Valneva Reports Q1 Results and Updates 2020 Guidance Following Major Lyme Partnering Deal

 Limited business impact of COVID-19 crisis during Q1Unprecedented partnering deal signed for Phase 2 Lyme vaccine candidate2020 full-year financial guidance updated with improved EBITDASARS-CoV-2 vaccine development program for COVID-19 initiatedSolid financial results in Q1 2020, with limited COVID-19 impactProduct sales revenue of €32.7 million in Q1 2020, similar to Q1 2019 (€32.8 million)Total revenues of €35.2 million in Q1 2020, similar to Q1 2019 (€34.9 million)Gross margin on product sales revenues of 69.4% in Q1 2020 driven by geographical mix and strong operational performance in manufacturingEBITDA¹ of €2.4 million in Q1 2020, lower than Q1 2019 (€8.2 million) due to increased R&D investmentsPositive operating cash flow of €3.0 million in Q1 2020Strong cash position of €80.8 million at the end of March 2020Supported by an $85 million debt financing arrangement with leading U.S. funds in February 2020 (the Company has drawn $45 million from this facility to date)2020 full-year financial guidance updated reflecting continuing COVID-19 impact and Lyme collaboration, with improved EBITDATotal revenues now estimated to be between €95 million and €135 million in 2020Revised guidance includes €10 million to €30 million revenues recognized from the Lyme disease vaccine collaboration to be reported in “Other Revenues”²Non-Lyme “Other Revenues” guidance maintained at ~ €10 millionProduct sales revenue guidance revised to €75 million to €95 million noting the continuing impact of the COVID-19 pandemicR&D investments of up to €80 million including:A potential three month delay in the initiation of the chikungunya Phase 3 trial driven by the COVID-19 pandemic situation, as previously announcedLyme-related costs noting the new Lyme collaborationInitial investment in the Company´s SARS-CoV-2 vaccine candidate (VLA2001)Valneva now expects improved negative EBITDA of €10 million to €30 million in 2020 (compared to previous guidance of up to €50 million negative EBITDA)Cost containment measures are being implemented across the Company and government support mechanisms are being used where possibleSignificant milestones reported for R&D programs since the beginning of the yearSigning of an unprecedented collaboration with Pfizer for Phase 2 Lyme disease vaccine candidate VLA15³$130 million upfront and $35 million development milestonesUp to a further $143 million in early commercialization milestone paymentsTiered royalties on sales starting at 19%No change to timelines of current VLA15 Phase 2 trials despite COVID-19 pandemic. First Phase 2 results expected in July 2020Positive End of Phase 2 meeting granted by the FDA for chikungunya vaccine candidate VLA1553⁴Chikungunya Phase 3 to be initiated as soon as the COVID-19 situation permits (currently planned for Q4 2020)Initiation of VLA2001 – a SARS-CoV-2 vaccine development program for COVID-19⁵Collaboration with Dynavax leveraging Valneva´s technical and platform capabilities to develop an inactivated, adjuvanted whole virus vaccine candidateExisting BSL3 laboratories recommissioned to undertake pre-clinical activitiesResources from other early stage programs reallocated to support the project; grant funding also sought for clinical development and manufacturingValneva and Dynavax to align with regulatory authorities on the optimal strategy for an expedited clinical development program, with the goal to initiate clinical trials before the end of 2020 (subject to successful preclinical work and receipt of appropriate funding)Production of clinical trial material expected in Valneva’s FDA approved plant in Livingston, ScotlandDavid Lawrence, Valneva’s Chief Financial Officer, commented, “Considering the current pandemic situation, we are very pleased with our first-quarter financial results. We have also delivered an unprecedented collaborative deal with Pfizer to advance our Lyme disease program in response to a major unmet medical need. Given the global COVID-19 crisis and its significant impact on our travelers vaccine business, we are pleased with our ability to balance employee welfare with business continuity, and would like to thank our employees for their ongoing commitment and flexibility.”Financial Information
(Q1 2020 unaudited results, consolidated under IFRS)Saint Herblain (France), May 7, 2020 – Valneva SE (“Valneva” or “the Company”), a specialty vaccine company focused on prevention against diseases with major unmet needs, reported today its first quarter financial results ending March 31, 2020. The condensed consolidated interim financial results are available on the Company’s website www.valneva.com.Valneva will provide a live webcast of its first-quarter 2020 financial results conference call beginning at 3:00 p.m. CEST today. This webcast will also be available on the Company’s website. Please refer to this link: https://edge.media-server.com/mmc/p/5i6xunqxCommercial VaccinesJAPANESE ENCEPHALITIS VACCINE (IXIARO^®/JESPECT^®)In the first quarter of 2020, revenues from IXIARO^®/JESPECT^® product sales reached €22.9 million, representing year-on-year growth of 2% (0% at CER). The increase was largely driven by demand in North America, both in the public and private markets. During the first quarter of 2020, the U.S. government Department of Defense (DoD) issued a Request For Proposal (RFP) for the supply of Japanese encephalitis vaccines to the U.S. military. As sole supplier of the only U.S. Food and Drug Administration (FDA) approved Japanese encephalitis vaccine, Valneva has responded to this RFP and expects to enter into a new contract with the DoD in the second quarter of this year. This expected contract will drive IXIARO^® sales in the second half of 2020 and beyond. In addition, the FDA granted a 36 month shelf-life extension for – IXIARO^® in March⁶, an important achievement supporting supply management flexibility.CHOLERA / ETEC⁷-DIARRHEA VACCINE (DUKORAL^®)In the first quarter of 2020, revenues from DUKORAL^® sales increased to €9.7 million compared to €9.6 million in the first quarter of 2019.TRAVEL VACCINES MARKET
The Company expects the travel market for IXIARO^®/JESPECT^® and DUKORAL^® to be significantly impacted, notably in the second and third quarters of 2020, with a gradual market recovery anticipated in the fourth quarter. Although it may take some years for travel-related businesses to return to previous levels, the Company believes that the current crisis may have a positive effect on the vaccine market in the mid-to-long term due to an increase in vaccination awareness.Clinical Stage Vaccine CandidatesLYME DISEASE VACCINE CANDIDATE – VLA15
Strategic alliance with Pfizer; First Phase 2 results expected mid 2020Valneva´s Lyme disease vaccine candidate, VLA15, is the only clinical development stage program in the world and addresses the most common tick-transmitted infection in the Northern hemisphere. The Company recently announced that it has signed a major partnering deal with Pfizer for the late stage development and future commercialization of VLA15⁸.Valneva and Pfizer will work closely together throughout the development of VLA15. Valneva is eligible to receive a total of $308 million in cash payments consisting of a $130 million upfront payment, $35 million in development milestones and $143 million in early commercialization milestones. Under the terms of the agreement, Valneva will fund 30% of all development costs through completion of the development program, and in return Pfizer will pay Valneva tiered royalties starting at 19%. Pfizer will lead late-stage development and have sole control over commercialization.Valneva has completed patient enrolment and most follow-up visits for the two ongoing Phase 2 studies in more than 800 people. Valneva expects to report first Phase 2 results from study VLA15-201 (0-1-2 month vaccination schedule) in July 2020 followed, in the third quarter, by first results from study VLA15-202 (0-2-6 month vaccination schedule). The results of these studies, comprising immunogenicity and safety data, will support the dose and vaccination schedule to be advanced into Phase 3.According to the U.S. Centers for Disease Control and Prevention (CDC), approximately 300,000 Americans⁴ are infected with Lyme disease annually with at least an additional further 200,000 cases in Europe⁹.VLA15 is a multivalent, protein subunit vaccine that targets the outer surface protein A (OspA) of Borrelia and is intended to protect against the majority of human pathogenic Borrelia species. VLA15 is designed to confer protection by raising antibodies that prevent Borrelia from migrating from ticks to humans after a bite. The program was granted Fast Track designation by the FDA in July 2017¹⁰.Peak revenue potential for a Lyme disease vaccine in the U.S. and EU is estimated at more than
$1 billion¹¹.CHIKUNGUNYA VACCINE CANDIDATE – VLA1553
Phase 3 initiation preparation proceedingValneva´s single shot chikungunya vaccine candidate, VLA1553, is unique and addresses a highly prevalent mosquito transmitted infection in the tropical and subtropical regions.
The Company plans to take this vaccine to market with the prospect of leveraging major manufacturing and commercial synergies primarily focusing on the traveler vaccine market. Valneva and the Butantan Institute in Brazil recently announced the signing of a binding term sheet for a collaboration for the development, manufacturing and marketing of Valneva’s single-shot chikungunya vaccine VLA1553 in Low and Middle Income Countries (LMIC)¹². The collaboration will be effective upon the signing of definitive agreements and will fall within the framework of the $23.4 million funding Valneva received from the Coalition for Epidemic Preparedness Innovations (CEPI) in July 2019¹³.During the first quarter of 2020 Valneva held an End-of-Phase 2 meeting with the U.S. FDA¹⁴. Valneva is currently advancing all activities, including its Contract Research Organization (CRO), to allow Phase 3 initiation as soon as the COVID-19 situation permits. As previously announced, the Company’s assumption is that it may start Phase 3 clinical studies in the fourth quarter of this year, which is three months later than originally planned.Chikungunya is considered a major public health threat with no preventive vaccines or effective treatments available. Chikungunya is a mosquito-borne viral disease caused by the chikungunya virus (CHIKV), a Togaviridae virus, transmitted by Aedes mosquitoes. As of 2017, there have been more than one million reported cases in the Americas¹⁵ and the economic impact is considered significant (e.g. Colombia outbreak 2014: $73.6 million)¹⁶. The medical burden is expected to grow as the distribution of the CHIKV primary mosquito vectors continues to spread further geographically.VLA1553 is a monovalent, single dose, live-attenuated vaccine candidate for protection against chikungunya. It was granted Fast Track designation by the FDA in December 2018¹⁷.The global market potential for chikungunya vaccines is estimated at up to $500 million and the traveler market at around $250 million ¹⁸.