Thomas Lingelbach: Yes. Maybe let me start first of all with a more qualitative statement while Peter is thinking about the quantitative part. So, I would say, basically we are not only investing a little bit, we are investing a lot. I mean, you can see this on our sales and marketing expense line and you will continue seeing this on our marketing – sales and marketing expense line. So, we are investing in launch, and more importantly, market access. There is a lot of work that needs to be done to educate the world around chikungunya and making sure that people understand the medical need, people understand the disease. So, disease awareness and all of that. There is a lot that we are doing right now. In parallel, we are also ramping up our commercial infrastructure primarily in the U.S., but not limited to the U.S. So, these are significant investments that go into this vaccine and of course, the whole topic around margin is a difficult one, and as I said, I’ll let Peter develop this further, because we have a brand new chain of custody for chikungunya.
You know that chikungunya is live-attenuated and hence a lyophilized vaccine, so which means that we are doing part of the manufacturing in-house, part of the manufacturing with third party, and there are significant economy of scale effect. But Peter, please.
Peter Buhler: Yes. Thanks, Thomas. So, in terms of the launch cost and overall sales and marketing expense how we think about chikungunya, so as you rightly said, we – you know, Thomas has also said, we significantly invest in the pre-launch activities. I think you will continue to see high sales and marketing investments into chikungunya as we start commercializing the product next year. And then over time, the way we think and in our long-range plan, I think we expect our overall sales and marketing spend in percentage of sales to go back into the regions where it was pre-COVID, but we’re probably talking here range €26 million, €27 million. Before that, there will be some other investments, of course, because of the market education, et cetera.
In terms of gross margin, similarly, here I think in the first years, and as sales ramp up, we expect some higher cost of goods than what you would have seen in the legacy business before COVID and then, once we get to scale, and as Thomas said, there’s a significant economies of scale. As we ramp up the volumes, I think we expect to see at least similar gross margins than what we would have seen with IXIARO and DUKORAL, and I think over time, I think we would even see higher gross margins. Yes.
Suzanne Van Voorthuizen: Got it. All right. Thank you. And then maybe just a last one from my side about Lyme program. Now that the dust has settled on the timelines, and your – given your current cash position and the recent additional 100 million loan facility, can you elaborate on how we should think about your cash burn and run rate from here? And that’s it from my side.
Peter Buhler: Yes. Thanks, Suzanne. So, we will still have significant payments to make on the Lyme program. And I mean, you can see some to extent, of course, in the – on the liability side of our balance sheet what is expected to be there. I think overall, after the 2022 equity offering, we said, we were sufficiently financed at least until the end of the fiscal year 2024. That, of course, still holds true, but we have not provided at this stage an updated guidance on cash burn rate. Something to consider in the future, but right now, we have not given a further guidance. But we are – for the foreseeable future, of course, we’re sufficiently financed. And then as we said, we still have appetite to potentially in-license R&D programs and if we were to do that, that might then require additional and dedicated financing, which could also be non-dilutive of course.
Suzanne Van Voorthuizen: Got it. Thank you.
Operator: We’re now going to proceed with our next question. And the questions come from the line of Max Herrmann from Stifel. Please ask your question.
Max Herrmann: Great. Thanks very much for taking my questions. Three if I may. Firstly, just on IXIARO and DUKORAL, I know last year you had some capacity constraints. You’ve obviously highlighted a batch failure in the IXIARO in the first half of this year. And I wonder where you are with capacity compared with demand for both those products. So, that’s the first question.
Thomas Lingelbach: Okay. So, Max, overall, we are right now managing supply-demand quite well. We have here or there still some minor shortages, but overall, on a 80-20 basis, we are fine. The effect that we were talking about, about higher write-offs leading to higher cost of goods were typical, I would say, restart issues after the team had not done IXIARO manufacturing for more than two years. So – but we are back on track with regards to the manufacturing performance here too. So, we are not expecting any further significant issues with supply-demand from a supply perspective, unless, of course, we see further positive surprises on demand side. We are seeing in some countries, an enormous uptake and increase of travel vaccines in general. So, we have to see how this is all going to play out going forward. But thus far, everything is fine.
Max Herrmann: Great. And then, next couple of questions, one, just – I’m sorry if I missed it, the DoD contract you’ve talked about, that being imminently signed. I just wondered what the sort of structure of that is. Obviously, you did a more multi-year kind of contract in the past, recent past, and then previously it was more an annual event. So, that was kind of that question. And then finally, just in terms of, I know you’ve just said that recruitment into the Lyme disease program has no issues. I wondered if you could be more specific a bit on the pediatric element of that recruitment, whether this is in some ways the fact that you’re doing over two seasons now is maybe been helpful because I know that was one of the areas that was hardest to recruit into. Thank you.
Thomas Lingelbach: Yes. Well, I mean on the contract itself, I mean you rightly pointed out, historically we have done single-year contracts, and that has been the standard with DoD. We had one exception which was the 2020, basically you’ve got option year contracts. It wasn’t an exception, it never materialized in reality because it unfortunately coincided with the COVID pandemic, as you know. So – and this gives you the answer what we are expecting. So on the recruitment front itself, we continue with a certain percentage of pediatric within the study which is absolutely in line with how we have designed the protocol and how we have that also the respective analysis and powering. So, there are no issues in the recruitment of the – any of the target populations that we need within the study at this point in time.
Max Herrmann: Great. Thank you very much.
Operator: We have no further questions at this time. I’ll hand back to you for closing remarks. Thank you.
Thomas Lingelbach: Yes. I think that concludes today’s call on our half year 2023 results and general corporate and business update. We would like to thank you again for your time today, for your good questions, and for following us so closely and diligently, and we look forward to catching up in the coming months. Thank you so much and have a great day.
Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect your lines. Thank you.
