Thank you. Hello, and thank you for joining us to discuss Valneva's full year 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 12 months ended December 31, 2023, which were published earlier today available within the Financial Reports section on our Investor website. I'm joined by Valneva's CEO, Thomas Lingelbach; and our CFO, Peter Buhler, who will provide an overview and update on our business as well as our key financial results for 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 that during this presentation, we'll 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, March 20, 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, and welcome to today's earnings call. Yes, the year 2023 was not a year without challenges, but also a year with many achievements we are proud of. We made excellent progress across our R&D pipeline. And of course, 2023 was our chikungunya year. We got FDA approval for the world's only and first chikungunya vaccine and very recently, ACIP recommendation and respective adoptions. We enrolled the Phase III study with Pfizer on Lyme completely. And we are just about to reentering Phase I with the second-generation Zika vaccine. And I'm going to go into more details on all of these programs. We have seen significant growth of our commercial business. Our product has surpassed prepandemic sales by 12% and 2022 sales by 26%. Both IXIARO and DUKORAL, our proprietary brands grew more than 70%, respectively, versus 2022. And overall, products, they grew 63% versus 2022, excluding the COVID-19 sales and Peter will go into much more detail. We have solidly funded with a strong midterm financial outlook. We had more than €120 million cash at year-end. We augmented that with close to €100 million as proceeds from our PRV sales early this year. And very recently, we extended the repayment of our interest-only period of the existing loan facility, which, of course, results in a significantly lower cash burn for the company. The operational business is, therefore, considered sufficiently funded, excluding debt repayment, of course, at a certain point in time, until the Lyme commercial revenues enable a sustained profitability for Valneva. When we look at the business in more detail, I would like to start this time with our strategy. Where do we see this company going? And as we have said already more than 10 years ago when we created Valneva, our strategy…

Thank you, Thomas. Good morning or good afternoon to all of you. Now let's look at the financial review of our fiscal year 2023. Total product sales surpassed prepandemic levels by 12%, reaching €144.6 million towards the upper range of our sales guidance. This represents an increase of 26% versus prior year. 2023 product sales included €5.7 million in sales of our COVID-19 vaccine, VLA2001, which was discontinued in 2022. We do not expect further COVID sales from 2024 onwards. Product sales, excluding VLA2001 reached €138.9 million, an increase of 63%. This increase was driven primarily by substantial growth of our proprietary travel vaccines. Looking in more detail, IXIARO sales reached €73.5 million, an increase of 78% versus prior year primarily the result of the continued struggle market recovery as well as price increases. As at the end of September 2023, we signed a new 1-year contract with the U.S. Department of Defense worth a minimum of €32 million, of which a bit more than half is included in our 2023 sales. DUKORAL sales reached €29.8 million compared to €17.3 million in 2022 an increase of 72%. Similar to IXIARO, DUKORAL benefited from significant recovery in the private and travel market, particularly in Canada, where there is a strong overlap between travelers to regions of high ETEC travelers, the vaccines approved indication in this country. Third-party product sales increased by 34% to reach €35.7 million for the fiscal year 2023, which was mainly driven by sales under our distribution agreement with Bavarian Nordic. The very positive sales performance continues to be, as I already mentioned, related to the recovery of global travel markets, several of which have reached our even exceeded pre-COVID levels, and we expect this trend to continue. Moving on to Slide 17, looking at the P&L. We…

Thank you so much, Peter. Yes. So it is important that we address also many, many questions that we have received in the market about the more midterm prospects of our business and where we see this business going, which is also why I started the presentation by reminding everyone of the Valneva trajectory. When we look this more completely into a midterm outlook, Peter mentioned that the proprietary business, excluding IXCHIQ will already be cash flow positive this year, including IXCHIQ, we expect the commercial business to contribute cash and help financing our R&D from 2025 onwards. This is driven by continued travel sales growth for IXIARO and DUKORAL, and we see, especially for IXIARO, a double-digit year-on-year CAGR for at least next 3 years. We expect IXCHIQ sales to exceed €100 million in year 3 of launch, and this even assumes a competitive product entry. We will stay focused and strategic with regards to our investments in R&D and our objective is clearly to provide our shareholders and everyone who can benefit from novel innovative vaccines with a new program to enter Phase III once Lyme has completed its Phase III. We see substantial gross margin improvement as we are focusing on proprietary sales. The majority of our third-party product sales, especially the collaboration with BN...

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We can hear you. Go ahead.

We expect gross margin improvement significantly, as I said, as we are focusing on proprietary sales. And we are improving substantially our manufacturing efficiency by leveraging our new facilities and predominantly the facility in Scotland, Almeida. And as Peter mentioned, especially for chikungunya, but also for others, we expect sizable non-dilutive funding, helping us to finance CRE. When we look at the upcoming catalysts and news flow in the short term, on chikungunya, we expect to initiate a Phase III in immunocompromised individuals still in the first half of this year. We talked in length about the upcoming potential approval by EMA, Health Canada, Anvisa. We will file for potential label extension as we generate more data and we have to reminder, we generated already data for the 12 to 18 year olds in Brazil, and we will initiate our Phase IV clinical program. With regards to Lyme, as I mentioned earlier, on the VALOR side, we expect to complete the booster vaccination for Cohort 1 in the second quarter, then the initial 3-dose primary vaccination for the Cohort 2 as well in this -- in the first part of this year. And then, as Peter mentioned, we complete our financial contributions to Pfizer's Phase III trial costs in the first half of this year. And then later this year, the Phase II year antibody persistence and put the results data, which will help us getting a better understanding about the necessity for potential annual boosters for this vaccine once implemented. With regards to additional news flow, we do expect a new U.S. Department of Defense supply contracts in the second half of this year. And we will give more clarity on our R&D pipeline as we go along in 2024. With that, I would like to hand back to the operator to take your questions.

[Operator Instructions] And the first question comes from the line of Max Herrmann from Stifel.

Congratulations on the milestones achieved during 2023 as well as obviously the CHIK, I meant, its approval. Three questions, if I may. Firstly, just in terms of getting back to the normal travelers market. In terms of revenues, DUKORAL pretty much back to where it was pre COVID, but still significantly below on IXIARO. And I wondered how much further catch-up there is in volume terms for both products? Question one. Secondly is just on -- in your kind of guidance overall, you talked about bringing another Phase III asset into development in the sort of midterm obviously, I assume that's not the Zika program, particularly given Moderna's recent announcement that they were halting development of that without further external sources of funding post Phase II. And then just wanted to know, finally, just on IXCHIQ, when do you think you will have durability data of 5 years or more?

Okay. Yes. Max, very good question. So basically, you're absolutely right that we have not in all markets reach volume-wise, pre-COVID levels. In some markets, we are back to pre-COVID volume levels in other markets, not yet. However, we expect to be back to -- back or better in terms of volume this year compared to pre-COVID. And everything that we are seeing right now points in this direction. And this is specifically true for IXIARO, and IXIARO U.S. And I think that's a very important point. When it comes to Phase III, we have intentionally not specified at this point in time, which program we will bring into Phase III. We are looking at a number of internal opportunities, but also external opportunities, all just to avoid misunderstanding within our R&D budget. And so -- and this is why I said on the news flow, we will provide further clarity on the pipeline development in the latter part of this year. When it comes to the antibody persistence data, we have the antibody persistence study for chikungunya is ongoing. We reported the 2-year data last September -- last December, sorry. So obviously, this means that we're going to report a 3-year data this December, and the trial will continue up to 5 years. So which means every year, in December, we will report 1 year more in terms of persistence data. I hope this answers your questions Max.

And the next question comes from the line of Maury Raycroft from Jefferies.

Congrats on the progress. I was going to ask one on IXCHIQ for exceeding €100 million for IXCHIQ by year 3 post launch. Can you talk about the assumptions that goes into that? Can we assume that the €100 million is part of the €300 million to €400 million market opportunity for travelers as well as military. And should we extrapolate growth trajectory based on these numbers?

[Audio Gap] Travel vaccines historically have shown an S curve in the ramp-up, right? So there is a -- this means you cannot just automatically extrapolate that because we expect the year 3 to be the first year of the period where it really goes steep up. And what we have assumed here is indeed the, let's say, travel and military segment. We have excluded, for the time being, any potential stockpiling opportunity. We have excluded any potential and meaningful sales in LMICs, and we have used in terms of modeling the IATA data, the experience that we have from IXIARO with regards to adoption rates in travelers and the most recent communicated price point for IXCHIQ in the United States. And on which basis we are also extrapolating the other price points and market opportunities in the travel segment. I hope this answers your question.

Yes, definitely helpful. And Thomas, right at the beginning of your response, you broke out a little bit and it came back in when you mentioned S-curve for the military segment. Can you repeat?

Let me just do it one more time. So I just said that all travel vaccines show from an uptick perspective in S-curve, and historically, and this will certainly be also true for IXCHIQ. So we expect the year 3, which is why we have guided year 3 as the first year where we see this program going into the steeper curve or the steeper part of the S-curve. And the €100 million that we -- or the greater than €100 million include travel and military.

Got it. Okay. Makes sense. And for that €100 million -- exceeding €100 million. So that includes presumably a U.S. military contract in there. Is there anything more you can say about that and just the progress in those communications with the military and when that could be announced?

Yes. So this is, of course, a good question. So we are following approval and following recommendations. We have -- are now in active dialogue with the U.S. military, but also with other public institutions and governments with regards to potential government contracts, which include potentially even stockpiles. So those discussions are ongoing. But please keep in mind that we got the ACIP recommendation very, very recently. And also for IXIARO, it took a certain period after the ACIP recommendation before we got into the first contract. And this is what we are currently assuming as well.

Got it. That's helpful. And maybe one more question, just following the ACIP recommendation, maybe if you can talk about what your sales force is emphasizing for the -- as it relates to the IXCHIQ data with payers and providers and -- is it the strong data in subject 65 and up, I guess just what are some of the key points that you're emphasizing? And then how are you addressing the onset of immunogenicity?

So basically, the start from the very end of your series of different questions. So the product got approved by way of accelerated approval pathway like many other vaccines did, by the way. So this means that the -- the immunogenicity level of seroprotective thresholds are predictive and considered predictive for efficacy. And we are, of course, emphasizing our very strong data here that we are close to 100% and that this includes elderly, where we see also a major differentiation against potential other vaccines that may enter. And the second point is, of course, the unique setting that you have with a single chart a very, very long protection, and which, of course, means that this is an important feature when people think about chikungunya vaccination the travelers that go there are very, very often travelers who go multiple times. And there's a lot of IATA data that supports that. And therefore, we emphasize this. And of course, we focus specifically the travelers 65 and above, but we promote according to what we are allowed to promote, meaning the label of the product as approved.

And the next question comes from the line of Evan Wang from Guggenheim Securities.

I just had 2. First, on the midterm outlook and some of the updated kicking on your market opportunity assumptions. Seems like the total market is consistent with what you guys have said prior, while the share of travelers has increased at travelers. So can you help us walk us through some of the updated assumptions here. Is that really driven by the ACIP recommendation, higher travel rates or initial reception [indiscernible] price? And then conversely, in terms of the reduced stockpiling or endemic opportunity? And then secondly, as we're looking at the first year launch, now it will be a ramp in that you described. If you could help us understand any stockpiling or seasonality since we're still early on.

Yes. So a couple of different questions. So first of all, market opportunity, as I said, we have taken a couple of key data points in the consideration. You have all seen the CDC maps that defined the areas where chikungunya and chikungunya transmission represents a major risk, it is the basis. Then we use the IATA data with travelers going to this area, meaning the total population that we are targeting and focusing on we are also using, of course, market data from the acceptance or expected acceptance for the vaccine preliminary data show that especially the longevity of immune response and the high levels of protection are especially appreciated by potential customers and prescribers. And then, of course, we take adoption rates and those adoption rates are really educated also based on our own experience from the travel vaccine sector. And all that together has led us to further fine-tuning the opportunity for the vaccine in the travel segment, as I mentioned earlier, and this is including, as I mentioned, the price point or the different price points in the different countries. Now what is important is we have not included any potential stockpiling opportunity at this point in time because we don't think that it's prudent to do that in the absence of really knowing whether there is a commercial opportunity around the stock product business. We have not necessarily decreased the LMIC opportunity. We -- but we have not yet a clear feel for the LMIC opportunity, and we will further develop that. So that's why we have focused our guidance right now on the travel segment.

And the next question comes from the line of Ed White from H.C. Wainwright.

So first, I just wanted to ask you about the third-party sales and moving to a proprietary platform. You had stated that this is going to improve gross margins. But will there be any impact on your SG&A efforts?

Yes, Ed. This is Peter. So the third-party business was really a way for us to bridge revenues during the COVID years. We have not really added -- I mean, we added a couple of people here and there, but really not significant numbers. So the focus on our proprietary products will not have a dramatic impact on our SG&A cost. It's really gross margin improvement that will be driven by that because our proprietary products have already much better gross margin.

Okay. And my other question was just regarding potential strategic transactions. You've mentioned it before. And I'm just wondering what is your strategy there? Maybe give us your thoughts on what makes for a good acquisition or what makes for a good target?

Yes. So basically, we will target a next Phase III program, as I mentioned, at the time when the Pfizer Lyme Phase III trial will be completed. And we have a couple of interesting internal programs we are currently working on that could be advanced and accelerated to match this time line and we've put it in direct competition to a couple of external opportunities that we are evaluating. When it comes to the criteria that we're going to use, we have, in the past, always focused our R&D pipeline development on trying to build vaccines and develop vaccine solutions in areas of unmet medical needs, and where we can have a differentiated position, first, best, only. And basically, this is what we're going to do going forward. And as mentioned earlier as part of the news flow update, we hope to present a more detailed pipeline strategy in the latter part of this year.

And the next question comes from the line of Nick Hallatt from Goldman Sachs.

Just coming back to the chikungunya program, if I could. On the Phase IV trial costs, how should we be thinking about the phasing of these costs? And how significant are the non-dilutive contributions you're expecting towards those costs? And then second, if I may, on financing. If we assume that there's no impact from potential business development deals in the near term. Should we assume that you won't be required to raise equity into at least post the potential launch in Lyme?

So let me start with the first part, and then I'll let Peter develop a little bit this cash outlook. So basically, when we look at the pipeline development, you are absolutely right. So we are not expecting pipeline or any potential pipeline injection to negatively influence our cash runway that we have projected before. When it comes to the Phase IV activities for chikungunya, as part of our approval, and we have disclosed this earlier, those Phase IV programs go over a long period of time. We have roughly 4 to 5 years to complete the 2 Phase IV studies. We have included this in our company deck, and it's still included, I think, in the company deck with regards to the time line. So there is not necessarily an equal spread over the -- when it comes to spending, but it's many, many years of Phase IV spending. We have said earlier that we are expecting approximately 30% of our contributions to those costs. And that's part of our planning going forward. Peter, on the cash runway discussion?

Yes. I think as Thomas alluded to, so we -- like we said were sufficiently financed for our operating business. I think that repayment is a different story. And for this, I'm sure we will find a solution. And so that's sufficiently financed for our operating business would include, as Thomas said, potential in injection, so we could still cover that. And so right now, we do not have any plans to raise further equity.

And the next question comes from the line of Samir Devani from Rx Securities.

I think I've got 2 or 3, just kick off with IXIARO. You mentioned getting back to pre-COVID levels. I think pre-COVID, IXIARO had a margin of nearly 70%. It seems quite a bit of a jump from the 52-odd that we've seen this year or 2023. So perhaps maybe a bit of commentary on how you expect the margin to evolve in line of that growth? And then just on IXCHIQ, again, on margins, and I guess, price as well, we can see it's being listed at $350. I'm just trying to work out what that would mean in terms of a net price to you guys, if you can help out either those, that would be great.

Do you want to take?

Yes, I can start with IXIARO. And hey, Samir, by the way. So yes, you're right. So pre-COVID, I think the margins we had published were in the 60s. And yes, I think close to 70%. And we do not see any reason why we would not get back towards this range again. And then I think on IXCHIQ, it's public. So the wholesaler acquisition price is $275. So that's basically what we get in the United States.

And the next question comes from the line of Suzanne van Voorthuizen from Van Lanschot Kempen.

This is Klara on behalf of Suzanne van. So I was wondering what was the trigger to put out a midterm outlook? And if you could confirm whether the midterm outlook is also including or excluding any potential milestones from Pfizer?

Yes. So basically, we have received a lot of feedback with regards to how we see the commercial business going especially for a new indication and a new product for which no benchmarks and no real data exist. And therefore, we thought it is prudent to provide further clarity, point number one, on the let's say, the future of the commercial business and how we see the ramp-up in the launch years. The second part is, of course, we have received many questions around cash and cash necessities, given that we have clearly articulated that we would put on pipeline development in direct competition to potential external pipeline injection. We wanted to make sure that people do not interpret this as external means financing needs or an imminent financing need. When it comes to the Lyme payments, the Lyme payments come at the point where we actually commercialize the vaccine or where Pfizer is going to commercialize the vaccine. So -- and they will be part of when -- of the influx that we expect to -- the business to turn into sustained profitability.

[Operator Instructions] As there are no further questions, I would now like to hand back to the speakers for closing remarks.

Thank you so much for your time. Thank you for your support and the excellent questions today, and wish you a good remainder of the day. All the best.