Okay. Hi, everyone. I'm Tara Bancroft. I'm one of the senior biotech analysts at TD Cowen, and thank you for coming to TD Cowen's 46th Annual Healthcare Conference. For our next session, we have a presentation from Valneva, and it's my pleasure to introduce Thomas Lingelbach, the CEO. Thomas, it's a pleasure to have you here, and thank you so much. I will let you kick off your presentation whenever you're ready.
Thank you so much. Yeah, it's a great pleasure for Valneva to be back here at the TD Cowen conference. We really like the place, we like the audience, and we like the very good meetings that we are having here. Of course, it's an exciting moment in the history of our company, and we're gonna come back to that, of course, during the course of the presentation. For those of you not familiar with Valneva in particular, let me introduce the company briefly to you. We are certainly today a leading specialty vaccine company, you know, one of the very few remaining pure-play vaccine companies that operate a fully integrated model, meaning we develop, manufacture, and commercialize prophylactic vaccines for infectious diseases addressing significant unmet medical needs.
We have a cash-generating specialty vaccine business in travel vaccines, commercializing today, three proprietary travel vaccines in most, if not all, of the key travel vaccine countries. We, of course, have a blockbuster clinical candidate coming up, a transformational event for the company with our Lyme disease vaccine candidate partnered with Pfizer, and we're gonna talk more about Lyme during this presentation. I'm pretty proud of the fact that the company and its people, because in our business, it's all about people, has a very deep vaccine expertise in development, in commercialization, in manufacturing, and we have a very strong development track record.
In our history, which is only 12 years old, we have brought three vaccines from bench to multiple licenses, which is not something that a mid-sized company can easily say. You will probably not find many who can say something like that. You know, our strategy is certainly grounded on success. We hope for Lyme success. On the back of that, we would like to strive towards becoming the leading vaccine biotech, which explains to you that our emphasis post-Lyme is really gonna be to maximize the R&D upside for our shareholders. We will continue growing our base business, driving commercial growth, you know, ensuring that this business, which is already today cash generative, will continue contributing positively as part of our fully leveraged integrated model.
As I said, the key notion is really to augment, both organically as well as strategically, towards our vision to contribute to a world in which no one dies or suffers from a vaccine-preventable disease. A little bit about our products. This is our currently commercialized vaccines. Our flagship is IXIARO. It's the only licensed vaccine against Japanese encephalitis, approved in many, many countries. The important part here to mention is that it is a vaccine that is used for forward-deployed troops here in the United States, so forward-deployed into Southeast Asia, and therefore, the DoD represents our single largest customer for that vaccine. Our key markets are all addressed directly through our own commercial infrastructures.
However, there are also some markets where we work through partners, which is why when we later talk about total sales, the total sales do not necessarily represent the in-market sales, but it's sales to Valneva, revenues for Valneva. Our second travel vaccine is DUKORAL. It's a vaccine against cholera, and in some markets, also against LT-positive ETEC. It's a vaccine that we acquired 2 years ago. It's a vaccine made in Sweden, and a vaccine that has made its place in the travel vaccination community quite nicely over past years. Many markets use it as a more general traveler's diarrhea vaccine. More recently, we licensed the first chikungunya vaccine that got a license in many countries.
This is a vaccine that is based on a live attenuated technology, so with a single shot, we are aiming very, very long protection. It's a vaccine that is currently licensed in not all, but most of the relevant, you know, travel vaccine markets. We decided to pull off from the U.S. a couple of months ago. We can talk more about that. We are currently trying to provide access to the vaccine in the areas where there is a very significant need, and the need is not necessarily in travel, also there is a travel vaccination requirement and benefit, but the real need is in endemic countries where chikungunya, which is a mosquito-transmitted disease, is prevalent or where you have a potential risk of outbreaks or repeat outbreaks.
When we then look at our, you know, sales development over time, as I mentioned, we have own in-house sales teams in most of the relevant travel vaccine markets. We have been able to grow our sales year-over-year historically, and, you know, there is, if you want to compare really year-over-year, you need to pay a little bit of attention to what we call the third-party product sales, which is the dark violet, but, you know, area. You know, during COVID, when, of course, travel vaccination went down to literally zero, we tried to keep our sales infrastructure, and we started selling vaccine for others, like, in a contract, you know, sales structure.
We have announced already two years ago that this is of course not strategic for us, and that we would wind down those third-party product sales to below 5% of total revenue in 2026. Therefore, when you compare a like for like, you need to, in a way, take this into consideration. If you deducted the third party and focused on proprietary, you would see that we have been able to perform literally double-digit year-over-year growth rates on our proprietary products. We continue to do that, and as I mentioned, this commercial portfolio is contributing cash to the company, cash that we use for our R&D.
Right now, we have, of course, our flagship program against Lyme disease, partnered with Pfizer, which is the only clinically advanced program, you know, worldwide today. We continue investing in chikungunya, and here especially post-marketing effectiveness studies, to prove real-world, you know, benefit. We have the most advanced program against shigellosis, a tetravalent program that is targeting Shigella and based on a bioconjugation technology which we licensed. This program is right now undergoing two phase 2a studies, one in children and one in adults. Well, we have a number of quite interesting preclinical assets, which are all, you know, close to, if not already, ready to go into clinics.
We're holding back a little bit, waiting for Lyme and hopefully then giving us also the financial capacity to further build and document our pipeline. Those includes a very interesting program against EBV, which we believe is highly differentiated compared to what others are doing. We are working on enteric disease targets, including, for example, a broad-covering ETEC vaccine, but also others. Yeah, let's talk about Lyme. I think, we are here in Boston. We are in a so-called high-risk area for Lyme disease, I don't think that you will find many people who don't know about Lyme. I think, Lyme is quite devastating, of course, in the meantime, we know that there are many, many different clinical manifestations associated with Lyme.
Borrelia burgdorferi, which is the correct term, these are spirochetes, and they have also the ability to behave a little bit like herpesviruses. They go into a dormant phase, and you can be infected today without clinical manifestations, and clinical manifestations come, you know, three years down the road. All of that wasn't known at the time when we started the development. A lot of it is, is new and is constantly emerging. When you think about that and think about a prophylactic solution, which of course would be ideal, prevention is always cheaper than therapy. Therefore, you know, you need to ask yourself, you know, who can benefit from that vaccine? Well, people with a high-risk exposure. Where do we have a high-risk exposure?
Primarily in so-called high-risk areas. High-risk areas are areas which are characterized by, let's say, above 0.5-0.8%, you know, incidence rates, which means 5-8 people every year out of 1,000 in those areas get a Lyme infection and a confirmed Lyme infection. They can be medically clustered in the three buckets: carditis, arthritis, neuroborreliosis. You know, the number of people who develop those clinical manifestations is pretty high, in between 10%-30%. What is even more devastating is that 5%-10% of the cases continue to have persistent symptoms following treatment. This means even an antibiotic treatment will not be sufficient to prevent those persistent symptoms. Therefore, we developed a vaccine.
From the beginning, we had this idea of developing a vaccine that would be suitable for people living and going to both sides of the Atlantic, which is why we developed a so-called multivalent, six-valent vaccine. There are, you know, different serotypes of Lyme borreliosis in the northern hemisphere. Our vaccine targets six, which represent about 97% coverage. We have based the vaccine on an established mode of action, namely the outer surface protein A of Borrelia burgdorferi, which is a highly conserved, you know, protein or epitope in this case, and actually a vaccine targeting, you know, the generation of anti-OspA antibodies.
This mode of action, mainly to, you know, down-regulate or kill the spirochetes in the midgut of the tick, something that was shown to work back in the nineties when there was a serotype one-specific vaccine developed by GSK, which was taken off the market after a while because of safety concerns or perceived safety concerns, and therefore, you know, and a commercial, you know, disappointment at the time. The vaccine technology, some of you who have a dog probably know that the vaccine technology survived because there is a vaccine against Lyme for dogs licensed today, very expensive by the way. That's something that is based on that, you know, mode of action.
The market opportunity is, of course, when you think about what I mentioned earlier, where are the people at risk? You know, 80 million people live in the United States in high-risk areas, around 200 million in Europe. When you think about the classical vaccine uptake or, first of all, eligibility, you have for typical eligibility number is 70%-80%. You take 80 million people times 70%, you have about 56 million people vaccine eligible in such a case. You take a typical uptake. You know, you can take an uptake that is as high as flu, or you can take an uptake that is as low as, I don't know, RSV or zoster or whatever.
You reach around, let's say, 15% uptake, which is what we heard yesterday with here at the panel with the experts. Then you see that the market opportunity is certainly north of what Pfizer and us have guided, namely annual sales above $1 billion, probably significantly more than that. I mean, it depends, of course, on recommendations, on final data, and so on. We are eligible to milestone and royalty payments by Pfizer since Pfizer will have the sole rights to commercialize this vaccine globally with attractive, you know, tiered royalties ranging from 14%-22%. Of course, those will go for Valneva straight down to the bottom line, therefore, will increase our ability to augment and grow the company strategically.
The official guidance for data readout is H1 2026, which is in reality tomorrow. We expect data really soon. Data from a placebo-controlled field efficacy study in more than 10,000 people. We have continued following the antibody kinetics, also following multiple boosters, especially because we are assuming that the vaccine will require annual booster shots at least for a certain number of years. When we look at the study itself, operationally, the study has been split into two cohorts, cohort 1 and cohort 2, but it's one study. Essentially, we are following people not only after a 3-dose priming but also following the first booster. We call it season one and season two.
The primary endpoint is the efficacy after the full 3+ 1 schedule, namely season two. Yeah. We are having, of course, a very significant number of secondary endpoints, including serotype-specific efficacies, you know, lot-to-lot consistency, and so on and so forth. Around 10,000 people randomized 1-1 vaccine against placebo. We have everyone in who is, you know, supposed to be eligible at the beginning, namely everyone above five years of age. In the study, youngest study participant five years, oldest one roughly 90. We have a randomization of 2- 1 North America versus Europe, given that we want to see serotype-specific efficacy against the predominant serotype here in North America, which is serotype 1.
Yeah, in summary on Lyme, we really see this as a hugely compelling opportunity in an underserved market today. There's nothing out there. We know antibiotics have limitations here when going into the field of Lyme treatment or Lyme disease treatment. The only vaccine in development or in advanced development at this point in time, it will be the first potential Lyme vaccine in more than 30 years for humans. As I mentioned, proven mode of action, anti-OspA antibodies, which get into the midgut of the tick, will there be a result there in a downregulation or in a killing and therefore, you know, a non-infection of the human being, you know, when the tick gives its secrets back.
We developed here a very modern vaccine, subunit, recombinant protein, also a technology that is in parenthesis currently liked by regulators. We are doing, of course, placebo-controlled efficacy, which is also what, especially here in the U.S. currently, is being put forward as a main, you know, requirement for licensure. We see a very broad accessible population, high and growing disease burden. I mean, Lyme, because it's a vector-transmitted disease, it's growing year-over-year. It's directly growing in connection with ongoing climate changes, and it will continue to increase. The strategic fit, I mean, with Pfizer, we certainly got the best partner for a successful commercialization subject to positive data. There are certainly very, very positive, attractive commercial dynamics.
With that, let me go to Chik for a second. Chikungunya is a also a vector-transmitted disease, which was entirely the seam of Valneva when we started the company. It's mainly an outbreak disease. When outbreaks hit, they come explosive. In order to really have a meaningful preventative solution, you need to have people and population vaccinated also ahead of an outbreak. That's why, you know, a solution in, especially in those endemic countries where you vaccinate people and have with or post-vaccination a very, very long duration of protection is the ideal vaccination strategy.
When you look really at the map here, you see that many, many parts of the world are considered, you know, chik risk areas, you know, more than 100 countries across five continents. I think it's fair to say that from a market perspective, we certainly see the outbreak preparedness, the endemic countries as the main and the key market for this vaccine, especially since we had a couple of issues in the travel segment on risk-benefit. It's a live vaccine. A live vaccine is reactogenic, and especially when you are giving them or the vaccine to people with comorbidities or in different co-medication settings, you run the risk of seeing severe adverse events, which we unfortunately did.
You know, also many of those were explainable by inappropriate use. Nevertheless, it did created some, you know, negative regulatory action, fine-tuning of, you know, labels, precautions, warnings. By the end of the day, since we couldn't agree on some of those, we also voluntarily pulled the vaccine out of the United States. We are currently continuing to show the real-world effectiveness. We are very proud of an ongoing pilot vaccination campaign. We have donated roughly half a million doses together with our partner CEPI. In Brazil, you know, many municipalities are currently running vaccination campaigns, and this will serve then as the basis for a surveillance study that will really show the real-world effectiveness.
It will provide us also with additional and new datasets on safety, because very large population, and we can ensure through the pilot vaccination that the vaccine is being given to the people in the right setting, in the right forum. Therefore, it will help us probably to revitalize also or revisit some of the cautious stance that we have currently been taking in the travel segment. On Shigella, I mentioned a couple of key highlights. you know, four serotypes, representing, obviously the most common pathogenic shigellosis bacteria. We are working on this program right now, two phase two programs, you know, one in children, one in adults.
In the adults, we run together with Johns Hopkins, a controlled human infection model, so a human challenge. Which is great because you see already in a phase II setting early on a quote-unquote pilot efficacy. Of course, there's still a way to go on this program before it's gonna be phase III-ready. We have not yet optimized dose schedule formulation. I think for us it was important to see an early sign of efficacy in order to take the right decision on capital allocation. Next milestone is certainly we will report the children data phase IIa, and we will report the CHIM data phase IIa. This brings me to the financial guidance and outlook.
you know, when we look at our guidance for this year, the commercial business, we gave quite a bit of a broad range. It's clear that it will remain cash flow generative. It's also clear, as I mentioned, that it will at a level of 95% only include sales of our proprietary products, so no third-party activities anymore. Total revenues, which include also other, you know, considerations about $15 million above product sales. Of course, we will, with or without positive Lyme data, we will continue with our disciplined cash management. you know, we anticipate, you know, milestone payments from Pfizer kicking in in the third quarter of 2027.
Until then, you know, we will of course, continue to be mindful, careful, focused, and then, you know, build on future pipeline. Yeah, with Lyme and, we of course plan for success here. We believe in success. We will be able to turn the company also in sustained financial self-sustainability, avoiding the word profitability. And while, you know, in continue investing in very, very interesting areas of unmet medical need. Yeah, so that's in a nutshell. To recap, you know, we would like going forward to leverage our expertise. We would like to deliver greater long-term value to our shareholders through innovation, through interesting and exciting new vaccine programs that are probably not being covered by the big four vaccine companies.
We will build scale on R&D, both organically as well as strategically. We are not excluding, you know, strategic in-licensing or M&A. I mentioned already at the beginning, now as we turn Valneva into its next era, we go away from the initial investment theme around vector transmitted disease and open now into new disease areas, which I mentioned enteric on the one hand side, but also the whole world of herpes viruses, e.g., EBV, but also others. We would like to do this while continuing optimizing our integrated operations. We are excited about the case, and that's Valneva, and thank you so much.