First Berlin – Valneva SE Research Update (02/08/2019)

First Berlin Equity Research has published a research update on Valneva SE (ISIN: FR0004056851). Analyst Simon Scholes reiterated his BUY rating and increased the price target from EUR 5.50 to EUR 6.00.

H1 product sales climbed 15.1% to €61.6m (H1/18: €53.5m) while the gross margin calculated on the basis of product sales jumped to 66.1% (H1/18: 60.0%). The €-10.7m net impact of the termination of the Strategic Alliance Agreement (SAA) with GlaxoSmithKline (GSK) announced in June meant that reported total revenue fell 7.6% to €54.5m (H1/18: €59.0m) but the underlying strength of the business as well as the expected receipt in H2/19 of the first €3m of a USD23.4m grant for the Chikungunya programme has enabled Valneva to leave full year guidance unchanged at total revenue of €125-135m and EBITDA of €5-10m. Meanwhile the pipeline continues to progress. The second phase II study of VLA15 in Lyme is currently evaluating an alternative immunisation schedule for the two lead dosage levels. Data are due next year and a phase III trial is expected to begin in 2021/22. Meanwhile, Valneva expects to announce an accelerated development plan to licensure for the Chikungunya vaccine candidate VLA1553 later this quarter. We have revised up our forecasts to reflect strong H1/19 product sales and the grant for the Chikungunya programme. We now see fair value for the Valneva share at €6.00 (previously: €5.50).