Valneva SE

PAR:VLA

Earnings Call Transcript 2023-Q1

[Operator]

Good day and thank you for standing by. Welcome to the Valneva present its Q1 2023 Financial Results Conference Call. [Operator Instructions].

I would now like to hand the conference over to your host today, Joshua Drumm, Vice President of Global Investor Relations. Please go ahead.

[Joshua Drumm, VP, IR]

Thank you, Sharon. Hello and thank you for joining us to discuss Valneva's first quarter 2023 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 quarter, which were published earlier today, available within the Financial Report section of our investor website. I'm joined by Valneva's CEO, Thomas Lingelbach and CFO, Peter Buhler, who will provide an overview and update on our business, as well as our key financial results for the quarter. 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 the presentation, we will be making forward-looking statements, which are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed or implied by these forward-looking statements. You can find information about these risk 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, May the 4th, 2023 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, Chairman, President & CEO]

Thank you so much, Josh and good day to everyone. Great pleasure to present couple of updates with regards to our quarter one and later Peter to present the financial report. Yeah, we have a very good momentum right now, driven on the one hand side by our strong sales performance, but also increasing clarity on our key catalyst. Our product sales in the first quarter nearly doubled year-over-year, was primarily driven by our proprietary product IXIARO and DUKORAL, both of which more than quadrupled from quarter one 2022.

We maintain a position of financial strength with a cash position of more than $250 million at the end of quarter one and we have reiterated our guidance with regards to expected product sales reaching or exceeding pre-pandemic levels this year. We have also a clear pathway towards our key transformative catalysts. Our chikungunya vaccine, which we expect to become the world's first Chikungunya vaccine if approved, a stellar track for it's PDUFA date confirmed after the mid-cycle review towards the end of 2023 -- August 2023, sorry. And we expect to commence further additional ex U.S. regulatory processes in 2023.

For Lyme, we have decided after careful evaluation of risk and benefits to keep the Phase 3 design and the endpoints as previously agreed with regulators and we will have additional enrollment for primary immunization to begin in the second quarter and will include the 2025 peak season, which in turn means that we are expecting to file in 2026. Pfizer will bear the current projected incremental cost due to the accrete additional enrollment and I will go into more detail during the R&D update.

Let us turn to Page 6 of the presentation, chikungunya. You know that our chikungunya vaccine is a live-attenuated vaccine candidate under FDA priority review, it is the first and only chikungunya vaccine candidate that reported positive Phase 3 data, was the first one to submit a biologics license application to the FDA for potential approval. And to remind everyone about the key benefits of a live-attenuated vaccine approach, it is targeting a very long-lasting protection. And thus far, we have seen excellent antibody persistence data over time.

Overall, our results demonstrated not only long lasting, but on health zero response rate after a single shot. We are now preparing full steam for our launch of VLA1553, which perfectly fits within Valneva's existing infrastructure. In terms of target populations, we are looking at the non-anemic countries, travelers, military, but also outbreak preparedness in key countries. And then, of course, the endemic use in no medium-income countries where we have partnered with [indiscernible] Instituto Butantan, which includes also local manufacturing.

To remind everyone about our key dates here in key KPIs, PDUFA date, as mentioned earlier, at this point in time confirmed for the end of August 2023 and then first company to achieve BLA approval will be eligible to a PRV and we are estimating that we could potentially sell this PRV if we got it at around $100 million. We have right now an adolescents trial ongoing because the initial approval will be in the above 18 years and older and we expect top line results mid of the year, which will then support also some of the regulatory filings.

And as I mentioned earlier, we expect to commence additional regulatory processes for Canada, EMA and U.K. this year. Overall, we are super excited about our chikungunya program and we are looking really forward to launch this product in an area of a very high unmet medical need.

Talking about Lyme on Page 7 of the presentation, Lyme -- our Lyme disease vaccine candidate, VLA15, the only one in clinical development today worldwide. It is a multivalent recombinant protein-based vaccine candidate, which has undergone a quite substantial number of Phase 1 group and two studies and we initiated a Phase 3 study as planned last year. And this is basically the -- this was the status until we had to discontinue a substantial amount of study subjects that we have integrated in the study due to uncovering GCP violations by a third-party operator, CRO in this case.

Yeah, so to remind everyone again, this program is partnered with Pfizer sponsor for the Phase 3 study and of course we have received a substantial number of milestones, including also mid equity investments that had in June 2022. And all the other features of this vaccine, we have presented many times multivalent, fixed valent because this covers the predominant serotypes in the Northern hemisphere established mode of action and we have mentioned already the fast-track designation that was granted for this program.

Now you are all interested in how are we going forward with the Phase 3 study and Page 8 shows the current status of the Phase 3 efficacy study called VALOR. We plan to enroll around 9,000 participants, five years and older and at high risk of Lyme disease in U.S., Canada and Europe. There will be a one-to-one randomization in between VLA15 and placebo and roughly a 2:1 randomization U.S. versus Europe. The primary endpoint is the rate of confirmed Lyme disease cases after two consecutive tick seasons and after completion of the three doses priming plus booster.

And the secondary endpoint is linked to the Lyme confirmed Lyme disease cases after the first Lyme season, which means after three doses or after the so-called priming. And this is illustrated now with the two different cohort in the graph below. What you see on the other part of the graph is the current participants, which we call now the cohort 1. These are the ones that were enrolled last year, where unfortunately we could not enroll the full necessary cohort because of the GCP issue and this is cohort 1, which will now receive very soon and receive the first booster. And then we have the cohort 2, which is -- which are the incremental number of study subjects that will be recruited soon.

In this cohort 2, we'll then start with three doses priming and the 18-month booster as well. And therefore, as mentioned earlier, you have the tick season 2023 and 2024 literally for the first cohort 2024 and 2025 for the second cohort. And this is -- this allows us to retain the initial protocol and the initial design. All of that means, that we are now aiming to submit regulatory applications in the U.S. and Europe in 2026 as compared to 2025 before we had and tie the experience the GCP issues.

When we look at R&D as a whole and pipeline and what's next, there are couple of quite interesting remarks to be made. Besides of chikungunya and Lyme, we are currently working on Zika. We are evaluating it to potentially re-enter the clinic at the end of 2023, early 2024, given the overall status and medical need around Zika also given the fact that the WHO expressed a very clear preference in a position paper for an inactivated or virus approach given the potential target population, meaning women and child faring age or even pregnant women. We are working on hMPV and have concluded now the initial preclinical talk. And as we mentioned during the last call, the overall respiratory environment is moving towards a future RSV hMPV combo. And therefore, we see our asset as an interesting asset for potential partnering.

And then we have the other three preclinical candidates with a clear priority on EBV where we expect to have our identification completed by the end of 2023 and Campylobacter and Parvo for both. We are currently working on certain work packages in order to facilitate the respective gating reviews. And with that overview about primarily our R&D activities, I would like to hand over to Peter to provide you with the financial report.

[Peter Buhler, CFO]

Thank you, Thomas and good morning or good afternoon to all of you. Let's discuss our first quarter 2023 financial. Total revenues reached EUR33.5 million, an increase of 53.4% compared to the first three months of 2022, while product sales increased by 98.6% to reach EUR32.1 million. This increase is driven by the continued recovery of the international travel market. Product sales, excluding the COVID-19 vaccine sales in the first quarter of last year increased by 159.7% over prior year.

On the right side of the slide, you can see the composition of product sales with small sales to U.S. military in the first quarter of 2023. Discussions with the U.S. Department of Defense are ongoing and we expect to sign a new contract in the coming months. Direct sales reached 71.6%, which is lower than usual. As a comparison for the full year of 2022, direct sales reached 91%. The decreased ratio of direct sales is a result of high sales to Bavarian Nordic for a distribution in the German market.

Moving on to Slide 12 to look at the details of our product sales. Sales of IXIARO quadrupled versus prior year and the same is true for DUKORAL. Again, this reflects the strong recovery of the travel market that directly impacts the sales of our travel vaccines. We see a solid year-over-year growth across all markets and managed to increase prices for IXIARO and DUKORAL in most markets. Third party product sales decreased by almost 20% as a result of supply constraints of products sold under the distribution agreement with Bavarian Nordic. Foreign currencies had no significant impact on the product sales performance versus prior year.

Moving on to Slide 13 and looking at the P&L. We already covered the over 50% growth in total revenues. Cost of goods and services increased by 48% year-over-year and gross margin of commercial for us excluding COVID somewhat deteriorated to reach 48.4% compared to 68% in the first quarter of last year. However, the prior year gross margin was positively affected by one-off effects.

Research and development costs reached EUR14.1 million compared to EUR20.7 million, a decrease of 32% as our chikungunya vaccine candidate progresses towards licensure. Also, in Q1 of prior year, we recorded more significant R&D expenses related to VLA2001, our COVID-19 vaccine. Sales and marketing expense increased from EUR2 million in Q1 of 2022 to EUR9 million in Q1 of the current fiscal year.

Costs related to the prelaunch activities of our chikungunya vaccine, including related staff increase is a major driver of the increase in sales and marketing costs. Sales and marketing costs in Q2 of last year were particularly low due to an impact of our share-based compensation. G&A costs in the first quarter increased significantly over prior year and reached EUR10 million. In the first quarter of 2022, all expense lines were favorably impacted by an adjustment of EUR11.7 million related to the impact of the company's share price development of the employee share-based compensation.

Without that favorable impact in the first quarter of last year, G&A costs would be roughly flat. Other income net of other expenses is reported at EUR3.5 million compared to EUR2.1 million in the first three months of 2022. This increase is driven by the revenue recognition of a grant in Scotland. Operating loss for the first quarter reached negative EUR16.6 million versus negative EUR18.4 million one year ago, while adjusted EBITDA reached negative EUR12.3 million versus EUR13.3 million one year ago.

Before we move on to the guidance, a word about cash. Total cash and cash equivalents amounted to EUR254.5 million at the end of March compared to EUR289.4 million at the end of December.

Now moving on to the next slide on guidance. We reconfirm the guidance for the total fiscal year of 2023 with EUR130 million to EUR150 million in product sales, EUR90 million to EUR110 million in other income, representing the PRV mentioned by Thomas at the beginning of the call and R&D investments are still expected to be between EUR70 million and EUR90 million.

With this, I would like to give the call back to Thomas.

[Thomas Lingelbach, Chairman, President & CEO]

Thank you so much, Peter. Yeah, to summarize where we see our key upcoming catalysts and newsflows for the remainder of the year. Chikungunya, as mentioned, first adolescent study result expected mid-2023, the potential BLA approval and first launch of the product in the United States alongside with the potential PRV sales immediately after the granting of the BLA. Then as mentioned earlier, three additional submissions plans, namely Canada for this year, Canada, EMA and the U.K. and those will happen this year.

Then on Lyme disease, VLA15, of course, it is critical that we get the enrollment price and that the enrollment for the additional now new second cohort for primary immunization begins in the latter part of the second quarter. And then we will see as part of our general program to review Antibody Persistence also some further data in the second half of this year.

When it comes to newsflow outside of chikungunya in line, and of course, a potential DoD contract for IXIARO in the coming months, this is certainly something that we should expect here. And we have talked in the past about the fact that we would partly evaluating, implementing the clinical pipeline through a program acquisition or partnering, in order to have more clinical and early clinical stage assets that could provide substantial catalysts in the future, while we are kind of accelerating our pre-clinical programs towards clinical entry.

And with that, I would like to go to the Page 18 of the presentation to conclude. Here, you see the slide that we have shown in the past a couple of times. This is just illustrating to you how we see the growth over the coming years with today main value driven by IXIARO, DUKORAL and third-party products, adding chikungunya to our commercial part and then later coming up with VLA15 and the first monetization around the Lyme program in our partnership with Pfizer. So all in all, Valneva is poised for the potential growth in the years to come.

And with that, I would like to hand back to the operator to take your questions.

[Operator]

[Operator Instructions]. We will now go to your first question and your first question comes from the line of Mauri Raycroft from Jefferies.

[Kevin Strang, Jefferies]

This is Kevin on for Mauri. Just a couple on Lyme to start. Could you clarify what the ultimate size of each cohort is going to be? And then, just maybe if you could talk about what potential options you were considering and what ultimately led you to keep the current protocol? And then just finally, with filing now in 2026, does that change how you think at all about your overall strategy or anything with the competitive landscape?

[Thomas Lingelbach, Chairman, President & CEO]

So let me try to answer your questions in this regard. So first of all, we are not permitted at this point in time to disclose the exact numbers of the different cohorts, but you have seen that pre the GCP issue. We had said 6,000 to 7,000 was the end. Pfizer reported that around 50% of the study subject had to be abandoned. Now you see on the slide, an end of 9,000, which answers your question.

And then when we talk a little bit about the strategy going forward, no. I think, yes, it is unfortunate that we are facing a one-year delay for the Lyme program as compared to where we were. But let's not forget that the underlying signs, the underlying strength of this product candidate is certainly still something that has not changed. And even if someone started tomorrow with a clinical development for a Lyme disease vaccine, it would still be the same clinically development program that what we needed and we know how long it takes. So therefore, we don't see necessarily any change in strategy in connection with that.

What were the other options? Of course, when you think about what has happened, it was primarily U.S. focused. So we have evaluated, of course, going for a sub course, EG, Europe first and then U.S. later and/or changing primary versus secondary, secondary versus primary. All of that has been a long process in excellent collaboration and consultation in between the two parties and supported also by external parties. And ultimately, we decided to keep everything at this and just add an additional cohort.

[Kevin Strang, Jefferies]

And on Chikungunya, for the mid-cycle review, you mentioned that there's no significant review or safety concerns. Just wondering, if there's any other points that were discussed that you could comment on that have implications for the review process label or post-approval studies?

[Thomas Lingelbach, Chairman, President & CEO]

Not at this point in time.

[Operator]

We will now go to our next question and your next question comes from the line of Max Herrmann from Stifel.

[Max Herrmann, Stifel, Nicolaus & Company]

I just wanted to understand a little bit about the pre-commercial activities for the chik vaccine, what are you doing? What are your plans? And then also on the chik, in terms of ACIP meeting in February, should we be expecting a few phases of an ACIP review? Or do you think you can get a clear decision with one meeting? That's first question. Second, just on -- following-up on the question with regards to Lyme. I just wanted to make sure that at 9,000 is excluding the 9,000 subjects is excluding any of the GCP kind of patients or subjects were recruited by that one CRO? And then final question on commercial. I notice usually you have a strong fourth quarter and a strong first quarter with the travel vaccine business, I noticed obviously that the IXIARO and other vaccine areas were down quarter-on-quarter, fourth quarter to first quarter. I just wanted to get an understanding of that stocking patterns or what was the cause for that given clearly we're still seeing a recovery in travel?

[Thomas Lingelbach, Chairman, President & CEO]

As usual, hi, so basically try to go to address them as soon as I can, the 9,000 line exclude, of course, the ones that were executed from the study. For chik launch, I mean you know that we are investing heavily. We are investing in people, processes, infrastructure, market access, activities, all the stuff that you would expect for a prelaunch phase, really getting everything ready in time to make the launch success and ensure that we see then over time a rapid uptake of the vaccine. So awareness is key around all of that. And this requires resources, human resources, but also other resources. And I mean you see this already the increase in sales and marketing expenses and which will continue.

Then on the whole ACIP think, I mean right now the vote date is set for February, there have been already a couple of steps and there are still a couple of additional steps planned. More we cannot predict at this point in time, it doesn't mean that we may not see additional steps here and there, but this is as far as we can tell at this moment in time.

On the commercial dynamics, please keep in mind, quarter one has still been affected by supply shortages on the Valneva side. And not only on the Valneva side, also on third-party product. So it is at this moment, it is very difficult to predict or to draw a conclusion on the pattern that we've seen this year to prior years. Therefore, we would like just to remind everyone that we have again reiterated the product, it's guidance for this year to reach EUR130 million to EUR150 million.

[Operator]

We will now go to our next question and your next question comes from the line of Ed White from H.C. Wainwright.

[Edward White, H.C. Wainwright & Co]

So just on hMPV, you had mentioned today and before that you could partner looking at an RSV combo. I'm just curious as to, if you've actually had any interest in that and if that's something we can expect to see this year? Or is this just some time down the road that we should be thinking about this opportunity?

[Thomas Lingelbach, Chairman, President & CEO]

So basically, we are having active discussions around hMPV, but it is by far too early to promise a partnering deal. We are -- we clearly see that, so for example, the mRNA company tried for RSV, hMPV combos. We also see the medical needs for RSV, hMPV combos. But there are only a certain number of RSV companies that could have potential differentiation by adding an hMPV component to the vaccine. But as I said, it is too early. This is why we are saying, we are evaluating partnering, but we are not promising the partnering at this point in time.

[Edward White, H.C. Wainwright & Co]

And just on chik, how should we be thinking about a potential for a DoD contract or the size of perhaps the stockpiling for outbreak preparedness. Is this going to -- how are you thinking about this opportunity? Is it immaterial or it's a material opportunity for the company?

[Thomas Lingelbach, Chairman, President & CEO]

This is a very difficult to answer question. So we have -- I mean, you know that we have been pretty clear about our expected -- the expected market opportunity in the travel segment and in the LMIC countries. We have not been specific at all around the size of a potential military business nor have we been to decide around stockpiling. We have discussions both with U.S. military, as well as with certain countries of base potentially interested in stockpiling. At this point in time, those segments do not represent a major chunk of our overall projections, but it is too early to really give a guidance or give a range for these opportunities. I think we should probably postpone this to next year same time or so, once this product is approved hopefully in the market, then we will have a very -- a much, much better understanding about those opportunities, I think.

[Edward White, H.C. Wainwright & Co]

And my last question is just regarding the two different cohorts for the tick study now. Are you considering these and Pfizer are considering these cohorts as different studies or the same study. So can you release the data from the cohort 1 prior to cohort 2? Or do you have to wait for those cohorts to finish to release the data?

[Thomas Lingelbach, Chairman, President & CEO]

No, we are currently expecting that we're going to release. So first of all, this is one study. And second, we are currently expecting to release it all together.

[Operator]

So now go to our next question and your next question comes from the line of Evan Wang Guggenheim Securities.

[Boran Wang, Guggenheim Securities]

I have one on Lyme and then one on Chikungunya. With Lyme, as we're thinking about the additional cohorts being enrolled, will that be entirely U.S. focused or majority U.S. focused just given the CRO patients? And for Chikungunya, just following up on the stockpiling opportunity there. I believe you have had some early conversations. Are there any color you can provide in terms of the feedback has gone? Is there any kind of additional studies or bottlenecks that may need to be addressed first?

[Thomas Lingelbach, Chairman, President & CEO]

So on Lyme, additional cohorts U.S. and Canada, so no additional enrollment in Europe. And for Chikungunya and the whole stockpiling, as I mentioned, we have discussions ongoing at this point in time, we do not expect further studies than the one that we have already planned. And please keep in mind, we have planned besides the pivotal studies that we have concluded adolescents of Phase 3 in adults and of course the adolescent and later pediatric. We have also planned studies in immuno compromise, we have signed co-vaccination studies, but we are not necessarily expecting those to become a prerequisite for a potential stockpiling. I think it will more be a question once the final recommendations will be there, the final approvals will be there. And I think that would be the moment where we're going to get more clarity and that's certainly important.

[Boran Wang, Guggenheim Securities]

If I can just squeeze one more, in terms of potential business development or in-licensing, is 2023 realistic? Or is that more a longer-term piece of...

[Thomas Lingelbach, Chairman, President & CEO]

Yeah, for us, it is 2023 objective. And -- but it depends on the opportunity, right? So we have clearly set this objective for this year, for the organization, for ourselves and we hope that we will be able to achieve that. At this point in time, we have multiple things that we are reviewing and evaluating. But as I said, a deal is done when the deal is done, right? I mean we cannot be sure that this is going to materialize this year.

[Operator]

We'll will now go to our next question and your next question comes from the line of Rajan Sharma from Goldman Sachs.

[Rajan Sharma, Goldman Sachs Group]

I had a couple. So I guess, firstly, just given the strong start for the travel vaccines in 2023 and given the quarterly performance, so I was just wondering how confident you are in reaching the upper end of your sales guidance? And then secondly, just on Japanese encephalitis given that there was a competitor vaccine, which was acquired by a private company who kind of talked about expanding global registrations of that vaccine. I was just wondering if you could discuss your thoughts on the market and how you are kind of people to defend your position there?

[Thomas Lingelbach, Chairman, President & CEO]

So let me take the second question and then I will give to -- the first part to Peter. So look, I mean, the -- at this point in time, we have not seen any competitor for JE initiating the necessary clinical studies for a registration in Europe and U.S. And there is no way you can register this competitive product without a respective clinical study and those will take time. And I think we're going to deal with it when we see a potential competitor entry.

In terms of positioning, our vaccine has more than 10 years' history. It is a vaccine that is marked by excellent effectiveness and safety and it is a very well-known and established brand. And as such, we feel strong about this product. We feel strong about its prospect and we will also feel strong about it if we had a competitor entry which is not on the horizon at this point in time from where we stand at this point.

Peter, you want to say something about guidance?

[Peter Buhler, CFO]

Look, I think we're very optimistic when it comes to our sales. I think -- as you said, with a very strong first quarter, actually in line with pre-pandemic level in euro terms. So of course, this is great for the rest of the year also and as Thomas said, we still have some supply constraints in Q1. So we are very optimistic with regards to reaching our guidance, whether it will be the upper part of the guidance, I think it's too early to tell, but we certainly had a good start.

[Operator]

[Operator Instructions]. We will now take your next question and your next questions comes from the line of Samir Devani, Rx Securities.

[Samir Devani, Rx Securities Limited]

I think I've got a couple. Just going back to the successful mid-cycle review, Thomas. I just wanted to get whether you got any more color as to whether there was likely to be a mid-cycle meeting or not? I guess that's the first question. And then the second one is really just on the Pfizer line collaboration. You haven't booked any -- or recognized any revenue in the P&L this quarter. So I was just wondering if you could help us understand whether we should still expect you to recognize anything for the remainder of the year? And if so, what sort of magnitude? And also, I think last -- in our last call, you talked about your contribution coming out of refund liabilities. There doesn't seem to have been much change in your refund liabilities on the balance sheet. Could you just confirm whether there's been a significant payment made by -- during the quarter for the R&D contribution?

[Thomas Lingelbach, Chairman, President & CEO]

So Samir, again, mid-cycle review, we have not mentioned anything about VRBPAC and we have not mentioned anything about any . This should be giving you the right answer I think. And then on the regulatory recognition contribution liabilities, I hand over to Peter if he need.

[Peter Buhler, CFO]

So on the revenue recognition, you're right, we have not recognized any revenue. There could still be going forward some revenue that we could recognize potentially, which we decided not to do so far as long as the Phase 3 trial is still in the relatively early stage and ongoing. But we certainly have some amounts that we could potentially recognize going forward.

I think on the refund liability, I think your observation is very good. So there was, I think, with the overall situation on the Lyme, I think there were some, I would say, delays in issuing invoicing. So we indeed have not paid as much in Q1 as we would have anticipated and that's why probably you haven't seen a lot of movement during the refund liability. So there will be a catch up in the later part of the year, but it doesn't change the overall cost base we had estimated earlier on.

[Samir Devani, Rx Securities Limited]

And then maybe if just sneak in one more, just on your third-party product sales, they were quite a lot lower than what they were in Q4. Could you just explain to us what's going on there and what we should expect for the rest of the year?

[Peter Buhler, CFO]

Yeah, look, as I said before, I think when I look at it, we're in Euro terms in line with where we were pre-pandemic. So I think it's a very strong quarter. I think it's in line with our expectations and we're optimistic for the rest of the year to deliver product sales within guidance, EUR130 million to EUR150 million.

[Operator]

We'll now go to our next question and your next question comes from the line of Simon Scholes, First Berlin.

[Simon Scholes, First Berlin]

I've got two questions. I remember in the last call, you were discussing that a more creative solution might have -- with the FDA might have allowed you to submit documentation already as early as 2025 despite the loss of trial participants and I just would be very curious to -- if you could discuss what that creative solution might have entailed? And secondly, can you give us any indication? I mean, can you tell us whether you expect the supply constraints which hit the travel vaccine business in Q1 to ease in the current quarter?

[Thomas Lingelbach, Chairman, President & CEO]

So first of all, I'm not so sure whether I recall having said created, but yeah, I mean, as I mentioned, I answered the same question earlier on, right? I think we have evaluated the possibility to take special sub calls earlier. But after a careful risk benefit evaluation, we have decided that it is not in the interest of this program to increase its risk profile and that's why we have said, we keep the original protocol that is.

On the supply constraint side of things, yes, we have had supply issues in -- still in the first half of the year because demand has just exceeded what we had anticipated. And we have a long lead time to produce the vaccine that when we saw last year that there was a beginning recovery, we immediately started, but it takes time. So we are currently anticipating no further supply constraints going forward from where we are today.

[Operator]

There are currently no further questions. I will hand the call back to you.

[Thomas Lingelbach, Chairman, President & CEO]

I think with that, we would like to thank you for your participation today. Thank you for your support and for following Valneva. It's been pleasure to provide you today's update, it's good to remain the rest of the day. Bye-bye.

[Operator]

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.