Valneva SE Q1 FY2026 earnings call

Lyme Vaccine (VLA15 / LBV6) Program

• The Phase III LIME trial met its second pre-specified statistical criterion, with overall efficacy above 70% and no identified safety concerns. The first pre-specified criterion was not met due to fewer than anticipated confirmed Lyme disease cases during the study.
• Partner Pfizer plans to submit the candidate for regulatory approval, addressing unmet need: there is no currently approved human Lyme disease vaccine, with almost 90 million at-risk people in North America, over 200 million in Europe, and over 600,000 reported cases annually (numbers are believed to be heavily underreported).
• VLA15 is the only Lyme vaccine candidate in late-stage development in nearly 30 years, with broad coverage of all prevalent serotypes across North America and Europe.

Chikungunya Vaccine

• A large pilot vaccination campaign is ongoing in Brazil for adults 18-59, with over 30,000 people vaccinated to date and a target of over 100,000 total vaccinations. A local version produced by partner Butantan (Butantan Chik) has received Brazilian licensure, a major milestone for expanding access in endemic countries.
• The 406 safety study is well advanced and near completion of enrollment, with partnerships for local manufacturing and distribution being expanded across endemic markets.

Shigellosis Vaccine Program

• It is one of the most advanced tetravalent Shigella vaccine candidates, targeting the four most common pathogenic Shigella strains, which cause the second leading cause of fatal diarrhea in children and have been prioritized by the WHO. The annual global market is estimated at over 500 million euros.
• Two studies (one in children in Africa, one controlled human infection model immunogenicity/efficacy study) are ongoing, with readouts expected in summer 2026, after which next development steps will be determined.

Restructuring and Cash Management

• Amid uncertainty around the Lyme vaccine program, management is prioritizing cash containment, and has launched a comprehensive restructuring to reduce 2026 operating expenses by 25-35% compared to 2025, including a 10-15% global workforce reduction.
• Management plans for a successful Lyme vaccine regulatory outcome, which would create significant strategic growth opportunities for Valneva. Post-approval, the company plans to expand its R&D pipeline beyond vector-borne diseases (already working on preclinical programs for EBV and enteric diseases) via both organic and inorganic growth, and continue optimizing commercial, manufacturing, and supply operations to generate maximum cash from existing commercial business.

Valneva reported total product sales of 30.5 million euros for Q1 2026, down from 48.6 million euros in Q1 2025. Breakdown by segment:

1. Ixiaro: 20.2 million euros, 66.2% of total product sales, down from 27.5 million euros in Q1 2025. The decline is primarily due to phasing differences in scheduled deliveries to the US Department of Defense.
2. Doucoural: 8.6 million euros, 28.2% of total product sales, down from 12.3 million euros in Q1 2025. The decline reflects one-off cholera outbreak-related sales in Q1 2025 and a distribution partner change in select EU countries that paused new deliveries in Q1 2026.
3. XGIC: 1.6 million euros, 5.2% of total product sales, down from 3.0 million euros in Q1 2025, due to the absence of 2025's one-off outbreak-related sales to La Réunion.
4. Third-party products: 0.1 million euros, 0.3% of total product sales, down from 5.8 million euros in Q1 2025, from an intentional wind-down of third-party distribution to focus on proprietary products.

Overall total revenues were 30.9 million euros (down from 49.2 million euros YoY). Gross margin for commercial product sales was 45.2%, down from 62.7% in Q1 2025, with Ixiaro gross margin at 50.8% (down from 72.6% YoY) and XGIC gross margin negative due to manufacturing cancellation fees and idle capacity costs. Operating loss was 23.7 million euros, with a net loss of 32.1 million euros for the quarter. Cash and cash equivalents totaled 105 million euros at quarter-end, excluding April 2026 reserved offering proceeds.

• Product sales guidance for full-year 2026 was revised downward to 135-150 million euros, with total revenue guidance revised downward to 145-160 million euros. The downward adjustment reflects emerging adverse trends in travel vaccine uptake across key markets driven by geopolitical factors.
• Management expects gross margin to normalize and improve after the one-time cost impacts in Q1 2026, and to approach the full-year 2025 gross margin level for the remainder of 2026.
• The 10-15% workforce reduction and 25-35% operating expense reduction (compared to 2025) from the announced restructuring program is expected to generate significant savings starting in the second half of 2026, with full annual savings realized in 2027. Most of the savings will come from R&D, with more modest savings from G&A and minimal changes to sales and marketing spend.

• The Lyme vaccine regulatory review process carries uncertainty: the first pre-specified Phase III endpoint was not met, and regulatory approval is not guaranteed despite meeting the second endpoint and having clinically meaningful efficacy.
• Geopolitical instability (particularly in the Middle East) is suppressing travel volumes, which negatively impacts demand for Valneva's travel vaccine portfolio, and further worsening of geopolitical conditions could lead to additional downside to full-year revenue beyond the current guidance range.
• Post-manufacturing transfer to the new Almeda facility, the company is facing higher idle capacity costs, batch write-offs, and lower overhead absorption, which has compressed gross margins in Q1 2026.
• The FDA has not yet approved the Almeda facility for Ixiaro production for the US market, requiring remediation work and resubmission, though the existing approved manufacturing site continues to supply the US market with no current impact to supply.

Q: What is the status of Pfizer's pre-BLA meeting with the FDA for the Lyme vaccine, when will full trial data be released, and are there comparable approved vaccines that missed the first primary endpoint but gained approval?

A: Pfizer is currently preparing for regulatory meetings, and no further details on timing can be shared at this point. Pfizer will present full trial data at an upcoming medical conference, which has not yet been confirmed. There are some comparable cases in vaccine development (e.g., Fluad, certain RSV and pneumococcal vaccines), though no direct like-for-like comparison exists; regulators will review the totality of clinically meaningful evidence Pfizer submits.

Q: Is the Q1 Ixiaro decline solely due to US DoD delivery phasing, and is the full-year guidance cut driven by broader travel market slowdown?

A: The largest driver of the Q1 decline is delivery phasing for the US DoD, Ixiaro's largest customer, with a minor additional impact from the EU distribution partner change. The downward guidance revision reflects an observed emerging trend of reduced travel to key high-risk destinations for Valneva's travel vaccines, supported by industry airline data, which had not yet fully impacted Q1 results.

Q: How will the restructuring savings phase in, what is the split of savings between departments, and when will full savings be realized?

A: Workforce reduction processes (particularly in Austria, where most cuts are located) require legal processes and notice periods, so full annual savings will not be realized until 2027. External cost savings are already being implemented, with significant savings expected in the remainder of 2026. Most savings will come from R&D, with smaller savings from G&A and only minor adjustments to sales and marketing spending aligned with the lower revenue outlook.

Q: What will management look for from the upcoming Shigella study readouts, has the go/no-go bar changed amid cost cutting, and what is the commercial strategy for the candidate?

A: Management expects to see protective efficacy in the controlled human infection model, a clear immunogenicity threshold for protection, solid immunogenicity and a workable two-dose schedule in African children. The strategic priority of the program has not changed, only the development pace, amid restructuring. The primary market is low- and middle-income endemic countries, with a longer-term opportunity to combine Shigella with other enteric disease antigens (cholera, ETEC) into a combined traveler's diarrhea vaccine.

Q: What is the current status of FDA approval for the Almeda manufacturing facility for Ixiaro, and will it impact US supply?

A: Valneva received a complete response letter from FDA regarding Almeda approval, but the facility was filed as an additional site, and the original approved manufacturing site continues to produce Ixiaro for the US market with no current impact on supply or DoD deliveries. The company is working to address FDA's concerns and will resubmit the approval application as soon as possible.