First Berlin – Valneva SE Research Update (05/11/2019)

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

9M product sales of €86.4m (+21.5% y-o-y) and EBITDA of €3.0m (-50.8% y-o-y) were slightly better than market expectations. EBITDA came in below the prior year figure because of the €10.7m net impact of the termination of the Strategic Alliance Agreement (SAA) with GlaxoSmithKline (GSK) announced in June. Management has raised full year product sales guidance from €115m-€125m to €125m-€130m on the expectation of strong Q4/19 sales of Ixiaro to the U.S. Department of Defense. High Ixiaro sales growth as well as the widening of the gross margin on product revenues to 65.2% (9M/18: 59.7%) means that management is able to leave full year guidance for total revenues of €125m-135m and EBITDA of €5m-10m given in February 2019 unchanged despite the SAA termination impact. Meanwhile, the pipeline continues to progress. At the end of September Valneva announced completion of recruitment for the second part of the phase II trial of its Lyme Disease vaccine candidate, VLA15. In addition, an End of Phase 2 meeting with the FDA regarding the Chikungunya vaccine candidate, VLA1553, is expected in early 2020. We have revised up our product revenue forecasts for 2019 but are leaving our projections for 2020 largely unchanged because the jump in Ixiaro sales in Q4/19 is partly based on the build-up of safety stock. Our price target of €6.00 and our Buy recommendation are unchanged.