise awareness of global threats, including recent significant cases in Brazil. And the ACIP is expected to discuss guidelines for endemic island regions, EIE, Puerto Rico, and the review is planned for October this year with a vote in February of 2025. And when we look at the territory expansion, you see already on slide 11 that we have many boxes ticked. U.S. done, of course, label extension. for adolescents, pediatric, but also antibody persistence is coming up. Canada, we got the approval also there. Label extensions will follow. In Europe, everything so far achieved according to plan, slightly ahead of plan, as I said. MHRA approval still outstanding for the UK. And then also here as next steps, post-licensure label extension submissions. We have the Brazilian licensure process ongoing, and we are targeting additional markets with established travelers markets, but also additional LMIC territories, including on the basis of WHO pre-qualification. When we look at the ongoing clinical activities, which as I mentioned at the beginning, are supported by the new more than $40 million CEPI grant. We have the post-marketing effectiveness study, phase four, which are in reality two studies, one observational effectiveness study in participants greater than 12 years of age in Brazil, and a so-called pragmatic randomized controlled effectiveness and safety study in adults in an endemic country with roughly 20,000 people. The label extensions I mentioned already, we completed the phase three successfully for adolescents. and the phase 2 for children 1 to 11 years of age is already fully enrolled. The ongoing antibody persistence and long-term safety study in adults is a very important study because it will further substantiate our hypothesis that this vaccine after a single shot will protect at least for five years. And then we have another study that we have been working on in potentially immunocompromised adults. When we look at Lyme, as I said, we consider Lyme the single largest value driver in Valneva. It's the only Lyme disease program in advanced clinical development today. You know, you have heard it many, many times, but it's a multivalent recombinant protein-based vaccine covering the six most prevalent serotypes of Lyme borreliosis in the Northern Hemisphere. It's based on an established mode of action, outer surface protein A and anti-OSPA antibodies able to basically kill the spirocytes in the midgut of the tick. And the single largest achievement in the first half of this year has been the completion of the primary vaccination enrollment. Great achievement by the joint teams at Pfizer and Valneva. You remember that we have estimated the market to be above 1 billion in sales. And as you also know, Balneva will be eligible for upfront and milestone payments up to more than $400 million, of which we received thus far 165. There's a tiered royalty model in place subject to sales levels in between 14 and 22. There are a couple of key important milestones coming up. We completed our cost contribution to the Lyme program in the first half of this year, as I mentioned during my introduction. And we expect the two-year antibody persistence and booster results in the third quarter this year. This is just by way of reminder, this is immunogenicity data post second booster. So it will give us an indication about the necessity for annual boostering. And of course, with all of that, we are on track for the phase three readout at the end of 2025 with regulatory filings expected in 2026. Page number 15 shows again the The overall study design of the phase three efficacy study, which is a placebo-controlled randomized study, one-to-one randomized against placebo, two-to-one North America versus European sites. And the primary endpoint is the rate of confirmed Lyme disease cases after two consecutive tick seasons, meaning primary immunization plus first booster with a secondary endpoint, including the efficacy after the first Lyme season, meaning after the completion of the primary series. So overall, we are very excited about the progress around Lyme, and we are very grateful to our partner Pfizer that we will be able to manage the study according to our guidance and plan. When we look at Shigella, as I mentioned during my introduction, it is a wonderful opportunity that we have generated here through the strategic partnership with Limatech. The product candidate is called S4V, and it is really a unique opportunity to develop a first-in-class vaccine for a life-threatening disease. It is the most advanced tetravalent Shigella program in the world. It's based on a so-called bioconjugation technology and has the potential to cover up to 85% of the Shigella infections. The license that we have entered into as part of our strategic partnership with Lima Tech It's a global one, and the vaccine candidate is, as I said, a four-valent covering the most pathogenic Shigella bacteria serotypes. Limatech already reported positive phase 1, 2 clinical data, including robust immunogenicity and favorable safety and tolerability data. We estimate the market opportunity for a Shigella vaccine to exceed half a billion dollars annually. And it's a wonderful plug and play because we are seeing here a very similar commercial footprint, namely travelers and military from high income countries, but LMICs as well, and here specifically children living in endemic countries. It is the second leading cause of fatal diarrheal disease. up to estimated more than 150 million cases and more than 600,000 deaths are attributed annually to Shigella. And therefore, it has been identified as a priority vaccine by WHO. In terms of upcoming milestones, I mentioned at the very beginning of this call, we will soon start the phase two, the first phase two GIM study. GIM means Controlled Human Infection Model, so it's a human challenge study. in the US in adults and phase two pediatric study in LMICs. Both will be led and conducted by Lima Tech. Before then, Valneva will take over further activities. We will start already working on a couple of things immediately, like CMC and regulatory activities. And of course, given the exclusive global license nature, we will be responsible for worldwide commercialization if approved. The page number 18 shows the overall key terms of the strategic partnership with Limatech. And here you see basically how the partnership works. So Limatech receives an upfront payment, is eligible for future milestone and royalty payments. The upfront payment is 10 million euros, and all the further development regulatory and sales-based milestones will go up to 40 million. There's a low double-digit royalty on net sales in the travel segment and additional payments and single-digit royalties based on commercialization in NMICs. As I mentioned, it's a true partnership. So, we collaborate through the phase two. LIMATECH conducts the first phase two human challenge study, which is a challenge with Sonae serotype. the pediatric immunogenicity study. Then Valneva will take the lead and initiate a second phase two GIM study against the second serotype, namely FLEX2A. And of course, Lima Tech and Valneva have already started working on tech transfer and the IND will be transferred to Valneva once all phase two studies are fully enrolled. And then, you know, Valneva will lead and manage all future development activities. So overall, we are really excited about this fantastic opportunity. You may recall that augmenting our R&D pipeline has always been one of our strategic objectives. And therefore, we are thrilled that we found an opportunity for a potential first-in-class vaccine for a life-threatening disease. So fully in line with our mission and vision. So when we talk a little bit about Zika, you know that we started a phase one study with our so-called optimized second generation vaccine candidate, VLA-1601. It should in reality call VLA-1601.2 because it's a second generation, activated inactivated whole virus. We are leveraging here the platform that we originally developed for Xearo, then further optimized for our COVID vaccine VLA2001 and upscaled. So we use a like-for-like technological approach here. And as you know, the Zika virus is coming back. It's re-emerging. And it's another mosquito transmitted disease with devastating clinical effects. And there are no vaccines or specific treatments available. Also worth noting that Zika is PRV eligible and many different organizations are currently discussing potential funding mechanisms around Zika. In terms of upcoming milestones, Of course, we are currently executing the phase one study and subject to data. We will then consider the future development strategy in the first half of next year. With this remarkable progress on our R&D and strategic development front, we come to the financials and it's a pleasure to hand over to Peter.

Thank you, Thomas. And good morning and good afternoon to all of you. Product sales for the first half year reached 68.3 million euros and on a comparable basis grew 7% over prior year. Including last year's sales of the COVID-19 vaccine, sales declined by minus 2%. The impact of currency fluctuation is neglectable. Total Ixiaro sales reached 41.9 million euros and increased by 38% over prior year. The strong year-over-year growth was primarily driven by sales to US military that were low in the first half of 2023. Ixiaro sales into the travel market also delivered growth over the first half year, despite supply constraints experienced during the first quarter. Ixiaro supply constraints were fully resolved in the second quarter. Ducoral sales declined year over year by minus 13% and reached 14.9 million euros in the first half of 2024. The decrease is mainly related to reduced marketing investment, as our new manufacturing site in Sweden underwent regulatory evaluation and approval. In terms of our ongoing launch of our new chikungunya vaccine, ixchik, we report sales of 1 million euros by June 30th in the United States. As a reminder, the ACIP recommendation for ixchik was adopted by the CDC in March of this year. In line with our expectations, third-party products declined by minus 37% year-over-year to reach 10.5 million euros. as a result of supply constraints. Moving on to the income statement, total revenues reached 70.8 million euros versus 73.7 million euros in the first half year of 2023. The decrease of 4% is driven by, as already mentioned, last year's revenue related to COVID-19 vaccine and lower revenues recognized from R&D collaborations as well as our prior year revenues related to the divestiture of our clinical trials material manufacturing site in Sweden. Looking at expenses, we observed a significant decrease in cost of goods and services from 53.8 million euros in the first half of 2023 to 45.6 million euros in the current first half year. Ixiaro gross margin reached 57.5% of Ixiaro product sales compared to 40.2% in the first half of 2023. In the prior year, the XCRO gross margin was adversely impacted by batch write-offs. Ducoral generated a gross margin of 34.8%, while third-party products yielded a gross margin below 30%. The total gross margin excluding XCHIC grew to 47.7% from 40% in the first half year of 2023. However, The total gross margin is also adversely affected by XCHIC-related overhead costs, as well as idle costs related to our new manufacturing site. In the second half of the year, we expect further gross margin improvements as supply shortages have been resolved. Research and development expenses increased from €26 million in the first half of 2023 to €29.7 million in the first half of fiscal year 2023. That increase mainly related to tech transfer costs for the transfer of our Ixchiaro and Ixchic manufacturing operations to our new Almeda site in Scotland, as well as higher R&D spent for Ixchic as we continue to execute ongoing studies. Marketing and distribution expense increased by approximately 15% to reach 23.2 million euros. The increase is related to increased launch costs related to our Ixchic vaccine that also include higher people costs as we expanded our commercial team. G&A expense were reported at 22.8 million euros and remained stable year over year. The sale of the PRV generated net other income of 90.8 million euros, which contributed to an operating profit of 46.7 million euros versus an operating loss of negative 35 million euros in the prior year. Adjusted EBITDA improved from minus 28 million euros to positive EPTA of 56 million euros. Now moving to slide 25. As discussed during our full year 2023 earnings release, we expect revenues to double by the time Lyme is launched. The main driver of this anticipated sales growth is, of course, the addition of sales derived from our XTRIC vaccine, but also expected continuous growth of XCRO. Next slide, please. We confirm our guidance for fiscal year 2024 with product sales of 160 to 180 million euros, other income of 100 to 110 million euros, and R&D expense of 60 to 75 million euros. It is to be noted that the addition of the Shigella program does not change our R&D expense guidance for the year. As we completed our contribution to the budgeted Lime Phase III trial, we expect a significantly lower cash burn in the second part of the year. We also confirm our mid-term guidance, including double-digit CAGR growth of XCR over the next three years and XGIC sales exceeding 100 million euros in year three of launch. With that, I hand the call back to Thomas.