Thank you for joining us to discuss Valneva’s Financial Results for the First Nine Months of 2024 and a Corporate Update. It's my pleasure to welcome you today. In addition to our press release and analyst presentation, you can find our consolidated financial results for the nine months ended September 30th, 2024, which were published earlier today, available within the financial reports section of 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 financial results. 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, November 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, Josh. It's a pleasure to welcome you all to today's call. What are the highlights for the first nine months, 2024? Overall, the company's performance is in line with our guidance. When we look at product sales, which landed at a bit more than €110 million at the end of the nine-month period, and given the slow uptake of IXCHIQ in the US market, we have narrowed our guidance to €160 million to €170 million, and Peter will provide more details on that. With a cash position of more than €150 million, we consider the company well-financed. And when we look at the R&D, we had a very strong R&D execution year-to-date. Of course, most importantly, with Lyme going 100% according to plan, Chik adolescents data that came in as expected and on time, pediatric and persistence data for Chik as well, and we presented our long-term R&D strategy at the Investor Day in New York recently. We continue to perform strongly on our scientific positioning, but also on the partnering front. Many very interesting publications in renowned journals like the Lancet, our partnership with CEPI supporting Chik development, and more recently, the partnership with LimmaTech on a very exciting Shigella program. Turning to Page 5 of the presentation and looking a little bit into the midterm of the company, it is fair to say, and Peter noted this in his quote of today's press release, that we are approaching next year really a turning point in Valneva's evolution. We are targeting sustained profitability from 2027 onwards, driven by success of the Lyme disease vaccine program, if successful and approved, of course. As mentioned, we are on track with regards to the Phase III study and regulatory filings in 2026, with first approvals in initial Phase in 2027,…

Thank you, Thomas and good morning and good afternoon, to all of you. So, moving to the financials of the first nine months of 2024. Product sales reached €112.5 million, and on a comparable basis grew 12% over the prior year. Including last year's sales of the COVID-19 vaccine, sales increased by 6%. The impact of currency fluctuation on a year-on-year basis is negligible. Total IXIARO sales reached €66 million and increased 31% over the prior year. The strong year-over-year growth was driven by a double-digit year-over-year growth rate in both the travel segment and US military. DUKORAL sales increased year-over-year by 6% and reached €22.3 million in the first nine months of 2024. In the third quarter, DUKORAL sales grew by 85%. As discussed in our half-year results release, we had limited DUKORAL related marketing investment at the beginning of the year as we anticipated supply constraints in our manufacturing facility in Sweden due to regulatory inspections. In terms of our ongoing launch of our new chikungunya vaccine, IXCHIQ, we report sales of €1.8 million by September 30th in the United States. The ACIP recommendation for IXCHIQ was adopted by the CDC in March this year, and as Thomas mentioned, we are still awaiting the MMWR publication. In line with our expectations, third-party products declined by minus 23% year-over-year to reach €29.1 million, primarily as a result of supply constraints. Moving on to the income statement, total revenues reached €116.6 million versus €111.8 million in the first nine months of 2023. Looking at expense, we observe a decrease in cost of goods and services from €74.8 million in the first nine months of 2023 to €71.3 million in the current year. IXIARO gross margin reached 58.8% of IXIARO product sales compared to 47.2% one year ago. DUKORAL generated a…

Thank you so much, Peter. Yeah, wrapping up with the summary of our key upcoming catalysts and news flow. On chikungunya, we have the upcoming potential approvals by Anvisa for Brazil and MHRA for the UK. As mentioned, the 36-month antibody persistence data for IXCHIQ and the initiation of the Phase IV clinical program, for which we have now poor alignment on its final detailed design and execution considerations. For the Lyme disease vaccine, the final booster dosing, as mentioned earlier, mid-2025, latest to be completed in line with the Lyme seasonality. Then, of course, we have the continuous monitoring for Lyme disease cases, and we will conclude on all of that towards the end of 2025, which then will enable submission to the regulatory agencies in 2026. Of course, subject to positive Phase III data, the initiation of the two Phase II studies for Shigella vaccine, still this side of Christmas, and the report of the Phase I data for our second generation Zika vaccine in the first half of next year. And one thing that we didn't talk about, but I would like to reemphasize here is we continue to see a very good uptake of IXIARO in the DOD. We expect the RFP for the next contract to be issued imminently. And with that, of course, a new contract with the DOD in the next six months. And with that, let me draw your attention on also the near and midterm value drivers. I think the most important one is certainly VLA15, our Lyme disease. It's the major catalyst for Valneva. It is probably the most important or likely the most important upside that we see for Valneva in the short to midterm. And on the back of Lyme, we expect this company to really transition into sustained profitability initially coming from the early milestones that we expect in 2027, and then followed by the royalties. And of course, with that, the entire value proposition of Valneva is expected to change in the near term. The commercial revenue growth with a strong focus not only on our existing brands, but also on IXCHIQ, where I would like to reiterate that despite of a slow uptake in the US this year, we have strong prospects for this vaccine across all the different markets, mainly North America, Europe, and LMIC countries. And we are absolutely excited and thrilled about the potential of our future pipeline programs, including Shigella but also Zika and the programs that we have currently in preclinical development that are expected to enter the clinic upon successful Lyme execution and approval in 2027. And with that, I would like to conclude our report and hand back to the operator to take your questions.

Thank you. [Operator Instructions] First question comes from Maury Raycroft at Jefferies. Your line is open. Please go ahead.

Hi, good morning. Congrats on the pilots and thanks for taking my questions. Maybe first one, I'll just start with IXIARO. You mentioned expectations for new orders in 2025 and you're seeing good uptake with DOD. Is there anything more you can say about that, including where the orders could be coming from and what the amounts could look like for next year?

So basically, on IXIARO, Maury, you know that when we exclude the one year where the military built additional stocks, which was, I think, 2019, all the other years with the DOD have been pretty stable. And when you calculate, in some years we gave details of the military and other years we did not. But you know that overall, you can calculate the demand of give or take 200,000 doses. And then it depends a little bit on the supply demand pattern because sometimes they keep higher stocks and lower stocks. And I think at this point in time, noting, of course, that a new government may have different views in terms of military personnel stationed in Southeast Asia. But at this point in time, and given that it is a mandatory vaccine for those parts of the troop, we expect this overall demand to be pretty stable at that level. And we expect that the RFP that will be for the next kind of request will also point in this direction. So that's our expectation right now on IXIARO and the DOD. And of course, we are in very active dialogue with the DOD on chikungunya as well. So we've seen that they issued a preliminary recommendation for IXCHIQ. But we are not yet at the point where they have decided whom to vaccinate, when to vaccinate. And that's something that we certainly expect to come next year.

Got it. That's helpful. And maybe a question related to IXCHIQ. I'm just wondering if you have a better sense of when the MMWR publication update could occur. And if you can remind how the publication will be leveraged with payers and stakeholders and how that could translate for the opportunity?

Yeah. So we expect the MMWR release is something where I think timing-wise, we don't feel comfortable making any promises. We had hoped to see this already months ago. You know, there is, when you look historically for other vaccines, how long it took, sometimes it was very fast, sometimes it took a long time. We certainly expect the MMWR release to be the major driver to allow us accessing the retail channel in the US. And we expect, and this is one of the big learnings probably for us. We certainly see that retail becomes more and more important in the US and especially given the very high cost that someone would need to pay in two other channels. And therefore, you know, this is one of the identified key drivers amongst, of course, a few others that we have identified.

Got it. And is that something you think could happen in 2025, the publication coming out?

Yeah, yeah. So I think, I mean, we said earlier in one of the prior calls, and if I recall correctly, even in New York, we said that we expect it by year end. But as I said, it's a little bit out of our control. There is nothing we can do about it. But it's certainly one of the pieces, let's say one of the missing pieces that we are still looking for.

Understood. Okay. Thanks for taking my questions, off back in the queue.

Please stand by for your next question. The next question comes from Suzanne Van Voorthuizen at Van Lanschot Kempen. Your line is open. Please go ahead.

Hello, this is Chiara Montigoni on behalf of Susan. Thanks a lot for taking my question and congratulations for the update. I had one question on IXCHIQ. I was wondering if you could give me more color on why the sales have not grown in Q3 compared to Q2. And what could explain that after reporting positive trends on other commercial metrics?

Yeah, it's a good question. So basically, partially it has to do with what we have in the channel right now. And so what is actually the product that we have really shipped and sold to distributors and this is one component to it. The second part is that we are really not seeing at this moment in time, let's say, the uptake that we -- or let's say that we didn't see the uptake at the end of the third quarter. I think we are now at the end of November. The situation has certainly improved. And so we are confident that we are now going into a better growth trajectory. But there are many elements that we need to monitor very, very carefully. And as I said a couple of times, it's a bit too early at this point in time to really draw conclusions on all of that. So we have given ourselves until the mid of the year in order to ensure that we get to the right level of understanding.

Okay, thank you so much. So basically, you will give guidance, let's say, in six months or more.

Yeah. I think, yeah. So basically, in other words, we have said, we have given a midterm outlook of anticipated €100 million product sales for IXCHIQ three years after launch. We have the pre-launch period right now, or the initial launch period ongoing in Canada. We expect to launch in France. And we will gain very good understanding about the LMIC demand in the first quarter next year. So this will help us to better understand the, let's say, the midterm prospect of this vaccine and whether our hypothesis on the S-curve. And you may recall that we discussed the S-curve and that all travel vaccine states uptakes in the history have followed a certain S-curve. But we have, of course, taken certain base assumptions on this S-curve progression, whether they hold still true or whether we need to update our midterm guidance. At the same time, it is very clear that we continue to see no reason to update or change the long-term prospect of the product.

Okay, got it. Thank you so much.

You're more than welcome.

Please stand by for your next question. The next question comes from Ed White, HC Wainwright. Your line is open. Please go ahead.

Hi, thanks for taking my question. I didn't hear any update on VLA2112 for Epstein-Barr Virus. I was just wondering if you can give us an update of where you are in development there and your thoughts moving forward.

Yeah, so good question. I mean, we provided an update on our EBV activities at the Investor Day in New York. It's our leading program in preclinical today. We are currently evaluating in vivo, in vitro different antigen composition. And we are expecting to conclude on the, say, the lead vaccine design next year based on all those experiments with the objective to really build what we call a differentiated EBV vaccine. We hope to learn also from others because there are a couple of data readouts expected from other companies working on EBV with either a more traditional gp350 approach, but also an approach that includes another antigen. And so all of that is working according to plan and going according to plan with our expected clinical entry as we suggested, or as we presented in 2027. Of course, there's always a point for us to accelerate clinical entry. So we would like to be ready for clinical entry probably towards the latter part of 2026, mid-to-end 2026, and then decide, you know, subject to capital capacity at the time when actually to start the clinical entry.

Okay, thank you. And perhaps a question for Peter. You had mentioned that R&D expenses were up due to the transfer costs to Scotland. I'm just wondering if these transfer costs will continue into the fourth quarter and into 2025, or if they're behind us now?

Yeah, this will still continue into 2025, and then basically end early 2026. So we will first transfer the IXIARO vaccine over to Almeda, and then followed by IXCHIQ.

Okay, thanks for taking my question.

Please stand by for the next question. The next question comes from Rajan Sharma at Goldman Sachs. Your line is open. Please go ahead.

Hi, thanks for taking my question. I've got a couple of one on margins and one on IXCHIQ. Just on IXCHIQ, I know you've kind of discussed it a little bit on the call, but could you just kind of help us understand what's changed from the Capital Markets Day in October when you sort of reiterated that midterm guidance? Has there anything kind of materially changed since then, or is it just kind of your latest view on trends, particularly in the US? And then maybe one for Peter on gross margins. Could you just discuss those idle costs that you highlighted and how that evolves through this year and into next year, and to what extent that kind of continues to be a factor on margins? And then I think you said around 59% gross margin on IXIARO. Do you think that remains stable from here? Thank you.

So let me start with the first question on the IXCHIQ prospect. I would say at this point in time, we are, as I reported, or as Dipal also presented at the Investor Day, we are monitoring month to month certain performance indicators that could be predictive for uptake. And this includes order, this includes reorder. But we were expecting, I would say, a deeper uptake towards the latter part of the year as compared to what we are seeing right now. And that's probably, and this is indicative, this is not definitive. And therefore, we have kind of said at this point in time, the uptake is slower than anticipated. And that's why we have to continue monitoring the situation throughout the first half of next year. And then, only then, we will have an informed basis and can take an informed decision as to whether our midterm expectation from this product is still right at about €100 million or not. And as I mentioned during the call earlier, we have the Canada launch that very, very recently started. We have Europe getting on stream with France as the identified and prioritized country. And we should not underestimate the significant demand that we are expecting from LMIC countries, for which we have at this point in time, some visibility, but still rather limited visibility. And all of that is expected to help us taking an informed decision on midterm guidance for the product around mid next year.

And so, to your question on gross margin, Rajan, so first on the IXIARO gross margin. So, when you look at our half-year result and you look at our Q3 result now, our year-over-year, our full-year gross margin for IXIARO improved by more than one percentage point, which shows you the direction this goes into. So, we gradually improved the margin every quarter, and we expect this trend to continue. As you know, we experienced some issues in manufacturing, and we lost a batch in Q1. But we will and so, this is now behind us. And what we also see is actually yield is increasing compared to what we saw in prior years. When we go to idle cost, we have our new beautiful manufacturing site in Scotland, where as we just said before, we're gradually transferring over now to manufacturing, first of IXIARO and then followed by IXCHIQ. And so, we do see idle costs going down over time, of course, as we transfer over to the new site.

Yeah. And just maybe to add on and complement what Peter just said, we are -- and this goes back to a question that Ed raised earlier, so we expect all those transfer activities and transition activities to continue well over the course of 2025. And then, when we come into 2026, we will have a situation where everything will be in our brand-new large-scale manufacturing facility. And basically, the old facility will not be needed anymore at that point in time. And that's a unique opportunity for us, because then we are really set also from a manufacturing standpoint for the long-term future and in a setting that allows even the cross-margin to further improve.

Okay. Thank you. And maybe, Peter, if I could just follow up on the one point on IXIARO. So, it sounds like you expect kind of continued gross margin increase from here. Is that fair? And in that case, is it likely to be linear?

Well, it will increase. Whether it will be totally linear, I can't comment, of course. But like we said in the past, we expect the IXIARO margin to continue to improve and over time to get back to where we were pre-COVID.

All right. Thank you very much.

Please stand by for your next question. The next question comes from Samir Devani at Rx Securities. Your line is open. Please go ahead.

Hi, guys. Thanks for taking my questions. I think I've just got a couple on the numbers. I think you mentioned that you're hoping that the commercial business will be cash generative next year. And I guess I'm trying to understand how much of your G&A spend is attributable to the commercial business. Maybe if you can give us a bit of on that. And then the second question is just on you've outlined the plan for the Shigella development and Phase III starting in 2027. I was just wondering if you could let us know how much is the cost of that Phase III development program? Thanks very much.

So, let me take the question on commercial business cash generative and then the G&A cost. So, we try to keep it relatively simple. And the way we look at our G&A cost is we allocate about 40% on to commercial. And that's how we determine the profitability then. And then the second question, Thomas?

You asked a question about, if I understood you correctly, you are talking about the entire Phase III program for Shigella, correct? So both or all the Phase III programs and trials together, is this what you had in mind?

That's right, Tom. I guess I'm asking in the context of you've indicated sustainable profitability from 2027. So, in light of that, I guess.

Yeah, absolutely, absolutely. So, now if we look at the -- so, what is our current working hypothesis? Our current working hypothesis is that we will have the two Phase III CHIM study, Phase III immunogenicity and safety study. And we will have a Phase III field efficacy study in infants. So, whether they will be initiated all three in parallel, whether there will be a sequence, whether there will be a staggered approach, it all will depend on the, I would say, the situation coming out of the Phase II CHIM studies. The further assumption that we are currently taking is that the Phase III study in the field efficacy study in infants will be fully funded by a public institution. And so that we will, as Valneva, pay for the respective Phase III studies. We have at this point in time a rough, rough ballpark estimate. But since we have not agreed the detailed trial design with the authorities, I do not feel comfortable giving a number at this point in time. What I can assure you is we will manage and stagger all of those activities in a way that we are fully committing and reconfirming that in the success state of Lyme, this company will be sustainably profitable from 2027 onwards.

Okay. That's great. Thanks very much.

There are no further questions, so I'll hand back for closing remarks.

Thank you so much for your great questions, as usual. Thank you for your time. Thank you for following us. And we wish you all a wonderful remainder of the day. Bye.