Valneva SE (VALN) 2022 Q4 法說會逐字稿

Good day, and thank you for standing by. Welcome to the Valneva Full Year 2022 Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded.

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

Hello, and thank you for joining us to discuss Valneva's full year 2022 consolidated financial results, which were published today and are available on our website. It's my pleasure to welcome you today. I'm joined by Valneva's CEO, Thomas Lingelbach; and CFO, Peter Buhler, who will provide a brief overview of our business and our financial results for the period as well as updated financial guidance and a summary of anticipated upcoming milestones. 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 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 also listed on our company website, www.valneva.com. Please note that today's presentation includes information provided as of today, March 23, 2023, and Valneva undertakes no obligation to revise or update forward-looking statements except as required by applicable securities laws.

And with that, it is my pleasure to introduce Thomas to begin today's presentation.

Thank you, Josh. Good afternoon and good day to all of you. Well, 2022 was a year marked by our ability to adapt to a changing environment and showed our resilience. We achieved several key milestones that underpin our unique value proposition. We made continued progress across the R&D pipeline with our chikungunya vaccine now under BLA review. On Lyme disease, we started the Phase III pivotal efficacy study, VALOR, together with Pfizer. On COVID-19, we were the first company to achieve a full marketing authorization by EMA. However, given the changing environment around COVID and the prospect of that vaccine, we decided to not further invest in development and stop manufacturing for COVID.

We accelerated our preclinical activities with the aim to build a new exciting R&D pipeline, up and beyond Lyme and chikungunya. We have seen a significant rebound of the commercial business and we clearly capitalized on the strong recovery in the travel segment, and we complemented our commercial portfolio with additional third-party product phase. We have reported strong full year 2022 revenues and cash position with revenues above EUR 360 million and product sales year-on-year increase well above 80%. Our cash position at the end of 2022 was close to EUR 290 million. We also strengthened our shareholder base with a successful upside follow-on offering, which included now also our new major long-term shareholders and Pfizer.

With that, let me go straight into our programs and into the business update. And I will start with chikungunya, Page 6 of the presentation. By way of a reminder, our chikungunya program is the most advanced chikungunya program in development worldwide. It is a live-attenuated vaccine candidate targeting long-lasting high seroresponse after a single shot. Basically, the Phase III study met all primary endpoints in terms of seroresponse rate but also in terms of lot-to-lot consistency. We reported positive 12-month antibody persistence data and the long-term persistence trial that will measure the seroresponse rate over time targeting at least 5 years.

The adolescent trial is fully enrolled by now, and we expect first data mid-2023. We are on the priority review for the BLA. A PDUFA action date has currently been assigned for end August 2023, and we expect to commence other regulatory processes in the second half of this year, including EMA. The program got also granted FDA Fast Track and Breakthrough and EMA PRIME designation, as you know.

In terms of target population and overall geographic reach, we have explained before that we see, of course, the nonendemic countries, and here primarily travelers, military but also the possibility for outbreaks and stockpiling; and on the other hand, the endemic use where we have a partnership agreement with CEPI and Instituto Butantan.

From there, let me turn over to the key data for chikungunya, seroresponse, 99% after a single vaccination. This immunogenicity profile has been sustained even after 12 months, and we have seen a similar seroresponse rate in elderly, which is particularly encouraging. And of course, on the basis of that high seroresponse rate, we see also a 100% seroconversion. With regards to safety data, VLA1553 was generally well tolerated. We had, of course, as expected for a vaccine of that class, solicited systemic adverse events. But the majority of the solicited adverse events were mild or moderate, and only 2% of study participants reported severe solicited adverse events, most commonly fever.

In terms of the future commercialization, as we repeatedly communicated, VLA1553 fits perfectly within our existing commercial infrastructure. And we have a high-caliber team with significant experience in the vaccine space, and we are currently adding a significant amount of talent and people as we are preparing for the commercial launch at market access for this brand-new vaccine in a brand-new indication. And we are all extremely excited about the prospect of being in a position to launch such a product.

Let's go to Lyme. It is, again, following our pipeline differentiation around first-only or best-in-class, the only Lyme disease vaccine in advanced clinical development today. It is a multivalent recombinant protein-based vaccine covering the 6 main serotypes of Lyme borreliosis prevalent in the Northern Hemisphere.

We initiated the Phase III study on the back of positive results for 3 Phase II studies, including a pediatric population. You know that as part of the ongoing Phase III study, there were GCP issues observed that led the study sponsor and our partner, Pfizer, to actually stop a significant part of the study subjects that were included in the study. Given the seasonality around Lyme development, we have currently a review of the trial design and the associated time lines ongoing. And this is, of course, a process that will still take a bit of time.

I think by way of reminder, with regards to the data, that have always been extremely strong for Lyme. And of course, also the GMP issues -- GCP issues that we have been facing now as part of the Phase III conduct do not change the picture on the underlying science and value of this program. All 3 Phase II studies showed strong immunogenicity. The product has been in more than 1,000 people, and as I said, including pediatric population. And we have seen, as part of the Booster studies, a very strong anamnestic response, which is of utmost importance for a product that is expected to be boosted over time.

When you look at our pipeline, you basically see that we are currently reviewing most of our -- some of our preclinical and previous clinical candidates with regards to next clinical entry. We have a Zika candidate, for which we conducted a Phase I study. We did not progress that further because of the work that we commenced on COVID. However, we are currently evaluating a potential clinical reentry at the end of this year or very, very early next year given that we could leverage one of our existing platforms and given that WHO made a clear recommendation for Zika vaccine to be based on inactivated whole virus technologies.

hMPV, human metapneumovirus, is a program that we developed throughout the preclinical phase. It has reached the end of the preclinical phase with the initial preclinical proof of concept being completed. But given that the market is shifting in the development arena towards combination vaccines, RSV hMPV, we've decided to evaluate a potential partnering before taking it potentially into a first trial in humans.

Our lead program in our preclinical shop today is Epstein-Barr virus. And we target the completion of the antigen identification for such a quite complex development in very -- in an area of very high unmet medical need by the end of 2022. The 2 other programs that we have in early R&D are Campylobacter and parvovirus,and we are still evaluating whether we put them into the preclinical R&D and development as of now or not but this is something that we will decide over the course of this summer.

With that, I would like to hand over to Peter to provide us the financial report.

Thank you, Thomas, and good morning or good afternoon to all of you. Let's look at the financial review of our fiscal year 2022. Total revenues grew by 3.8% versus fiscal year 2021, driven by a strong product sales growth. Total product sales reached EUR 114.8 million, an increase of 82.3% versus prior year or 66.7% in constant currency. 2022 product sales include EUR 29.6 million of VLA2001, our COVID-19 vaccine. Product sales excluding our VLA2001 sales reached EUR 85.2 million, exceeding our guidance of EUR 70 million to EUR 80 million.

Moving on to Slide 14, looking at product sales details. IXIARO sales reached EUR 41.3 million, a decrease of minus 8.4% versus prior year as a result of fewer shipments to U.S. military. The decrease in sales to U.S. military was partially offset by significant increase of sales in the travel market of 300%. DUKORAL sales reached EUR 17.3 million compared to EUR 2.4 million in 2022, an increase of more than 600%, once again driven by the recovery of the travel market.

Third-party product sales increased by 72% to reach EUR 26.5 million for the fiscal year 2022. This represents a record level of this product segment as well as to manage to increase third-party product sales consistently over the last few years. The very positive sales performance in our trial vaccine is as already mentioned, related to a travel market recovering faster than expected. Finally, as already mentioned, we shipped COVID-19 vaccines for an amount of EUR 29.6 million to certain member states of the European Union as well as to the Kingdom of Bahrain.

Moving on to Slide 15, looking at the P&L. We already covered product sales. Other revenues reached EUR 246.5 million and primarily consists of one-off revenues derived from the advanced purchase agreement with the European Commission and the United Kingdom. The cash related to these revenues were received in 2021 and early 2022. Also included in the other revenue line is the adverse impact related to amendment of the VLA15 agreement with Pfizer and updated cost sharing. Further details will be included in our universal registration document in 20-F that we plan to publish next week.

Total revenues reached EUR 361.3 million, slightly exceeding our guidance of EUR 340 million to EUR 360 million. Looking at expenses, we observed a significant increase in cost of goods, and this is mainly a result of one-off items related to the wind-down of our COVID-19 program, following reduced market demand. Research and development expense decreased to EUR 173 million in 2021 to EUR 104.9 million in the fiscal year 2022 and stayed well within the revised guidance of EUR 95 million to EUR 110 million communicated during our 9 months results release.

The decrease compared to prior year is mainly driven by lower spend on our VLA2001 program, but also by decreased spend on clinical trials of our chikungunya vaccine as the program advances to its licensure. Marketing and distribution expense remained stable compared to prior year at EUR 23.5 million and contained EUR 7.3 million of cost for our chikungunya vaccine candidate, twice the amount spent a year ago as we prepare for a potential launch.

G&A expense decreased significantly from EUR 47.6 million in 2021 to EUR 34.1 million in 2022. All expense lines benefited from a substantial noncash adjustments related to the positive effect on the costs related to the company's share-based compensation due to the share price performance in 2022. Overall, an upside of EUR 25 million resulted in 2022 compared to a total cost of EUR 37 million in 2021. Other income of EUR 12.2 million mainly consists of R&D tax credit and other expense related to the provision for the ongoing Vivalis/Intercell litigation procedures.

Total other income decreased compared to prior year due to the lower R&D spend and the related decrease of R&D tax credit. In 2022, Valneva generated an operating loss of EUR 113.4 million compared to EUR 61.4 million in prior year and an adjusted EBITDA of negative EUR 69.2 million versus minus EUR 47.1 million in the prior year.

Next slide, please. Looking at our COVID business segment, we see total revenues of EUR 309.6 million with a total cost of goods and services of EUR 267.1 million. COVID cost of goods include significant costs related to the wind-down of the COVID program. The company recognized major costs related to a write-down of all COVID-related inventories and onerous agreements, in particular, the discontinuation of the third-party manufacturing contracts. The operating loss for the COVID segment in 2022 reached minus EUR 42.8 million.

The business outside COVID generated a total revenue of EUR 51.7 million. As already mentioned, the negative other revenues were driven by the revised line agreement. Cost of goods and services reached EUR 57.3 million and consist of EUR 9.2 million cost of technologies and services, EUR 3.3 million for vaccine candidate and EUR 41.8 million of commercialized products. Gross margin on product sales reached 45.5% compared to 36.5% in 2021. Cost of goods of commercialized products also includes impairment charges related to DUKORAL.

Turning to operating loss for the business outside COVID was EUR 70.6 million compared to an operating loss of EUR 65.3 million in 2021. The increased operating loss is driven by the negative revenues related to the Pfizer agreement.

Moving on to Slide 17 and looking at our balance sheet. Total assets decreased from EUR 817 million at the end of 2021 to EUR 621 million at December 31, 2022. The main decrease in assets related to a sharp decrease in inventories, primarily related to the full write-down of all COVID-19-related inventories. Cash and cash equivalents at the end of 2022 were as EUR 289.4 million compared to EUR 346.7 million at the end of the prior year.

Next slide. Valneva's equity was strengthened in 2022 through a global offering of EUR 102 million at the end of the third quarter as well as Pfizer's investment in Valneva shares for a total value of EUR 90 million. At the same time, total liabilities decreased by EUR 245 million, in particular driven by a decrease of contract and refund liabilities driven by the revenue recognition of deferred revenues related to the COVID-19 agreement. Borrowings and other noncurrent liabilities remain stable, while total borrowings increased to an increase -- due to an increase in Deerfield and OrbiMed loan, these liabilities decreased due to amortization and the foreign exchange impact. Provisions decreased due to lower cost of share-based compensation driven by the decrease in Valneva share price. Overall, Valneva significantly improved its debt-to-equity ratio in 2022.

Now moving on to the financial outlook on Slide 20. We expect product sales to reach EUR 130 million to EUR 150 million, and this includes marginal remaining VLA2001 sales under the Bahrain Supply Agreement. Further EUR 90 million to EUR 100 million of other income are expected in relation to the sale of the PRV expected upon potential approval of our chikungunya vaccine candidate. Investments into research and development are anticipated to reach between EUR 70 million and EUR 80 million. This concludes the finance section of this call, and I would like to hand back to Thomas for the news flow.

Thank you very much, Peter. Yes. So we see for the year 2023 a quite significant number of catalysts and an interesting news flow. As mentioned earlier, on chikungunya, it's of course the adolescent study results that will come mid of the year. Please keep in mind that we expect to extend the label in the United States post licensure and probably include the data directly for the initial filing in other markets.

Of course, then it's all about our launch here, so the potential BLA approval and the launch and the pan-successful approval, the PRV and the potential PRV sales that Peter mentioned earlier. And we try to accelerate bringing this novel and unique vaccine to many markets as quickly as we can. And hence, you should expect additional ex-U.S. regulatory submissions in the second half of this year.

On Lyme, of course, we all understand that it is important that we get clarity on our Phase III clinical study plans. We need to have this as quickly as we can so that we can restart enrolling people in time. And of course, as we are running the antibody persistence studies in an ongoing way, we will also expect additional antibody persistence results in the second half of this year.

Then on IXIARO and military, we expect the potential new DOD contract still towards the latter part of H1. The progression of the selected preclinical programs towards clinical entry, so we will take a clear decision, which one and by when. And as we reported earlier, we are reviewing and evaluating to potentially augmenting our clinical pipeline through a program acquisition or partnering in the R&D environment.

When you look at our strategy and how we see the company evolving over time, we prepared Slide 23. And you see that our value proposition will gradually be extended. The additional potential growth drivers include the continued recovery of the travel market to pre-COVID levels and beyond, new U.S. DOD contract for IXIARO, further expansion of our third-party distribution segment and potential in-licensing or acquisition of additional clinical and commercial stage products.

With that, we conclude our presentation, and we hand back to the operator to take your questions.

(Operator Instructions) We will now take the first question. It comes from Maury Raycroft from Jefferies.

Congrats on the progress. I was going to ask, one, about the Lyme disease program, so for the Phase III Lyme proposed protocol modifications that would allow Pfizer and Valneva to remain on track for a 2025 filing. I'm guessing you can't provide too much into exact interactions with FDA. But can you talk about some of the scenarios or moving parts involved with being able to maintain the time lines?

So Maury it's, of course, an excellent question. You would certainly understand that, as you rightly pointed out, there is very little we can say at this point in time, and we don't want to disturb this ongoing process. It is very clear that, as we discussed previously, of course, we did lose a significant number of people in the season 2023.

Of course, given the seasonality, you have only a certain window where you can recruit people. And of course, one scenario is just to add another season, and this is the obvious one that you already figured it out yourself and just restarting again this summer for the next peak season 2024. And there are other, what I would call, more creative scenarios that may potentially allow still a filing, but those are in the make right now -- or in the discussions, and we can't comment on those.

Got it. Understood. And for CHIK, I'm wondering if there's been any new correspondence with FDA related to potential foreign advisory committee meeting. And looking ahead, how are you preparing for the February 2024 ACIP vote? And maybe talk about how that vote -- outcomes from that vote could impact your launch strategy.

Excellent question. So first of all, we are making progress in the ongoing review process. At this point in time, there is nothing that has come up in an unexpected way. Otherwise, of course, we would have reported it. As far as the VRBPAC is concerned, no decision has been taken yet as to whether a dedicated VRBPAC for this program will be needed or not. It goes without saying that we are preparing full speed and full steam for structured VRBPAC. Our teams are well prepared and we are putting everything together to enable a very positive VRBPAC should it be required.

With regards to the ACIP, I mean, you know that the ACIP process has been very clearly outlined. We had already a number of presentations on the program. We will continue following the path as we are being invited to present. And of course, we do hope and do assume a positive vote as part of our launch plans for the United States.

We will now take the next question. It comes from the line of Evan Wang from Guggenheim Securities.

Following up on Lyme. Just as you guys are having discussions, just wondering, have you seen this kind of situation before? Have FDA or EMA provided any kind of commentary? Or is there any precedent that gives confidence that a modification could be reached? And then I have a follow-up on the -- follow-up after.

I would say the situation with Lyme is, in a way, unprecedented because of the seasonality of the disease. Under normal circumstances, if you did not have a seasonality to be considered, you lose for whatever reason, people in your clinical study and then just -- you just continue recruiting and the recruitment takes longer. Here, we have, of course, a situation where you need to recognize the seasonality because otherwise, you don't get the necessary case counts in a placebo-controlled field efficacy setting. And as such, there is probably not any precedents to such a specific situation.

Now the discussion with FDA on primary endpoints, secondary endpoints, co-primary endpoints, parallel endpoints, these are discussions that I've been through in my more than 30 years of vaccine development many, many times. And this is certainly nothing unusual. And these are things that will -- that need to be based on different statistical modeling, and this is clearly something that is not new to any regulatory authority. But by the end of the day, it is always a matter of risk, benefit and judgment. And that's all I can say at this point in time.

Got it. And I had a follow-up on chikungunya. Can you expand a little bit more on your travels commercial infrastructure? And in particular, how it compares to that of Bavarian Nordic?

So first of all, we do have own commercial operating entities and organizations in the U.S., in Canada, in the U.K., in France, the Nordics and Austria. And we are working with Bavarian Nordic under commercial agreement where in some of the markets where we have our own infrastructure, we sell the Bavarian Nordic products; and in other markets we have a very heavy infrastructure, they sell our products. As we said previously, of course, this whole collaboration is going to be under review. But for now, most parties have made a clear commitment to respect their respective contractual obligations going forward.

Great. And then one last one on hMPV. It seems like maybe there's more emphasis on partnering, Am I interpreting that right? Or is there still kind of plans to bring that into clinical stage development?

So I would say right now -- so basically, we have, as I mentioned earlier, we have reached the point of preclinical completion. So this means we need to take clinical entry decision on this asset. But the point is that we are talking here about a prefusion candidate that requires an adjuvant. And stand-alone hMPV does not really make sense from a product development perspective. And the first trial in men is certainly very valuable, but whoever would then later combine this asset with an RSV vaccine would need to go largely back to the drawing board because of the specifics around adjuvantation. Therefore, we have said we've given us a slight pause and look whether it would not be more valuable to bring this asset at this point already into a partnership model with one of the RSV candidates, and therefore have a more efficient developmental approach. Should it not be seen as a viable and value-generating option, then we will certainly consider taking it into the clinic in order to increase the assets value.

We will now take the next question. It comes from the line of Max Herrmann from Stifel.

Three of them if I may. Firstly, just some financial clarity just on the inventory -- the COVID vaccine inventory write-off in the fourth quarter. It was -- interested to find out what that was. Secondly, on the Epstein-Barr virus candidate, how do you view the field given the mRNA vaccines ahead of you in the clinic already? And then just a little bit more clarity on the refund liabilities at EUR 136 million. What do they actually -- is that to do with the Pfizer funding? Or what's within that? If we could get a bit more clarity on that.

So let me start with the nonfinance questions, first about EBV. As you know, Valneva's strategy is certainly based -- Valneva's R&D pipeline strategy is basically based on our clear idea to have assets where we can play a differentiating role, first-in-class, best-in-class, only-in-class. So if we entered into a space where others are more advanced, we will see whether we can play a differentiation game. And you're absolutely right. There are -- there is one program in clinical development, I think. But we will evaluate our candidates and then take a decision before we enter the clinic, of course. That brings us to the finance question?

Yes. Thanks, Max, for the questions. So first question on the COVID inventory write-off. So basically, the approach we took, and we communicated previously that we have 8 million to 10 million inventory of COVID -- 8 million to 10 million doses of COVID vaccines in our inventory, so the approach we took at the end of 2022 is basically to take a full write-down on semifinished, finished products but also on specific raw material related to the COVID vaccine. We, of course, continue our efforts to try and sell these products to the market. But given where we are today, we decided that it's the prudent approach to fully write down those inventories.

With regards to your second question on recent liabilities. This is by and large price related. There is a small historic remaining part that relates to an old GSP contract or refund liability, which is related to the part that was only there last year, but basically, the large majority of the refund liabilities is related to pricing.

And just on my inventory write-off, are you able to quantify it? Because it's quite hard to model these things when we're unclear about what the actual amount was? I mean, does that mean that you've written off the product, your -- all your inventory now or the stuff that you planned to ship to Bahrain that you've kept at cost? I'm just trying to understand the implications.

Yes. So your assumption is exactly correct. We basically wrote off everything except the remaining shipments for Bahrain. So that will still be included in our inventory, and that's a relatively small amount. But overall, you can assume we had a write-off in the financial year 2022 of roughly EUR 130 million. That goes into our cost of goods.

We will now take the next question. It comes from the line of Rajan Sharma from Goldman Sachs.

Just on the marketed travel vaccines, firstly, could you just kind of help us understand what proportion of the revenue growth in 2022 was driven by volume versus price? And how we should think about this dynamic into 2023 and into the midterm? And then secondly, just again on kind of the commercial vaccine business. There's some additional detail in today's release which was helpful on gross margins. I was just wondering how we should think about this in 2023? Is it safe to assume that it's kind of up '22 levels? And what could be the pushes and pulls to this?

And then just one follow-up on Lyme. In kind of a scenario where there's additional trials required, I just wanted to clarify if your potential contribution to those costs are capped at a certain level?

So let me start with the Lyme question and then this gives the finance team a bit more time to pick the numbers up. So I would say on Lyme, so first you used the term additional studies, no. The study is ongoing. So this means we have -- the study got not stopped, so which means that there is -- it's only a matter of when do you recruit the necessary additional people into the study because you lost some of them. And the second part is, of course, related then to what kind of -- do you keep the readout and when do you do the readout. In the -- and this is always in relation to readout after primary immunization versus readout after priming plus first booster. So that's more from the clinical development point of view. On the cost side of things, we have not had any discussion yet about any potential incremental costs. And this is something that is -- will be discussed as soon as we have an agreed development plan going forward.

Yes. And then with regards to your volume versus price question. So when we look at IXIARO, as you can see on the slide, at constant exchange rates, we look at the downside of about 18% to 6% versus prior year. We are looking here the upside rate to price of a plus 10%. So then the difference is, of course, then volume-driven. When we look at DUKORAL, we have a volume upside versus the prior year of roughly 400%. And then the difference to the total 600% upside versus prior year would be price related. And I think you had a second question, but if you could just repeat that one.

Yes. Sure. Just on the gross margin on the travel vaccines. Because I think you had some additional information in the release today, and I was just wondering whether those '22 levels are kind of a fair assumption for margins going forward.

Yes. So we look at a much stronger gross margin than -- for IXIARO than DUKORAL in 2022. And as you can see, the gross margin improved significantly versus prior year, and we would expect this improvement also to continue as we continue to increase volumes.

We will now take the next question. It comes from the line of Samir Devani from Rx Securities.

I think I've got 3, mainly finance related. So the first one, just on the guidance. Other income, EUR 90 million to EUR 110 million, I just wanted to confirm that that's essentially noncash revenue recognition. So that's the first question. And then in terms of the Pfizer Phase III, I wanted -- I was wondering whether you have made a cash contribution to that in 2022. And if so, maybe you can just explain -- I think you previously talked about that not going through the P&L, but if you could just maybe explain where that's coming out in the cash flow. And then the final question is just on your distribution and marketing expenses, which show a little bit of a bump in Q4. Is Q4 a good run rate -- quarterly run rate going into this year?

So I start with the first point on guidance. So other income, as we said, this is related to the PRV we expect to receive upon approval of our chikungunya vaccine candidate. And as we expect to sell this PRV, we assume it will be cash related, because we would recognize that other income as we get the cash. And just also to be very clear, we expect this to go not into other revenues but other income, i.e., further down in the P&L. With regards to the price of Phase III cash. I mean, the way the agreement works is that we basically pay every quarter our share to the trial. And indeed, to your point, it does not go into the P&L, but it would go on the -- against the balance sheet against the refund liability, which we talked about previously in Max's question.

Then distribution and marketing expense, so the -- what you see in Q4 is an increase indeed versus prior year -- to previous quarters. which is primarily driven, of course, as we get ready with our -- or we get prepared, we prepare with chikungunya, our candidate launch; also, of course, related to our overall commercial activities ramping up as the markets come back. And it's safe to assume that you could see further increases there as we get ready with our commercial infrastructure -- strengthening the commercial infrastructure in view of the near launch.

We will now take the next question. It comes from the line of Suzanne van Voorthuizen from VLK.

It's Rohan calling in for Suzanne. I just had one confirmatory question. So since you've mentioned that you've written off all COVID-19 inventory in 2022, do I then understand correctly that we will see no financial impact for the current year?

I mean, you -- we will continue to have some R&D expense as we continue to finalize certain clinical trials that we had started in the past. We will not initiate new clinical programs, of course, but we do need to ramp up some clinical trials, that cost is included in our R&D expense. We do not expect further inventory write-offs to that point. Of course, we will -- we have invited also the final shipments to Bahrain. So that would, of course, drive revenues. So that's basically what we expect for 2023 in terms of COVID hitting our P&L.

Okay. And then one final question. So last year's R&D Day, you presented on various preclinical programs such as Zika, hMPV and EBV, which we expect in terms of updates on these programs during this year.

Our objective is to have a clinical entry by the end of this year, very, very early next year. Whether it's 1 program or 2 programs, is still something that we're going to decide out of our own pipeline, but we will definitely inform the market which program is we are expecting to enter the clinic. So this will certainly be a news flow for this year. And then we have this ongoing point about reviewing potential additional external opportunities to inject in our clinical pipeline since we have clinically relevant capacity and capability. And that's certainly an ongoing process as reported in the expected news flow and catalyst.

(Operator Instructions) We will now take the next question. It comes from the line of Rajan Sharma from Goldman Sachs.

I just wanted to follow up on the BD M&A piece or the external kind of sources of innovation. Would your preference on that be kind of a technology platform that you potentially don't have in-house right now? Or would you be looking at specific assets? And then just secondly, just to follow up again on the -- my initial question on kind of volume versus price. So I was just wondering, I guess I could ask in a different way, were you able to kind of take price increases on DUKORAL third-party products and IXIARO in 2022? And do you expect to be able to do that in 2023?

Yes. Thanks, Rajan. Let me start with your second question. So yes, we did increase pricing across the board for basically both IXIARO, DUKORAL and also some of our third-party products. And we, of course, also looking at continued selective price increases in certain countries going forward.

Can you repeat your first question, please?

So it was just in terms of kind of the external sources of...

Okay. The external inflict, you mean. Yes. So basically, I mean, you know that Valneva is technology-agnostic company, right? So we are not a technology company. We have -- we go by indication, we go by indication where we are looking into indications where we can still play a pioneering role. I mentioned earlier, first only best. Valneva has historically worked with literally all vaccine technologies out there except mRNA. Of course, we will also be open to work on a specific indication on mRNA. But it's not our interest to acquire a technology company or a technology platform or going back -- or becoming out of us in a technology company. So we will go by a specific indication and by a specific asset.

Thank you. There are no further questions at this time. I would like to hand back over to Thomas Lingelbach, CEO for final remarks.

I hand over to my friend, Josh.

Yes. All right. Well, thank you, everybody, for your time and participation today. Please note an archived version of today's webcast will be made available later today and a PDF of the slides presented during today's call is already accessible on the company's website. We look forward to a productive 2023 and to welcoming you back for our next conference call in the not-so-distant future. Thank you, and enjoy the rest of your day.

That does conclude our conference for today. Thank you for participating. You may all disconnect.