| Revenues from contracts with customers | 5.5 Revenues
from contracts with customers Within
the Group the following revenue streams were identified:
a. Product
Sales
b. Other
revenues
5.5.1 The
Group’s product sales contracts, normally concluded with retailers and, in the United States, with the DoD (“direct
product sales”) as well as with distributors (“indirect sales – sales through distributors”), generally
include one performance obligation. Revenue is recognized at the point in time when the identified performance obligation is transferred
to the customer, so when the customer obtains control over the goods. Some
of the Group’s product sales agreements include retrospective rebates, charge-back clauses, discounts and under certain
conditions return rights which give rise to variable consideration under IFRS 15. The expected rebates, discounts and considerations
for product returns are recognized on an accrual basis and reported as refund liabilities in the consolidated balance sheet. In
most cases, Valneva sells the products through retailers. When more than one party is involved in providing/distributing goods
or services, the standard requires an entity to determine whether itself and its retailers are principals or agents in these transactions
by evaluating the nature of its promises to the customer. An entity is a principal if it controls a promised good or service before
transferring that good or service to the customer. An entity is an agent if its role is to arrange for another entity to provide
the goods or services. Indicators that control has been transferred are that a) the retailer is primarily responsible to fulfill
the promise to its customers, b) the retailer has inventory risk and c) the retailer has discretion in establishing the price
for the sale to its customers. One of Valneva’s retailers has extensive rights to return and consequently no inventory risk
and does not have the power to establish the price for the sales to its customers. Therefore, this retailer acts as agent rather
than as principal. All other of Valneva’s retailers act as principal. While revenues to principals are recognized when the
control is transferred to the principals, revenue from product sales to agents are recognized when the control is transferred
to the final customer, when the goods are delivered to the final customer. Payables to customers are deducted from revenue for
principals, costs paid to agents are recognized as “ Marketing and distribution expenses” Valneva
also sells products acquired from third parties. Valneva considers that it is acting as principal given that it controls products
before transferring them to the final customer. More specifically, Valneva has an inventory risk before the goods have been transferred
to customers and has discretion in establishing the prices. Revenue is recognized when the product is delivered to the customers.
Products purchased from third parties are recognized as “inventory” in the balance sheets and when sold as “cost
of goods” in the statements of income.
5.5.2 The
Group generates other revenues for its product candidates and proprietary
technologies. The contracts in place often include several different promised goods or services such as
research licenses, commercial licenses and further R&D services. The
Group’s license contracts in place provide distinct right to use licenses, therefore the revenue is recognized at the point
in time at which the licensee is able to direct the use and benefit from the license. The consideration for licensing contracts
may consist of fixed and variable parts. In case of right-to-use licenses, the fixed part of the consideration is recognized at
the point in time when the licensee is able to direct the use and benefit from the license. For any variable consideration, revenue
is recognized at the point in time when the variable constraint is removed. Revenue
for research and development services within the Group’s contracts currently in place is recognized over time. For those
contracts including constraints, once the constraint is removed the transaction price is updated and revenue is recognized in
line with the revenue recognition of the corresponding performance obligation. The progress is measured on an input basis (costs
incurred related to total costs expected). It is considered that this input method is an appropriate measure of the progress towards
complete satisfaction of these performance obligations under IFRS 15. Variable
considerations are included in revenues only to the extent that it is highly probable that a significant reversal in the amount
of the cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently
resolved. At the end of each reporting period, the Group updates the estimated transaction price and its assessment of whether
an estimate of variable consideration is constrained. Amounts
allocated to a satisfied performance obligation are recognized as revenue, or as a reduction of revenue, in the period in which
the transaction price changes. Vaccine
Supply Agreement with the UK Authority In
September 2020, Valneva entered into a supply agreement, or the UK Supply Agreement, with the Secretary of State for Business,
Energy and Industrial Strategy of the United Kingdom, or the UK Authority 359.2 million 408.3 million Under
the UK Supply Agreement, Valneva was obligated to use commercially reasonable efforts to develop the vaccine candidate, to secure
marketing authorization (and to proceed with the application for minimum viable marketing authorization) in the UK, to conduct
assigned activities in accordance with the facility and manufacturing plans and to perform other activities, including working
with third parties to maintain sufficient manufacturing capacity. Pursuant to the terms of the UK Supply Agreement, the UK Authority
placed an initial order for 60 million 40 million 90 million 40 million non-UK
customers of product manufactured using any facilities used under the UK Supply Agreement, Valneva is obligated to pay the UK
Authority a low single-digit royalty on such net sales, subject to a maximum royalty payment. In
September 2021, Valneva received notice of the UK Authority’s decision to terminate the UK Supply Agreement. Valneva had
not received any indication from the UK Authority, prior to this time, of the UK Authority’s intention to serve the notice.
In the termination notice, the UK Authority purported to terminate the contract on one of two different bases detailed thereafter,
each with different potential or actual consequences. First, the UK Authority purported to terminate the UK Supply
Agreement on the common law (non-contractual) ground that Valneva would allegedly, at some time in the future, breach its obligations
regarding the delivery schedule under the UK Supply Agreement. Valneva strongly disputes the UK Authority’s purported termination
based on an alleged anticipated breach of the UK Supply Agreement and did not consider such termination to be valid. However, if the UK
Authority were to successfully bring proceedings for damages against Valneva in respect of the alleged anticipatory breach, it could be
argued that the applicable contractual cap on the liability under the UK Supply Agreement could be as high as an amount equivalent to
the sums paid by the UK Authority prior to termination. However, Management believed that it was very unlikely that any such claim by
the UK Authority would be successful. In any event, the UK Authority did not notify Valneva of any specific claim for damages in connection
with the purported termination for alleged anticipatory breach nor did it indicate the amount of any possible claim as of the date these
financial statements are authorized for issue. Second, the UK Authority purported to terminate the UK Supply Agreement on 30 days’
notice based on its discretionary right under the UK Supply Agreement to terminate for convenience. Valneva acknowledged the UK Authority’s
termination of the UK Supply Agreement on the basis of this discretionary right, and, as such, the termination became effective in October
2021. The UK Supply Agreement provided that, in the case of termination for convenience by the UK Authority, Valneva shall not be obliged
to refund or repay any amount paid by the UK Authority. The above-mentioned royalty on sales and other certain obligations survived termination
of the UK Supply Agreement.. The other obligations are related to investments in manufacturing, such as the Alemida manufacturing facility,
which were acquired with funds advanced by the UK, Valneva may have certain obligation to the UK Authority, such as a partial return of
funding received, in respect of those assets if they are sold, disposed or repurposed. The
impact of the termination of the UK Supply Agreement was assessed. Payments received, where the likelihood of repayment is remote,
totaled € 253.3 million 166.9 million Valneva
will update this estimate of the refund liability in accordance with IFRS 15.55 in 2022 when these uncertainties are resolved
and would recognize revenue in the future, to the extent that it becomes highly probable that no future significant reversal in
the amount of cumulative revenue recognized will occur.
Disaggregated
revenue information Revenues
as presented in the Consolidated Income Statement and in the Segment Reporting (see Note 5.4) include both revenues from contracts
with customers and other revenues (mainly subleases), which are out of scope from IFRS 15: Schedule of disaggregated revenue information
Year ended December 31, 2019 Commercialized products COVID Vaccine candidates Technologies and services Total
Revenues from contracts with customers 129,674 — (10,516 ) 5,768 124,926
Other revenues — — — 1,270 1,270
Revenues 129,674 — (10,516 ) 7,038 126,196
Year ended December 31, 2020 Commercialized products COVID Vaccine candidates Technologies and services Total
Revenues from contracts with customers 65,939 — 31,604 11,814 109,357
Other revenues — — — 965 965
Revenues 65,939 — 31,604 12,779 110,321
Year ended December 31, 2021 Commercialized products COVID Vaccine candidates Technologies and services Total
Revenues from contracts with customers 63,002 253,314 3,257 27,613 347,186
Other revenues — — — 899 899
Revenues 63,002 253,314 3,257 28,512 348,086 Valneva’s
total revenues for 2019 include a negative revenue of € 10.7 million Schedule of recognition of negative revenues
€ in thousand 2019
Settlement fee (fixed) (9,000 )
Settlement fee (variable; excluding financing component) (5,987 )
Release of SAA related contract liabilities 4,274
Net effect of SAA termination (10,714 ) The
Group’s revenues from contracts with customers are disaggregated as follows: Type
of goods or service Schedule of type of goods or service
Year ended December 31, 2019 Commercialized products COVID Vaccine candidates Technologies and services Total
IXIARO 94,307 — — — 94,307
DUKORAL 31,471 — — — 31,471
Third party products 3,896 — — — 3,896
Others — — (10,516 ) 5,768 (4,748 )
Revenues from contracts with customers 129,674 — (10,516 ) 5,768 124,926
Year ended December 31, 2020 Commercialized products COVID Vaccine candidates Technologies and services Total
IXIARO 48,480 — — — 48,480
DUKORAL 13,300 — — — 13,300
Third party products 4,158 — — — 4,158
Lyme VLA15 — — 31,604 — 31,604
Services related to clinical trial material — — — 7,997 7,997
Others — — — 3,817 3,817
Revenues from contracts with customers 65,939 — 31,604 11,814 109,357
Year ended December 31, 2021 Commercialized products COVID Vaccine candidates Technologies and services Total
IXIARO 45,118 — — — 45,118
DUKORAL 2,444 — — — 2,444
Third party products 15,440 — — — 15,440
COVID VLA2001 — 253,314 — — 253,314
Chikungunya VLA1553 — — 3,257 — 3,257
Lyme VLA15 — — — 14,265 14,265
Services related to clinical trial material — — — 10,001 10,001
Others — — — 3,346 3,346
Revenues from contracts with customers 63,002 253,314 3,257 27,613 347,186 In
2020, commercialized products revenues from DUKORAL and IXIARO were adversely impacted by the worldwide reduction in travel due
to the COVID-19 pandemic:
● in
2020, IXIARO product sales were € 48.5 million 45.8 million 94.3 million
● in
2020, DUKORAL product sales were € 13.3 million 18.2 million 31.5 million
● In
2020 commercialized products revenues from third party products were € 4.2 million 0.3 million 3.9 million In
2021, commercialized products revenues from DUKORAL and IXIARO continued to be adversely impacted by the worldwide reduction in
travel due to the COVID-19 pandemic:
● in
2021, IXIARO product sales were € 45.1 million 3.4 million 48.5 million
● in
2021, DUKORAL product sales were € 2.4 million 10.9 million 13.3 million
● in
2021 commercialized products revenues from third party products were € 15.4 million 11.3 million 4.2 million € 253.3 million The revenues within the vaccine candidates segment in 2020 related to the Lyme vaccine candidate and amounted to € 31.6 million 3.3 million In 2021 revenues
from technologies and services amounted to € 27.6 million 11.8 million 5.8
million 14.3 million Geographical
markets Schedule of geographical markets
Year ended December 31, 2019 Commercialized products COVID Vaccine candidates Technologies and services Total
United States 63,700 — 162 130 63,992
Canada 24,396 — — — 24,396
Austria 2,668 — — 4,136 6,803
United Kingdom 8,596 — — 15 8,610
Nordics 11,027 — — 5 11,032
Germany 10,345 — — 150 10,495
Other Europe 4,961 — (10,678 ) 440 (5,277 )
Other markets 3,980 — — 893 4,873
Revenues from contracts with customers 129,674 — (10,516 ) 5,768 124,926
Year ended December 31, 2020 Commercialized products COVID Vaccine candidates Technologies and services Total
United States 36,414 — 31,604 341 68,359
Canada 8,965 — — — 8,965
Austria 3,333 — — 6,928 10,261
United Kingdom 1,848 — — 1,038 2,886
Nordics 2,866 — — 5 2,871
Germany 7,060 — — 200 7,260
Other Europe 2,068 — — 2,373 4,441
Other markets 3,384 — — 930 4,314
Revenues from contracts with customers 65,939 — 31,604 11,814 109,357
Year ended December 31, 2021 Commercialized products COVID Vaccine candidates Technologies and services Total
United States 40,339 — — 14,452 54,791
Canada 4,226 — — — 4,226
Austria 9,341 — — 8,376 17,718
United Kingdom 2,721 253,314 — 40 256,075
Nordics 2,440 — — — 2,440
Germany 726 — — 240 966
Other Europe 3,075 — — 3,210 6,286
Other markets 134 — 3,257 1,294 4,684
Revenues from contracts with customers 63,002 253,314 3,257 27,613 347,186 Sales
channels Commercialized
products are sold via the following sales channels: Schedule of commercialized products
Year ended December 31,
€ in thousand 2021 2020 2019
Direct product sales 60,325 54,160 110,386
Indirect product sales (Sales through distributors) 2,678 11,778 19,125
Total product sales 63,002 65,939 129,511
5.5.4 See
Note 5.19 for details on trade receivables, Note 5.20 for details on costs to obtain a contract, Note 5.28 for details of
contract liabilities and Note 5.29 for details of refund liabilities. |
