Prepared remarks
Good day, and thank you for standing by. Valneva presents its half year 2026 financial results. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Joshua Drumm, VP of Investor Relations. Please go ahead.
Hello, and thank you for joining us to discuss Valneva's financial results for the first half 2026 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 6 months ended June 30, 2026, which were published earlier today available within the Financial Reports section on our Investor website. I'm joined today by Valneva's CEO, Thomas Lingelbach; and our CFO, Peter Buhler, who will provide an overview and update on our business as well as our financial results. 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 will be making forward-looking statements, which are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. You can find 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, August 13, 2026, 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. Good day, everyone. Let me start off with a couple of introductory remarks. The first half of 2026 has certainly been marked by our efforts to focus on enhancing our financial position, especially after the initial Lyme Phase III VALOR results and the resulting uncertainty. We have been able to generate a strong cash position with more than EUR 120 million in cash. This is a result of our disciplined cash management and the proceeds from the recent offering. We also initiated a broad restructuring program, and we expect the positive P&L and cash flow impact in the second half of this year and beyond. This included a reduction in our workforce, a reprioritization of projects and activities, and a focus on our core operational business. When we look at our general commercial business performance, we generated more than EUR 60 million in total product sales. We have reaffirmed the guidance because the half-year sales performance is in line with our anticipated pacing of product sales throughout 2026. We have had a number of adverse EBIT impacts in the first half of the year. Peter will explain those in greater detail. Most of them are really one-off effects and are non-recurring. But the most important thing and the most exciting thing is that Pfizer continues to be very positive about the prospect of the Lyme disease vaccine, and they recently announced during their earnings that they expect regulatory decisions for the Lyme disease vaccine candidate in the next 12 months, which is really great news. Now turning to our general business update. And of course, I would like to start with Lyme. The vaccine showed a very strong point efficacy, greater than 70%, and a very good safety profile. As we discussed multiple times, we had a miss on the lower bound of the 95% confidence interval. However, we have to note that we see with this product candidate a very significant clinically meaningful efficacy. We also had a 95% confidence interval lower bound greater than 20% in the second pre-specified analysis. All of that in combination with the huge unmet medical need, the totality of clinical evidence and the expectation of positive health economic benefit for a potential prophylactic solution increases our confidence in the future prospects of a potential Lyme vaccine. There is a huge unmet medical need. The annual burden of disease is increasing, and we have been noting recently close to 500,000 cases in the United States. European numbers remain significantly underreported because not all countries have respective surveillance systems, but certainly north of 100,000 cases every year. Some of them come along with very severe manifestations in the order of 10% to 30%: carditis, neuroborreliosis, arthritis. Unfortunately, 5% to 10% of cases continue to have persistent symptoms even following treatment. As such, we really believe that LB6V, as it's called now, is a compelling opportunity in a highly underserved market. We could leverage a first-mover advantage. The perception around a need for Lyme vaccination is high. We are the only Lyme disease vaccine candidate in late-stage clinical development, and it could become, if licensed, the first potential Lyme vaccine in nearly 30 years. The vaccine is based on a proven mode of action. We cover the six key serotypes prevalent in the Northern Hemisphere, and the technology is based on modern state-of-the-art recombinant protein technology. We have a broad addressable population. At this point in time, we showed in the study results for people above 5 years of age. I mentioned already that we see a growing disease burden. With global warming, the tick population across high-risk areas of Lyme disease is steadily increasing. We have an excellent partner, and there is a huge strategic fit with Pfizer's vaccine franchise. Hence, we anticipate very attractive commercial prospects and dynamics. So all in all, we share Pfizer's positivity on the prospects of that vaccine, and we really hope that we can get this vaccine to licensure on both sides of the Atlantic. On IXCHIQ, as part of our overall restructuring process and reprioritization of our key strategic focus areas, we are shifting more and more towards IXCHIQ access in countries where there is highest risk for chikungunya infection, meaning primarily low- and middle-income countries. We are currently executing a significant number of post-marketing activities, all supported by our great partner, CEPI. We have a Pilot Vaccination Campaign ongoing in Brazil. We have more than 50,000 people already vaccinated today; these are adults 18 to 59 years of age. We have a study ongoing to confirm effectiveness and optimize characterization of the safety profile, which over time could potentially even lift the highly restrictive warnings, precautions and other indications we have right now in our label for travel. All of that is to ensure greater access, and we are focusing on expanding our network of manufacturing and distribution partners in low- and middle-income countries. We hope to be able to announce something toward the latter part of the year. The locally manufactured vaccine in Brazil by our partner Butantan has now been approved and is expected to be incorporated into Brazil's public health system in the near future. We in-licensed an interesting candidate against shigellosis. It's the most clinically advanced tetravalent Shigella vaccine candidate. Right now, we are running two studies, one in infants, the other in adults. One is an immunogenicity and safety study. The other is a controlled human infection model study, so pilot efficacy through human challenge. We expect results for both studies in the coming months. Based on the results, we will decide on the next development steps for that vaccine. There is still a significant market opportunity for shigellosis, especially given that it's the second leading cause of fatal diarrheal disease, with an estimated 165 million cases and 600,000 deaths annually, mostly in children in low- and middle-income countries. There is also an interesting opportunity either in a stand-alone setting or in a combination vaccine setting to work towards a broader diarrheal vaccine for travelers. With this short update on our core R&D activities and general business development, I would like to hand over to Peter to provide you with the financial report.
Yes. Thank you, Thomas. So first, looking at product sales. Product sales reached EUR 64 million compared to EUR 91 million in the first half of 2025. Sales, excluding third-party products, decreased by 18.3% versus prior year at constant currency. This decrease was primarily due to product-specific effects, which I will discuss shortly. IXIARO sales reached EUR 44 million compared to EUR 54.7 million in the prior year's first half. The year-over-year decrease primarily reflects the transition to a new distributor in Germany in January 2026 as well as product sales phasing, notably the timing of deliverables to the U.S. Department of Defense. Shipments to the U.S. Department of Defense in the first half of 2026 continued under the one-year contract signed in January 2025. We expect to sign a new contract in the coming months and begin recording sales under this new contract in the second half of the current fiscal year. Foreign currency fluctuation also had an adverse impact of EUR 1.5 million on IXIARO sales during the first half of 2026. DUKORAL sales reached EUR 14.7 million compared to EUR 17.4 million in the first half of 2025. Prior year sales benefited from one-time sales associated with the supply of DUKORAL doses to Mayotte in response to a cholera outbreak. In addition, sales in the first half of 2026 were adversely affected by the distributor transition in Germany in January 2026. Similar to the first quarter, existing inventory transferred from the previous distributor was sufficient to meet market demand during the period. Furthermore, there was a slight weakening of the travel market in certain geographies due to geopolitical factors. IXCHIQ sales reached EUR 4.4 million compared to EUR 7.5 million in the first half of 2025. While current year sales include the first shipment of drug substance to our Brazilian partner, Instituto Butantan, the prior year benefited from 40,000 doses sold to the French island La Reunion in response to a major chikungunya outbreak as well as travel sales in the United States. In light of the slow product uptake in travel, the company is currently evaluating its future commercial strategy for IXCHIQ, including the potential focus on endemic markets. Third-party products decreased substantially from EUR 11.4 million in the first half of 2025 to EUR 1 million in the first six months of 2026. This planned reduction is the result of key third-party distribution agreements that ended in December 2025 without renewal. Moving on to the income statement. Total revenues reached EUR 65.8 million versus EUR 97.6 million in the first half of 2025. The decrease is mostly related to the lower product sales. Last year's other revenues also included a one-off upfront payment related to the licensing agreement with the Serum Institute of India for our single-shot chikungunya vaccines. Looking at expenses: Cost of goods and services for the first half of 2026 reached EUR 59.5 million compared to EUR 47.2 million during the same period last year. Cost of goods in the first half of 2026 were impacted by a number of non-recurring and exceptional effects. In particular, a provision of EUR 9.7 million in cancellation fees related to external manufacturing commitments for IXCHIQ and a EUR 4.5 million non-cash impairment of excess IXCHIQ inventory resulting from lower-than-anticipated sales. In addition, cost of goods were adversely impacted by changes in manufacturing schedule and volumes and related adverse variances as well as higher idle costs following the transfer of manufacturing to our Almeida facility. IXIARO's gross margin reached 56.4% compared to 65.5% in the prior year. The decrease is mainly related to lower volumes and an unfavorable change in the manufacturing schedule. Last year's IXIARO gross margin was exceptionally high due to high manufacturing volumes and favorable overhead absorption. DUKORAL generated a gross margin of 24.7% compared to 52.9% in the first half of 2025. The gross margin of DUKORAL in the first half of 2026 was adversely impacted by higher-than-usual failed batch costs and inventory revaluation. In contrast, the prior year gross margin benefited from favorable overhead absorption due to manufacturing timing and higher volumes. The IXCHIQ gross margin was negative due to the one-time cancellation fees provisioned in the second quarter as well as the inventory write-down mentioned previously, which importantly had no cash impact. Research and development expense decreased from EUR 32.4 million in the first half of 2025 to EUR 30.2 million in the first half of 2026. That decrease is mainly a result of reprioritization and rescheduling of R&D activities. Marketing and distribution expenses decreased significantly from EUR 20.3 million in the prior year to EUR 13.5 million in the first half of 2026. The decrease is related to a planned reduction in advertising and promotion related to IXCHIQ as well as reduced personnel, warehousing and distribution costs. G&A expenses decreased to EUR 15.4 million compared to EUR 19 million in the first half of 2025. The reduction was a result of lower personnel costs and savings in advisory and professional fee services. The company implemented the restructuring program in June 2026, and operating expenses in the first half year included one-time cost of EUR 3.2 million related to that program. Savings are expected in the second half year and beyond. In the first half of 2026, Valneva reported an operating loss of EUR 49.9 million compared to EUR 16.8 million in the prior year. Adjusted EBITDA loss in the first half of 2026 reached EUR 40.1 million compared to EUR 6 million in the prior year. Before moving to the outlook and guidance, a word on cash. As mentioned by Thomas at the beginning of the call, cash at June 30th was EUR 121.5 million compared to EUR 109.6 million at the end of fiscal year 2025. Cash used in operations in the first half of 2026 was EUR 13.7 million compared to EUR 10.9 million in the first half of the prior year. Moving to Slide 18. We confirm our financial guidance for the fiscal year 2026 with product sales of EUR 135 million to EUR 150 million and total revenues of EUR 145 million to EUR 160 million. We expect the signing of a new contract with the U.S. Department of Defense for the supply of IXIARO in the coming months. We expect our commercial business to continue generating positive cash flow and the restructuring program implemented in June will have a positive impact on the P&L and cash flow in the second half of the current fiscal year and beyond. We expect product-related gross margin to improve in the second half following the non-recurring effects in the first half of the year. We continue to see potential to become financially self-sustainable starting in 2026, pending successful regulatory approval of the Lyme disease vaccine and subsequent commercialization by Pfizer. With this, I hand the call back to Thomas.
Thank you so much, Peter. The 2026—well, we mean 2027, of course—indeed it would be nice to already be financially self-sustainable in 2026. Let me close by giving a little perspective on how we see the future of Valneva, provided and subject to Lyme success. Going forward, we would like to leverage the company's core strengths in vaccine development to deliver greater long-term value. We would like to build scale in the R&D pipeline once Lyme has been out of the pipeline and hopefully successfully brought to market. We see a clear opportunity for strategic in-licensing to augment our clinical-stage pipeline. What we would like to do is create a risk-balanced portfolio of innovative specialty, life-cycle and high-value vaccine assets, which are attractive and go beyond our prior focus on vector-borne diseases. We are targeting new assets based on defined criteria and new disease areas. In parallel, we are advancing our internal earlier-stage candidates such as EBV and ETEC/a broader enteric disease covering candidate program, and we would put emphasis on targets that reduce antimicrobial resistance. All of that will be flanked by further optimizing our integrated operations. We have kicked off a number of initiatives already as part of our restructuring program this year. This mainly focuses on adapting and adjusting our value chain, changes of custody, make versus buy external manufacturing partners, and continuous optimization of our commercial models, all with one clear objective: to maximize cash from our integrated operations and commercial business in particular. So all in all, we see a very good prospect for Valneva going forward. But for now, it's all about Lyme, and we have to wait until we hopefully see further positive development on the Lyme vaccine candidate, while executing thoroughly on our base business and maintaining strong and disciplined cash management. With that, I would like to conclude the presentation and hand back to the operator to take your questions.
Questions and answers
This question comes from Tara Bancroft from TD Cowen.
I was hoping maybe you could give us a little — any more detail or thoughts or feelings that you have on a regulatory update? I know Pfizer still sounds optimistic about it and a decision in the near to midterm over the next 12 months. But is there anything else that you can add to the discourse that you've had with Pfizer and our regulators? That would be really appreciated.
Pfizer are making very good progress with the regulatory agencies. We hope that we will be able to announce next steps soon. That's all we can say at this moment in time specifically.
I see. Okay, totally understood on that commentary. Maybe then I can ask a little more detail about some scenarios that could possibly come up. One in particular that might be helpful to get your thoughts on is the potential for you and Pfizer to maybe run another Phase III program or even a post-marketing surveillance study. What I'm hoping you can help us understand is the economics of those avenues—what you would be responsible for? And how does that factor into your capital allocation plans?
Yes. It's a good question, Tara. The existing agreement with Pfizer includes that Valneva shares development costs to licensure. Everything that comes beyond licensure is currently not part of the contractual agreement with Pfizer. Whether or not we will further invest in Lyme on the points you mentioned is something that may be discussed at a later point in time, but definitely not before we see the product being licensed—hopefully being licensed in the respective jurisdictions.
We are now going to take our next question, and this one comes from Maurice Raycroft from Jefferies.
Congrats on the progress. I was going to ask one on Shigella. So wondering if you can provide more color on what is gating the update? Is it operational related to the clinical study or data analysis? Or are you awaiting additional regulatory clarity on the potential development path? And then when the data are disclosed, should we also expect clarity on the path forward? What are the latest scenarios you're considering there?
Yes. Thanks for your question, Maurice. We have had a few delays on the program. The studies are still conducted by LimmaTech, which was recently acquired by Lilly. There are a couple of key cleanup steps right now, but we are in the last and final steps on data validation and putting the conclusions together, final analysis, et cetera. This is not going to take a long time until we will be able to disclose. What do we expect? Please remember that we ran a controlled human infection model, meaning a human challenge. The human challenge will give us a very clear understanding about the efficacy of the vaccine. Of course, it cannot be decisive or conclusive, but it is highly indicative. It will also provide us with a view on the immunological threshold we need to achieve to see a level of protection and at which level of protection. The flanking immunogenicity study in children will provide us with safety data, which is very important, and a first feel for how the immunological profile in children compares to adults. While not a direct head-to-head, it will provide a good indication. We will take those two data packages together, and then we will see whether this is already good enough to proceed to the next development stage or if there is a need to optimize. Optimization could involve dose, schedule, or formulation. Our objective is to announce the next development steps either with the data or very shortly thereafter. I hope this answered your question.
Do you need some regulatory feedback to do that then?
We have a group of regulatory advisers with whom we are working. We are currently not expecting to seek direct regulatory advice from the relevant regulatory bodies because we had prior discussions, and I think for us it's pretty clear what the potential expectations would look like.
We are now going to move to our next question. This question comes from the line of Vamil Divan from Guggenheim Securities.
This is Edward on for Vamil. Just a couple more questions online, if I may. First, it sounds like Pfizer told us that they have filed in Europe, but not yet with the FDA. They're still in conversations. Can you share any details on your learnings on why they decided to proceed that way? Second, are there any differences in how the European agency and the FDA look at vaccine data in general and VLA15 specifically that would be pertinent? To what extent would the European filing derisk the FDA filing?
Yes. We can confirm that Pfizer filed with the European Medicines Agency. They disclosed that after their last earnings. We are, of course, very happy about this step. Following the data, they clearly advanced the regulatory processes. As I mentioned earlier, these are two independent agencies. We also know from the past and our own history that there are close interactions and communications between those agencies. I would not speculate about why one filed earlier than the other. Let's celebrate the progress. There is a huge medical need on both sides of the Atlantic and a significant commercial opportunity on both sides. In one of the recent analyst reports, it was clearly articulated that the market is expected to be probably the same size on both sides, which aligns with what we have been stating. We are quite pleased about progress, and we are looking forward to how Pfizer will conclude with the FDA in support of their planned BLA submission for the Lyme disease vaccine candidate. Regarding how the European versus U.S. regulators look at vaccine data: I don't know specifically whether there are fundamental differences in how they will look at these data. The data are the data: we have safety data, efficacy data and immunogenicity data, and those are the same. All agencies look at the totality of clinical evidence, risk-benefit, health economic benefits, mode of action and scientific rationale. There are nuances—as we know from prior programs—on statistical analysis details, potential post-marketing commitments or pediatric development routes, but I have not seen material differences in how the two agencies handle applications in vaccine programs historically.
We are now going to take our next question, and this one comes from Suzanne van Voorthuizen from Kempen.
This is Suzanne. I have one on the Valneva ambition from here. It seems like you are gravitating to more of an R&D or biotech-driven identity rather than a commercial focus. Can you elaborate to what extent this strategic direction depends on Lyme being successful? Or phrased differently, how do you envision walking this future path independent of the state of the Lyme program? And then a small question on the sale of the site in France—next to the EUR 6 million in proceeds, does this also bring an ongoing cost reduction of a certain degree?
Suzanne, yes. You're right that we see our commercial business as subscale. It is important to have a fully integrated model because the commercial and industrial capabilities are beneficial for vaccine development. We see value in staying fully integrated, but the key purpose of our commercial business is to generate cash that we can reinvest in R&D. Therefore, our focus will be to maximize cash generation from the commercial business going forward. We believe we are one of the few remaining pure-play vaccine companies with proven expertise in bringing novel vaccines from bench to licensure, and we would leverage that. The extent of investment in capacity depends heavily on Lyme success, because the economics of the deal with Pfizer are favorable. Besides milestones, royalties from Lyme would flow to the bottom line and could allow us to invest significantly in enhancing our pipeline, both organically and through strategic in-licensing, while potentially becoming financially self-sustainable. This is a very appealing strategic outlook, but it depends on licensure and commercial success of the Lyme vaccine. Regarding Nantes, as part of our restructuring program, we consolidated all of our R&D operations into Vienna, so all R&D is now centralized there and we shut down R&D operations in Nantes. This consolidation brings efficiency and cost reduction over time. We have incurred redundancy and restructuring costs, but we expect significant benefit in the future. We also disclosed in the half year report that we will receive proceeds from the sale of the building.
We are now going to move to our next question, and this question comes from Shyam Kotadia from Goldman Sachs.
Two on the modeling side of things. You mentioned your ongoing restructuring program. How should we think about SG&A and R&D for the remainder of the year, especially knowing SG&A came in lower than expectations? I can see that linked to that, you no longer call out the 25% to 35% reduction in OpEx versus 2025 that you did in your prior release. Does that still hold? Second, what is a realistic expectation for gross margin in the second half of 2026? I realize you're not guiding on it specifically, but could you help us understand how it could compare to last year given that you're mentioning an uptick there?
Thanks for the questions. On restructuring and the impact on R&D and SG&A: you saw a trend that started last year when we implemented some efficiency improvements, and it continues this year. We expect continued efficiency in SG&A spending. What you see in the first half is in a way where we will continue to see going forward. There were also some one-off costs this year that we will not have anymore, and we eliminated a number of positions. In H1 you don't see the full impact yet, and you will see that going forward. Similarly on R&D, we expect to see a decrease in costs in the second half of the year. Yes, we provided guidance in the last press release about where we see costs going versus last year, and that still holds true. We have not revised it. On gross margin: there were many one-off events and some non-cash effects in the first half. In the second half, we clearly expect a much better gross margin than in the first half. Overall for the year, we will probably not get exactly to where we were last year, but we will get much closer to the full-year gross margin recorded last year. I would also expect a positive trend into 2027.
We are now going to take our next question, and this will come from Simon Scholes from First Berlin.
I have a question on IXCHIQ. The local version of the IXCHIQ vaccine has now been approved in Brazil. How long might it be before the start of commercial sale of the vaccine in Brazil?
Our partner Butantan is currently in the midst of launch planning. It is a bit too early to talk about commercial timing. There is a clear desire to include the chikungunya vaccine into the healthcare system, and there is a significant opportunity in both public and private markets in Brazil. We recorded in the first half the first revenues from drug substance sales because the locally produced product means we ship drug substance and they turn it into drug product. Based on what we're seeing, we expect this to become a significant opportunity, but it's too early to provide numbers without a clear confirmation from our partner.
A supplementary on the Pilot Vaccination Program. I think you've delivered—vaccinated 50,000 persons so far. How long do you expect this Pilot Vaccination Program to continue?
This program is owned by the Ministry of Health. The government's objective is a minimum of 100,000 people vaccinated because what we are generating there is active pharmacovigilance, especially given the nature of the vaccine. Before including it in a broad public vaccination schedule, they need to see active pharmacovigilance results. Their internal target has been a minimum of 100,000 doses vaccinated, which could be reached by the latter part of the year.
There are no further questions for today. I will now hand the call back to Thomas Lingelbach for closing remarks.
Thank you so much for your questions today. Thank you for following Valneva so closely, and of course Lyme in particular right now. As I said, we share the positivity that you could see across Pfizer's communications. We are very happy about the progress that is being made. We are optimistic that we're going to see approvals for the vaccine in the next 12 months, which would enable attractive strategic prospects as I described earlier. With that, thanks again, and have a good remainder of the day. Goodbye.
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.