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 8.90 price target.
Valneva?s Q1 results were close to our expectations. Product sales nearly doubled to €32.1m driven by strongly recovering demand for the travel vaccines Ixiaro (Japanese encephalitis) and Dukoral (cholera, ETEC). The share price has risen over 30% since the numbers. We believe the rally has been driven primarily by the removal of much of the uncertainty surrounding the phase 3 trial of the Lyme disease vaccine candidate, VLA15, which we see as the most valuable asset in Valneva’s portfolio. On 17 February, Valneva and Pfizer (with whom Valneva is collaborating on the development of VLA15) announced that half of the 6,000 participants had been removed from the trial because of good clinical practice violations at US trial sites run by a third party. The original plan was to submit marketing authorisation applications to the FDA and EMA in 2025 after two tick seasons (2023 and 2024). The loss of half the study participants two months before the start of the first of two tick seasons called this schedule into question. The February announcement also created concerns that Valneva would have to cover additional costs in connection with a possible extension of the trial. In the Q1 press release, management stated that the phase 3 trial will be extended into the 2025 tick season and that hence regulatory applications will take place in 2026. We already assumed this in our most recent note of 4 April. Pfizer will cover incremental study costs. Valneva’s most valuable assets are the existing commercial vaccine business, which is expected to generate sales of USD150m or more this year, and the Lyme and chikungunya vaccine programmes. FDA approval of the chikungunya vaccine candidate, VLA1553, is expected at end August. Subject to approval, these two vaccine candidates will be clear leaders in global markets projected to generate annual revenue of USD1.0bn (by 2032) and USD500m (by 2030) respectively. Relative to these numbers, and given the limited competition (see page 3), we find Valneva’s current EV of USD740m to be too low. The current cash position of €254m is sufficient to fund operations through at the least the end of 2024. We maintain our Buy recommendation and price target of €8.90.
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