First Berlin – Valneva SE Research Update (27/05/2021)

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 13.50 price target.

Q1 sales and EBITDA were close to our forecasts. Sales came in at €23.2m (FBe: €24.2m; Q1/20: €35.2m) while EBITDA was €-28.3m (FBe: €-30.1m; Q1/20: €2.4m). However, Valneva have reduced full year 2021 revenue guidance not including the VLA2001 COVID-19 vaccine to €80m–€105m (previously: €100m–€115m) due to the ongoing weakness of the travel vaccine market. The phase 1/2 trial of VLA2001 tested high, medium and low doses of the vaccine. Based on results of this trial released in early April, Valneva has advanced the high dose of the vaccine to the phase 3 trial. This trial is set to enroll 4,000 patients, 80% of whom have already been recruited. Valneva have announced that VLA2001 will be part of Cov-Boost, a UK government-funded trial of seven different COVID-19 vaccines as potential booster shots. Virus-inactivated vaccines such as VLA2001 have already been shown to work well as boosters and so we expect a positive outcome for Valneva. Initial (first and second) shots of VLA2001 are likely to contain more antigen than booster shots and hence take longer to manufacture and have a higher cost of goods. In our view the hesitancy on including VLA2001 in guidance relates to uncertainty as to how the initial 60m doses which the company is scheduled to supply to the UK government will split firstly between initial and booster shots and secondly between delivery in Q4 2021 and early 2022. We expect inclusion of VLA2001 in guidance in the autumn, which should also see results of the phase 3 and Cov-Boost trials as well as the vaccine's licensure in the UK. We also expect initial data from the phase 3 trial of the chikungunya vaccine candidate, VLA1553, and subject to negotiations and capacity, further VLA2001 supply deals over the next few months. Near-term newsflow should also include additional phase 2 read-outs with respect to the Lyme disease vaccine candidate, VLA15. Importantly, the final phase 2 study of VLA15 includes a pediatric population. We maintain our €13.50 price target and Buy recommendation. In our view the current share price weakness is a good opportunity to pick up stock cheaply.