First Berlin – Valneva SE Research Update (07/05/2019)

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 5.50 price target.

Valneva's Q1 2019 revenue of €34.9m (Q1/18: €32.1m) was close to the consensus estimate; but EBITDA at €8.2m (Q1/18: €4.9m) was well above both the consensus forecast and our estimate of €3.2m and €2.7m respectively. Higher than expected profitability was due to absolute reductions in cost of goods sold (-6.2%) and marketing/distribution expenses (-6.2%) and also lower than expected R&D costs (27% below consensus). Moreover, during Q1 Valneva announced positive initial booster data and final phase I data for its Lyme disease vaccine candidate, VLA15, and also positive phase I interim results for the chikungunya vaccine candidate, VLA1553. Pipeline development should see further brisk progress during the remainder of 2019. With respect to VLA15, determination of final doses is expected later this quarter followed by initiation of a second phase II trial. Achievement of clarity before the end of 2019 on the partnership model for the phase III trial with VLA15 is also a key management objective. For VLA1553, management expects unblinded safety and immunogenicity data at dose group level by mid-2019 which may open the way to licensure. Q1/19 EBITDA of €8.2m is already in line with full year guidance of €5-10m. But management cautions that the Ixiaro and Dukoral businesses are seasonal and that plans for the supply and delivery of Ixiaro to the U.S. Department of Defense have not yet been finalised. Against this background, management has not changed 2019 guidance which remains for revenues of €125-135m and EBITDA of €5-10m. We are leaving our forecasts unchanged and maintain our Buy recommendation and price target of €5.50.