Valneva SE Q2 FY2023 Earnings Call

Good day, and thank you for standing by. Welcome to the Valneva Half Year 2023 Financial Results Call and Webcast. Please note that today's conference is being recorded. I would now like to turn the conference over to your speaker, Joshua Drumm, VP, Global Investor Relations. Please go ahead, sir.

Thank you, everyone. Hello and thank you for joining us to discuss Valneva's first half 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 six months ended June 30, 2023, which were published earlier today, available within the Financial Reports section on our Investor website. As always, I'm joined today by Valneva's CEO, Thomas Lingelbach; and CFO, Peter Buhler, who will provide an overview and update of our business, as well as our key financial results for the first half of the year. 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'll 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 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 listed on our company website. Please note that today's presentation includes information provided as of today, September 21, 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.

Thank you so much, Josh. A very good day everyone. It is a pleasure for me to report our first half achievements. When we look at R&D, we made substantial progress towards the potential FDA approval of the world's first chikungunya vaccine. We have online now the Cohort 1 of the Phase 3 VALOR study completing its first tick season, and the Cohort 2 is currently enrolling, and I will provide more details around that. We decided to reinitiate our Zika vaccine development with an expected clinical trial start early next year. Again, I will provide more details around this. When we look at the commercial business, we are very pleased with the commercial performance. Our product sales of almost €70 million have more than doubled as compared to the prior year excluding all the COVID sales, of course, and hence we are on track to meet our 2023 sales guidance of €130 million to €150 million. We had a strong cash position at the end of June with more than €200 million and very recently further strengthened it by an up to $100 million new supplementary debt facility. When we look at the business in detail, let me start with our chikungunya vaccine, which is a live-attenuated vaccine candidate currently under FDA priority review. It is the first chikungunya vaccine candidate in the world that reported positive Phase 3 data with all trial endpoints met. It's the first chikungunya candidate that has an ongoing BLA application with potential approval and a filing accepted by Health Canada. By way of reminder, our live-attenuated approach was chosen because we wanted to go for a single-shot vaccine that was particularly well suited to target long-lasting protection compared to other chikungunya assets currently being evaluated in clinical trials. Our results have demonstrated that our initial development hypothesis holds true, and we have excellent data year-to-date on that vaccine, which I'm going to present a bit more in detail. And from a strategic point of view, VLA1553 fits perfectly within Valneva's existing commercial infrastructure, augmenting our existing travel vaccine portfolio. With regards to target population and geographical reach, we have on the one hand side the travel business, but also an endemic need in LMIC countries where we have partnered with CEPI and Instituto Butantan, including certain local manufacturing activities. To remind everyone about the key features and timelines, current FDA PDUFA date is at the end of November. That got extended by one quarter due to ongoing discussions around Phase 4 applications. We have also the adolescent trial ongoing where we reported positive initial safety, and immunogenicity data will come in November 2023, and we expect additional regulatory processes to commence including the EMA later this year. Let me turn to Page 7 of the presentation. Since we received many questions about the onset of immunity, we would like to present a little bit on where we are on our vaccine today. We have data that has been published in different journals, including The Lancet. We have the Phase 3 data, we also have the Phase 1 data, and we have done a number of post-hoc analyses on the back of this data. What we can see here on this slide is that we have a very nice onset of immunity already at day 15. So, you see the day 15 data shows data from our Phase 1 cohort, and you see that even at a lower dose, which is not the Phase 3 dose and the final dose, we are well above the seroresponse threshold already on day 15, which means that in between day eight and day 15, we will surpass the seroresponse threshold, which is identified by PRNT50 greater or equal to 150, and hence, this titer level is reasonably likely to predict protection. Now, Slide 8 shows you also a little bit on seroresponse and that seroresponse is sustained at the highest levels up to month 12. At this point in time, we're going to read out month 24 in the not-too-distant future. What is also important is the graph to the right, where you can see that there are absolutely comparable titers in younger and older adults. We see no difference across the different data points that we have clinically generated, and more importantly, our vaccine has fast onset of immunity, and I think that's important to note. It will be further substantiated as part of further studies that we have planned or that are already ongoing. We recently reported positive initial safety results in adolescents and pre-exposed participants. This study was conducted in partnership with Instituto Butantan and is being funded by CEPI. We had more than 700 adolescents randomized against placebo, and for the first time, we looked at the vaccine in participants with prior exposure to the chikungunya virus. Importantly, this is a very meaningful finding. The vaccine continues to be generally well-tolerated, including in individuals previously infected with chikungunya virus, the AE profile is consistent with adults, and the initial data suggest that we see even a more favorable safety profile in seropositive patients or participants, which is in line with what we published around our Phase 1 data where we described our so-called re-vaccination challenge, where people had been re-vaccinated with the vaccine itself. As we have done for the entire study, the independent DSMB has not identified any safety concerns associated with this vaccine. Now looking forward, the Phase 4 alignment is currently the number one topic that we are dealing with. It is the reason for why we got a postponement on the PDUFA date in the first place. We are working very collaboratively with the FDA to align on post-approval Phase 4 requirements. This is not an easy endeavor for both parties because this Phase 4 alignment and the design of the Phase 4 activities is likely to set future standards for outbreak disease indications under FDA accelerated approval pathways. Nothing exists today in this regard, and therefore, we are breaking new ground here. We have additional studies ongoing, specifically an antibody persistence study. We are following the cohort here for five years because we want to show that after a single shot, there is long-lasting protection. We reported the 12-month data in December and we expect the 24-month data by the end of this year. The adolescents Phase 3 trial is important to support potential label expansion, and licensure in Brazil is funded by CEPI. Additionally, a significant part of the data needs to be included in the EMA submission. We are planning for co-vaccination in pediatric and special populations. We are executing on the Phase 4 program and Phase 4 effectiveness in endemic settings. When we look at the market, I mentioned briefly, we have travelers from non-endemic regions, which are highly complementary with our existing travel portfolio, and there is a significant need as we see more and more outbreaks, including in Europe and the Americas. We see a military opportunity here for troops stationed in areas at risk of chikungunya, and of course, in areas where we need to prepare for potential outbreaks or respond during outbreak situations. We are working with CEPI and Instituto Butantan. I am very happy with this collaboration overall. So, we continue to be absolutely excited about this first chikungunya vaccine that hopefully is going to make it to market, and we are looking forward to our PDUFA date and the approval of this vaccine in the United States first, and then in other countries thereafter. When we look at our Lyme disease program, our program VLA15 is the only Lyme disease program in advanced clinical development today. We had multiple Phase 2 studies, including first pediatric and adolescent data. We currently have the Phase 3 ongoing called study VALOR, and we have partnered with Pfizer on this. This partnership with Pfizer has been very fruitful and constructive over multiple years. By way of reminder, this vaccine is a recombinant protein vaccine candidate, multivalent targeting the six most prevalent serotypes causing Lyme disease in the United States and Europe, because we want to ensure that we have a vaccine for people living and going to both sides of the Atlantic. The program operates under Fast Track Designation granted by the U.S. FDA in July 2017. We have demonstrated strong immunogenicity results across three different Phase 2 studies, which included pediatric data. Overall, we see very strong data here, and I believe this strong anamnestic response and booster response for a vaccine that might need a booster annually or at a longer cadence remain very important. This is another key step towards a potential vaccine solution in this area of high unmet medical need. Regarding the Phase 3 efficacy study itself, we are receiving many questions around the study, so let me repeat again the key cornerstones of this study. Around 9,000 participants, older than five years of age, meaning we cover the vast majority of the target population, and we are including people at high risk of Lyme disease by residence and/or occupational or recreational activities. In the U.S., in Canada, and Europe, we are randomizing 1:1 against placebo, and 2:1 U.S. versus non-U.S. With regards to the primary endpoint, it is the rate of confirmed Lyme disease cases after two consecutive tick seasons, meaning after completion of the full primary season, sorry, meaning three doses plus the booster dose. As part of the secondary endpoints, we also can look at the efficacy after priming with three doses amongst other secondary endpoints as defined in the Phase 3 protocol. Following the discontinuation last year for one part of the study, one cohort of the study was run through a specific set of study centers, and we have now split into two cohorts still under the roof of one study. The enrolled participants cohort, one in blue, shows the three doses given at month zero, two, and six, and the booster given after 18 months. This cohort has been completely enrolled. We are now completing the tick season 2023 and will be giving the booster shot next year, and the cohort is rolling. The booster will be administered in the 2025 tick season. Pfizer aims to submit the regulatory applications in the U.S. and Europe in 2026 subject to positive data, which we hope to see at the end of 2025 after the completion of the 2025 tick season. If we turn over to Zika, Valneva has a Zika vaccine in its R&D portfolio for a number of years. We paused the development program when we refocused our resources towards COVID vaccine development. Now that the COVID vaccine development is behind us, we have reactivated our Zika program because we believe that there is significant unmet medical need. This is also a highly complementary potential asset when it comes to leveraging our existing inactivated whole-virus platform that we initially developed for Japanese encephalitis and then further enhanced and modified for our COVID vaccine, VLA2001, so it can fit very well onto our existing platforms. This vaccine candidate would also fall under an accelerated approval pathway for which we are generating a lot of expertise and capabilities because of our CHIK development. Additionally, we meet the desire for the Target Product Profile as articulated by WHO. All of that led us to our decision to continue or restart with our Zika development with a trial start as early as probably next year. Regarding our portfolio, we are working on a number of things in the preclinical area. I would like to point out hMPV for which we completed our preclinical proof of concept successfully, given that the vaccine development environment is transitioning towards an RSV-hMPV combination vaccine. We have initiated partnering discussions, and those discussions are currently underway, and partnering is under evaluation. Our lead candidate in the preclinical arena remains EBV, Epstein-Barr virus. We are currently in the final antigen identification phase and hope to have a final product candidate designed by the end of this year. Of course, we are working on several other projects in the preclinical phase, but we are prioritizing and focusing. Our overall R&D portfolio management always strives towards delivering highly differentiated assets, first-in-class, best-in-class, only-in-class. With that, I would like to hand over to Peter to provide us with the financial report and take us through the rest of the presentation.

Thank you, Thomas, and good morning and good afternoon to all of you. Now, let's look at the financial review of the first half of fiscal year 2023. Product sales reached €69.7 million and grew 109% over the prior year. At constant currency, product sales grew 113.6%. The strong growth is driven by all product lines, with IXIARO growing at 150% at constant currency, DUKORAL at 213%, and third-party products at 46.8%. This excellent sales performance is primarily driven by the recovery of the private travel market, but also by price increases across the board. In the first half year, we also still recorded residual COVID-19 vaccine sales related to a pre-existing contract with the Kingdom of Bahrain. Moving on to the income statement. Total revenues reached €73.7 million versus €93.2 million in the first half year of 2022, a decrease of 20.9%. In the prior year, Valneva had recognized other revenues related to its COVID program, which explains this decrease. Looking at expenses, we observed a significant decrease in cost of goods and services from €171.5 million in the first half of 2022 to €53.8 million in the current fiscal half year. The prior year's cost of goods and services were heavily impacted by one-off items related to the wind-down of our COVID-19 program. The gross margin of both IXIARO and DUKORAL is still below pre-COVID levels and is adversely impacted by IXIARO batch write-offs in our Scottish manufacturing site and high sales volumes in indirect markets, where our average selling price is lower than in direct markets. In the first half year, we also recognized initial cost of goods related to the launch preparation of our chikungunya vaccine candidate. Research and development expense decreased from €51.9 million in 2022 to €26 million in the first half year of fiscal year 2023. That decrease is driven by the lower spend on Valneva COVID vaccine programs and, at the same time, the cost related to the Zika vaccine candidate increased as the company has moved towards a re-initiation of our clinical development program. Marketing and distribution expense increased significantly year-over-year from €7.8 million to €20 million. The increase is related to higher pre-launch costs for our chikungunya vaccine candidate that more than tripled versus prior year. In addition, high EC spend has had a positive impact related to our employee share-based compensation. G&A expense increased from €60 million in 2022 to €22.9 million in 2023. In the previous year, all expense lines had a favorable effect for a total of €19.5 million related to employee share-based compensation due to the share price development. The increase in other income from €3.6 million to €14 million is mainly related to the recognition of a grant received from Scottish Enterprise. Overall, the company recorded an operating loss of negative €35 million versus €150.4 million in the prior year. Adjusted EBITDA improved from €136 million to €28 million negative. Finally, we reported cash and cash equivalents as of June 30, 2023, of €204.4 million compared to €289.4 million at the end of December 2022. This position does not include the increased debt facility of $100 million, of which $50 million were drawn down in the third quarter of 2023. Now moving to Slide 21 to review our guidance for the fiscal year. We reiterate our guidance for revenues and other income communicated earlier this year. We expect product sales to reach between €130 million and €150 million and other income to reach €90 million to €110 million. We also reiterate our guidance on R&D investment expected between €70 million and €90 million. This concludes the finance section of this call. Now let's move to Slide 23, looking at upcoming catalysts and news flow. On our VLA1553 program, we still anticipate the PDUFA action date and potential BLA approval at the end of November. We also expect to release adolescent immunogenicity results in November 2023 and progress towards submitting EMA regulatory submission in Q4. Also in Q4, we'll report additional 24-month antibody persistence data and we expect the ACIP recommendation for Q1 in 2024. On VLA15, we expect the trial execution to continue with the recruitment of Cohort 2 in advance of the 2024 tick season as explained by Thomas earlier during this call. Additional news flow, we expect imminently to announce a new DoD contract for IXIARO and then potential granting of FDA priority review voucher as we obtain the VLA1553 BLA approval. Also, as already mentioned, we expect the initiation of our Phase 1 clinical trial of Zika in the first quarter of 2024 and the advancement of selected preclinical programs mentioned just before by Thomas. With this, we really see Valneva poised for substantial growth, primarily led by new product launches. We see in the next six to twelve months, of course, VLA1553 reaching the market, and then longer-term, VLA15 reaching the market and for Valneva to record significant milestone revenues. Additional growth drivers include the continuous recovery of the travel market that will be reflected in substantial growth, still in IXIARO and DUKORAL, as mentioned, the DoD contract for IXIARO, and potential label expansion for VLA1553 after the initial approval in adults. Longer-term, we may look into in-licensing or acquisition of additional clinical candidates, and potential market launch of these in-licensed programs. This concludes this part of the call. I would now like to hand back to Joshua to open the Q&A session.

We are now going to proceed with our first question. The questions come from Maury Raycroft from Jefferies. Please ask your question.

Hi. Thanks for taking my questions. I was going to ask one on chikungunya. What are your latest thoughts on what a potential Phase 4 outbreak study might look like in terms of size, geographic areas, or any other details? And I'm also wondering, is the outbreak study something that ACIP could potentially want to see for a recommendation or how do you view that study in the context of ACIP?

Hi, Maury. You will understand that given that we are in the middle of agreeing and aligning the Phase 4 activities with the FDA, there is only very little I can share publicly around that. What I can say is, it is under the accelerated approval pathway. We need to show effectiveness in a real-life setting, meaning in endemic countries, and ideally during an outbreak situation. Therefore, you need to prepare for that, and different populations included, meaning adolescents, as well as adults. Historically, ACIP has not been awaiting final effectiveness data which can take many years to provide their vaccine recommendations; at this point in time, we do not expect this to happen. We have a strong database that we're going to present and continue to present to ACIP, which serves as a strong package. Unfortunately, I cannot disclose more at this point, but soon we will be in a position to explain what we're going to do, and I hope for your patience until then.

Okay. Yes, makes sense. And I was going to ask one other question about chikungunya. You've talked about the different revenue streams, including travel sales in the U.S. and EU, military and potentially stockpiling contracts, and then endemic. Can you talk about the potential cadence of the launch in terms of these different revenue streams? How are you preparing currently for the launch? And have you thought of when you might give guidance on sales for some of these groups post-launch?

Yes. That's an excellent question, Maury. First of all, as you know, we have prioritized the travel and outbreak preparedness in highly developed countries. We started with the U.S., where we see by far the single largest market opportunity in terms of revenue, followed by Canada and EMA. This is our cadence. The Canadian filing got accepted, which we disclosed. Next step is, of course, EMA. Then we will go immediately into Brazil. We are currently looking into the next most important LMIC territory, which of course is Asia. This is probably the cadence of how we're going to approach it from a regulatory and licensure perspective. With regard to outbreak preparedness stockpiling, there isn't a dedicated regulatory process needed for that in highly developed countries. However, we have quite a number of initiatives ongoing to potentially attract a stockpiling business. As such, we have not been comfortable providing any guidance on how big this opportunity might be, but there is a lot going on, and we hope to attract some business in this segment too.

Got it. All right. Thanks for taking my questions.

We are now going to proceed with our next question. The questions come from the line of Samir Devani from Rx Securities. Please ask your question.

Yes. Hi guys. Thanks for taking my questions. Just a couple really on the numbers. Is this the last of the COVID-19 vaccine orders that we're expecting? And on R&D, can you just maybe explain what would make you come in at the bottom or at the top end of your guidance? Thanks very much.

Thanks, Samir, for the questions. On COVID-19, yes, there is some residual revenue expected in the second half of the year. But we're mostly done with COVID-19 in terms of revenues. In terms of R&D, yes, great question. Your question targets the level of spend we see for the first half year compared to the guidance. Obviously, we are tracking more towards the lower end of the guidance when you look at the first half year, and that is driven by how much we spend on ongoing trials, specifically on chikungunya, but also on how quickly we accelerate spend on Zika. These are key drivers on the R&D spend.

In addition to that, Samir, it's also related to when we actually initiate some of the additional studies for chikungunya. You have seen that we have quite a number of studies planned for chikungunya. Of course, we will only start some of those studies once we have received the approval of the vaccine. That’s why there are a couple of swing factors that may affect the final spend, especially with regards to direct R&D expenses.

Great. Thanks very much.

We are now going to proceed with our next question. The questions come from the line of Simon Scholes from First Berlin. Please ask your question.

Yes, hello. Thanks for taking my questions. I've got two. First of all, I was wondering, on the commercial vaccine business, if you could tell us how much direct sales were in Q2. I think the figure for Q1 was 71.6%. And I was also wondering if you could quantify the batch write-off on IXIARO in Q2. Thanks.

Thanks. Let's start with the second question on batch write-off while we look for the number on direct sales. You will understand that this is something we are not publishing. The reason we mentioned it is that it was a higher amount than we usually see, which is related to the fact that we are restarting full steam commercial manufacturing post-COVID. However, we are back on track with our manufacturing performance. So, we do not expect any further significant issues with supply-demand from a supply perspective unless we see further positive surprises on the demand side. We are seeing in some countries a significant increase in travel vaccinations.

Okay. And would you expect the number to stay around that level?

No, clearly not. I think this was unusually high in both Q1 and Q2, and we would expect for the remainder of the year to get more towards ratios like we saw in the past.

Especially with military contracts kicking in, remember that.

Okay. Yes. Thanks very much.

We are now going to proceed with our next question. The questions come from the line of Damien Choplain from Oddo BHF. Please ask your question.

Yes, hello. Can you hear me?

Loud and clear.

Yes, yes. Thank you for taking my questions. First on Zika, please. Why do you need to conduct a new Phase 1? Why don't you directly move to Phase 2 trial? First question. And what would be the market potential for this vaccine?

Let me expand a bit on what we're going to do. In the Phase 1 study, we saw very nice immunogenicity data and good safety data, but we did not reach an immunological plateau, meaning we did not maximize the potential of the vaccine with the formulation. Hence, what we're going to do is update the formulation of the vaccine and also integrate it onto the platform we further enhanced for VLA2001, as we want to have a highly differentiated vaccine. We want an inactivated vaccine that is best-in-class and therefore, we decided to conduct a new Phase 1 protocol, which in reality is quite large, but technically it's classified as a Phase 1 protocol. Regarding market size, it’s very difficult to quantify at this point. We will have another review time-point on Zika at the end of the next clinical study. There is a significant unmet medical need and we see emerging outbreaks around Zika, but for outbreak diseases, quantifying market potential is complex. We need to assess three things: whether we can deliver a best-in-class vaccine, what the potential is under a normal travel sector viewpoint, and potential partnerships that could improve overall financials around it, as we did for chikungunya with CEPI. All that will be further evaluated as we move along. For now, we recognize the unmet medical need, and we see the opportunity for Valneva to provide a best-in-class vaccine solution that meets the expectations of the medical and scientific community.

Maybe just a quick one on your guidance. Can you confirm that it still includes the sale of the potential PRV in 2023, despite the approval delay of the chik vaccine?

Yes, indeed, it still includes the expected proceeds from the PRV, despite the later PDUFA date.

Okay. Thanks.

We are now going to proceed with our next question. The questions come from the line of Evan Wang from Guggenheim Securities. Please ask your question.

Hi, guys. Thanks for taking the question. Two from me. First on Lyme. Just with the update on the ongoing trial, I know it's in the hands of Pfizer, but I am interested in what the companies are observing in terms of the incident rate of cases and Lyme serotypes in Europe and the U.S. Is it consistent with what you were expecting? And second on chikungunya, I'm happy to see some of the durability data that show early time point data. I was just wondering if there are thoughts on including maybe a subset of patients in either the Phase 4 or other studies to potentially evaluate an earlier time point titer in a larger patient population?

Both excellent questions. Let me start with the second one first because it's frequently asked. Regarding onset of immunity, we were the first to develop the vaccine. We agreed with the authorities on the readout at day 29. We have datasets indicating that the vaccine has a full onset above the seroresponse level very early on. We will include those earlier time points as part of studies that we are initiating under either Phase 3 or Phase 4 protocols. There's absolutely no reason not to do so, and we expect a fantastic onset of immunity above the seroresponse level early on. Regarding Lyme, Pfizer conducted an EP study in Europe and the U.S. before the Phase 3 study was even initiated. There have been partial disclosures around EP study results at various conferences. Overall, this EP study confirmed the distribution of the different serotypes on both sides of the Atlantic. No surprises on that front, and the overall case count is being monitored at this point in time. Pfizer has no issues attracting and recruiting the respective target population into the study.

Thanks, guys.

We are now going to proceed with our next question. The questions come from the line of Suzanne Van Voorthuizen from VLK. Please go ahead with your question.

Hi there. Good afternoon, team. A couple of questions from my side. To start off with product sales that are growing quite nicely again, can you remind us what the seasonality is that we should keep in mind for IXIARO and DUKORAL? Which quarters are typically stronger given the travel patterns, and what should we expect for chikungunya over time? And then I have a follow-up.

Excellent question. If you look at prior years, you typically see a dip during summer. There is higher uptake earlier and later in the year, which has to do with travel patterns, particularly to Southeast Asia. You also see a seasonality pattern for DUKORAL, given that the largest market for DUKORAL is Canada. Typically, there's strong demand early on in the year. At the end of the year, Canadians travel to warmer regions when it's cold in Canada. We have seen considerable variability across the years, making precise modeling challenging. However, we stick entirely to guidance. Regarding chikungunya and your question about seasonality, we have slightly different territories for chikungunya compared to Japanese encephalitis. Our current hypothesis is they will balance each other out, and we're not modeling a strong seasonality profile for chikungunya yet, but this may change as we learn more.

Got it. Okay. That's very helpful. And then continuing on the chik vaccine, you started to invest a little bit in preparation for the launch. Can you remind us what gross margin you believe is feasible on this product and how we should look at your sales and marketing expenses for the launch and the long-term run rate?

We are not only investing a little, we are investing a lot. You will continue to see high sales and marketing investments into chikungunya as we start commercializing the product next year. Over time, we expect our overall sales and marketing spend as a percentage of sales to revert to pre-COVID levels. We are talking about a range of €26 million to €27 million. Before that, there will be some additional investments due to market education, etc. Regarding gross margin, in the early years, we expect higher costs of goods than what you saw in the legacy business before COVID. However, once we reach scale, we expect to see at least gross margins similar to IXIARO and DUKORAL, and potentially higher over time.

Got it. All right. Thank you. And then finally, regarding your Lyme program. Now that the dust has settled on the timelines and your current cash position and the recent additional $100 million loan facility, can you elaborate on how we should think about your cash burn and run rate from here? And that's it from me.

We will still have significant payments to make on the Lyme program, and you can see some extent of that on the liability side of our balance sheet. After the 2022 equity offering, we stated we were sufficiently financed until the end of fiscal year 2024. That holds true, but we have not provided updated guidance on cash burn rate at this stage. We have not given further guidance yet, but for the foreseeable future, we are sufficiently financed. We continue to have an appetite to potentially in-license R&D programs, which could require additional, non-dilutive financing.

Got it. Thank you.

We are now going to proceed with our next question. The questions come from the line of Max Herrmann from Stifel. Please ask your question.

Great. Thanks very much for taking my questions. Three if I may. Firstly, just on IXIARO and DUKORAL, I know last year you had some capacity constraints. You've highlighted a batch failure in IXIARO in the first half of this year. Where are you with capacity compared with demand for both those products? So, that's the first question.

Overall, we are managing supply-demand quite well right now. We have minor shortages here or there, but on an 80-20 basis, we are fine. The issues we discussed with higher write-offs leading to higher costs of goods were typical, restart issues after our team had not manufactured IXIARO for more than two years. We are back on track with our manufacturing performance, and we do not expect significant issues with supply-demand from a supply perspective unless we see positive surprises on the demand side. We see significant demand in some countries for travel vaccines in general, and we are tracking well.

Great. And then, next couple of questions. I'm sorry if I missed it, but you mentioned a DoD contract you talked about, that being imminently signed. I just wondered what the structure of that is. You did a more multi-year contract in the past, and then previously it was more of an annual event.

Historically, we have done single-year contracts, which has been the standard with DoD. We had one exception with a 2020 contract with option years. However, that did not materialize due to the onset of the COVID pandemic. This gives you an idea of what we are expecting.

And finally, I know you just said that recruitment into the Lyme disease program has no issues. Would you be able to provide additional specificity on the pediatric element of that recruitment? Do you think conducting the study over two seasons has helped recruitment since I know that was one of the hardest areas to recruit into?

Indeed, we continue to maintain a certain percentage of pediatrics within the study, which is in line with how we designed the protocol and how we also analyzed and powered the study. There are no issues in recruiting any of the target populations required in the study at this point in time.

Great. Thank you very much.

We have no further questions at this time. I'll hand back to you for closing remarks. Thank you.

That concludes today's call on our half year 2023 results and general corporate and business update. We would like to thank you again for your time today, for your great questions, and for following us closely and diligently. We look forward to catching up in the coming months. Thank you so much, and have a great day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect your lines.