Hi, everyone. My name is Maury Raycroft, and I'm one of the biotech analysts at Jefferies. I'd like to welcome Peter Bühler, the CFO, and Josh Drumm, VP of Global IR from Valneva. We're going to do fireside chat format. Maybe for those who are new to the story, if you can give a brief intro to Valneva.
Yes. Hey, Maury. Thanks for having us here. Valneva is a vaccine company. We basically focus on prophylactic vaccine and infectious diseases. We go all the way from research development through manufacturing and commercialization. We have right now three of our proprietary vaccines that we market in Europe and in North America, and then also with partners in other regions. We manufacture those vaccines in Scotland and Sweden. We are actually incorporated in France, but our operating headquarters is based in Vienna, where we also have our largest R&D footprint, and we are just under 700 people. In terms of our clinical pipeline, we have a well-advanced project together with Pfizer, where we develop a Lyme vaccine where data readout is expected in the first half of next year.
Got it. Yeah, that's a great intro. Definitely a lot of interest in the Pfizer phase III Lyme study. It's going to read out first half of next year. Maybe you provide an overview of the phase III study and talk about the primary endpoint for it.
Yeah. The Lyme phase III program is a randomized placebo-controlled field efficacy study that looks basically at the ability of VLA15, that's how it's called, to prevent Lyme disease. The primary and the key secondary endpoint will basically be the relative rate of infection in the treatment arm versus the placebo arm. In terms of the design, we have roughly 9,500 participants in the trial, 2:1 North America versus Europe, and 1:1 placebo-controlled versus treatment. It's age 5 years and above. The way the vaccine scheme works, it's a three-dose priming. Then 18 months after the first dose, we look at the booster. That's also something, I think, from the post-COVID area. We now look at the efficacy after booster. This will also be the primary endpoint, will be after booster.
Got it. OK. Pfizer recently revised the guidance for the top line from year-end 2025 to first half 2026. Can you walk us through the reason for the revised guidance based on your latest communications with the company?
Yeah, look, I think so nothing to do with the vaccine. I think that's important to note, right? We have not seen any data. The data readout will really be next year. Nothing with that. It's just because basically the season ended at the end of October. That's when the case count stops. There is no follow-up for safety until the end of the year, so for three more months.
There will be a few exceptions where if people actually declared tick bites before the end of October, but they only have symptoms in the three-month follow-up, they will still be counted both in the placebo and the treatment arm. What Pfizer basically said is they want to go through this three-month safety update. The case adjudication will happen next year. They will do the whole data analysis and publish the data readout.
Got it. That three-month time frame, that's the amount of time that you need to confirm a delayed vaccine.
Yeah, and also for safety follow-up.
For safety.
I think the other thing also which is really important to note is while the data readout is delayed into the first half of next year, all the other timelines are basically not touched. They stay the same. We still expect if we get through successful approval, we expect commercialization starting late in 2027, in advance of the 2028 tick season, basically.
Got it. OK. Yeah, I guess for the update, you said you'd have the top line and then additional endpoints by first quarter. I guess based on the new timeline guidance, do you still expect that there will be two data disclosures or one combined data disclosure?
At this stage, we do not really know. That is something that is up to Pfizer to decide. At this stage, I cannot comment on it.
Got it. OK.
I mean, sorry, there will be several data readouts, of course, but we don't exactly know how much they will disclose in the first readout versus later.
Got it. OK. Presumably, they would want to have data at medical conferences as well.
I think from what we understand is as soon as they have the data, they will basically publish those. They will not wait for any conference. It will be disclosed immediately to the market.
OK. The top line and then probably have more detailed data at a congress.
Yes.
Yeah. OK. On the second quarter earnings call, you guys mentioned that there could be a very different efficacy profile with VLA15 based on the immunological profile of the vaccine. Can you clarify how you're thinking about potential differentiation? Do you think there's potential to show numerically higher vaccine efficacy after one tick season or more likely after two seasons?
Yeah, maybe I started, and Josh can elaborate. I think compared to the prior Lyme vaccine that was on the market, the dosage changed. The previous one was 2 + 1. Ours is now 3 + 1. That has an impact. Yes, of course, we do see a different profile after the booster. Josh, maybe you can elaborate.
Yeah. I mean, that's really the basis of it. The only thing I would add is that we know that the immunogenicity broadly correlates with efficacy, just based on the prior experience. We would expect just based on the optimal or optimized immunological profile that we may indeed see higher efficacy both first season and second season.
Got it. OK. Can you talk about how the stringent case definitions you use in the phase III compare and contrast with prior Lyme vaccine studies? Do these definitions further increase the probability of success to differentiate?
Yeah. I mean, the basic parameters are similar to what we're doing versus what the prior Lyme vaccines had done in that there's sort of a clinical assessment combined with one or more diagnostics, confirmatory diagnostics. The main differences being that Pfizer is using more modern, more stringent assays compared to sort of the ELISA and Western blot standards of the time 25 years ago. Cases will be sort of treated in the same way, broadly speaking.
Got it. Maybe going back to the efficacy expectations for the data after tick season one versus two, I guess can you just talk about percentages there relative to your phase II and then versus the competitors as well? What you'd expect to see?
We know from our phase IIs that after the priming doses, you have a spike in anti-OspA IgG, that is the antigenic target. You have a spike in anti-OspA IgG, and then that declines over the course of the tick season. When you get your booster dose, we have shown a very strong, and not just we, also GSK with LYMErix , show a very strong anamnestic immune response where the titers shoot up much higher than they do after the priming doses.
As I said before, because titers tend to correlate with efficacy, and again, in line with what was shown with LYMErix , they showed a 50% or so efficacy after the priming doses and then about 75% efficacy after the booster dose. 2 + 1 . Because again, we have 3 + 1, we expect that we might see a greater efficacy, but at least as good just based on the similar mechanism of action.
Got it. OK. That's helpful. I'm sure you guys get this question. We've gotten questions on just the theoretical risk of arthritis that came up with the LYMErix vaccine, which was never definitively linked to the vaccine. Can you talk about how you've designed your vaccine to mitigate potential arthritis risk? What are your expectations for the safety profile overall based on your phase II?
Yeah. I'll start with the end. Based on our phase II, we had, or just our prior clinical experience prior to this pivotal, more than 1,000 participants, mostly adults, but also in children as young as five. We saw no clear safety signals that are concerning.
There was a whole story around LYMErix regarding potential autoimmune pathway causing sort of arthritic symptoms. It is something we'll look at, but it's not a particular concern, primarily because, as you said, that postulate was eventually withdrawn after it was disproven.
However, they did cite a specific sequence within the OspA protein that might have homology to a T cell epitope. And it's only relevant to serotype 1 because that vaccine was only serotype 1, so only relevant to the U.S. market primarily. We and Pfizer went ahead and replaced that sequence with the corresponding sequence from serotype 2 just to mitigate any potential challenge about that.
Got it. OK. Do you still expect the regulatory submissions to FDA and EMA are going to occur in mid-2027?
Yes, that's right. Yes.
Mid-2026.
Submissions mid-2026, approval early mid-2027.
Early mid-2027.
Launch late 2027, as I said, ahead of the tick season 2028.
Got it. OK. OK. What are your expectations for potential ACIP meeting in 2027? Just thoughts on the language of the recommendation in terms of age, states where it would be recommended, and booster frequency.
Yeah, look, I think at this time, we cannot really speculate on ACIP recommendation. I think that's to be seen. It is going to be managed also by Pfizer. Of course, they're interacting with ACIP, but we can't really talk about or speculate on recommendation post-approval.
OK. So they're meeting with ACIP even before you have data from the phase III?
I think the ACIP has established a working group. Now how exactly the interaction there works, et cetera, I'm not in these details.
OK. OK. Yeah, I guess at some point, would we get additional information into just how ACIP is viewing this? Maybe talk about the implications of the ACIP recommendation for the commercial opportunity.
Yeah. I personally have limited experience with this, but I'll draw from our chikungunya vaccine where leading up to approval, there were regular meetings of ACIP where chikungunya virus was discussed and a chikungunya virus vaccine was discussed. I would imagine a similar situation would happen with this vaccine. Again, as Peter said, the working group's been formed. What will go onto the agenda of the upcoming ACIP meetings between now and 2027? I'm not sure.
Got it. OK. Any perspective into just regulatory risk with new leadership at CBER and ACIP? Do you think the traditional protein subunit vaccines, the traditional subunit vaccines have a lower risk versus mRNA or other modalities?
Yeah. Yeah, look, I think on the regulatory risk, I can't really comment. I think what I would say is it's important to note, as I said in the beginning, it's a randomized placebo-controlled field efficacy study. I think in terms of that, I think it responds to the expectations of the authorities. It's also looking at efficacy after booster. I think that's really important to note. Sorry, what was the second part of your question?
Just if they have, if a natural traditional protein subunit vaccine has lower risk.
Yes, that's what we saw in previous trials. The phase that subunit protein-based is relatively safe vaccine compared to others.
Right. OK. Yeah, that's interesting. OK. For your timelines that you've mentioned, are you anticipating priority review or standard review?
It is priority review.
Priority review. OK. Got it. Yeah, are they using a voucher for the program or is that?
No, the program has fast-track designation.
OK. Yeah. Assuming you get priority review.
Right.
Yeah. OK. You also have a phase III with younger patients, participants from 5 to 17 years old for the safety database. On [cdc.gov], it says that the study is completed as of September 2025. Can you confirm that the study is complete and data are ready to submit with the BLA and MAA?
Yep. The study is in sort of final evaluation and will be part of the initial BLA submission.
Got it. OK. Got it. You and Pfizer have mentioned it could be a billion-dollar-plus global market opportunity. What do you think it could represent in terms of peak royalty revenue to Valneva? Can you remind us how it gets you to sustained profitability in 2027?
Yeah. As you say, Pfizer did say at the beginning of the collaboration that they expect this to be above a $1 billion market opportunity per year. We have not really communicated any further numbers on that. We will get tiered royalties between 14% and 22%. We have not commented on peak sales. We have not commented also on royalty revenue. We will get milestones upon first commercial sales, basically three triggers, first commercial sales in Europe, in the U.S., and ACIP opinion. On the back of those milestones and then later the royalties, we do indeed expect that the company could become sustainably profitable.
Got it. Are you providing more granularity on the milestone payments?
We have not given the granularity between the three triggers because we also expect that they will more or less all happen at the same time, end of 2027 as we have the first sales happen. There will also be sales milestones of up to $100 million and the royalty revenues. Also there, we have not published the tiers of the royalties.
Got it. OK. Any perspective on just the past tick seasons? I've heard anecdotally from people that it's just there are a lot of ticks and I don't know.
Yeah. I mean, again, I mean, CDC reported that I think it was based on visits to urgent care with suspected tick bites was higher than usual in 2025, but I could not really quantify it.
Got it. OK. OK. Let's shift gears, talk about IXCHIQ briefly. This is your vaccine for chikungunya virus where FDA suspended the BLA in August based on the SAEs. What's your latest thinking on the path forward with IXCHIQ in the United States?
Yeah. So indeed, it was the FDA suspended based on what they saw for new cases. There were foreign cases actually outside the U.S. They were seen by the FDA later because it's just a question of how they appear in the global systems. They had been taken into account by the competent authorities in their respective countries in their previous assessment. They did not see any necessity to further action. The FDA suspended the vaccine. We responded to the FDA. Now there is really not a very clearly defined path forward. We're now waiting to see when the FDA comes back. There is also not an established timeline for that.
OK. Can you say when you responded to them and how long?
When was that? Early October, I think, right?
It was within 10 days of suspension.
Ten days after suspension.
OK. You still haven't heard back yet. Maybe by the end of the year, you'll get feedback.
You know why? We don't know.
Got it. In your response, did you submit any additional safety data? Did you formally request a meeting with them?
They had all the safety data. Basically, they had everything from our clinical trials. They get, of course, any reporting through the relevant systems. I'm not sure if we requested a meeting, but we responded to their points, basically.
Got it. OK. At some point, you guys are running the post-marketing studies. You will get additional data, additional safety data from those as well. You could potentially leverage that to continue this conversation with FDA.
Yeah, right. We started those post-marketing studies because they're not just relevant for the U.S., but they're also relevant for all other markets, for Europe and also for low-middle-income countries. They basically started. They will really ramp up next year. They're basically set in a dynamic setting. We will, of course, also use these data then for further discussions with the FDA.
Ex-U.S., you're still commercial.
That's right.
Things are still advancing there. Maybe provide a status update on just how that's going.
Yeah. We are commercial in Europe and in Canada. We are working with our partners in the low-middle-income countries, sorry, in Brazil, notably, and in India, to get the vaccine there approved, working on also tech transfer for the finishing. That is all ongoing, yes.
Got it. OK. And IXIARO, can you talk about expectations for revenue growth and improvements in gross margin moving forward?
Yeah. So IXIARO, it's our Japanese encephalitis vaccine, for those who don't know. We see a nice growth. In our half-year results, we reported a good growth of IXIARO. We expect to continue to see the product growing. It's also, of course, driven by travelers into endemic areas. From what we see from IATA data, the number of travelers are growing and are expected to continue to grow. As volumes increase, we also transferred now the product to manufacturing in our Scottish manufacturing site, to the new site that we built during the COVID period. Over time, as volumes grow, we do expect a further improvement of our gross margin.
Got it. OK. The DOD could potentially order more IXIARO by January 2026 under the current supply agreement. How should we think about projecting for this in respect to additional doses and revenue potential?
Yeah. The contract, it's an annual contract with the DOD. According to the contract, they have an option to upsize by 50% of the doses, which they used in the past. I think it can be used in two ways. It can be used because they deploy more troops and they need more doses. It can also be used, they have to take it within a certain timeline after the end of the contract. It can be used in case the last time, for instance, the contract negotiation took a little longer. They can use, of course, this to upsize and bridge the time until we sign the new contract. It really depends on the number of troops they deploy.
Got it. What's your base case estimate on what that could look like?
I can't comment on that.
OK. Understood. There should be some updates, probably first half of next year.
Yeah, of course. Look, we will report our Q3 earnings tomorrow. As we publish our annual results, we will comment on that, yes, or as we sign a new contract.
Got it. OK. Understood. For Shigella, one of your pipeline programs, you have the strategic partnership with LimmaTech for their tetravalent Shigella vaccine. You'll show infant immunogenicity data by the end of this year, and then an early look at initial efficacy data from the phase II-B controlled human infection model in early 2026. How are you setting expectations for this program?
Sure. We have not discussed a specific target efficacy. For this adult human challenge study, we will be looking for a certain level of pilot efficacy, as well as the immunological profile across serotypes of Flexneri, and of course, also overall responder rates. I will just add to that that the second CHIM study that we expect to do with a different vaccine strain is equally as important because we can use that to further refine the formulation, the dosing, the schedule.
Got it. For making that decision to do the second study, I guess, what do you need to see in order to do that?
Yeah. Again, a certain level of pilot efficacy. We haven't communicated a specific target.
OK. Understood.
Combined with the pediatric trial, if both of those are successful. Right now, LimmaTech is running those studies. If they're successful, Valneva will take over sponsorship of the program and move forward with the second challenge study.
Got it. You have the efficacy bar in-house. You are just not sharing what it is to the public. Is that right?
If we have one, I don't know it. I'll guess.
OK. Yeah, and for this program, if you eventually moved it into a phase III study, I guess, how could that look? What would you need to see in order to make that decision?
Again, similar answer. We'll take all the phase IIs sort of together to sort of inform a go, no-go decision on a phase III. In parallel, we'll speak with regulators to understand the path forward. We may choose to prioritize one path over another based on efficient capital allocation and unmet need.
Got it. For getting the updates from the program by the end of this year, is that likely going to be in a press release? Or how should we think about that?
Yes. I mean, this is important to the company. We would put that out in a press release for both the current ongoing phase IIs.
Got it. OK. Whatever conversation you have with FDA, that would likely happen next year. You'd make some decisions.
After the second challenge study, we plan to have an end-to-phase II meeting and discuss the pathway forward.
Got it. OK. OK. That's helpful. OK. I think anything else you want to say just ahead of the earnings? You got earnings tomorrow.
Not much we can say about Q3, right, today. No, I think we covered a lot online. I think that's the key catalyst, of course, coming up next year, a very, very important milestone for the company. Of course, also, as we just touched based on Shigella, that's going to be another important one. Also, we have a healthy base business. As I said, three products in the market. We guided annual product sales of EUR 155 million-EUR 170 million. A healthy business.
Got it. OK. Thank you so much for joining us today.
Thanks for having me.
Thank you.