Valneva SE

Welcome and good day to our quarter one analyst call where we'll report our full year 2021 results and provide corporate update. So if you move to the Slide 2 please and acknowledge disclaimer, we go on to Slide 4 of the presentation.

Yeah, 2021 has been an exceptional year for Valneva and we have been able to make excellent progress in all of our clinical programs. For Lyme disease, we reported further positive Phase II results, including booster data.

We determined finally the final Phase III dose and vaccination schedule. For our COVID 19 vaccine, we reported positive Phase III results obtained a first emergency youth authorization from Bahrain and an ongoing rolling reviews for conditional approval with EMA and MHRA.

For chicken gunaya, we reported final positive Phase III results and top line, not a lot data and initiated the adolescent Phase III activities. As you will see in the financial report, we have also been able to report strong full year 2021 revenues and cash position.

Our total revenues are $348 million roughly in 2021 compared to around $110 million in 2020, an increase of 216%. Our cash position is wrong with $346.7 million as of end of December.

We are very proud that we have achieved a successful NASDAQ initial public offering European placement and follow on offering. With that, let me take you a little bit through the different clinical programs.

Slide six, first of all, VLA15, our multivalent Lyme disease vaccine candidate. As you know, this is the only Lyme disease program in advanced clinical development today worldwide.

We got FDA fast track designation granted. We have an exclusive worldwide partnership with Pfizer.

I'm going to report more about the Phase II data and the booster response as well as the Phase III schedule and dose that we finally selected. And of course we are also waiting for further Phase II data, which I expected to come in the second quarter 2022.

As by way of reminder the multivalent vaccine candidate contains serotypes, which covered the most prevalent serotypes in the Northern hemisphere and the vaccine candidate follows a validated mode of action for other Lyme disease vaccines that were on the market many, many years ago. In terms of results, we reported positive results from two initial studies VLA-201 and VLA-202.

initiated study VLA15-221 in which we recruited 625 participants, five to 65 years of age. We confirmed as part of that study where we compared also head to head three dose versus a two dose schedule that the three dose schedule is going to be the one to be used for Phase III and we reported those results in the sub-analysis in February this year.

We expect further data from the pediatric and adolescent population soon in the second quarter of 2022. And of course we have also seen from our study 202 strong top line booster results.

VLA15 was immunogenic across all those groups and elicited high antibody responses across all serotypes, one month after primary vaccination and the booster dose one year following the six months dose elicited strong anamnestic response. With that and on the basis of this data, we plan to initiate the pivotal efficacy trial in the third quarter this year.

And of course the clinical readout as reported any times in the past is expected to cover peak season 2023. Enhanced readout is expected early 2024.

25% -- $25 million milestone payment is due to Valneva upon trial initiation. VLA1553 is our single shot chikungunya vaccine candidate.

It is the most advanced chikungunya vaccine program worldwide today. It is the only program that reported final positive pivotal Phase III results and we coupled this with top line lot-to-lot data and as mentioned at the beginning, we also initiated the adolescent Phase III trial in January, 2022.

Also the pediatric label extension is expected post-marketing. We got FDA breakthrough therapy fast track EMA prime designations and by way of reminder, the first one to receive BLA approval will be eligible for priority review voucher.

We expect to initiate the FDA pre-submission process in the second quarter of this year. Chikungunya vaccine candidate VLA1553 is a single shot life attenuated prophylactic vaccine that targets the chikungunya virus utilization and we expect very long protection after a single shot.

In order to make the product accessible to LMIC countries, we partnered with CEPI and Institute of [indiscernible] and CEPI has been granting $23.4 million in support of this program. Chikungunya will provide an excellent fit with our existing commercial and manufacturing capabilities.

We expect the global market, including endemic regions to exceed $0.5 billion annually by 2032. In terms of development outlook, I mentioned already that we expect the FDA pre-submission process to commence in the next quarter and a little bit about the data and the Phase III.

So we completed six months follow up period. All Phase III immunogenicity and safety endpoint were met and even after six months, we saw zero protection in 98.9% of participants after one month and 96.3% after six months.

And the good safety and tolerability profile was confirmed. The positive top line, lot-to-lot consistency trial for which we've reported data early this year, clearly confirmed the consistency of three lots manufactured.

Final data is expected in quarter two 2022. The antibody persistence follow up trial is ongoing and up to 375 volunteers from the 301 study will be followed annually for five years.

The adolescent Phase III trial was initiated in January 2022 to support potential label expansion. As I mentioned earlier, post initial licensure in adults and it's funded at CEPI.

The pre-submission process with FDA is expected to commence. And again, the sponsor of the first chikungunya vaccine approved in the US will be eligible to receive a priority review voucher.

VLA2001, Page 10, our inactivated whole virus COVID 19 vaccine candidate is the only inactivated COVID 19 vaccine program in the clinics in Europe today. It builds on our Valneva IXIARO manufacturing technology combined with Dynavax CpG 1018 adjuvants.

I mentioned earlier that the Bahrainian NHAR [ph] provided us with an Emergency Youth Authorization in March this year, and EMA and UK MHRA rolling reviews are ongoing. We have achieved last year in advanced purchase agreement for up to 60 million doses with the European Commission and for up to one million doses with Bavarian, The pivotal Phase III data showed superiority versus [indiscernible] bacteria and significantly more favorable tolerability.

We also obtained positive top line homologous booster data, and we showed in lab experiments, neutralization against Omicron and Delta variants, The ongoing clinical trials gradually expand the target product profile as well as the geographical reach and as you know, we are leveraging Valneva's manufacturing sites in Scotland and Sweden, coupled with our existing CMO partners. And this all will target an installed capacity of more than a 100 million doses.

Coming back to the data and especially the key data stemming from our COV-COMPARE study, on immunogenicity, we met, of course our co-primary endpoints. We showed superiority in terms of geometric mean titers for neutralizing antibodies, which are still today seen as the most relevant correlate for protection and the GMT ratio that we observed was 1.39, and we showed non-inferiority in terms of zero conversion rates.

We also observed quite interesting and broad antigen specific T-cell activity, not only against the S protein, but also against the end and the end protein. In terms of safety and tolerability VLA2001 was generally well tolerated, significantly more favorable profile compared to the comparator.

And we showed significantly viewers solicited adverse events, including injection site reactions and systemic reactions, which is of course something that is particularly important for that product and confirms what we have seen in the world of vaccinology previously for inactivated vaccines. We also saw COVID cases in this study, as you may recall and the occurrence of COVID cases was similar between the treatment groups, the complete absence of any severe COVID cases could suggest that both vaccines used in the study prevented severe COVID 19 caused by the circulating variant at that time, predominantly Delta Slide 12 summarizes the current purchase agreements and grants that we have received in connection with VLA2001 to date.

Up to 60 million doses from the European commission to be supplied in 2022 and 2023 of which 24.3 million doses are expected to be supplied in the second and third quarter of 2022 and we see as the option to increase its initial purchase, the remainder of which would be delivered in 2023. With Bavarian, we have one million doses to be supplied in 2022 and 2023.

And the NHA HR emergency use authorization, which we received allows us first deliveries at the end of this month. We also received a grant from Scottish enterprise to advance vaccine development and this grant is totalling up to 20 million pounds expected to be received over the next three years, commencing already this month.

The first grant up to 12.5 million pounds will support R&D related to VLA2001 manufacturing. The second grant up to 7.5 million pounds will support R&D connected to manufacturing of Valneva's other vaccine candidates in Scotland.

In terms of expected label extensions, as I mentioned earlier, we expect the gradual extension of the label for VLA2001. We start this primary immunization in the 18 years old to 55 years old, then expand those in the elderly 55 plus.

We are currently generating a lot of additional booster data including mix match, so called heterologous booster data that we would like to generate. And then of course the different developments under the pediatric investigation plan, adolescence 12 to 17 years of all FH as well as children, two to 11 years of age.

Let me now hand over to Peter our new CFO for whom it is today his first earnings call with Valneva to provide the financial report.

Thank you, Thomas and good morning or good afternoon, everyone. As Thomas' said, this is my first earning call as Valneva CFO.

In the three months that I have been with the company, I met with a large number of colleagues to get familiar with the organization and its processes, but also with a number of investors and external partners. I'm excited to be part of our Valneva and to contribute to our journey to become a highly valued, internationally known specialty vaccine company.

The year 2021 was a truly exceptional year for Valneva. We invested more than ever in the history of the company in our development programs and in our infrastructure and did advancement of our pipeline is a testament of our consistently excellent execution.

The impact of the global pandemic on the travel industry, adversely influenced Berlin's top line over the last two years. At the same time, the company reacted by leveraging expertise to develop the only inactivated whole virus, COVID 19 vaccine in Europe.

The related contract first was the UK Government, and then was the European Union and Kingdom of Bahrain generated substantial cash flows. During this call, I will further elaborate how the investment in our pipeline and the government contract impacted our financials.

With this, let's move on to Slide 15 and look, our fiscal 2021 revenues. Total revenues for the year reached €348.1 million compared to €110.3 million in the prior year, which represents an increase of 215.5%.

This increase is driven by other revenues and primarily by revenues related to the COVID 19 supply and clinical trial agreements with the UK Government. In relation with these contracts, we recognize €253 million as revenues in 2021 revenues.

Revenues from technologies and services are also included in other revenues and more than doubled compared to prior year to reach €28.5 million euros. Product sales, slightly decreased compared to prior year and reach €63 million euros.

This decrease is a reflection of a still weak travel market. Foreign currency fluctuation had no impact on growth rates with the prior year.

On the right side of the slide, you see the composition of our product sales with [indiscernible] generating more than 70% of total sales. XCRO IXIARO sales to the US Military were €38 million driven by the new supply contract signed in September of last year.

The vast majority of our sales in 2021 was made through our direct sales channels. Moving on to Slide 16, where you will see a year on year product sales comparison.

Third party products grew by 271% over prior year, driven to a large extent by the sales of Rabipur and Encepur. These products are covered by distribution agree between Valneva and Bavarian Nordic and sales in certain geographies started in 2021.

IXIARO/JESPECT sales decreased by 6.9% with prior year while DUKORAL decreased by 81% versus prior year. This adverse performance is as already mentioned, caused by still very heavily impact of the pandemic on the global travel industry.

Moving on to our income statement on Slide 17, we already covered the revenue part on the previous slide. So let's just focus on cost.

Cost of goods and services increased significantly compared to 2020 and reached €187.9 million. The main driver for this increase were cost of goods related to our COVID 19 vaccine candidate.

COVID related cost of goods include inventory write-offs, cost for sales manufacturing batches, as well as advanced payments for key raw materials. These advanced payments were recorded as period cost in our 2021 income statement Investments in R&D more than doubled compared to prior year and reached a €173.3 million.

This increase reflects the significant investment in our clinical pipeline and most importantly, of course, advancement of COVID 19 vaccine candidate. Our R&D investments into our other clinical candidates slightly decreased versus prior year, which is in line with the planned progression of our pipeline.

Marketing and selling costs increased as we invest in pre-launch activities of our chikungunya program. G&A costs saw a significant increase of €20 million to reach €47.6 million and this increase was driven by several factors.

Our US IPO generated additional costs compared to prior year, asset investment in support of our COVID program and increased non-cash effect related to our share-based compensation and related social security. Overall, our employee related expect increased by more than 50%, a reflection of increased staff to support our development programs and ramp up of our manufacturing capacity plus again, increased cost related to our share based compensation.

Other income increased from €19.1 million to €23 million, driven by an R&D tax credit increase from €10 million to €22 million due to our heavy investment in our COVID vaccine program. At the same time revenues related to grants decreased from €7.7 million in 2020 to €1.7 million in 2021.

Finally, total financial income and expense plus income tax increased by roughly €3 million. This increase was primarily driven by higher financial expense in relation to our refund liabilities and increased income tax charges.

These increased expenses were partially offset by a favorable for an exchange gain of €8 million euros. As a result, we record a loss of €73.4 million for fiscal year 2021, compared with a loss of €64.4 million in prior year.

The EBITDA of negative €47.1 million slightly deteriorated versus the year 2020. Slide 18 illustrates an analysis of the group P&L for COVID versus the rest of the business.

As you can see, the COVID business generated a positive EBITDA for the year 2021. At the same time, our business excluding COVID generated a negative EBITDA as we continue to invest substantially to advance our pipeline.

Our non COVID R&D expense were at the low end of the guidance for the year of €60 million to €70 million. Moving on to the balance sheet on Slide 19, as already mentioned in 2021, we invested substantial in our infrastructure, primarily driven by investment in our COVID 19 manufacturing and fill finishing site in Scotland and Sweden.

Overall, we invested €95.8 million euros in property, plant and equipment. At the same time, our inventory increased by €97 million euros to €124.1 million used to stock of raw materials and work in progress related to our COVID 19 vaccine.

Trade receivable increased from €77 million to €115 million, primarily driven by receivables from member states of the European Union in relation to the advanced purchase agreement for our COVID 19 vaccine candidate. To date the mass majority of the trade receivables at December 31 have been paid.

Our cash and cash equivalence increased consequently from €204 million to €346.7 million. This increase is a result of significant cash inflows from the contract with the UK Government, the advanced purchase agreement with the European community and the US IPO and follow on offering.

With the strongest cash position in the history of the company, Valneva has the financial flexibility to execute on its plans and further advance its clinical pipeline. Moving to Slide 20; our total equity increased by roughly €100 million compared to December 31, 2020, driven by our US IPO and follow and offering.

Total liabilities increased significantly and mainly related to contract and refund liabilities. Contract liabilities increased by approximately €35 million.

This increase was driven by payments received from member states of the European Union, as well as the Kingdom of Bahrain in relation to the anticipated supply of VLA2001. At the same time, we recognized the total revenue of the €87 million related to the UK supply agreement that were recorded under contract liabilities at the end of fiscal year 2020.

Total refund liabilities increased by about €143 million driven by payments received from the UK Government. SLIDE 21 outlines the main impact of the UK supply agreement and clinical trial agreements on our 2021 financials.

In 2020 and 2021, we received total contributions of €420 million. In 20 21, €253 million were recognized as revenues while €167 million remain on our balance sheet and are reflected on the refund liabilities.

According to the supply agreement with the UK Government, the company is required to pay to the UK Government, a low single dig royalty on its sales of VLA 2001 to customers outside the United Kingdom. €85 million of the remaining refund liability is set aside to cover the maximum royalty obligation.

The remaining €80 million represents potential refund liability related to advanced payments received for our new manufacturing site in Scotland. We expect to this amount of revenues in the future.

This concludes the review of our financial statements. Now let's move to Slide 23 to look at our guidance for the financial year 2022, As already disclosed at the beginning of February, we expect total revenues to be between €430 million and €590 million whereby €350 million to €500 million are expected to be for our COVID 19 vaccine.

€60 to €7 million are expected for other vaccines. This range takes into account existing purchase agreements, but also anticipates additional contracts to be concluded over the next few months.

Revenues from collaboration, license and services expected to reach approximately €20 million. R&D investment are expected to reach between €160 million and €200 million.

This range covers the advancement of our pipeline and the range depends on the execution of planned as well as potential new clinical trials related to our COVID 19 vaccine. This concludes the finance section and with this, I would like to hand back to Thomas to provide an update on the expected new flow.

Thank you so much, Peter. Yeah, let me conclude with Page 25 of the presentation and summarize the key upcoming catalyst and news flow.

For line we mentioned it already first pediatric data to be expected next quarter. And the Phase III initiation thereafter expected in the third quarter of 2022.

So probably the most relevant milestones and catalyst for Lyme. For chikungunya, as disclosed at the beginning of the presentation, we expect to commence the pre-submission process with the FDA in the next quarter and alongside with that also the final lot-to-lot Phase III data.

You know that outside of the world of COVID, you are required to have six months follow up for the respective clinical studies and yeah, for our COVID for 19 vaccine candidate VLA 2001, we still be discussing a lot about it. Of course we hope for our regulatory approvals in Europe through and EMA and MHRA and then followed by supplies and hopefully further purchase agreements.

And since we are still in clinical development, have a lot of studies ongoing and still to commence. We expect further clinical trials and data.

Yeah. With that, let me conclude our presentation and open it up for your questions.

Hi, congrats on the progress and thanks for taking my questions. I wanted to check on the potential EMA and MHRA regulatory approvals and see if there's anything additional that's gating for those approvals, besides what's mentioned in the press release.

And can you talk more about specific next steps for label expansions and otherly and what we're seeing.

So happy to take your answer. As you know, we are enrolling review processes.

We have gone through different rounds of questions both with EMA as well as with MHRA. We have now responded to the questions and of course, subject to the CMPs acceptance of Valneva's responses, Valneva now anticipates receiving a positive CHMP recommendation for conditional approval of VLA2001 for prime immunization in adults, 18 to 55 in April.

And that follows then as you respective start of deliveries into the European countries in the second quarter. This is where we are with the regulatory authorities.

Factor your question about the label extensions, we have, you saw the slide in our deck on page, what is the page number? Let me go back and check the page number.

So page number 13 of the presentation illustrates how we look at the different label extension timelines. Of course, you know that we and we reported this in the past, we conducted a study in elderly in New Zealand but we have also experienced significant backlog in testing at Public Health, England for binding neutralizing antibody binding and neutralizing antibodies and hence we need, we are at this point in time, not able to report a precise timeline by when we're going to get the data.

On the boosters -- on the booster extensions, we have of course reported homologous booster data from our Phase I, II study. And we have submitted this data as supportive data as part of our regulatory processes.

We have now the homologs stroke, heterologous booster extension ongoing for the 301 study, which boosters people who have either been primed with Valneva or DSS vaccine. So this data will provide a first glance on homologous booster and this data is expected in the next quarter and we will start, have yet not started, but will start another booster study where we will booster people prime with mRNA.

The adolescent and children activities have commenced in the 12 to 17 year olds, not yet in the two to 11 year olds. Of course we are facing difficulties in recruitment and hence we need to also extend the trial into different geographies.

And this is where we are at this point in time. So for some like the initial booster data, we can provide already precise timelines for others.

We unfortunately cannot at this point in time yet.

Got it. Okay.

That's all really helpful perspective. And then also had a question on COVID manufacturing.

You said you're targeting greater than a 100 million annual dose manufacturing capacity. Can you say where you're at currently and when you could reach that capacity goal?

Yeah, I mentioned earlier that we are targeting an installed capacity. So capacity and manufacturing is always driven by A, the technically installed capacity and then the operational capacity which is linked to the level that you operate under, from a staffing perspective and so on and so forth.

We have the manufacturing facility in Scotland, the new one now under validation and we expect to be completed with that task over the summer and then be ready for commercial manufacturing in the fourth quarter. We have thus far manufactured in the existing facility in Livingston as we reported previously and we are working right now and manufacturing as we speak at our partner IDT in Germany.

So right now, we are probably in terms of operational capacity at half of what we may target. But our capacity and supplies are of course matching with the anticipated revenues for this year, meaning the business that we see for the year 2022.

Got it. That makes sense.

And that's helpful. Okay.

Thank you for taking my questions.

Thanks very much for the question. So just a couple quick ones.

On the plans for the pediatric opportunity now it sounds like I was just hoping that you might be able to contextualize some of the updates that we've had on the mRNA vaccines recently sort of mixed results in the pediatric patient population. How do you see your own programs advancing there?

Just as a starting point.

Yeah. Excellent question.

Of course. We see VLA2001 as a perfectly suited vaccine for children.

Why is that? We know that a vast majority of childhood vaccines are based on inactivated technologies.

Inactivated technologies are clearly characterized by very good safety and tolerability profiles and inactivated vaccines in other indications have shown to work extremely well in children. So therefore we see really a significant opportunity for our vaccine in adolescents and children.

And this is why we are trying everything to progress the respective studies as quickly as we can. In a quite difficult environment at least when it comes to Europe, given ongoing vaccinations and of course we need to show first vaccine, primary vaccination in children and that's the reason why we are extending now the clinical operations also into outside Europe.

Great. And a, as we think about the evolution of your own vaccination series and the boosters, is the need for an additional variant something that you're focused on when might we see a little bit more information whether it be related to manufacturing updates in that regard become a little bit more evident.

It seems like an inactivated vaccine would be perfectly positioned to deliver a multi variant COVID vaccine as the pandemic evolves to an endemic setting.

Yeah. I would say another excellent strategic question of course.

As previously communicated Valneva's inactivated technology platform is adaptable for new variants if required, right? We have shown this for Alpha for Beta for Delta.

We have clearly a process that can be used. It is a well-known I would say set up that we all understand from the world of influenza.

Now the question is what is the ideal vaccine composition and you know that some in the field are targeting vaccine compositions with Wuhan and Omicron. We are conducting a lot of KOL processes at this point in time.

And of course we need to firm up an opinion on what is the best possible setup for a second generation vaccine if required, and you know that there are also mixed fuse on that and we are trying to get prepared. So we are currently in the process of preparing more research viral seats and manufacturing, viral seats for different variants of concern.

And we could initiate then respective large scale manufacturing relatively soon. But at this point in time, we have neither taken a decision to proceed into the second generation vaccine development nor have we finally concluded on the best possible vaccine composition from a medical needs perspective.

Understood. And just one final question I know that you guys have limited control over progress in the Lyme disease with the Lyme disease vaccine, but just wondering if you might be able to help us understand the kind of preparation that you think is necessary, as a Phase III approaches.

I think the timing is now early 2024 versus the prior 2023. Just wanted to get your thoughts along those lines.

Thanks.

Yeah. May maybe let me start -- let me start off with a clarification.

I think first of all, we are talking here about a thick transmitted disease and as you know, the outbreaks have a certain seasonal pattern. So you have high incidents during the peak season.

So hence if you want to show efficacy in a placebo controlled field efficacy study, you need to get people vaccinated prior to the peak season starting. So that's why the Phase III is expected to commence in the third quarter of this year.

And this means that the first efficacy readout can occur during the peak season 2023. This then means in turn that you have the final data of the study probably early 2024 and this is the -- and this is the current timeline that has, only marginally changed from where we started.

We had always foresee the 2023 peak season as the, let's say the core season to evaluate efficacy. And yeah, we are working very closely with Pfizer, who of course are in the lead for this Phase III study and in between now and the Phase III start as reported in the presentation, we have of course the readout in the pediatric stroke adolescent population from the Phase II study VLA 15221 as well as the final preparations for Phase III including things like end of Phase II.

Excellent. Thanks for the clarification.

Really. Appreciate it.

Yeah. Hi Thomas.

Hi, Peter. I've got a couple of questions, one on the guidance, and then just one on chikungunya.

Thomas, you talked about pre-submission in this statement, I'm just wondering, when do you expect to complete submission for the chikungunya vaccine?

As, usual Samir? You listen very, very carefully.

So, I would say the reason why we have been a bit way on the description of the submission process is because we don't know at this point in time, which submission route we're going to take. Whether we're going to take a rolling review process or whether we're going to take a full standard quote unquote old passion review process.

And this will of course determine then the overall submission strategy, but certainly we expect to complete this year.

Okay. That's great.

And then just Peter just on the guidance, I've got a few questions just from the guidance. Is your guidance assuming the $25 million Pfizer milestone?

Obviously we're looking for at the end of this year, and then just on R&D could you just give us a sense of how much of the R&D guidance relates purely to VLA2001, and then just finally could you give us some guidance on CapEx for this year as well? Thanks very much.

Yes. Thank you for those questions.

So on the Pfizer, so we do expect indeed to get the $25 minute as we initiate as price would initiate the Phase III, but this will have no impact on our revenues, because it will go straight to our balance sheet to cover for future obligations we have in under this contract for basically this, our share of the cost. On R&D, of course the R&D guide is to a launch extent driven by COVID, as you would expect.

Now, we haven't given the numbers separately this year because we just think the way we look now at our business is basically we have a full envelope for R&D and we are not going into details in our guidance what is COVID versus non-COVID. And then finally on CapEx, we have not given guidance on CapEx.

There is still relatively significant CapEx spend expected to finalize our, our manufacturing facilities, but we have not guided at this stage in CapEx. It will be sorry, just to add, maybe it will be significantly lower than it was in 2021, of course.

Okay. That's helpful.

And then just maybe one on DUKORAL, obviously the cost of goods, you're reportings at about €8 million. At what point do you stop selling DUKORAL?

So, basically it is very clear from the numbers that at this point in time due to the pandemic DUKORAL is a loss making product. At the same time, we see a significant strategic value in the travel vaccine bundle with XERO and we have in the past been able to generate profit with DUKORAL pre-pandemic.

So now the year 2022 will certainly be a decisive year for DUKORAL because we cannot continue like that if we are not seeing a rebound of the DUKORAL sales in at the new 2022 environment and we will certainly review the product and its future very, very carefully.

Great. Thanks very much for taking the questions and congratulations on progress that you've been making in last 12 months.

Primarily question is on the margin, the gross margin for '22. Obviously we've seen, quite a fluctuation in the margin.

So it'd be good to get some sort of guidance on how we should look at it in terms of cogs for 2022, whether that should be going up or down from where we were in '21 and what sort of drivers should we be considering? Thanks.

Yeah, thanks for that question. Actually when you look at the margin of our product on product sales for 2021, it was relatively stable versus the prior year.

You, will be able to see that in our detailed financials. Now, when we look at 2022 with COVID sales kicking in, we would expect to see this March into somewhat improve and while we haven't given the guidance I think it is fair to assume it will be in the range of 40% to 50%.

Great. Thanks.

And then just to follow up on sort of future opportunities for VLA2001 and potentially future variants, how are you viewing the sort of longer term potential for perhaps an annual flu COVID combination? Is that something you are thinking about ways to develop something in that regard?

So hi Max and good question. First of all I think there is more and more evolving consensus around the fact that there might be a need for an annual COVID vaccination.

At the same time there is also a more and more evolving understanding that that it needs to or it requires modified vaccines. It requires vaccines that have an antibody assistance and longevity of an immune response that clearly protects you for a year.

And so hence the vaccination against COVID may indeed follow a flu-like pattern in the years to come with all the caveats that we all understand these days including, what is the best vaccine composition? Is there a need to adjust vaccines on an annualized basis?

Yes or no? These are all questions that at this point in time, certainly no one is able to answer.

When it comes to the combination, there are, we can all see in the market today that different companies in COVID take different stance on the potential flu COVID combo. There are certainly reasons that speak for a combination vaccine, but there are also reasons that speak against it.

What from a Valneva perspective and from a VLA2001 perspective, we it very opportunistically an inactivated whole virus vaccine can be from a technological perspective and most of you know, that I'm an old CMC guy, from a technological perspective, the combination of our vaccine with Influenza in co-formation in C2 is technically feasible. And whether it makes sense from a medical standpoint and whether it makes sense from a business standpoint, we have to see, but we try everything to be prepared for that and that's currently our position.

We will certainly not as Valneva developed an own flu COVID combo, we have no access to an Influenza vaccine, but we are open to any kind of collaboration in this regard,

Thomas. Thank thanks very much.

Okay. Thank you so much.

This concludes today's analyst call and we look forward to following up with many of you in two calls, have a good day. Bye-bye.