Valneva Q1 2025 Earnings Report

Valneva EPS Results

• Actual EPS: -$0.13
• Consensus EPS: -$0.40
• Beat/Miss: Beat by +$0.27
• One Year Ago EPS: N/A

Valneva Revenue Results

• Actual Revenue: $51.79 million
• Expected Revenue: $41.80 million
• Beat/Miss: Beat by +$9.99 million
• YoY Revenue Growth: N/A

Valneva Announcement Details

• Quarter: Q1 2025
• Date: 5/7/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, May 7, 2025
• Conference Call Time: 9:00AM ET

Valneva (NASDAQ:VALN) SE is a specialty vaccine company focused on developing, manufacturing and commercializing vaccines for infectious diseases with significant unmet medical needs. The company combines research and development capabilities with commercial vaccine operations and serves travelers, public-health programs and other markets through products distributed in multiple countries.

Valneva’s marketed portfolio has included IXIARO, a vaccine for Japanese encephalitis, and DUKORAL, an oral vaccine used for protection against cholera and certain forms of travelers’ diarrhea. The company also developed IXCHIQ, a vaccine targeting chikungunya, and continues to advance vaccine candidates for diseases including Lyme disease. Product availability and regulatory approvals vary by geography.

Valneva was formed in 2013 through the merger of Austria-based Intercell and France-based Vivalis. Its operations and research activities have included facilities in France, Austria, Sweden, Scotland and Canada, supporting development and supply for international markets. The company is headquartered in France and is listed on Euronext Paris and, through American depositary shares, on the Nasdaq Global Select Market under the symbol VALN.

Valneva Q1 2025 Earnings Call Transcript

Key Takeaways

• Q1 product sales rose 51% to €48.6 M and total revenues reached €49.2 M, while operating cash burn fell to €8.1 M and cash balances remained above €150 M.
• Regulatory wins for XCHIC include UK authorization for adults 18+, EU extension to ages 12+, and first approval in Brazil, with adolescent label submissions underway.
• ACIP and EMA issued precautions for use of XCHIC in frail elderly (65+), prompting ongoing safety investigations despite no confirmed causal link to date.
• Lyme vaccine Phase III VALOR study is in its third tick season with over 9,000 participants and first efficacy data expected end-2025, aiming for a 2026 regulatory filing.
• 2025 guidance reiterated at €170–180 M product sales and €180–190 M total revenues, targeting a 50% reduction in cash burn and path to sustained profitability by 2027.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the Valneva's First Quarter 2025 Financial Results Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question-and-answer session. To ask a question during the session, you will need to press *11* on your telephone keypad. You will then hear an automated message advising your hand is raised. To withdraw a question, please press *11* again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to our first speaker today, Joshua Drumm, Vice President, Global Investor Relations. Please go ahead.

[Joshua Drumm, VP of Global Investor Relations at Valneva]

Thank you. Hello, and thank you for joining us to discuss Valneva's first quarter 2025 results and corporate update. It's my pleasure to welcome you today. In addition to our press release and analyst presentation, you can find our consolidated financial results for the three months ended March 31, 2025, 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 CFO, Peter Buhler, who will provide an overview and update on our business, as well as our key financial results for Q1 2025. There will be an analyst Q&A session at the conclusion of the prepared remarks.

[Joshua Drumm, VP of Global Investor Relations at Valneva]

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, May 7, 2025, 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.

[Thomas Lingelbach, CEO at Valneva]

Thank you, Josh, and good day to all of you. Pleasure to provide the update during today's earnings call. Yeah, the first quarter 2025 was a solid quarter with strong overall financial performance. Total revenues reached almost EUR 50 million. The reduction in operating cash burn is reflecting our continuous focus on cash and cash management, and this is also shown in a cash position north of EUR 150 million, excluding the recent proceeds from our April ATM transaction. In quarter one, we also made progress on the regulatory front, predominantly around IXCHIQ label extensions and further approvals. When we look a little bit more into the details of the first quarter 2025, we got a new IXIARO contract awarded by the US Department of Defense.

[Thomas Lingelbach, CEO at Valneva]

We responded to the French government's call for IXCHIQ to combat the Chikungunya outbreaks in La Réunion and Mayotte, and we responded to the cholera outbreak in Mayotte by supplying doses of DUKORAL. All in line with our mission to address unmet medical needs. With regards to the key regulatory achievements that I mentioned earlier, we got the marketing authorization for IXCHIQ in the U.K. in individuals 18 years of age and older, and we also submitted the respective adolescent label extension application. We got the IXCHIQ label extension in Europe for individuals 12 years of age and older by the European Medicines Agency, and the IXCHIQ marketing authorization in Brazil represents the first approval of a Chikungunya vaccine in an endemic country.

[Thomas Lingelbach, CEO at Valneva]

On clinical data and pipeline progress, we reported high sustained immune response in adolescents one year after IXCHIQ vaccination with a single dose and as part of our phase III. We reported positive phase II pediatric results for IXCHIQ, and as such, could decide the dose for the planned phase III study in the pediatric population. We initiated the first vaccination in the phase II infant study in Africa of our Tetravalent Shigella Vaccine candidate S4V2. Turning our attention a little bit to Lyme, you all are very aware of the Lyme program and the medical needs that Lyme disease represents globally.

[Thomas Lingelbach, CEO at Valneva]

There is no vaccine available to prevent Lyme disease in humans, and we see a growing annual burden of disease with almost half a million cases reported, and these are confirmed cases reported in the United States, more than 100,000 cases reported in Europe, and those numbers are heavily impacted by underreporting or not even existing reporting systems in some of the countries. When we look at the clinical manifestations, 2%-30% develop really severe clinical manifestations, including carditis, neuroborreliosis, or arthritis, and 5%-10% have persistent symptoms even following treatment. Therefore, we see a huge unmet medical need for a preventative solution and hence commercial opportunity for Valneva, especially given that we are talking about almost 90 million people in the U.S. and more than 200 million people in Europe who live in endemic regions where Lyme represents a major risk.

[Thomas Lingelbach, CEO at Valneva]

You all know that we are in year three or in the third tick season of the ongoing phase III study VALOR, and we are expecting first data at the end of this year. This is a study that includes more than 9,000 participants, five years of age and above, who are at high risk of Lyme disease. We are measuring here against the placebo-controlled setting, randomized one-to-one, against placebo, two-to-one, North America, Europe, and the primary endpoint is the rate of confirmed Lyme disease cases, so prevention of the disease after the second consecutive tick season. Right now, we have the second cohort undergoing the booster vaccination, and then we have quite a significant number of secondary endpoints, including the rate of confirmed Lyme disease cases after the first season after the primary series.

[Thomas Lingelbach, CEO at Valneva]

Very exciting year, and we hope to see the first data set by the end of the year, which will be followed by a significant number of secondary endpoints and other data associated with the study, and provided positive data, we expect filing with the regulatory authorities next year. With that, let me turn over to IXCHIQ. You know that our Chikungunya vaccine is a highly differentiated vaccine, and we are glad that we have been able to report strong clinical data thus far across all the studies and across all the target populations that we have been evaluating and got licensed by now. At the same time, we have experienced recent changes to ACIP recommendations in response to reports of serious adverse events in frail elderly individuals.

[Thomas Lingelbach, CEO at Valneva]

As such, ACIP recommended precaution for use in 65-plus, EMA cautioned against use in frail older adults, especially those with comorbidities, and a Trans-Hispanic recommendation for use in 65-plus. All of that, you know, pending ongoing investigations. As we stated in our different publications and communications, we are highly committed to standards of safety and appreciate, therefore, these precautionary decisions. All investigations into SAEs remain ongoing, and it's worth noting that causality has not been definitively established at this point in time. We will, of course, continue to closely monitor all reported adverse events and cooperate fully with health authorities while working proactively on a potential update of the product indication. We have now a bit more than 40,000 doses administered, so doses of IXCHIQ that landed in people's arms, and we continue to see a positive risk-benefit in the vast majority of people with potential exposure to the disease.

[Thomas Lingelbach, CEO at Valneva]

We would like to remind one more time that IXCHIQ must not be given to people who are immunodeficient or immunosuppressed due to disease or treatment. When we look at the further development of IXCHIQ that we are currently conducting, we are preparing for the post-marketing effectiveness phase IV program. This is a program to confirm the effectiveness following licensure based on an Immunological Correlate of Protection, the so-called accelerated approval pathway, and to further help optimizing the description of the safety profile. We are planning an observational effectiveness study in Brazil, pragmatic randomized control effectiveness and safety study in endemic countries, and prospective safety cohort study and pregnancy surveillance in Brazil.

[Thomas Lingelbach, CEO at Valneva]

We have ongoing label extensions to expand access to the vaccine for all age groups, and we reported already the phase III data in adolescents, which landed in some countries and some regulatory jurisdictions already in a label extension. Others are still under review, and we plan to start a phase III study in children aged 1-11 years of age. On the product profile, all of that, and across all programs, we would like to confirm the long-term durability of the immune response to further differentiate our vaccine. Turning to Shigella, which is really the most advanced program right now in the tetravalent bioconjugate vaccine space targeting Shigella infections, it's a program that we have partnered with LimmaTech. It includes the four most common Pathogenic Shigella bacteria serotypes. LimmaTech, in the past, reported positive phase I-II clinical data, and the program got awarded FDA Fast Track designation.

[Thomas Lingelbach, CEO at Valneva]

We expect a huge unmet medical need, of course, primarily in children living in low-medium-income countries, but also a substantial added value for travelers and military personnel. The Shigella disease and the work around Shigella vaccines have been identified as a priority by the World Health Organization. As mentioned at the beginning, we launched a phase II infant study this year, and we expect data already towards the latter part of this year. We have an ongoing phase IIB, so-called Controlled Human Infection Models. This is a study that goes in two steps. The first step is to optimize dose and schedule. Second is to challenge and get with the challenge a first idea around pilot efficacy.

[Thomas Lingelbach, CEO at Valneva]

We announced that we have slightly extended the immunogenicity phase, so the so-called step 1, and as such, we are not expecting the pilot efficacy data, as previously announced, in the second half of this year, but in the first half of next year. We will work continuously on this exciting program and make sure that we progress towards the next development phases. Turning to ZIKA, we expect phase I results later this year on our second-generation optimized vaccine candidate against the ZIKA virus. It is an inactivated whole virus vaccine-based vaccine that leverages our technology that we developed and further optimized as part of our Covid work and our Covid vaccine during the pandemic, VLA2001. We hope to see positive data that would enable further development against the disease that can have quite devastating effects.

[Thomas Lingelbach, CEO at Valneva]

Please be reminded that there is currently absolutely no vaccine or specific treatment available, and as such, we hope also for support of public institutions, for example, to help advance a potential vaccine against the ZIKA virus. With that, I would like to hand over to Peter to provide us with the financial report.

[Peter Buhler, CFO at Valneva]

Thank you, Thomas. Good morning and good afternoon to all of you. Now let's look at the financial report for the first quarter of fiscal year 2025. Product sales reached EUR 48.6 million and increased by 51.2% versus the first quarter of the prior year. IXIARO sales reached EUR 27.5 million, 65.5% above last year, and the year-over-year growth is driven by a strong increase in sales to U.S. military, but also into the travel channels. In addition, the first quarter includes higher sales related to stock replenishment in indirect markets.

[Peter Buhler, CFO at Valneva]

As you may recall, the first quarter of 2024 had been adversely impacted by supply constraints. DUKORAL sales grew by 9.4% and reached EUR 12.3 million. The increase in DUKORAL sales is primarily driven by a shipment of EUR 1.1 million to the French island Mayotte. IXCHIQ sales reached EUR 3 million in the first quarter of 2025 compared to EUR 200,000 in the first quarter of last year. IXCHIQ was first launched in the United States in quarter one of 2024, and the increase in sales is related to the continued ramp-up of sales in the United States and the launch in additional territories, mainly in France and Canada. In the first quarter of 2025, we received an order for 40,000 doses of IXCHIQ to respond to the Chikungunya outbreak on La Réunion.

[Peter Buhler, CFO at Valneva]

The significant majority of these doses were shipped early April, and hence sales will be recorded in the second quarter. Third-party product increased by 41% to EUR 5.8 million compared to EUR 4.1 million in the first quarter of last year. As mentioned previously, we expect third-party product sales to decrease over time, and this year-over-year increase for Q1 is primarily due to supply constraints faced by our third-party partners in Q1 of last year. Over time, we expect the continued reduction of our third-party business to have a positive impact on the company's gross margin. Foreign currency effects have no material impact on the year-over-year sales performance. Now moving on to the income statement. Total revenues reached EUR 49.2 million versus EUR 32.8 million in the first three months of 2024. Cost of goods and services increased marginally versus prior year despite the significant increase in sales.

[Peter Buhler, CFO at Valneva]

Gross margin on commercial products, excluding IXCHIQ, amounted to 62.7% compared to 43.9% in the first quarter of 2024. The significant improvement in gross margin is primarily due to better manufacturing performance with fewer batch failures and inventory adjustments. IXIARO's gross margin reached 72.6%, which is significantly better than the 52% of last year and even exceeds pre-Covid levels. DUKORAL's gross margin reached 52.2% compared to below 40% in the first quarter of last year. Research and development expense increased by around EUR 2 million to EUR 15 million driven by costs related to our new Shigella program following the start of our collaboration with LimmaTech Biologics in the fourth quarter of last year. Marketing and distribution expense in the first quarter reached EUR 10.4 million compared to EUR 11.3 million in the prior year. The decrease is mainly related to lower advertising and promotion expense.

[Peter Buhler, CFO at Valneva]

General and administrative costs were reduced to EUR 9 million compared to EUR 11.7 million in the prior year. The decrease is related to a lower spend on recruiting, lower insurance costs, and savings in professional services. The operating loss of the first quarter 2025 is reported as minus EUR 6 million compared to an operating profit of EUR 68.2 million in the first quarter of the prior year. In the first quarter of 2024, we sold the Priority Review Voucher obtained upon approval of the Chikungunya vaccine IXCHIQ in the United States. This resulted in a non-recurring revenue of EUR 90.8 million. Net finance and income tax expense is reported at EUR 3.3 million compared to EUR 9.3 million in the prior year.

[Peter Buhler, CFO at Valneva]

The lower expense is mainly related to a foreign exchange gain of EUR 3.7 million due to the development of the US dollar versus euro exchange rate and the related balance sheet revaluation. With this, the loss for the first quarter of fiscal 2025 reached EUR 9.2 million compared to a profit of EUR 58.9 million in the prior year. EBITDA is slightly negative, while last year it was positive driven by the sale of the Priority Review Voucher. Before we move to the guidance, a word on cash. As mentioned by Thomas at the beginning of the call, total cash and cash equivalents at the end of March were EUR 153 million compared to EUR 168 million at the end of the prior fiscal year.

[Peter Buhler, CFO at Valneva]

In the first quarter of 2025, we significantly reduced the cash used in operations compared to the prior year from EUR 28.4 million to EUR 8.1 million, mainly driven by higher sales and good cost control. In addition, as mentioned at the beginning of the call and as stated in our press release, in April, we issued new shares for a value of EUR 14.2 million through our at-the-market program based on a reverse inquiry from Novo Holdings. Through this transaction, plus additional shares acquired in the open market, Novo is now one of our top shareholders. Now moving to slide 22 to review our guidance for fiscal year 2025. The guidance is unchanged compared to the full year 2024 earnings call. We reiterate our product sales guidance of EUR 170 million-EUR 180 million for the fiscal year and total revenues of EUR 180million-EUR 190 million.

[Peter Buhler, CFO at Valneva]

Total R&D expenses are expected between EUR 90 million-EUR 100 million, partially offset by grant funding and R&D tax credits. As demonstrated in the first quarter, we are on track to reduce our operational cash burn by 50% on a full year basis, with the goal of being able to reach key inflection points with our existing cash. In the midterm, we continue to focus on gross margin, and we see a path to potential sustained profitability from 2027 based on a successful Lyme disease vaccine approval and commercialization. This concludes the finance section of this call, and I would like to hand back to Thomas to discuss our major growth drivers.

[Thomas Lingelbach, CEO at Valneva]

Thank you so much, Peter, for this comprehensive financial report. Turning to page 24 of the presentation, looking a little bit into our expected growth drivers for 2025 and beyond.

[Thomas Lingelbach, CEO at Valneva]

Of course, it's all about Lyme for the time being, and therefore, we are very much looking forward to the results of VLA15 and hopefully its success, which, as Peter pointed out, has the potential for sustained profitability upon approval and commercialization, of course, driven by the substantial milestones and royalties kicking in towards the latter part of 2027, according to current timelines and expectations. When we look at the commercial business, we have shown that we have been able to optimize and grow our commercial business, and we expect in the near term continued growth for both of the existing older brands like IXIARO and DUKORAL, but also expect IXCHIQ to gain further global traction. When we look at the future pipeline, we expect really value creation through new pipeline programs and ongoing programs that we have already in the pipeline, including Shigella and S4V2.

[Thomas Lingelbach, CEO at Valneva]

Our goal, as communicated previously, is to have a next phase three program ready post-successful introduction of the Lyme vaccine. With that, we see overall a really good prospect of our business, with, of course, major growth drivers around Lyme, but also major growth expected from our commercial business and upside from future or existing clinical and preclinical R&D assets. We would like to conclude our presentation and hand back to the operator to take your questions.

[Operator]

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad and wait for your name to be announced. To withdraw a question, please press star 11 again. Please stand by, we will compile the Q&A roster. This will take a few moments. Now we are going to take our first question.

[Operator]

It comes to the line of Maury Raycroft from Jefferies. Your line is open. Please ask your question.

[Maury Raycroft, Equity Research Analyst at Jefferies]

Hi. Congrats on the progress, and thanks for taking my questions. I'll ask a quick one on IXCHIQ first and then one on Lyme. I guess for IXCHIQ, just wondering what are next steps regarding the label. Wondering if you've heard back from the FDA regarding the label extension application for adolescents that was submitted a couple of months ago. And then what are next steps regarding potential need to add new language safety?

[Thomas Lingelbach, CEO at Valneva]

Yeah. Thanks for your question, Maury. I'll start with the last one first. The review with the FDA is still ongoing. We have submitted, as you rightly pointed out, and we are waiting for their reply and hopefully soon the adoption of the label to include the 12 and above. Yeah.

[Thomas Lingelbach, CEO at Valneva]

The current situation and next steps, at this stage, we have seen changes to the recommendation. You know that we are absolutely committed to the highest standards of safety. The investigations are ongoing. We know that all of that has occurred in frail, older individuals. We have strongly recommended and continue to do so that healthcare providers apply individualized clinical judgment when determining the appropriateness of IXCHIQ for elderly frail patients. We are supporting the regulatory authorities as much as we can on evaluating those cases and will review also whether certain additional precautions or contraindications in specific population groups may be warranted.

[Maury Raycroft, Equity Research Analyst at Jefferies]

Got it. Okay. That makes sense. For the phase III Lyme study, can you remind me what the p-value threshold is for the primary endpoint of confirmed Lyme cases?

[Maury Raycroft, Equity Research Analyst at Jefferies]

When considering GMT from historical studies, how are you setting expectations for the bar on what antibody titer you will need to achieve to get sufficient protection?

[Thomas Lingelbach, CEO at Valneva]

Unfortunately, I can't disclose the p-value for the phase III study, but it is sufficiently powered according to the expectations and according to the, I would say, epi studies and disease burden evaluations, which most of them got published by Pfizer. I think that's basically what we can say. I would like to point your attention to a publication, a joint publication that we also referenced by Pfizer and Valneva, where I would say a potential protective immunological threshold has been hypothesized, I would say. I think we discussed in length in the past, Maury, that it is very difficult at this point in time. There has never been an immunological correlate for Lyme.

[Thomas Lingelbach, CEO at Valneva]

Of course, assays are very different. I mean, we can, of course, send you again the link to the respective publication.

[Maury Raycroft, Equity Research Analyst at Jefferies]

Okay. Yeah. That sounds good. That would be helpful. Okay. Thanks for taking my questions. I'll head back in the queue.

[Operator]

Thank you. Now we're going to take our next question. It comes to the line of Rajan Sharma from Goldman Sachs. Your line is open. Please ask your question.

[Rajan Sharma, Executive Director of Pharma and Biotech Equity Research at Goldman Sachs]

Hi. Thanks for taking my question. Just one on Lyme, actually. I think you're due $143 million in milestones from Pfizer as an initial milestone. I was wondering, would part of that be due with a potential positive phase three, or is that related specifically to approvals, whether that's in the U.S. or elsewhere?

[Rajan Sharma, Executive Director of Pharma and Biotech Equity Research at Goldman Sachs]

Then secondly, I was just wondering if you could just comment on tariffs, which is obviously a focus in the sector at the minute. It'd be helpful just to get your perspectives on potential impact for Valneva. Could you just help us understand your manufacturing footprint and any potential mitigations you may have? Thank you. Peter?

[Peter Buhler, CFO at Valneva]

Yeah. Hey, Rajan. It's Peter. Thanks for the questions. Yes, you're absolutely right. There is a milestone of $143 million that Pfizer would pay us upon first commercialization. It's not at the end of phase III. There are basically three triggers for that. There are three parts of the $143 million. There is first commercial sales in the U.S., first commercial sales in Europe, and ACIP opinion. All three events are supposed to happen in 2027, basically.

[Thomas Lingelbach, CEO at Valneva]

On tariffs, and just to add maybe that there is another, there will be another $100 million commercial milestones afterwards based on sales thresholds, cumulative sales thresholds, and royalty rates of between 14%-22%, just to remind everybody. On tariffs, it's obviously something we're closely following. I think right now it's difficult to express an opinion on it because nothing has been defined in terms of tariffs. Right? Too many unknowns. We are, of course, looking at potential mitigation strategy or initiatives. To your question on our manufacturing footprint, our vaccines are basically all manufactured in Europe. Drug substance for IXIARO and IXCHIQ is manufactured in Scotland, and then fill finishing happens in Germany. As far as DUKORAL is concerned, it's all produced in Sweden. The IP is also in Europe.

[Rajan Sharma, Executive Director of Pharma and Biotech Equity Research at Goldman Sachs]

Okay. Thank you. Thank you.

[Operator]

Now we're going to take our next question. It comes to the line of Vamil Divan from Guggenheim Securities. Your line is open. Please ask your question.

[Vamil Divan, Managing Director and Senior Research Analyst at Guggenheim Securities]

Great. Thanks for taking my questions. Maybe a couple on the financial side. One, the sales this quarter are quite a bit higher than consensus. You obviously maintained your full year guidance. I'm just trying to get a sense of the nuances there, maybe relative to what you see from consensus estimates right now. Just one in terms of sequencing of the sales that drove through the first quarter for IXIARO. Maybe is that a reason to not be too optimistic on the read-through through the rest of the year? Or is there maybe some IXCHIQ sort of conservatism built in, given some of the label updates that are coming on that front?

[Vamil Divan, Managing Director and Senior Research Analyst at Guggenheim Securities]

Then the second question is just more on the gross margin side. I think you've talked about kind of getting back to these pre-pandemic levels. I think IXCHIQ is one of the key drivers there. Just if there was a shift in sort of uptake of that vaccine, given some of the new label updates and safety questions, would you still feel comfortable getting to the pre-pandemic levels on gross margins, even again, if your product mix maybe shifts a little bit? Thanks.

[Thomas Lingelbach, CEO at Valneva]

Yeah. Thanks for the question. Starting with sales, yes, absolutely. Our first quarter revenues are above the consensus. I think it was expected by us. As I said in the call, we did see strong growth, in particular in IXIARO, on both travel and also DOD. As I mentioned, last year was very heavily impacted by restricted supply.

[Thomas Lingelbach, CEO at Valneva]

That was resolved in April of last year. You will see this year a slightly different phasing, which is also why we do not see right now any change to our guidance. First quarter for us was in line with what we had anticipated. As you know, on sales to the Department of Defense, we have not published the number. As you saw, we signed a new contract, and supply is ongoing according to plan. It has also increased versus prior year. In terms of gross margin, we said in the past that we expect IXCHIQ over time to yield a better gross margin than the other products. I think that we're still looking at, we're still considering this, of course. This has not changed. I think overall, Q1 gross margin was very good. You're right.

[Thomas Lingelbach, CEO at Valneva]

We did say in the past we expect to reach a pre-pandemic level, although we have not defined this for 2025. We have not guided on gross margin for 2025. Of course, we're very well pleased to see where we were in Q1.

[Vamil Divan, Managing Director and Senior Research Analyst at Guggenheim Securities]

Okay. Thank you.

[Operator]

Thank you. Now we're going to take our next question. It comes to the line of Samir Devani from RX Securities. Your line is open. Please ask your question.

[Samir Devani, Managing Director at Rx Securities]

Hi guys. Thanks for taking my questions and congrats on a good quarter. Have you now fulfilled the Mayotte order in this quarter?

[Thomas Lingelbach, CEO at Valneva]

C'est de la Réunion? What did you say?

[Samir Devani, Managing Director at Rx Securities]

Not the Réunion. The Mayotte order. Oui, de Mayotte.

[Thomas Lingelbach, CEO at Valneva]

Mayotte?

[Samir Devani, Managing Director at Rx Securities]

Yeah. So that was the DUKORAL.

[Thomas Lingelbach, CEO at Valneva]

Yes. That was actually fulfilled in the first quarter.

[Samir Devani, Managing Director at Rx Securities]

Okay. Fine.

[Samir Devani, Managing Director at Rx Securities]

Just on the La Réunion order, can you help us in terms of thinking how we should phase this in terms of our modeling for IXCHIQ? Is it going to lead to a reasonable spike in the next quarter and then a sort of fall away in Q3?

[Thomas Lingelbach, CEO at Valneva]

Yeah. As we said, we supplied a small number of doses at the end of Q1, and the remaining part will be supplied in Q2. Or it was already supplied

[Samir Devani, Managing Director at Rx Securities]

in Q2, I should say. Okay. Finally, just on the mechanism for IXCHIQ and it being a live attenuated, I'm just wondering, Thomas, if you could comment on has this made you reconsider the sort of dose that you might use in the pediatric studies in light of the potential adverse events you're seeing in the elderly?

[Thomas Lingelbach, CEO at Valneva]

It's, of course, a good question.

[Thomas Lingelbach, CEO at Valneva]

We do not see at this point in time any unexpected safety profile in younger adults or even adolescents. At this point in time, we have not reconsidered the dose for the phase three infant study that we had previously announced. As I said, at this point in time, that is all I can say for now.

[Samir Devani, Managing Director at Rx Securities]

Okay. That is great. Thanks very much.

[Operator]

Thank you. Now we will proceed with our next question. The question comes to the line of Suzanne Van Voorthuizen from Van Lanschot Kempen. Your line is open. Please ask your question.

[Company Representative at Van Lanschot Kempen]

Hello. This is Samuel Lawrence for Suzanne. Thank you for taking our questions. For the Lyme phase three program and the last tick season now starting, can you provide some color on the infection rate so far in this study? Is this monitored and in line with the company's expectations?

[Company Representative at Van Lanschot Kempen]

Secondly, with the study consisting of two sequential cohorts of subjects, is the first cohort receiving a second booster this season already? Will you report data on this too at the year-end readout? Lastly, regarding the latest news that came from vaccine policymakers, could you comment which elements may or may not affect your vaccine business? Do you see particular risks or opportunities there?

[Thomas Lingelbach, CEO at Valneva]

So many questions. Thank you for that. I would say we have not yet, we are, of course, monitoring on an ongoing basis the overall Lyme cases during the study. We are and will not comment on those other than we have seen the overall profile over the past couple of years be pretty consistent in terms of number of Lyme cases. We see at this point in time no concerns.

[Thomas Lingelbach, CEO at Valneva]

With regards to the study cohort, the answer is no. With regards to the other activities that you were mentioning, namely impact on the business, I mean, at this point in time, probably no one is able to really say what all these political dynamics in the United States mean with regards to any of the vaccines on the market or in development. I think we should probably not speculate about that. Will it have an impact? Probably yes. Probably not. I think we have to wait until certain things become more defined and turn into real requirements or policies.

[Operator]

Excuse me. Any further questions?

[Company Representative at Van Lanschot Kempen]

Thank you very much.

[Operator]

Thank you. Now we're going to take our next question. It comes to the line of Oscar Haffen Lamm from Bryan Garnier & Co. Your line is open. Please ask your question.

[Oscar Haffen Lamm, Equity Research Analyst at Bryan Garnier & Co]

Hi, Samir.

[Oscar Haffen Lamm, Equity Research Analyst at Bryan Garnier & Co]

Thank you for taking my questions. The first one on IXIARO. Relative to Q4 last year, sales were roughly similar. We are just wondering if there were any seasonality effects seen during this first quarter. How do you forecast the growth of the asset for the remaining of the year?

[Thomas Lingelbach, CEO at Valneva]

On IXIARO, like I said, the impact is more quarter over quarter. I do not think there is any particular seasonality impact in Q1, except, as I mentioned also, particularly in one of our indirect markets, there is probably some stocking effect. In the overall picture, I would not say it is absolutely material. I am sorry, I did not get the second question. Can you maybe repeat that one?

[Oscar Haffen Lamm, Equity Research Analyst at Bryan Garnier & Co]

Yeah. Just how do you forecast the growth of IXIARO for the remaining of the year?

[Thomas Lingelbach, CEO at Valneva]

Oh, yeah. We have not guided specifically on IXIARO.

[Thomas Lingelbach, CEO at Valneva]

What we did say is we expect IXIARO to grow double-digit CAGR, which we would expect still for this year as double-digit growth. We have not guided specifically on a number for IXIARO.

[Oscar Haffen Lamm, Equity Research Analyst at Bryan Garnier & Co]

Okay. Thanks. Maybe quickly a second question this time on IXCHIQ. I was wondering if, following the updated recommendation from the French HAS, there could be a potential impact related to the order book of vaccines that were ordered for the outbreak in La Réunion?

[Thomas Lingelbach, CEO at Valneva]

We have, at this point in time, confirmed the 40,000 dose order, and we delivered the 40,000 dose order, and all the rest we have to see.

[Oscar Haffen Lamm, Equity Research Analyst at Bryan Garnier & Co]

Okay. Thank you.

[Operator]

Thank you. Dear participants, as a reminder, if you wish to ask a question, please press star 11 on your telephone keypad. Just give us a moment.

[Operator]

The question comes to the line of Simon Scholes from First Berlin. Your line is open. Please ask your question.

[Simon Scholes, Senior Analyst of Biotech and Resources at First Berlin]

Yes. Good afternoon. Thanks for taking my questions. I've got three. First of all, I was wondering if you could give us some color on the idle capacity costs and your efforts to reduce these. Then secondly, on the IXIARO gross margin, which was 73% in Q1, I mean, do you think the gross margin on IXIARO is sustainable at this level? And on the DUKORAL gross margin, do you expect that to be able to get that closer to 60% over time? Thanks.

[Thomas Lingelbach, CEO at Valneva]

Yeah. Let me start with the gross margin questions. On IXIARO, we do think that Q1 was probably not representative of what it will be for the full year. We do expect an improvement, of course, versus prior year.

[Thomas Lingelbach, CEO at Valneva]

I think north of 70%, I think, is probably not what we will see for the full year. I think on DUKORAL, we have not guided on the gross margin, but I think the Q1 gross margin is probably roughly representative. On the idle cost, for the first quarter, I would say it was probably roughly around EUR 2 million. This is primarily related, of course, one, because we have large capacity, but also because some of the, especially the new manufacturing sites in Scotland, we are in progress of transferring over production. Over time, we will see a reduction in that idle cost, of course.

[Simon Scholes, Senior Analyst of Biotech and Resources at First Berlin]

Okay. Thanks very much.

[Operator]

Thank you. Now we are going to take our next question. Just give us a moment. My apologies. Yes. He could be standby. Excuse me, Suzanne. I know that you would like to ask a question.

[Operator]

If you don't mind, please, can you press star 11 again? The speaker's running for the questions for today. I would now like to hand the conference over to the management team for any closing remarks.

[Thomas Lingelbach, CEO at Valneva]

Thank you so much for your attention today. Good questions, as usual, and your interest in following the company closely. We are looking forward to staying closely in touch while we are focusing on our execution this year to build strategic value for the future. Thank you so much.

[Operator]

This concludes today's conference call. Thank you for participating. You now may all disconnect. Have a nice day.

Participants

Executives

• Joshua Drumm, VP of Global Investor Relations
• Thomas Lingelbach, CEO
• Peter Buhler, CFO

Analysts

• Maury Raycroft, Equity Research Analyst at Jefferies
• Rajan Sharma, Executive Director of Pharma and Biotech Equity Research at Goldman Sachs
• Vamil Divan, Managing Director and Senior Research Analyst at Guggenheim Securities
• Samir Devani, Managing Director at Rx Securities
• Company Representative at Van Lanschot Kempen
• Oscar Haffen Lamm, Equity Research Analyst at Bryan Garnier & Co
• Simon Scholes, Senior Analyst of Biotech and Resources at First Berlin