Q3 2022 Valneva SE Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Okay.
Good day, and thank you for standing by.
Although neither.
Nine month 2022 results and provides corporate update call at this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one one on your telephone please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your speaker today Tom.
Single box CEO . Please go ahead.
Thank you very good day everyone.
Sure.
To our nine months results.
Paul.
Yes, the nine months.
Have again been marked.
With quiet.
The potential number of key achievement.
We stand today at the nine months revenue level of about 150 million at a level of three five times.
Compared to 2021.
We have a very strong cash position with more than $260 million at the end of September which excludes the proceeds from the recent.
Offering.
Our chikungunya vaccine candidate progressed very nicely towards <unk>.
Life insurer.
The rolling submission for BLA with U S FDA.
Ongoing.
And expected to complete by the end of 2022.
Our Lyme disease candidates.
Again, great progress with the phase III enrollment going to plan.
And expected to complete.
In the first half of next year.
As we are moving our lead David.
Clinical asset.
We are of course working on back filling our pipeline.
We are progressing.
Our preclinical asset.
And we are trying to explore all options.
To inject other clinical stage assets into our pipeline.
We have communicated in the past about our reshaped strategy.
Of course reshape means for us are refocused on our key asset winding down Colgate.
Shifting focus away from Covid.
With a strong emphasis on our core assets slide shake the commercial product, but also rebuilding the pipeline and it comes.
With also a re sizing of the organization.
This is a process that we have been planning for quite a while we have been going through the necessary processes with.
What account representatives.
As you have seen we are targeting a 20% to 25% reduction, which will in turn without and around $12 million.
Operating cost savings on an annualized basis and Peter will develop.
Things more carefully and more in detail.
During the latter part of the presentation.
If we look at the pipeline.
Which is shown on page six of the presentation.
By way of reminder, chicken.
Yes.
Our.
Program right now on its way towards a first line.
Sure.
DLA.
Michelle is expected to be completed before the end of the year.
Third company that's well.
Receive BLA approval might be eligible for a priority review voucher, which in turn we.
<unk> expect to monetize.
Line phase III enrollment well underway.
With the next milestone expected earlier next year.
<unk> partnered with Pfizer and again, we kind of come back to those points.
Points in detail.
You see here on the slide two assets.
Mark.
Light low.
Many people ask us about where we stand on those.
Dave our candidates, we progress all the way to the end of phase two.
Put this asset on hold.
Well.
Sanofi is data on the desk came out and now we have.
Following positive data on Cts.
Have decided to explore.
Partnering for its asset meaning out licensing for this asset.
On CCAR.
We conducted.
Phase one study successfully.
Now.
<unk>.
<unk> got under four brands from WH OLED target product profile for <unk>.
Prioritizes inactivated vaccine.
Currently considering be activating that program.
Then we have here as an example put forward two of our preclinical assets, which at this point in time are being prioritized lever.
One is <unk> clearly in.
An interesting candidate.
Pre fusion stock unit base.
That's how we'll approach its preclinical proof of concept.
By the end of this year.
We also have an interesting candidates in a combination with RSV.
And our <unk> candidate.
Earlier in the preclinical pipeline, but clearly a very interesting indication that we have prioritized at this point in time and then at the bottom of the slide you see our three commercial assets.
<unk>, our Japanese encephalitis vaccine.
To quote our color vaccine.
Of course, our our corporate fax.
Vaccine BLA 2001.
Talking a little bit about <unk>.
You are all well aware of the program.
Only one in clinical development against Lyme disease today.
The phase III followed.
Three.
Successful phase two tablets, including.
In pediatrics.
The program is exclusively at worldwide partner with Pfizer.
Based on.
Our recombinant tap you on that approach with.
With thick serotypes.
In order to ensure that the product can be used for people living or going to both sides of the Atlantic. It follows a well proven motive action that was validated through the people control feed efficacy study back in the nineties and the program is under Patrick designation.
Phase III that is currently ongoing again illustrated on page eight of the presentation.
Right now we are conducting a randomized placebo controlled phase III study caused by law.
Around 6000 participants.
Every one of our five years of age currently being enrolled in the study.
Of course, we are running this study in high risk areas.
Both in the U S as well as in Europe Randomization in U S. Europe .
Two to one.
Zero versus placebo one to one.
And.
Basically the primary endpoint is the rate of confirmed Lyme disease cases after the second season.
And the secondary endpoints include the rate of confirmed lung disease cases. After the first season. So we are testing in one study.
Already.
Booster that is expected to be needed after the <unk>.
First priority is serious.
And then of course subject to pending successful completion of the phase III study.
Pfizer could potentially submit the biologics license application to the FDA and MAA application to the European agencies in 2025.
When we look at check.
Our program is.
It's still the most sticky Admiral chikungunya vaccine program in the World.
We.
Well.
Our rolling submission process.
Following.
Successful clinical pivotal clinical studies that met all endpoints.
The program.
FDA breakthrough designation fast track <unk> Prime.
And I mentioned already the potential and the <unk> for.
For the priority review voucher.
By way of reminder, it's the single shot <unk>.
Vaccine. So we expect that after a single truck.
It would be a very long protection. We are currently studying it and have different antibody persistence studies for up to five years.
Of duration.
We have also a partnership on this program.
So TEP with Instituto <unk> Tom.
We are currently conducting an adolescent phase III.
The data from those studies I expected.
Tweaks tent.
Labor.
Post licensure and.
To add to further regulatory submission.
Both adolescents and adults.
In other territories outside of the United States.
We mentioned before that.
Our intention to commercialize this product ourselves because there is an excellent fit.
And the significant synergy within our commercial and industrial footprint.
And.
When talking about market size and of course as we are going.
Closer to.
Launch.
Of course.
Very important question.
We have reiterated at this point in time that we estimate.
The market to exceed $500 million annually by.
<unk> tool, which is the point, where we expect decent penetration of this vaccine.
The clinical data highlights.
Again summarized in this presentation.
The key ones are really that we see.
So very high.
Zero response rates.
The basis for licensure, so called accelerated approval pathways. So there is an immunological.
Surrogate to determine effectiveness of the vaccine.
So this they were response rates.
Shouldnt be at 98, 9% after a single vaccination.
The immunogenicity profile maintained over time.
Even if they have a D C.
96, 3%.
Interesting.
Very good court order at similar.
Similar levels of.
Their response rates neutralizing antibody titer.
CRE hurdle and then Seroconversion of course extremely high at 100% possible.
From a safety perspective overall wildcat.
All right.
And the profile in terms of safety and Tolerability.
You would expect for this class of vaccines.
Okay.
The what it is also worth noting is.
We recently.
Ed It's a few data points today.
<unk> five <unk> hundred one.
And this had to do with additional data in elderly 65 years plus.
Where we where we showed.
In the meantime, also through an additional cohort.
In addition, a readout.
The thorough response rates.
Similar high levels.
When we then come to the program progression.
Towards FDA filing.
We presented the program at the Cdc's October ACR meeting.
The rolling submission got initiated as I mentioned earlier.
And you see here the next steps with the breakthrough therapy designation.
Alrighty with you the completion of the BLA submission by the end of 2022.
And of course, the eligibility of the PRP.
Presented an overview of BLA 15, five three at the Asa meeting.
No chip vaccine has been previously licensed thereof, therefore, no existing AC a recommendation the thing at this point in time.
The chikungunya working group provided a preliminary review and timetables plus assets recommendation decision.
And to head off the anticipated February 2020 for Afib vote.
Working plan the working plan to present further on <unk> travel the epidemiology and disease burden.
A more comprehensive review of Immunogenicity and safety data as well as the so called Great assessment.
And longer term additional data in younger age groups.
Yes.
We then look at the.
Outlook.
Has still to come or what will come on.
Our program BLA 15, five three.
The ongoing clinical trials to support regulatory submissions of costs, namely the antibody persistence study.
And should that this is a.
Study that.
A follow up from the previous.
Studies that have already been initiated and.
<unk>.
Expect to follow.
Respective volunteers for at least five years.
The 12 month data are expected later this year.
The adolescence clinical study I mentioned already 750 volunteers, aged 12 to 17 years of age 12 months follow up.
And data expected.
In the first half next year and then we made.
Additional studies to support future commercialization of the of the product, including Quebec. The nation special populations and then of course, the phase four observation of effectiveness study.
When we look at our commercial product portfolio.
You see of course year debt.
We have strong faith.
Of our commercial products in the first nine months.
The product sales outside of Covid crew by.
11, 2% versus prior period.
We see a significant recovery in the travel market.
With Japanese encephalitis in the travel segment.
Increased significantly we.
We see product sales of Cola vaccine increased.
It's similar.
Sure.
And the third party product make a significant contribution.
To our business they increased to $18 4 million euros from 11 two.
The comparable period in 2021.
This is of course related to one of our key distribution agreements with the very Nordic.
Of course, we also saw Covid.
COVID-19 vaccines as part of our.
EC.
We generated 23 $9 billion in sales.
All the deliveries to EU member states have been.
There are still some supplies to remain outstanding.
But overall this is where we stand on Covid.
You know that that we are still planning.
To seek potential opportunities outside of Europe .
And the onset of the current license area.
Talking about Covid.
The only.
Inactivate the tall bar with COVID-19 vaccine approved in Europe.
First one to get an ordinary marketing authorization in Europe for this vaccine that is based on the more traditional conventional technology.
Coupled with a modern adjuvant CPG <unk> it gets the bias toward.
Th one.
We are still expecting a few more data points on Covid, who made help us too.
Sell the remaining inventory that we have.
Specifically in international markets.
Got already.
Positive hydro logos booster data following.
Primary immunization with our succinic acid vaccine, we will expect some.
Data also from.
From people who are either private.
With mrna or a natural infection.
That is expected to conclude.
By the end of this year and as we.
Moving along with the program we are also extending the.
The shelf life stability data become available.
And right now we are at.
At 18 months.
15 months submitting for 18 months.
Of course, we'll follow this through because inactivated vaccines.
Typically at least 24 months if not longer.
When we look at our Resized thing.
The frac to reflect the evolution of the COVID-19 program.
We did this at many different locations in light of our reduced order value from.
From the EU member states with suspended our internal manufacturing as well as the external manufacturing.
Entered into a settlement agreement with our external partner IDT for example.
We retained our inventory fortune of supplies.
We are trying to deploy our inventory we mentioned previously in between $8 million to $10 million.
Most of it.
And yes of course, we ramped up the organization quite substantially.
In response to the anticipated COVID-19.
<unk> specifically.
The significant cobot manufacturing quantities.
So we are now reducing our workforce globally by approximately 20% to 25%, which still means that we will land.
The level of 25% above.
Headcount wise.
Patrick Cole.
Right.
And this is of course, allowing us to retain talent and expertise that we built.
Throughout the Covid period.
And also to allow full focus on.
One of our key strategic pillars, namely our.
R&D progression not only our late stage programs, but also.
The earlier stage pipeline.
Development and potentially even in.
Injection of additional pipeline programs.
With this I would like to hand over to Peter to cloud with the financial report.
Thank you Thomas and good morning, or good afternoon to all of you.
Now, let's discuss our first nine months financials.
Total revenues reached $249 9 million, an increase of 258% compared to the first nine months of 2021.
This increase is largely driven by other revenues that will come comment on that later.
<unk> sales reached $74 4 million, an increase of 64% versus prior year.
This increases to launch extent driven by shipments of <unk> 2001, a record with vaccine European member States at the same time. It also reflects the continued recovery of the travel market that leads to increased demand in travel vaccines.
Shipments to the U S Department of Defense continue to remain low and this was anticipated based on this year's delivery schedule.
The chart on the right side illustrates the composition of total revenues.
The increase in revenues is to a large extent driven by other revenues that reached $175 5 million on a year to date basis.
Other revenues comprised release of refund liabilities that were previously reported on our balance sheet.
Earlier in the year, we recognized $89 4 million euros or the revenues relates to payments from UK government <unk> hundred one program.
In Q3, we released $110 8 million euros advanced payments from European member States related to BLA 2001, the orders that were subsequently cancels.
Other revenues also include negative revenues recognized in the second quarter related to the price of contract revision.
Moving on to slide 19 to look at the details of our product sales.
Sales of <unk> decreased versus prior year, which was the result of the scheduled shipments to the U S Department of defense.
As indicated at the bottom of the table <unk> sales to the private market decreased from $4 6 million euros in the first nine months of 2021 to $19 4 million euros at the current year, an increase of $260, 70% at constant currency.
<unk> sales reached $9 2 million euros in the nine months of 2022, a dramatic increase compared to 500000 viewers reached in the prior year.
Third party products also had a solid performance and reached $18 4 million euros compared.
Compared to $11 2 million euros in the first nine months of 2021.
Finally, COVID-19 vaccine sales increased to $3 8 million euros at the end of June to $23 9 million euros at September year to date, driven by shipments to European member States in Q3 as mentioned by Thomas earlier.
Now moving on to slide 20, looking at the P&L.
We only coverage revenues at the significant increased to $249 9 million euros.
Cost of goods and services also increased significantly over the prior year and this is of course, mainly driven by BLA 2001 related costs.
As explained in our first half year financials, we recognized significant inventory write down in the second quarter of the current fiscal year.
Research and development expenses decreased from $117 2 million euros in the first nine months of last year to $75 4 million euros in the first half of 2022.
This decrease was driven by lower spend on clinical trials at our chikungunya vaccine progress towards licensure combined with the reduced spend on our COVID-19 vaccine candidate to be late 2001.
Marketing and distribution expense as well as general and administrative expenses decreased compared to prior year, which was largely driven by release of provisions for share based compensation and related social security cost.
The cost of Phantom share program for certain employees as well as the cost of social security on our equity plans, depending on the development of <unk> share price.
We had a release of $30 6 million euros in the first nine months of 2022 compared to cost of $13 7 million at the same period of last year.
Issuance of over 40 million euros that positively affected all expense lines in our P&L and in particular, our G&A expenses.
As outlined in this morning's press release, the marketing and distribution line includes launch preparation cost for our chikungunya vaccine candidate were $4 3 million compared to $2 8 million euros in the prior year.
Other income.
Net other expenses with reported at $7 5 million euros compared to 16 million in the first nine months of 2021.
That decrease is primarily driven by lower R&D tax credits as a direct result of the lower R&D expense.
Other expenses include a small increase in the provision on the ongoing we've always interest how virtual litigation proceedings.
Operating loss for the first nine months was reported at $75 1 million euros compared to $237 6 million euros for the same period in 2021.
Financial expenses income tax reached.
42 million euros.
Compared to an expense of $8 3 million euros of the prior year.
The difference is primarily due to significant unrealized foreign exchange losses, driven by U S dollar denominated liabilities.
Interest expense increased in line with the increased loan.
The total loss for the period reached $99 1 billion euros.
$245 9 million euros in the first nine months of 2021.
Next slide please.
Looking at our <unk> business, we see total revenues of $224 1 billion euros, and an operating loss of $14 2 million euros compared to an operating loss of nearly 200 million euros in the first nine months of 2021.
The P&L outside of Covid business shows productivity of $50 6 million euros and negative auto revenues as previously explained the negative revenues are driven by the Pfizer agreement revision in Q2 with an adjusted cost chain.
Cost of goods and services systematically improved compared to last year, driven by lower cost of services related to Pfizer as the CGM, United Sweden and.
In addition, the 2021 numbers was impacted by inventory write offs and idle capacity cost.
The level of operating expenses is as already mentioned favorably impacted by the effects related to the Companys share plan.
R&D costs are significantly lower than in prior years.
This is a direct consequence of our chikungunya vaccine moving towards licensure the costs related to our preclinical programs are naturally lower but will increase as these move into the clinical space.
The adjusted EBITA for non Covid business reported for the first nine months reached negative $38 6 million euros, which is comparable to last year.
Before moving to guidance, let's go to slide 23 to look at our value proposition, how we expect to deliver on it.
The first pillar talks about progression of our late stage clinical pipeline programs.
We initiated the FDA submission of our chikungunya vaccine candidate and after.
Repairing for the potential launch in the United States and later in Europe .
At the same time, we continue our excellent collaboration with price and underlying program and as mentioned by Thomas earlier patient recruiting for phase III trial is still ongoing.
The second pillar is about progressing new vaccine candidates from preclinical to clinical stage.
This is clearly a priority is we're committed to refill our early stage clinical pipeline.
So now the focus is on the HPV and EBV program as mentioned by Thomas earlier in this call.
At the same time, we put in place a small dedicated team that is continuously screening the market to look for potential in licensing opportunities to complement our clinical pipeline.
The third pillar is about maximizing our commercial products.
We want to benefit from the recovering travel market and make sure our travel vaccines grew at least in line with the travel market.
We're very encouraged by the growth we were able to realize with our distribution partnerships and the recently agreed deal with BPI is an illustration of our focus to complement our commercial proposition where it makes sense.
Finally, as announced previously we are aiming at selling additional doses of COVID-19 vaccines outside of Europe.
Is an effort that will continue in 2023.
Last column, we are in progress of restarting our operations.
We initiated a program to reduce our workforce by 20% to 25% due to the discontinuation of our Covid program.
The reduction workforce is expected to result in annual savings of approximately 12 million euros and will be achieved through a combination of natural attrition and layoffs.
Savings are to a large extent.
And our manufacturing operations.
Resizing of our organization will not impact our development projects as we are clearly committed to invest and what is required to bring food R&D pipeline.
Before moving to guidance, let me briefly comment on our cash situation.
Our balance sheet at September 30th released this morning shows total cash and cash equivalents of 261 billion euros.
While this is still a high level of cash we consumed a significant amount during the third quarter.
As a company we believe it is important to be sufficiently finance to invest in our clinical and preclinical pipeline.
We therefore decided to proceed with an equity offering at the end of September .
In a difficult market managed to raise over 100 million euros.
The proceeds of this offering are not yet reflected in the September accounts.
And further strengthen our cash position with this the company is well positioned to deliver on our existing programs.
Now, let's move to the fiscal year 2022 guidance on slide 24.
We reiterate our total revenue guidance of 340 to 360 billion euros.
Including $30 million to $40 million of Covid vaccine and 70 to 80 million euros. Other vaccine sales as a reminder, we have increased the guidance for other vaccine sales at half year.
Other revenues are anticipated adoption of approximately 240 million euros, mainly based on revenues recognized from EC and UK COVID-19 contracts.
Meaning that these revenues will have no additional cash impact in Q4.
We expect R&D expenses to be between 95 million and 110 million euros quite a bit lower than previously announced.
This decrease is related to some phasing of clinical trial expenses and the wind down of our BLA 2001 activities.
This concludes the finance section of this call and I would like to hand back to Thomas for the upcoming catalysts.
Thank you so much Peter.
Yes, let me summarize.
What we have already mentioned at different points in this presentation.
The clear near term catalysts for <unk>.
On line.
It is of course extremely important that we complete the enrollment on time.
Given the seasonality of.
Lyme disease and.
Respective.
Regression of the trials of the tribe over two seasons.
We also expecting.
Some follow up data from existing studies, which we have not specifically mentioned here on the key catalyst on chikungunya very clearly the completion of the BLA submission.
Before the end of the year of course also supportive data like the antibody persistence data Lake.
Nature this year or divestments data then.
In the earlier part of next year, which.
Would it be important to complement the label and support submissions in other territories.
On COVID-19, we expect further data.
Till the end of the year as I mentioned this before.
And of course, we are.
As we have clearly articulated in the past in touch with a few international markets, meaning countries in Middle East Asia. For example, where we are trying to E C.
Seek regulatory approval and be.
Potential sales of our existing.
COVID-19 vaccine BLA 2001 and respected.
Inventory.
This all of cost to maximize the value from the existing assets and these are the key catalysts that we see.
No.
Still very very important.
Anticipated news flow in new growth in the short term.
And with that I would like to hand back to the operator to take your questions.
Thank you as a reminder to ask a question you May press Star one one on your telephone.
<unk> was part of the Q&A roster.
Yes.
First question comes from the line of Maury Raycroft from Jefferies. Your line is open.
Hi, Congrats on the progress and thanks for taking my questions.
I'm going to start off with the preclinical assets you mentioned that the BLA $15 54.
In 2012 are currently being prioritized or can you talk about how much investment do you plan on putting into these programs and where will you report the preclinical <unk> dollars 54 proof of concept data by year end and is there anything additional you can say about the timeline to moving these programs into the clinic.
Okay. Good summary, right now we have not.
Split the R&D.
Investments by program or by activities as you know.
But but we have gone back to pre COVID-19.
Investment levels in the non clinical.
Rina.
So I think that's the only thing that I can say to that.
With regard to <unk>.
Preclinical talk of cost we are talking here about the classical preclinical pockets that you would anticipate for.
Vaccine candidate meeting in vivo and in vitro.
We anticipated that this data will be published.
And we cannot say how long it will take to get those published but but we clearly.
We will try everything to do this as quickly as possible.
Then of course with regards to HBV.
The company will evaluate clearly the clinical entry.
For <unk>, we have started preparing.
Active plan.
In parallel we will also look.
Two potential combination.
Combination settings.
HBV might be a very interesting asset for people working in RFP given that the RFP HBV Campbell.
It is expected to add significant value in terms of medical benefits addressing a huge unmet medical need.
And <unk> will take a little bit longer for us to progress.
At this point in time.
Got it makes sense and I was going to ask one other question on $15 53 for the <unk>.
Antibody persistence and adolescent studies can you remind what expectations are and what would be considered good or bad data.
Yes.
For the antibody persistence data specifically is there a certain threshold for antibody persistence.
That matters.
<unk> by the end of the day the important thing Maury is debt.
We'll see.
<unk>.
The vaccine.
So you know that we are working on.
On the other.
The surrogate marker that.
Derived through.
Passive transfer in nonhuman primate effected by the authorities.
And basically then translated into.
Sierra protection level, meaning percentage of people above their respective protective threshold.
And you know that there is no regulatory requirement to say what is good and what is bad.
I mean of course, you would expect.
About 80% being an excellent result in the world of vaccine.
In terms of long term.
Antibody persistence levels.
Yes, just maybe as much as I can say to 15 Pepsi.
Okay. That's helpful.
I'll stop there and hop back in queue. Thanks. Thank you for taking my questions.
Laurie.
Thank you.
One moment for our next question.
Our next question comes from the line of Sameer <unk> from Rx Securities. Your line is open.
Hi, everyone. Thanks for taking my questions of course, coupled.
First one is on sort of CLA.
And your contribution.
The size of clinical trial costs.
Talks about 40% over 2022 and 2023 I just wanted to clarify are you not expecting to contribute to the end of the study except to oxy in 25. So that's the first question and then the second question is just on the COVID-19 vaccine you hope to have some good sales in the quarter.
Previously you told US that you had eight to 10 million doses in the inventory, perhaps you could just update us with where the inventory stands and whether you could just clarify whether you have any confirmed orders for 2023 or should we be looking for nice new announcements for <unk>. Thanks very much.
EMEA. So so let me talk with the Covid question, and then I will.
I'll give the floor to Peter who can explain.
Again, how we are how long.
All payments with regard to our light share to the phase III work. Following the last amendment that we did with Pfizer so on the inventory yet you're absolutely right. We previously confirmed eight to 10 million doses. This is absolutely correct we have.
This inventory in our.
In our warehouses.
Ed.
We have at this point in time, no confirmed orders above and beyond.
The C and the.
The existing Bahrain.
<unk> orders.
But as I said, we are active.
Active right now in seeking regulatory approval in territories, where we feel that there is a demand.
And where we have ongoing discussions with regards to potentially deploying that inventory and and we will of course.
Something like that materializes immediately inform.
The market.
With that Peter you may want to explain how our line cost contributions work and why 2000 22020, yes.
Yes of course, thanks Haytham you.
Well basically the way the Kaiser mentioned works is that we pay 40% of the total cost.
But our 40% of Frontloaded so essentially.
Most all the all our contribution will be paid during 2022 and 2023, there might be a small residual amounts kicking in.
Later, but basically after the end of 2023.
It will be priced covering their 60% of the total cost and we will not have any sort of cash out. So that's how it works and I was just also take advantage to remind you that.
We paid to Pfizer is basically going against our balance sheet. So it goes against our our.
Contract liability and not through the P&L.
Okay. That's very helpful and maybe just one clarification the EC contract and the borrowing contract do they have is there any sales anticipated from either of those contracts in 2023.
There might be small amount related to the Bahrain contract, but not to the EPC contract.
Okay. That's very helpful. Thanks very much.
Thank you one moment for our next question.
Our next question comes from the line of <unk> Wang from Guggenheim Partners. Your line is open.
Alright, Thanks for taking my question.
Can you help.
First question I have is on <unk>.
One three can you help us understand some of the additional trials or analysis could open additional opportunities I guess in settings like military pediatrics stockpile opportunities.
Are there additional trials to come.
Conduct and.
Any kind of timelines or expectations. We can think there and then I have a follow up.
Okay. So yes, so let me let me remind you about the overall development program for for Chikungunya. So we conducted.
Two pivotal phase III trials.
One.
The phase III immunogenicity trial to determine safety and effectiveness of the vaccine.
In it does.
About 18 years of age.
And alongside with that clinical lot to lot consistency study also needed for licensure.
With these two studies.
We expect the vaccine to be approved.
In the United States for everyone about 18 years of age.
There is no additional study required.
Towards supports.
That said the market launch.
In all the segment that you have mentioned.
From a U S perspective of course.
We want this vaccine to be available for everyone about probably two years of age so which means we will.
Conducting studies.
In additional <unk>.
Young girl age groups.
And this is and one of the very important study is the study that we are currently conducting in Brazil.
Brazil through our partner <unk>.
And this data is expected to complement and change.
Just the label from a U S perspective, we also expect that this data that we generate.
In Brazil will be tied together with the existing package.
We may have.
Order neighborhoods right from the start in terms of age group.
All the other studies that I mentioned on the slides for example, co vaccination studies.
And the like a voluntary studies. So these are studies that are not required from a regulatory perspective.
May provide.
Provide us with additional data to potentially.
Further differentiate and further increase.
Potential uptake of the vaccine in the future and those are for example.
<unk> explanation studies.
Of course, you have for <unk>.
For every vaccine behalf to typical post licensure phase four commitment in our case.
And in field effectiveness study that is of course, a regulatory requirement post licensure, which will be conducted.
Great and then can you talk about some of the competitive dynamics in the market I think.
There are other trials ongoing I think unexpected first half of next year I guess in terms of the 2020 for HIV.
Are you expecting multiple vaccines to be discussed at this point.
Can you talk about how.
Youre thinking about kind of competitive dynamics.
Very good question. So let me start with the latter part first we do not expect that at the ACR meeting other.
Chikungunya vaccines will be ready for discussion.
So at this point in time.
As you know there is only one.
Additional program in phase III.
In the quarter for Western World.
And this program is.
Two phase III.
Three study to our knowledge.
One study that for which.
Enrollment completion was just just recently.
Recently announced and then another study tool.
Tool.
To complement the upper age range.
To our knowledge.
Recruitment is still ongoing.
We expect.
With regards tool.
Competition with regard to.
Toward life insurer to be well well ahead of any competition.
Great. Thanks, guys.
Thank you our moment for next question.
Our next question.
Comes from the line of Max Herrmann from Stifel. Your line is open.
It's Max Herrmann from Stifel. Thanks, very much for taking my questions.
A few if I may.
Firstly just wanted to.
I understand a little bit about comment about completion of recruitment of the BLA 15 study.
The valor study in Q2.
If youll recruiting completing recruitment.
At that stage will that enable you to recruit all the patients in time for the season for the 2023.
Lyme disease season, that's my first question.
Yes.
Basically first of all high end to a very good question.
You know that.
The season starts.
In March April it goes all the way until September depending on the area September October .
<unk> costs in the second quarter as long right. So it's not the.
It's not.
It doesn't necessarily say that we are recruiting till the end of the second quarter.
So.
Basically of course, we are anticipating that we are doing the enrollment as quickly as possible. So that we can get.
The.
100% of the anticipated people into the first season.
Because obviously, you've got a six month period.
The vaccination period to get the absolute three doses in and so if you even if you start in April .
Tony just finishing that.
Patients.
Finally occurring.
In October we will have.
You will have a number of patients that you will not only catch towards the end of the season.
Yes, okay.
Our next question is a more financial.
So.
I'll put the moment in terms of.
Covid inventory I know you say you have eight to 10.
Million.
Million doses on hand, I was wondering if you could give us.
A bit of a view.
Portion of your inventory levels.
Represented by that.
Actual COVID-19 stock.
Second question is just the margin in the fourth quarter you obviously, the gross margin that is.
Obviously, you had a relatively low margin.
In the.
Third quarter assume primarily related to the collaboration and license revenue, which I guess is margin without margin just trying to understand how we should view.
The margin.
Relevant going forward.
And then just in terms of R&D.
Very interesting comment about.
I wasn't aware that the.
Faiza.
R&D spend over the balance spend that you make will go against the balance sheet. So.
Yes.
Giving us a feel do you expect R&D in 2023, therefore to be lower than you expect it to be in 2022. Thank you.
Yeah.
Yes, sorry, I was muted.
So first question Max.
<unk> inventory, so we have not.
In Q3 with details of inventories.
But you can assume that actually there is a fair portion of the increase that we reported in our balance sheet relates to COVID-19.
And it is safe to assume that it's approximately half of it.
Most of it of course finished products or semi finished and finished product and as we said this already.
Doses that we are.
Amy.
Selling in markets outside of Europe .
Okay.
Gross margin in Q4.
And here, we have not given guidance on gross margin so.
So I wouldn't specifically comment maybe about on Q4 I think overall speaking, we clearly look at our gross margin on our travel vaccines.
Proving significantly as we as we increase volumes and we do expect that.
In 2023 will probably be close to where we used to be pre COVID-19 and remember we were at.
Top of my head, 64% I believe roughly.
That's clearly the objective ticket.
This range as far as cost of goods on travel vaccines.
As concerns.
You're absolutely right of course, the margin does get diluted.
Depending on what contracts we have.
<unk> third parties in our Cts facility.
In Sweden.
And then finally.
Your question on R&D.
So yes.
Whatever we pay to Pfizer goes against our liabilities.
The spend that we have.
On a yearly 15 goes into R&D spend is primarily people cost of course, but that goes into R&D expense and we have not yet provided guidance for 2023 I think your question was on 2023. So we have not provided guidance on that yet.
But we will do that of course.
Once we do publish our full year results.
And maybe just pushing back a little bit on the R&D guidance for 2023, I mean, it wasn't I wasn't really I'm just trying to get understand.
Next year the Faiza.
Trial costs are going to be the big significant part of that is not going through your R&D spend and you are not spending on the COVID-19 vaccine anymore.
The chikungunya vaccine see most of the.
Registration studies have been completed then that would suggest.
Quite a significant.
The reduction in R&D spend for next year, Yes, correct sounds right right way to think about it well, yes, our R&D spend.
Sure go down.
It will of course include some some post marketing commitments for our chikungunya vaccine and of course progressing our preclinical pipeline.
Absolutely fair to assume that our R&D cost in 2023 will be significantly lower than in 2022 years correctly. Thank you very much.
Yes.
Thank you.
And one moment for next question.
Okay.
Yeah.
Our next question comes from the line of are seeing welcome from Kepler Chevron.
Your line is open.
Thank you for taking my question first of all Vodafone for.
A question on R&D expenses.
R&D costs are likely to go back from pre Covid levels, but do you expect any additional costs related to COVID-19.
Vaccine.
In 2023, the second question is.
Youre manufacturing site.
You took your manufacturing site.
Two one.
Or was there some additional costs related to the month months offers.
On the last one is on the chikungunya vaccine.
How are we going to commercialize this vaccine by your own are you booking for a partnership because there is no real synergy with <unk> and you will need to bring your own sales force.
Yes.
So let me let me probably start by your last.
Shannon your last comment.
So please keep in mind that the chikungunya.
Chikungunya.
Targeting.
Sure.
<unk>.
One is travel.
So between people traveling to tropical top tropical areas.
People, who live in North America and Europe .
In Australia.
And here, we have a huge synergy with our existing commercial infrastructure.
We are covering.
Our existing commercial infrastructure, which includes team.
<unk> in North America, meaning U S Canada.
In Europe , we have the U K, we have France with Australia, we have the nordics.
And with that we cover 80 plus percent of the necessary travel market with the existing teams and the existing infrastructure. The second part is related to stockpiling and MMA and PA.
Potential outbreak preparedness.
Here of course, we will need to add resource, but we expect that overall, we are well positioned within our existing infrastructure than we have.
Cost potential segment in.
St.
Institutions like military and again here, we have existing and well established channels and infrastructure. When it comes to endemic countries. Yes of course for endemic countries.
We have a partnership an existing partnership with Instituto put Anton who have the right to endemic countries.
Countries, so low medium income countries.
And this is the <unk>.
Partnership that we entered into and we announced already so we will not commercialize the product ourselves in <unk> territories.
And then maybe the maintenance, yes of course, we have a dedicated factory.
In Scotland.
Our COVID-19 at this point in time, we have not decided what we're going to do with this factory.
And hence we will keep the factory in a so called one stage.
And this one stage comes at a cost.
And which we have not.
And cannot disclose at this point in time, but it's not.
It's as I said keeping warm.
Cost base.
Not material the overall setting with that too.
<unk> the floor to Peter for the other financial questions.
Yes. So there was about R&D expense expected in 2023, but there will be some some residual R&D expense related to COVID-19 as we are.
To continue or finalizing the last <unk>.
The nickel trials that are running right in island that will still.
Continue into 2023, but it will of course be much much lower than what we spent in 2022 or 2021.
Okay.
Alright, thank you.
A moment for our next question.
Our next question comes from the line of.
Small <unk> from Bryan Garnier Your line is open.
Good afternoon congratulations.
Congratulations on the progress and thank you for taking my question.
My first one on the recently is it meeting.
It seems that.
Vaccines efficacy in specifically into the population what sort of.
Wonderful importance. So could you maybe reiterate that data in this age group, which is about 100 participants currently would be sufficient.
And especially in the light that imaging study.
He is including about 400 participants of this age group.
And maybe the second question.
Is it basically asked won't group to more clearly define at risk populations. So I'm. Just curious if you have any insights on how these more specific risk based groups could look like.
Hi IRA.
Were referring on your second question to treat coaxial tool line.
Yeah.
Good morning.
Okay.
So good so then.
First of all.
Let me start with your first question yes.
Yes, you have seen that FDA therapy meeting we.
We presented additional data additional readout from our.
Elderly cohort.
We consider based on all interaction that we had to date that that our database with about 100 people in the past 65 years of age combined with the fact that we do not see.
<unk>.
H dependence on our <unk>.
Crop protection level a level.
To be sufficient for the fall.
Our labor.
This is our current hypothesis and this is based on all interactions to date as I said driven by two aspect may be number one.
We have not seen an H dependent on ours to electrical and even in Russia a profile.
For the vaccine and that we have.
100 people with some being really really old and this in this cohort.
So second when we talk at risk Yep. This is of course I mean, we this is an excellent question and so on the one hand side.
We consider of course people, who are going to area.
There was a high risk exposure to chikungunya infection.
Areas, where you have either.
Already existing outbreak or a high risk for outbreaks.
And does that primarily the tropical subtropical areas.
And this would be.
As part of the health economic analysis.
<unk> cost will be further detailed in characterized and precise as part of the ACP process.
Thank you.
<unk> okay.
<unk> moment for next question.
Our next question comes from the line of Nick <unk>.
From Goldman Sachs. Your line is open.
Okay.
Okay.
Hi, it's Nick on for Cai. Thank you for taking my questions.
Just a couple more on chikungunya.
What's your updated thoughts on potential PLD.
<unk> there.
And if you could give us an idea of pricing and potential benchmark, we should be thinking about.
Then from a financial question.
You were 12 million annual savings from the restructuring where should we be thinking about.
Their impact on the P&L and would that be largely on SG&A. Thank you.
Okay.
You want to start.
Yes, I can start on the on the savings out of the resizing of the organization So Nick.
Essentially I would say the vast majority of the reduction is going to be in the manufacturing space, because that's where we clearly see.
The significant more significant reduction in workload.
As we stop COVID-19, so thats, where I think most of it will go.
Yes.
So.
So the of course on the <unk> coming back to your question around the PRA.
Dave It's a process.
Around the <unk>.
Irrespective application.
We will do as part.
Off.
Towards the completion of the submission.
For the BLA and then.
Once we have the confirmed eligibility.
We.
We will get the <unk>.
The BLA approval and of course, the company will start.
Marketing this priv as soon as we are getting closer tool.
The pier B.
Many.
Most companies in the past.
Have had their <unk> deals in the pocket before it actually got the pov.
And.
And this is of course, something that we will do.
We tried to do it.
Elevate provided net of everything.
Got into plan and.
We have we have.
<unk>.
Under the fast track and provided all prospect conditions are being confirmed.
We expect to produce our dates in the second half next year, so, which which would tell you a little bit also the timeline of <unk>.
<unk>.
That's great. Thank you.
And then Brian .
Yes, you mentioned pricing.
As I told you already when we met we are currently.
We have we are in.
The middle of the of the <unk>.
Process around health economics analysis pricing et cetera, So we do not want to interfere with this.
Process and therefore, we are currently not in a position to comment on pricing.
Okay. Thank.
Thank you very much.
Thank you and I'm not showing any further questions in the queue.
I turn the call back over to Thomas for any closing remarks.
Thank you so much for your time today excellent questions as usual thanks for following up.
Leave us and supporting Us and we're looking forward to keep you updated on the exciting pulse is an exciting program that we have ahead of us. Thank you very much and good day.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
Bye bye.
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