Good day, and thank you for standing by. Welcome to the Valneva full year 2022 financial results conference call. At this time, all participants are in 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. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Vice President of Global Investor Relations, Joshua Drumm. Please go ahead.
Hello, and thank you for joining us to discuss Valneva's full year 2022 consolidated financial results, which were published today and are available on our website. It's my pleasure to welcome you today. I'm joined by Valneva's CEO, Thomas Lingelbach, and CFO, Peter Buhler, who will provide a brief overview of our business and our financial results for the period, as well as updated financial guidance and a summary of anticipated upcoming milestones. 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 also listed on our company website, www.valneva.com. Please note that today's presentation includes information provided as of today, March 23, 2023, and Valneva undertakes no obligation to revise or update forward-looking statements except as required by applicable securities laws. With that, it is my pleasure to introduce Thomas to begin today's presentation.
Thank you, Josh. Good afternoon, good day to all of you. Well, 2022 was a year marked by our ability to adapt to a changing environment and showed our resilience. We achieved several key milestones that underpin our unique value proposition. We made continued progress across the R&D pipeline with our chikungunya vaccine now under BLA review. On Lyme disease, we started the phase III pivotal efficacy study, VALOR, together with Pfizer. On COVID-19, we were the first company to achieve a full marketing authorization by EMA. Given the changing environment around COVID and the prospect of that vaccine, we decided to not further invest in development and stock manufacturing for COVID. We accelerated our pre-clinical activities with the aim to build a new, exciting R&D pipeline above and beyond Lyme and chikungunya.
We have seen a significant rebound of the commercial business and we clearly capitalized on the strong recovery in the travel segment and we complemented our commercial portfolio with additional third party product sales. We have reported strong full year 2022 revenues and cash position with revenues above EUR 360 million and product sales year-on-year increase well above 80%. Our cash position at the end of 2022 was close to EUR 290 million. We also strengthened our shareholder base with a successful upside follow on offering which included now also our new major long-term shareholders and Pfizer. With that, let me go straight into our programs and into the business update and I will start with chikungunya. Page six of the presentation.
By way of reminder, you know, our chikungunya program is the most advanced chikungunya program in development worldwide. It is a live attenuated vaccine candidate targeting long-lasting high seroresponse after a single shot. Basically, the phase III study met all primary endpoints in terms of seroresponse rate, but also in terms of lot-to-lot consistency. We reported positive 12-month antibody persistence data and the long-term persistence trial that will measure the seroresponse rate over time, targeting at least five years. The adolescence trial is fully enrolled by now and we expect first data mid-2023. We are under priority review for the BLA. A PDUFA action date has currently been assigned for end August 2023. We expect to commence other regulatory processes in the second half of this year including EMA.
The program got also granted FDA Fast Track and Breakthrough and EMA PRIME designations as you know. In terms of target population and overall geographic reach, we have explained before that we see of course the non-endemic countries and here primarily travelers, military, but also the possibility for outbreak preparedness and stockpiling. On the other hand the endemic use, where we have a partnership agreement with CEPI and Instituto Butantan. From there, let me turn over to the key data for chikungunya. Seroresponse 99% after a single vaccination. This immunogenicity profile has been sustained even after 12 months. We have seen a similar seroresponse rate in elderly, which is particularly encouraging. Of course, on the basis of that high seroresponse rate, we see also a 100% seroconversion.
With regards to safety data, VLA1553 was generally well tolerated. You know, we had, of course, as expected for a vaccine of that class, solicited systemic adverse events. The majority of solicited adverse events were mild or moderate, and only 2% of study participants reported severe solicited adverse events, most commonly fever. In terms of the commercial, future commercialization, as we repeatedly communicated, VLA1553 fits perfectly within our existing commercial infrastructure. We have a high caliber team with significant experience in the vaccine space, we are currently adding a significant amount of talent and people as we are preparing for the commercial launch and market access for this brand-new vaccine in a brand-new indication. We are all extremely excited about the prospect of being in a position to launch such a product.
Let's go to Lyme. It is, again, following our pipeline differentiation around first, only, or best-in-class, the only Lyme disease vaccine in advanced clinical development today. It is a multivalent recombinant protein-based vaccine, covering the six main serotypes of Lyme borreliosis prevalent in the Northern Hemisphere. We initiated the phase III study on the back of positive results for three phase II studies, including a pediatric population. You know that as part of the ongoing phase III study, there were GCP issues observed that led the study sponsor and our partner, Pfizer, to actually stop a significant part of the study subjects that were included in the study. Given the seasonality around Lyme development, we have currently a review of the trial design and the associated timelines ongoing.
This is of course a process that will still take a bit of time. I think, by way of reminder, with regards to the data that have always been extremely strong for Lyme and of course also the GMP issues, GCP issues that we have been facing now, as part of the phase III conduct do not change the picture on the underlying science and value of this program. All three phase II studies showed strong immunogenicity. The product has been in more than 1,000 people and as I said, including pediatric population. We have seen as part of the booster studies a very strong anamnestic response, which is of utmost importance for a product that is expected to be boostered over time.
When we look at our pipeline, you basically see that we are currently reviewing most of our, some of our, pre-clinical and previous clinical candidates with regards to next clinical entry. We have a Zika candidate for which we conducted a phase I study. We did not progress that further because of the work that we commenced on COVID. However, we are currently evaluating a potential clinical re-entry at the end of this year or very, very early next year, given that we could leverage one of our existing platforms and given that WHO made a clear recommendation for Zika vaccines to be based on inactivated whole virus technologies. HMPV, human metapneumovirus, is a program that we developed throughout the pre-clinical phase.
It has reached the end of the pre-clinical phase with the initial pre-clinical proof of concept being completed. Given that the market is shifting in the development arena towards combination vaccines, RSV HMPV, we've decided to evaluate a potential partnering before taking it potentially into a first trial in humans. Our lead program in our, you know, pre-clinical shop today is Epstein-Barr virus, and we target the completion of the antigen identification for such a quite complex, you know, development, in a very, in an area of a very high unmet medical need by the end of 2023.
The two other programs that we have in early R&D are Campylobacter and Parvovirus. We are still evaluating whether we put them into the pre-clinical R&D and development as of now or not, but this is something that we will decide over the course of this summer. With that, I would like to hand over to Peter to provide us the financial report.
Thank you, Thomas, and good morning or good afternoon to all of you. Let's look at the financial review of our fiscal year 2022. Total revenues grew by 3.8% versus fiscal year 2021, driven by a strong product sales growth. Total product sales reached EUR 114.8 million, an increase of 82.3% versus prior year or 66.7% in constant currency. 2022 product sales include EUR 29.6 million of VLA2001, our COVID-19 vaccine. Product sales excluding our VLA2001 sales reached EUR 85.2 million, exceeding our guidance of EUR 70 million-EUR 80 million. Moving on to slide 14, looking at product sales details.
The IXIARO sales reached EUR 41.3 million, a decrease of -8.4% versus prior year as a result of fewer shipments to U.S. military. The decrease in sales to U.S. military was partially offset by significant increase of travel sales in the travel market of 300%. DUKORAL sales reached EUR 17.3 million compared to EUR 2.4 million in 2022, an increase of more than 600%, once again driven by the recovery of the travel market. Third-party product sales increased by 72% to reach EUR 26.5 million for the fiscal year 2022. This represents a record level of this product segment, as Valneva managed to increase third-party product sales consistently over the last two years.
The very positive sales performance in our travel vaccine is, as already mentioned, related to a travel market recovering faster than expected. Finally, as already mentioned, we shipped COVID-19 vaccines for an amount of EUR 29.6 million to certain member states of the European Union as well as to the Kingdom of Bahrain. Moving on to slide 15, looking at the P&L. We already covered product sales. Other revenues reached EUR 246.5 million and primarily consist of one-off revenues derived from the advanced purchase agreements with the European Commission and the United Kingdom. The cash related with these revenues were received in 2021 and early 2022. Also included in the other revenue line is the adverse impact related to amendment of the VLA15 agreement with Pfizer and updated cost sharing.
Further details will be included in our Universal Registration Document in 20-F that we plan to publish next week. Total revenues reached EUR 361.3 million, slightly exceeding our guidance of EUR 340 million-EUR 360 million. Looking at expenses, we observed a significant increase in cost of goods. This is mainly a result of one-off items related to the wind down of our COVID-19 program following reduced market demand. Research and development expense decreased from EUR 173 million in 2021 to EUR 104.9 million in the fiscal year 2022 and stayed well within the revised guidance of EUR 95 million-EUR 110 million communicated during our nine-month result release.
The decrease compared to prior year is mainly driven by lower spend on our VLA2001 program, but also by decreased spend on clinical trials of our chikungunya vaccine as the program advances to its licensure. Marketing and distribution expense remained stable compared to prior year at EUR 23.5 million and contained EUR 7.3 million of cost for our chikungunya vaccine candidate, twice the amount spent a year ago as prepared for a potential launch. G&A expense decreased significantly from EUR 47.6 million in 2021 to EUR 34.1 million in 2022. All expense lines benefited from a substantial non-cash adjustment related to the positive effect on the cost related to the company's share-based compensation due to the share price performance in 2022.
Overall, an upside of EUR 25 million resulted in 2022 compared to a total cost of EUR 37 million in 2021. Other income of EUR 12.2 million mainly consists of R&D tax credits and other expenses related to the provision for the ongoing revised and to sell virtual litigation procedures. Total other income decreased compared to prior year due to the lower R&D spend and the related decrease of R&D tax credits. In 2022, Valneva generated an operating loss of EUR 113.4 million compared to EUR 61.4 million in prior year and an adjusted EBITDA of - EUR 69.2 million versus - EUR 47.1 million in the prior year. Next slide, please.
Looking at our COVID business segment, we see total revenues of EUR 309.6 million with a total cost of goods and services of EUR 267.1 million. COVID cost of goods includes significant costs related to the wind down of the COVID program. The company recognized major costs related to a write down of all COVID-related inventories and onerous agreements, in particular, the discontinuation of the third-party manufacturing contract. The operating loss for the COVID segment in 2022 reached EUR -44.28 million. The business outside COVID generated total revenues of EUR 51.7 million. As already mentioned, the negative other revenues were driven by the revised Lyme agreement.
Cost of goods and services reached EUR 57.3 million and consists of EUR 9.2 million cost of technologies and services. EUR 3.3 million for vaccine candidates and EUR 41.8 million of commercialized products. Gross margin of product sales reached 45.5% compared to 36.5% in 2021. Cost of goods of commercialized products also include an impairment charges related to DUKORAL. Total operating loss for the business outside COVID was EUR 70.6 million compared to an operating loss of EUR 65.3 million in 2021. The increased operating loss is driven by the negative revenues related to the Pfizer agreement. Moving on to slide 17 and looking at our balance sheet.
Total assets decreased from 817, EUR 17 million at the end of 2021 to EUR 621 million as December 31, 2022. The main decrease in assets relate to a sharp decrease in inventories, primarily related to the full write down of all COVID-19 related inventories. Cash and cash equivalents at the end of 2022 were at EUR 289.4 million compared to EUR 346.7 million at the end of the prior year. Next slide. Valneva’s equity was strengthened in 2022 through a global offering of EUR 102 million at the end of the third quarter, as well as prices invested in Valneva shares for a total value of EUR 90 million.
At the same time, total liability decreased by EUR 245 million, in particular driven by a decrease of contract and refund liabilities, driven by the revenue recognition of deferred revenues related to the COVID-19 agreement. Borrowings and other non-current liabilities remain stable. While total borrowings increased due to an increase in the deferred and orbit loan, these liabilities decreased due to amortization and the foreign exchange impact. Provisions decreased due to lower cost of share-based compensation driven by the decrease in Valneva share price. Overall, Valneva significantly improved its debt to equity ratio in 2022. Now, moving on to the financial outlook on slide 20. We expect product sales to reach EUR 130 million-EUR 150 million, and this includes marginal remaining VLA2001 sales under the Bahrain supply agreement.
EUR 90 million-EUR 100 million of other income are expected in relation to the sale of the PRV, expected upon potential approval of our chikungunya vaccine candidate. Investment into research and development are anticipated to reach between EUR 70 million and EUR 80 million. This concludes the finance section of this call. I would like to hand back to Thomas for the news flow.
Thank you so much, Peter. We see for the year 2023, a quite significant number of catalysts and an interesting news flow. As mentioned earlier on chikungunya, it's of course the adolescent study results that would come mid of the year. Please keep in mind that we expect to extend the label in the United States post licensure, and probably include the data directly for the initial filing in other markets. Of course, it's all about our launch here. The potential BLA approval and the launch, and upon successful approval, the PRV and the potential PRV sale that Peter mentioned earlier. We try to accelerate bringing this novel and unique vaccine to many markets as quickly as we can.
Hence, you should expect additional ex-US regulatory submissions in the second half of this year. On Lyme, of course, we all understand that it is important that we get clarity on our phase III clinical study plans. We need to have this as quickly as we can so that we can restart, you know, enrolling people in time. Of course, as we are running the antibody persistence studies in an ongoing way, we will also expect additional antibody persistence results in the second half of this year. On IXIARO and military, we expect a potential new DoD contract still towards the latter part of the H1. The progression of the selected preclinical programs towards clinical entry.
We will take a clear decision which one and by when. As we reported earlier, we are reviewing and evaluating to potentially augmenting our clinical pipeline through a program acquisition or partnering in the R&D environment. When you look at our strategy and how we see the company evolving over time, we prepared slide 23. You see that our value proposition will gradually be extended. The additional potential growth drivers include the continued recovery of the travel market to pre-COVID levels and beyond. New U.S. DoD contract for IXIARO. Further expansion of our third party distribution segment. Potential in-licensing or acquisition of additional clinical and or commercial stage products. With that, we conclude our presentation, and we hand back to the operator to take your questions.
Thank you. As a reminder to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile a Q&A roster. We will now take the first question. It comes from the line of Maury Raycroft from Jefferies. Please go ahead. Your line is open.
Hi, congrats on the progress, thanks for taking my questions. I was gonna ask one about the Lyme disease program. For the phase III Lyme proposed protocol modifications that would allow Pfizer and Valneva to remain on track for a 2025 filing. I'm guessing you can't provide too much into exact interactions with FDA, but can you talk about some of the scenarios or moving parts involved with being able to maintain the timelines?
Maury, hi, good day. It's of course an excellent question. You will certainly understand that, as you rightly pointed out, there is very little we can say at this point in time, and we don't want to disturb this ongoing process. It is very clear that, as we discussed previously, of course, we did lose a significant number of people in the season 2023. Of course, given the seasonality, you have only a certain window where you can recruit people and, of course, one scenario is just to add another season. This is the obvious one that you already, you know, figured out yourself and, you know, just restarting, you know, again this summer for the next tick season, 2024.
There are, you know, other, what I would call more creative scenarios, that may potentially allow, still, a filing, but those are in the make right now or in the discussions and we can't comment on those.
Got it. Understood. For IXCHIQ, I'm wondering if there's been any new correspondence with FDA related to potential for an advisory committee meeting. In looking ahead, how are you preparing for the February 2024 ACIP vote? Maybe talk about how that vote, outcomes from that vote could impact your launch strategy.
Excellent question. First of all, we are, you know, making progress in the ongoing review process. At this point in time, there is nothing that has come up in an unexpected way. Otherwise, of course, we would have reported it. As far as the Work Package is concerned, you know, no decision has been taken yet as to whether a dedicated Work Package for this program will be needed or not. It goes without saying that we are preparing full speed and full steam for such a Work Package. Our teams are well prepared, and we are putting everything together to enable a very positive Work Package should it be required. With regards to the ACIP, I mean, you know that the ACIP process has been very clearly outlined.
We had already a number of presentations on the program. We will continue following the path as we are being invited to present. Of course, we do hope and do assume a positive vote as part of our launch plans for the United States.
Got it. Okay. Thanks. thanks so much for taking my questions.
Thank you. We will now take the next question. It comes from the line of Evan Wang from Guggenheim Securities. Please go ahead. Your line is open.
Hey, guys. Thanks for taking the question. Following up on Lyme, just, you know, as you guys are having these discussions, you know, just wondering, have you seen this kind of situation before? Have FDA or EMA provided any kind of commentary or, you know, is there any precedence that gives confidence that a modification could be reached? I have a follow-up after.
I would say, the situation with Lyme is in a way unprecedented because of the seasonality of the disease. Under normal circumstances, if you did not have a seasonality, you know, to be considered, you lose, you know, for whatever reason, people in your clinical study and then just, you just continue recruiting and the recruitment takes longer. Here we have, of course, a situation where you need to recognize the seasonality because otherwise you don't get the necessary case counts. In a placebo-controlled field efficacy setting. As such, there is probably not any precedence to such a specific situation.
The discussion with FDA on, you know, primary endpoints, secondary endpoints, co-primary endpoints, parallel endpoints, these are discussions that I've been through in my more than 30 years of vaccine development many, many times, and this is certainly nothing unusual. These are things that will that need to be based on different statistical modeling and this is clearly something that is not new to any regulatory authority. By the end of the day, it is always a matter of risk, benefit, and judgment, and that's all I can say at this point in time.
Got it. I had a follow-up on chikungunya. Can you expand a little bit more on your travels, commercial infrastructure, and in particular, how it compares to that of Bavarian Nordic?
First of all, we do have own commercial operating entities and organizations in the U.S., in Canada, in the U.K., in France, the Nordics, and Austria. We are working with Bavarian Nordic under a commercial agreement where in some of the markets where we have our own infrastructure, we sell Bavarian Nordic products. In other markets where Bavarian have an infrastructure, they sell our products. As we said previously, of course, this whole collaboration is gonna be under review. For now, both parties have made a clear commitment to respect their respective contractual, you know, obligations going forward.
Great. I had one last one on HMPV. It seems like, maybe there's more emphasis on partnering. Am I interpreting that right? Is there still plans to bring that into clinical stage development?
I would say right now, so basically we have, as I mentioned earlier, we've reached the point of pre-clinical POC completion, so this means we need to take a clinical entry decision on this asset. The point is that we are talking here about a pre-fusion candidate that requires an adjuvant. Standalone HMPV does not really make sense from a product development perspective. The first trial in men is certainly very valuable. Whoever would then later combine this asset with an RSV vaccine would need to go largely back to the drawing board because of the specifics around adjuvantation.
Therefore, we have said we give it a slight pause and look whether it would not be more valuable to bring this asset at this point already into a partnership model with one of the RSV, you know, candidates and therefore have a more efficient development route. Should this not be seen as a viable and value-generating option, then we will certainly consider, you know, taking it into the clinic in order to increase the asset's value.
Great. Thanks, guys.
Thank you. We will now take the next question. It comes from the line of Max Herrmann from Stifel. Please go ahead. Your line is open.
All right. Thanks very much for taking my questions, three if I may. Firstly, just some financial clarity just on the inventory, the COVID vaccine inventory write-off in the fourth quarter. Was interested to find out what that was. Secondly, on the Epstein-Barr virus candidate, how do you view the field given the mRNA vaccines ahead of you in the clinic already? Then just a little bit more clarity on the refund liabilities at EUR 136 million. What do they actually... Is that to do with the Pfizer funding or what's within that? If we could get a bit more clarity on that. Thank you very much.
Max, so let me start with the non-finance question first about EBV. As you know, the Valneva's strategy is certainly based and Valneva's R&D pipeline strategy is basically based on our clear idea to have assets where we can play a differentiating role. First in class, best in class, only in class. If we entered into a space where others are more advanced, we will see whether we can play a differentiation game. And you're absolutely right. There is one program in clinical development, I think. We will evaluate our, you know, candidates and then take a decision before we enter the clinic, of course.
Okay. Understood. Thank you.
Thank you.
Oh, yeah. This brings us to the finance questions.
Yeah, thanks, Max, for the question. First question on the COVID inventory write-off. Basically the approach we took, and, you know, we communicated previously that we have 8-10 million inventory of COVID pro- dose. 8-10 million doses of COVID vaccines in our inventory. The approach we took at the end of 2022 is basically take a full write-down on semi-finished, finished product, but also on specific raw material related to the COVID vaccine. We of course, continue our efforts to try and sell these products at the market, but given where we are today, we decided that this is the prudent approach to fully write down those inventories. With regards to your second question on refund liabilities, this is by and large, price related.
There is a small, historic remaining part that relates to an old GSK contract or refund liability, which is related to the past, that was already there last year. Basically the large majority of the refund liabilities is related to Pfizer.
Just on my inventory write.
Sorry, yeah.
Inventory write off it. Are you able to quantify it? 'Cause it's quite hard to model these things when we're unclear about what the actual amount was. I mean, does that mean that you've written off the product your all your inventory now or the stuff that you plan to ship to Bahrain that you've kept the cost? I'm just trying to understand the implications.
Yeah. Yeah. Your assumption is exactly correct. We basically wrote off everything except the remaining shipments for Bahrain, so that will still be included in our inventory and that's a relatively small amount. Overall, you know, you can assume we had a write-off in the financial year 2022 of roughly EUR 130 million. That goes into our cost of goods.
Okay, great. Thank you.
Thank you. We will now take the next question. It comes from the line of Rajan Sharma from Goldman Sachs. Please go ahead. Your line is open.
Hi. Thanks for taking my questions. Just on the marketed travel vaccines. Firstly, could you just kind of help to understand what proportion of the revenue growth in 2022 was driven by volume versus price, and how we should think about this dynamic into 2023 and into the midterm? Then secondly, just again on kind of the commercial vaccine business, there was some additional detail in today's release, which was helpful on growth margins. I was just wondering how we should think about this into 2023. Is it safe to assume that it's kind of at 22 levels? What could be the pushes and pulls to this? Then just one follow-up on Lyme.
In kind of a scenario where there's additional trials required, I just wanted to clarify if your potential contribution to those costs are capped at a certain level. Thanks.
Let me start with the Lyme question, and then this gives the finance team a bit more time to dig the numbers up. I would say on Lyme, first you used the term additional studies. No. The study is ongoing. This means we have the study got not stopped. Which means that there is, it's only a matter of when do you recruit the necessary additional people into the study because you lost some of them. The second part is of course, related then to, what kind of do you keep the readout, and when do you do the readout? And this is always in relation to, readout after primary immunization versus readout after priming plus first booster.
that's more from the clinical development point of view. On the cost side of things, we have not had any discussion yet, about any potential incremental costs, and this is something that is, will be discussed, as soon as we have an agreed development plan going forward.
Yeah. With regards to your volume versus price question. When we look at IXIARO, as you can see on the slide, at constant exchange rate, we look at a downside of about 18.6% versus prior year. We are looking here, the upside rate to price of a +10%. The difference is of course then volume driven. When we look at Dukoral, we have a volume upside versus the prior year of roughly 400%. The difference to the total 600% upside versus prior year would be price related. I think you had a second question.
Yeah.
If you could just repeat that one?
Yeah, sure. It was just on the growth margin on the travel vaccines, 'cause I think you had some additional information in the release today. I was just wondering whether those 22 levels are kind of a fair assumption for margins going forward.
Yeah. We look at a much stronger growth margin than for IXIARO than for DUKORAL in 2022. As you can see, the growth margin improved significantly versus prior year, and we would expect this improvement also to continue as we continue to increase volumes.
Okay. That's, that's very helpful. Thank you.
Thank you. We will now take the next question. It comes from the line of Samridh Devani from Rx Securities. Please go ahead. Your line is open.
Hi, guys. Thanks for taking my questions. I think I've got three, mainly finance related. The first one, just on the guidance, other income, EUR 90 million-EUR 110 million. I just wanted to confirm that that's essentially non-cash revenue recognition. That's the first question. In terms of the Pfizer phase III, I was wondering whether you have made a cash contribution to that in 2022, and if so, maybe can you just explain. I think you previously talked about that not going through the P&L, but if you could just maybe explain where that's coming out in the cash flow. The final question is just on your distribution of marketing expenses. We saw a little bit of a bump in Q4.
Is Q4 a good run rate, quarterly run rate, going into this year? Thanks.
I start with the first point on guidance. Other income, as we said, this is related to the PRV we expect to receive upon approval of our Chikungunya vaccine candidate. As we expect to sell this PRV, we assume it will be cash related, because we would recognize that other income as we get the cash. Just also to be very clear, we expect this to go not into other revenues, but other income, i.e. further down in the P&L. With regards to the Pfizer Phase III cash, I mean the way the agreement works is that we basically pay every quarter our share to the trial.
Indeed, to your point, it does not go into the P&L, but it would go against the balance sheet, against the refund liability, which is talked about previously when, in Max's question. Then distribution and marketing expense. What you see in Q4 is an increase indeed versus prior year, versus pre-previous quarters, which is primarily driven of course as we get ready, with our, you know, or we get prepared, we prepare our Chikungunya vaccine candidate launch. Also of course related to, you know, our overall commercial activities ramping up as the markets come back.
It's safe to assume that you could see further increases there as we get ready with our commercial infrastructure, you know, strengthen the commercial infrastructure in view of the new launch.
Okay. That's great. Thanks very much.
Thank you. We will now take the next question. It comes from the line of Suzanne van Voorthuizen from VLK. Please go ahead. Your line is open.
Hi. Thanks. Yes, it's Rowan calling in for Suzanne. I just have one confirmatory question. Since you've mentioned that you've written off all COVID-19 inventory in 2022, do I then understand correctly that we will see no financial impact for the current year?
I mean, we will continue to have some R&D expense as we continue to, you know, to finalize certain clinical trials that we have started in the past. We will not initiate new clinical programs of course, but we do need to ramp up some clinical trials, and that cost is included in our R&D expense. We do not expect further inventory write-offs to that point. Of course, we will, we mentioned also the final shipments to Bahrain, that would of course drive revenues. That's basically what we expect for 2023 in terms of COVID hitting our P&L.
Okay, thanks. One final question. At last year's R&D Day, you presented on various pre-clinical programs, such as Zika, HMPV, and EBV, which we expect in terms of updates on these programs during this year. Thanks.
Is your line on mute, please?
Our objective is to have a clinical entry by the end of this year, very early next year. Whether it's one program or two programs, is still something that we're gonna decide out of our own pipeline, but we will definitely, you know, inform the markets, you know, which program is we are expecting to enter the clinics. This would certainly be a new news flow for this year. We have this ongoing point about reviewing potential additional external opportunities to inject in our clinical pipeline since we have clinically relevant capacity and capability. That's certainly an ongoing process as reported in the expected news flow and catalyst section.
Thank you. As a reminder, if you wish to ask a question, please press star one and one on your telephone. That is star one and one. We will now take the next question. It comes from the line of Rajan Sharma from Goldman Sachs. Please go ahead. Your line is open.
Hi. Thanks for taking my additional questions. I just wanted to follow up on the BD M&A piece or the external kind of sources of innovation. Would your preference on that be kind of a technology platform that you potentially don't have in-house right now, or would you be looking at specific assets? Then just secondly, just to follow up again on the initial question on kind of volume versus price. I was just wondering, I guess I could ask in a different way, were you able to kind of take price increases on DUKORAL, third-party products and IXIARO in 2022, and do you expect to be able to do that in 2023? Thank you.
Thanks, Rajan. Let me start with your second question. Yes, we did increase pricing across the board for basically most—IXIARO, DUKORAL, and also some of our third-party products. We of course also looking at continuing selective price increases in certain countries going forward. Can you repeat your first question, please?
Sure. It was just in terms of kind of the external sources of-
Oh, okay. The external influx, you mean?
Yeah.
Basically, I mean, you know that Valneva is a technology agnostic company, right? We are not a technology company. We go by indication. We go by indication where we are looking into indications where we can still play a pioneering role. I mentioned earlier, first, only best. Valneva has historically worked with literally all vaccine technologies out there except mRNA. Of course, we would also be open to work on a specific indication on mRNA, but it's not our interest to acquire a technology company or a technology platform or going back or becoming out of a sudden a technology company. We will go by a specific indication and by a specific asset.
Okay. That makes sense. Thank you.
Thank you. There are no further questions at this time. I would like to hand back over to Thomas Lingelbach, CEO, for final remarks.
This one I hand over to my friend, Josh.
Yes. All right. Well, thank you everybody for your time and participation today. Please note an archived version of today's webcast will be made available later today. A PDF of the slides presented during today's call is already accessible on the company's website. We look forward to a productive 2023 and to welcoming you back for our next conference call in the not so distant future. Thank you. Enjoy the rest of your day.
That does conclude our conference for today. Thank you for participating. You may all disconnect.