First Berlin Equity Research has published a research update on Valneva SE (ISIN: FR0004056851). Analyst Simon Scholes downgraded the stock to ADD and decreased the price target from EUR 22.10 to EUR 12.00.

On 24 June the European Commission (EC) granted marketing authorisation in Europe to Valneva’s COVID-19 vaccine, VLA2001. The November 2021 Advance Purchase Agreement (APA) between Valneva and the EC stipulated firm delivery of ca. 24.3m doses in 2022 and an option on a further ca. 35.7m doses in 2023. The EC had the right to terminate the APA if VLA2001 did not receive marketing authorisation by 30 April 2022. Under the APA, Valneva had 30 days from 13 May 2022 to obtain a marketing authorisation or propose an acceptable remediation plan. Valneva announced on 19 May that the European Medicines Agency (EMA) had accepted the filing of its marketing authorisation application. At this point Valneva could not gain marketing authorisation within 30 days of 13 May because this required a positive opinion from the EMA’s Committee for Medicinal Products for Human Use (CHMP). These opinions are given at the CHMP’s monthly meetings and the next CHMP meeting ran from 20 to 23 June. The alternative of remediation meant negotiations with the EC and individual member states over VLA2001 deliveries. On 10 June Valneva stated that preliminary, unofficial volume indications from the EC were not high enough to sustain the VLA2001 programme, and that without larger orders, Europeans would not have access to the vaccine. Over 15% of Europeans over 18 are unvaccinated and we believe there is a significant demand for a COVID-19 vaccine using traditional technology such as the inactivated whole-virus-based VLA2001. Meanwhile, the COVID incidence rate in the EU has nearly trebled since early June. Against this background we expect EU member states to reconsider and order at least 4 million doses, which is the number we believe would justify continuation of the VLA2001 programme. As this is far below the quantity in the APA, we have sharply reduced our valuation of the VLA2001 programme. However, at the same time we have lowered the discount rates we apply to Valneva’s vaccine programmes to reflect the, in our view, significant likelihood that Pfizer will in time mount a full bid for the company having taken an initial 8.1% stake last month. Our new price target is €12.00 (previously: €22.10). We have moved the rating to Add from Buy. (p.t.o.)