First Berlin Equity Research has published a research update on Valneva SE (ISIN: FR0004056851). Analyst Simon Scholes reiterated his BUY rating and decreased the price target from EUR 8.60 to EUR 7.70.

Abstract
Valneva had cash and cash equivalents of €131m at the end of June. Cashburn will be lower in H2/24 compared with the first six months due to the completion in the spring of Valneva’s contributions to the VLA15 Lyme vaccine development cooperation with Pfizer. However, sustainable free cashflow is unlikely until revenues, milestones and royalties are forthcoming from the launch (subject to approval) of VLA15 in 2027. Our previous study of 20 August showed a cash position of €10m at the end of 2026. In August 2023 Valneva announced a doubling of the debt outstanding to its principal creditors, DeerField and OrbiMed, to USD200m. In March 2024 the interest-only period on the first USD100m tranche was extended from July 2024 to January 2026. The second USD100m tranche is interest-only until Q1/27. Given the increase in its debt and the prospect of the substantial depletion of its cash position over the next 27 months, it was always possible that Valneva would seek to raise new equity capital. The capital raise completed on 13 September, which raised gross proceeds of €61m, provides Valneva with the flexibility to invest in its chikungunya, shigella, zika and preclinical R&D projects before free cashflow turns positive following the Lyme vaccine launch. We now forecast Valneva’s end-2026 cash position at €64m, and so we believe the capital raise has eliminated any requirement for cash ahead of the Lyme vaccine launch. This means investors will capture full upside from the expected positive Lyme vaccine phase 3 data (expected by end 2025), regulatory approval and launch. We have reduced our price target from €8.60 to €7.70 to reflect the dilution occasioned by the issue. However, we reiterate our Buy recommendation as we think the Valneva share is very undervalued relative to the prospects both for the existing commercialised vaccine portfolio and the pipeline, above all VLA15.