First Berlin – Valneva SE Research Update (10/09/2020)

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 7.40 price target.

Valneva has announced a new contract for the supply of Ixiaro to the U.S. Department of Defense (DoD). As Valneva flagged in the H1/20 report, the new contract spans three years. The value of the first (base) year of the contract is USD61m. During the succeeding two years the DoD has the option to purchase US76m – USD105m of Ixiaro. The new contract follows a previous Ixiaro contact with the DoD worth USD70m signed in January 2019 which ended in Q2/20. The increased visibility provided by this new longer term contract provides valuable support to Valneva's vaccines business which is currently adversely affected by reduced travel as a consequence of the SARS-CoV-2 pandemic. On 8 September Valneva also announced the initiation of the phase III trial of its Chikungunya vaccine candidate VLA1553. The initiation of this trial comes ahead of the Q4/20 timing guided for in the H1/20 report. Valneva looks set to generate further positive newsflow between now and the end of the year. This includes finalisation of a full supply agreement between Valneva and the UK government for the SARS-CoV-2 vaccine candidate VLA2001, which is expected to enter clinical trials later this year. The results of the second phase II study of the Lyme Disease vaccine candidate VLA15 are also due over the next few months. Providing, as we expect, that these are positive, an annoucement on finalisation of the phase III strategy for VLA15 should be forthcoming before the end of this year. Our forecasts are unchanged and we maintain our Buy recommendation at an unchanged price target of €7.40.