Valneva SE (NASDAQ:VALN) Q2 2025 Earnings Call Transcript

Valneva SE (NASDAQ:VALN) Q2 2025 Earnings Call Transcript August 12, 2025

Joshua Drumm: Thank you, operator. Hello, and thank you for joining us to discuss Valneva’s first half 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 6 months ended June 30, 2025, which were published earlier today available within the Financial Reports section on our Investor website. I’m joined today by Valneva’s CEO, Thomas Lingelbach; and our CFO, Peter Buhler, who will provide an overview and update on our business as well as our key financial results for the first half. There will be an analyst Q&A session at the conclusion of the prepared remarks. Before we begin, I’d like to remind listeners that during this presentation, we will be making forward-looking statements, which are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements.

You can find additional information about these risks and uncertainties in our periodic filings with the Securities and Exchange Commission and with the French Market Authority, which are listed on our company website. Please note that today’s presentation includes information provided as of today, August 12, 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: Thank you, Josh. Good day, everyone. It’s a pleasure to present our first half 2025 financial results and key business highlights. A first half of the year that has been quite eventful and marked by excellence in execution. We achieved total revenues close to EUR 100 million, a very significant year-over-year growth and a cash position of more than EUR 160 million, which also marks not only a strong additional cash influx through ATM transactions, but also a significant reduction in operating cash burn, which again shows you that we are focusing on investing into the right things and really making sure that we retain a strong cash position as we go into the period of Lyme data readout. We have further pipeline and regulatory progress around Lyme, IXCHIQ and Shigella, and I’m going to go into those in more detail.

When we look on Page 5, what we have really seen or what we are seeing is our key highlights. In line with our mission and vision, we have really addressed unmet medical need in the first half of the year. We finalized a new supply agreement for IXIARO with the U.S. Department of Defense. And we responded to the French government’s call for IXCHIQ to combat chikungunya outbreak in La Réunion and Mayotte. We also responded to the cholera outbreak in Mayotte by supplying doses of DUKORAL. So really by addressing those unmet medical needs, ensuring that we make a change to peoples’ lives. On the regulatory and commercial achievements, we secured additional marketing authorizations for IXCHIQ in the United Kingdom, in Brazil and label extensions for IXCHIQ in Europe for adolescents 12 years of age and older.

We also announced an exclusive vaccine marketing and distribution agreement for Germany with CSL Seqirus, and we are happy about this partnership. We had to undergo a very comprehensive safety assessment with the two key regulatory authorities, FDA and EMA in connection with IXCHIQ safety signals observed during — mainly during the vaccination campaign in La Réunion. And we were able through this collaborative interactions and approach with the agency to lift the temporary age-related restrictions again. On Lyme, we are very happy that the VALOR study is progressing to plan, the entire program is progressing to plan. And as very recently announced by Pfizer during its earnings call, we completed the vaccination in the current VALOR Phase III study.

On IXCHIQ, we have seen a high sustained 1-year immune response in adolescents, which again reconfirms what we have seen in adults, mainly the key differentiation of this product, long-term antibody persistence and protection. We also achieved positive Phase III pediatric safety and immunogenicity results for IXCHIQ. On Shigella, we have been progressing our first controlled human infection model study, and we initiated vaccinations in a dedicated Phase II infant study. When we look at the programs one-by-one, of course, we would like to start with our Lyme disease vaccine candidate, which is clearly the world’s leading candidate in that field. And as we reported on many occasions, Lyme disease represents a major medical need and market opportunity.

There’s currently no vaccine available to prevent Lyme disease in humans and also the treatment options are very limited. The annual burden of disease is constantly increasing, and the most updated numbers show that we are approaching in the Northern Hemisphere more and more numbers that geared towards 1 million cases on an annual basis. Many of those cases result in severe manifestations, carditis, neuroborreliosis, arthritis. And unfortunately, many people experience persistent symptoms. And those even persistent following treatment with antibiotics. So therefore, there is a clear medical need and a clear objective to find a suitable, meaning efficacious and safe preventative solution. When we look at the Phase III study that is ongoing, this is a study that for operational reasons, as reported many times in the past, has been split into two cohorts, but it’s one study spanning over three tick seasons, tick season 2023, 2024 and 2025.

We included in this study more than 9,000 participants aged 12 years and older. And the study is randomized 1:1 vaccine against placebo, 2:1 North America versus Europe. The primary endpoint and what we try to achieve here is prevention of the disease. Therefore, we are measuring as part of the primary endpoint, the rate of confirmed Lyme cases after 2 consecutive tick seasons, meaning after completion of the full vaccination series, priming with 3 doses and first booster. Therefore, at 3 plus 1 or 4 doses. This is the primary endpoint. With regard to secondary endpoints, of course, we will report and we aim to report the number of Lyme disease cases and efficacy after the first tick season and many other immunological endpoints as defined in the Phase III protocol.

On the slide on Page 9, you can see that now all the little syringes here are marked green. And this is the key progress. And with this progress, Pfizer reconfirmed that they aim to submit regulatory applications in the United States and Europe in 2026. And this is in line with the time line that reported — that we have reported, Pfizer reported in the past, namely that we aim to launch in the autumn of 2027, subject to positive data to have people protected for the 2028 tick season. We are going to monitor this year the Lyme cases until the end of October. This is the end of the Lyme season. Then thereafter, Pfizer will undergo case adjudication, database cleaning and all of that. So everything is on track, and we are looking forward to this data and hopefully, to a nicely efficacious and safe vaccine that will be able to make a substantial change to people’s lives and represent a major catalyst for Valneva going forward.

Turning to chikungunya, our single-shot chikungunya vaccine, IXCHIQ or VLA1553. We mentioned already that FDA and EMA have now lifted again the temporary restrictions against use in elderly. You know that they had reports of serious adverse events in frail elderly individuals, primarily among elderly with multiple underlying health conditions and most of it resulted and was observed through the mass vaccination campaigns in La Réunion in response to a very severe chikungunya outbreak. EMA and FDA, therefore, imposed temporary restrictions while they investigated together with us the reported SAEs. I mentioned already twice that those restrictions have now been lifted and all the labels have been updated. What has been updated primarily are the use conditions and the safety sections, precautions and warnings either on the prescribing information in the United States or the Summary of Product Characteristics, SmPC in Europe.

And this reaffirms what we have been saying from the very beginning, a live-attenuated vaccine has a clear advantage, especially for an outbreak disease, which is unpredictable in terms of timing. And it is coming with a very, very long antibody persistence and protection. And we are monitoring in a follow-up study antibody persistence for up to 10 years. And most importantly, IXCHIQ remains indicated for the prevention of disease caused by the chikungunya virus in individuals 18 years of age and older in the United States, 12 years and older in Europe who are at high-risk exposure to CHIKV. So it remains an excellent vaccine solution if given to the right people in the right setting. Of course, we are continuing to focus expanding access, label extensions and furthermore, the overall product profile for IXCHIQ.

We have a very robust clinical program that is supported by more than $40 million grant by CEPI, and we are grateful that CEPI continues to support this program and the company as a whole. The Phase IV [Audio Gap] aim to confirm effectiveness and basically is a key post-marketing commitment since the vaccine got its initial approval to an immunological surrogate of protection, so-called accelerated approval pathway. There will be observational effectiveness study in Brazil, a pragmatic randomized controlled effectiveness and safety study in adults and adolescents to be confirmed in other endemic countries. And we expect also further prospective safety cohort studies. On the label extension, we aim to expand access to the vaccine for all age groups and will gradually develop it accordingly.

On the product profile, I think, it’s very important that we confirm the long- term durability of the immune response that we have — that we can show that the vaccine following a single shot has a very long sero seroresponse rate and hence, effectiveness. And this ongoing antibody persistence, as I said earlier, is a study that will monitor people for up to 10 years. We reported positive 3- month results to date with 4 months — with the 4 years results coming up later this year. Now turning to Shigella, which is the world’s most clinically advanced tetravalent Shigella vaccine candidate. We are targeting to cover with the four serotypes up to 85% of the shigellosis infections. And these infections are really life-threatening, especially in young children and therefore, also identified as a priority vaccine by WHO.

We are aiming to develop the vaccine both for children living in low medium-income countries, but also for travelers who are exposed to the disease. We — our partner, LimmaTech, reported positive Phase I data previously in this program, which got awarded FDA Fast Track designation. As I said at the very beginning, we launched a Phase II infant study with data expected towards the latter part of this year. And we have the ongoing Phase IIb controlled human infection model study aiming to provide an early look at potential efficacy with efficacy data expected very early next year. Those studies are still led by LimmaTech, and Valneva will assume all further regulatory R&D, CMC and future commercialization activities in the near term. As we reported earlier, we are working on a novel Zika virus candidate.

This is a candidate that we optimized against the first- generation candidate that we had pre-COVID. It leverages our inactivated whole-virus platform that we further advanced and developed as part of our COVID endeavor. And previous results showed already excellent immunogenicity safety. And now in this Phase I study, we look at safety and immunogenicity with an enhanced process and optimized vaccine formulation. As we reported earlier, we believe that a vaccine solution against this flaviviral disease transmitted by the Aedes mosquitoes is needed because of the devastating effects those infections can have. But at the same time, we will need to evaluate future development strategies based on the Phase I results, external non-dilutive funding and the resulting market potential and to see where we really are at the point of data readout.

With this update on our primarily R&D programs here, I would like to turn over to Peter to provide you with the financial report.

Peter Buhler: Thank you, Thomas, and good morning and good afternoon to all of you. Now moving to the financials of the first half of 2025. Product sales reached EUR 91 million compared to EUR 68.3 million in the first half of 2024, an increase of 33.3%. Foreign currency fluctuation had an adverse impact of EUR 500,000. IXIARO sales reached EUR 54.7 million, increasing 30.6% over prior year. The strong year-over-year growth was equally driven by sales to travelers and to the Department of Defense. IXIARO sales during the first quarter of 2024 were adversely impacted by supply constraints. DUKORAL sales grew year-over-year by 16.4% and reached EUR 17.4 million in the first half of 2025. The growth in DUKORAL sales was supported by a EUR 1.1 million sales to the French island of Mayotte to combat a local cholera outbreak.

IXCHIQ sales reached EUR 7.5 million compared to EUR 1 million in the first half of 2024 when the product has been launched in the United States. IXCHIQ sales in the first half of 2025 benefited from a supply of 40,000 doses to the French island La Réunion as the island experienced a major chikungunya outbreak. Third-party products increased by 8.8% year-over-year to reach EUR 11.4 million. This increase is primarily a result of supply constraints in the first half of the prior year, and we continue to expect a gradual decrease of third-party products. Moving onto the income statement. Total revenues reached EUR 97.6 million versus EUR 70.8 million in the first half year of 2024. The increase of 37.8% is driven by higher product sales and an increase in other revenues related to the licensing agreement with the Serum Institute of India for Valneva single-shot chikungunya vaccine.

Looking at expenses. Cost of goods and services for the first half of 2025 reached EUR 47.2 million compared to EUR 45.6 million during the same period last year. The gross margin on commercial products, excluding IXCHIQ reached 59.2% in the first half of 2025 compared to 47.7% in the prior year. The improvement in gross margin was driven by better manufacturing performance. IXIARO gross margin reached 65.5% compared to 57.5% in the first half of 2024, and DUKORAL generated a gross margin of 52.9% compared to 34.8% last year. Cost of goods related to IXCHIQ amounted to EUR 2.5 million or a gross margin of 66%. Cost of goods also includes a EUR 5.9 million idle capacity cost. Research and development expense increased from EUR 29.7 million in the first half of 2024 to EUR 32.4 million in the first half of 2025.

That increase is driven by costs related to the Shigella vaccine candidate following the R&D collaboration with LimmaTech Biologics. We expect another acceleration of our R&D costs in the second half of 2025, in particular driven by the IXCHIQ Phase IV program. Marketing and distribution expense decreased from EUR 23.2 million in the prior year to EUR 20.3 million in the first half of 2025. The decrease is related to a planned reduction in the advertising and promotion spend related to IXCHIQ following the launch in early 2024. The decrease was partially offset by higher costs related to warehousing and distribution. G&A expense decreased to EUR 19 million compared to 2022 — EUR 22.8 million in the first half of 2024. At the end of 2024, the company ran a program to increase operational efficiency and the reduction in G&A spend is a direct result of this initiative.

In the first half of 2025, Valneva reported an operating loss of EUR 16.8 million compared to an operating profit of EUR 46.7 million in the last year. Last year’s operating profit was the result of the sale of a priority review voucher for a total net proceeds of EUR 90.8 million. Adjusted EBITDA in the first half of 2025 reached minus EUR 6.8 million — minus EUR 6 million compared to a positive EBITDA of EUR 56.2 million last year. Excluding the one-off PRV sale in the prior year, adjusted EBITDA improved by 80% year-over-year. Before moving to the outlook and guidance, a word on cash. As mentioned by Thomas at the beginning of the call, cash at June 30 was reported at EUR 161.3 million compared to EUR 168.4 (sic) [ 168.3 ] million at the end of 2024.

Cash used in operations was reported at EUR 10.9 million compared to EUR 66.3 million in the first half of 2024. Now moving to Slide 21. We confirm our financial guidance for the fiscal year 2025 with product sales of EUR 170 million to EUR 180 million and total revenues of EUR 180 million to EUR 190 million. We continue to project R&D expenses of EUR 90 million to EUR 100 million. The R&D expenses will be partially offset by grant funding and anticipated R&D tax credits. As confirmed in the first half year results, we expect a significantly lower use of cash in operations, targeting a year-over-year reduction of more than 50%. Cash will remain a key focus in order to ensure sufficient runway to reach key inflection points. In the midterm, we expect continuous growth in our product sales, focus on strategic investments into R&D and continuous improvement in gross margin.

We continue to expect Valneva to be sustainably profitable post successful approval and commercialization of the Lyme disease vaccine. With this, I hand the call back to Thomas for the outlook.

Thomas Lingelbach: Thank you, Peter. Yes, when we look at the 2025 guidance, of course, it is important that we look at the growth drivers and the growth drivers primarily are, as Peter mentioned last. I think the VLA15 program or the Lyme disease program with Pfizer is not only the single largest catalyst for the company and its future development and strategic optionality, but it’s also the vaccine that could make the single largest impact to people’s lives. As such, it is very highly matching with our purpose, our vision and mission. Of course, in the near term, as Peter said, we will focus on growing commercial revenues, and we will reposition IXCHIQ as the right vaccine against chikungunya for the right setting and the right population and the right geographical areas.

With regard to future pipeline, we have our two early-stage or mid-stage clinical assets, Shigella and Zika. And our goal is to not only progress those programs, but possibly even further augment our pipeline post Phase III successful line. As such, we have really a great opportunity to become on the back of a positive Lyme outcome, the leading vaccine biotech in the world. And with that, I would like to hand back to the operator to take the questions.

Q&A Session

Operator: [Operator Instructions] We are now going to proceed with our first question. And the questions come from the line of Maury Raycroft from Jefferies.

Mohamad Amin Makarem: This is Amin on for Maury. Congrats on the progress. A couple of questions from us. Regarding the 40,000 doses you sold to the French government, should we expect any additional revenue recognition in Q3? Also, could you share your perspective on demand scenarios for IXCHIQ through year-end, considering the evolving CHIKV outbreak in Indian Ocean and now it looks like China?

Thomas Lingelbach: Yes. So let me start with the second part of your question, and then I hand over to Peter to take the first part of your question. So you’re absolutely right. I mean we are seeing right now a very critical and devastating epidemiological dynamics around chikungunya. We are in contact with all the respective governments where currently outbreaks are occurring. As I mentioned earlier, we believe that especially for those countries, our vaccine proposition represents a very good vaccine solution. It’s too early to state at this point in time where and how we will be able to respond. We have no supply constraints. We have sufficient material available for addressing those potential response strategies. But we also would like to make sure that we stay in control over those vaccination or potential vaccination campaigns given the experience that we had with La Réunion.

So therefore, bear with us that at this point in time, we don’t want to promise anything other than we will be utmost responsive. Peter?

Peter Buhler: Yes. So on the 40,000 doses, they were all shipped in the first half year, and the revenue was fully recognized in the first half year. So nothing related to that 40,000 to come in the second half.

Operator: We are now going to proceed with our next question. And the questions come from the line of Sebastiaan van der Schoot from Van Lanschot Kempen.

Sebastiaan van der Schoot: I am on for Suzanne. And for the Lyme vaccine, could you maybe provide some insight on how the reporting of the data readouts will transpire at year-end? Will the disclosure only report top line data? Or can we also expect some detailed results? And then maybe would you be able to position the vaccine in terms of immunogenicity towards vaccines of the past?

Thomas Lingelbach: We couldn’t — Sebastiaan, we couldn’t hear the second part of your question. You were breaking up for most part of the question, I’m sorry for that.

Sebastiaan van der Schoot: Sure. It’s regarding the immunogenicity profile of the vaccine versus past COVID — I’m sorry, Lyme vaccines in the past from the ’90s.

Thomas Lingelbach: Yes. Okay. So let us, first of all, address the first part of the question. Of course, the reporting of the Phase III results is under the sole responsibility and accountability of Pfizer. We are currently expecting that the data readout will come in two steps, namely a report on the so-called top line data, which primarily will include efficacy numbers and then a subsequent data communication on all the other endpoints given that, as you know, the study has many endpoints and many primary, secondary exploratory — there are many things that will need to be reported. And as we said in the past and as many of you have it already included in the respective reports, we expect all data to be out probably by the end of the first quarter, but definitely in time to support the anticipated regulatory submissions around mid next year.

When it comes to the immunological profile, it is very difficult to compare what was observed from an immunological profile back in the days from vaccines that had undergone Phase III studies like LYMErix or ImuLyme because they had very different schedules. The entire formulation was different. The antigen construct was different. The assays were different. What we can say is that we have tried to compare the — those previous full-length serotype 1 antigen to our most modern recombinant subunit and multivalent fusion protein VLA15 in different animal models. We have published those results in the direct comparison against what we call in parenthesis an full length of a serotype 1 biosimilar, and we have seen that across the border, we could really identify noninferiority or in many cases, also superiority.

Any other comparison right now would just not be scientifically sound. And by the end of the day, the efficacy readout will tell us, Sebastiaan.

Operator: We are now going to proceed with our next question. And the questions come from the line of Damien Choplain from Stifel.

Damien Choplain: Congrats on the good publication. I have first one on IXCHIQ. So could you please elaborate a bit on what might trigger an acceleration in sales uptake within the traveler market? And are you still in discussion with the states in the U.S. for potential stockpiling? And my second question is on distribution agreements with CSL. What should we expect in terms of financial impact on top line and potentially EBITDA?

Thomas Lingelbach: Yes. So let me start with the second part of your question first. We have been collaborating with Bavarian Nordic for a number of years now in Germany and for reasons that we all understand. We have to change, and we have been extremely pleased that we were able to find with CSL from our perspective, an excellent partner with an excellent state infrastructure in Germany. The commercial terms under the agreement are very similar to what we used to have. And therefore, we do not expect an immediate difference in the prospects around Germany in the mid- to long term as CSL gear further up in Germany, we may even see a potential upside. When it comes to IXCHIQ and future market access, you would certainly appreciate that the uncertainty that we have experienced and had to experience following all those safety investigations has an impact on the market uptake for that vaccine.

At the same time, we know that the vaccine profile and especially the profile of a live-attenuated single-shot vaccine has distinct advantages when it comes to future outbreak preparedness. And therefore, we are expecting that now that all those restrictions got lifted, the investigations got concluded, the — that prescribing information and SmPC got updated, we will see a new momentum. And we expect, as I mentioned earlier, hopefully, to be able to respond to some of the emerging outbreaks across the globe right now. And all the other discussions will hopefully resume now in the latter part of this year.

Operator: [Operator Instructions] We are now going to proceed with our next question. And the questions come from the line of Rajan Sharma from Goldman Sachs.

Rajan Sharma: So a couple on Lyme and VALOR trial. So on clinicaltrials.gov, the entry suggests that the primary completion date of the trial is 26th of December. So I just wanted to double check your confidence that, that Phase III headline data will be coming in, in 2025? Or is there a potential that this could spill into 2026? And then just on the trial specifically, what do you consider to be the bar for success here? And I know you kind of talked about the inability to kind of do cross-trial comparisons with the previous sets of vaccines that were approved, but I think LYMErix demonstrated a 49% efficacy rate after two priming doses. And I think you’ve talked previously about potentially showing better efficacy. So is that what you’re looking for? And if you have any color, it would be helpful to understand what the FDA’s bar for approvability is as well.

Thomas Lingelbach: So let me start with the second part of your question first. So you rightly pointed out that the direct comparison to LYMErix and ImuLyme is very difficult. And you know that schedule was different, but also the efficacy readout of the two vaccines were very different. And LYMErix after two doses, as you mentioned, a bit below 50%, ImuLyme above 60%. And then both very substantially increased after three doses. We have a different setup right now. We have with [ 0 to 2 tick ] and then a booster after 1 year. We have a very different immunological profile. And hence, we are also expecting a very different efficacy profile as compared to those vaccines that were developed at the time. There is a reason for why we [ concluded ] with the authorities to set this primary endpoint after 3 plus 1 doses.

And we are — and as I said earlier, all the models that were run and published in animals, [ therefore ] show a non-inferiority or superiority after the final dosing and this is what we are expecting, of course, that is what we are hoping for. There is no communicated or aligned bar for approval with the FDA or the European Medicines Agency, but there are precedents on certain efficacy levels that you can certainly point and filter out. But I don’t want to mention here specifically any number. When it comes to the data readout, trials.gov always includes safety follow-up period and follow-up period. This is what all notifications on trials.gov show, trials.gov shows very clearly that we have to do case count until the end of October. And thereafter, as I mentioned at the beginning, Pfizer will go through their case adjudication process and their database cleaning.

And it will take as long as it will take. For us, the most important thing is that Pfizer reaffirms the submission time lines and whether we will receive the top line data a month earlier or a month later, a, it is not in our control; and b, it is not material for us. And therefore, I don’t want to comment on and put execution time lines at this moment in time into Pfizer here. It would not be appropriate for me to do that.

Operator: We have no further questions at this time. So I’ll hand back to you for closing remarks. Thank you.

Thomas Lingelbach: Yes. Thank you so much for your attendance today for your good questions and for following Valneva. I hope you share with us the exciting prospects that we see in the company, in our business, in our mission and vision. Thank you so much, and have a great day.

Operator: This concludes today’s conference call. Thank you all for participating. You may now disconnect your lines. Thank you, and have a great day.