Valneva Q4: Resilient Pipeline And Partnership With Pfizer, Reinforcing A Promising Future

Summary:

• Valneva’s pipeline and high-stakes clinical catalysts warrant a buy rating, despite the setback in its Lyme disease Phase 3 trial.
• The CHIKV vaccine candidate is on track for PDUFA in August 2023, and the company plans to launch one or two programs in clinical trials by the close of 2023.
• Valneva’s partnership with Pfizer on its Lyme disease vaccine candidate gives the product credibility and commercial potential.
• Clinical and regulatory risks, capital raise risk, commercial and competitive risks, and financial stability are potential risks investors should consider.

Q4 Earnings update

We maintain a buy rating on Valneva (NASDAQ:VALN) stock due to its robust pipeline and high-stakes clinical catalysts. The setback with its Lyme disease Phase 3 trial notwithstanding, VALN’s CHIKV vaccine candidate remains on track for PDUFA in August 2023, and the company plans to launch one or two programs in clinical trials by the close of 2023 or the beginning of 2024. Additionally, the company’s prioritization of partnering with its hMPV program is an encouraging sign of a sound business strategy.

Furthermore, Valneva’s partnership with Pfizer on its Lyme disease vaccine candidate gives the product credibility and commercial potential as it caters to a market with no approved vaccines. Although the regulatory discussions around proposed modifications to the Lyme Phase 3 trial are ongoing, the announcement by the company at a competitor conference that potential regulatory clarity could arrive in the “next two months” hints at a possible positive development.

Valneva (NASDAQ:VALN) and Pfizer (NYSE:PFE) have pushed back by a year the end date of a phase 3 trial for their Lyme disease vaccine candidate VLA15. The delay is because a significant number of participants had to be discontinued from the trial at sites run by a third-party contractor due to violations of Good Clinical Practices. In its Q4 2022 financial results posted this month, Valneva said that despite the setbacks, Pfizer (PFE) is still aiming to file an application for the vaccine by its original deadline, 2025. The new estimated completion date for the VALOR trial is December 2025, according to clinicaltrials.gov.

Source: Seeking Alpha

Please read our initiation article for a more in-depth analysis of Valneva’s pipeline and market potential.

Risks

There are still clinical and regulatory risks for the company as it has several ongoing clinical trials. Additionally, Valneva’s lack of positive cash flow presents a risk for future capital raises. Furthermore, with the decline in COVID-19-related revenue expected, the company may face challenges in maintaining its financial stability. Moreover, as Valneva awaits upcoming approvals, it may encounter commercial and competitive risks. The company must demonstrate its ability to commercialize its products effectively, given the competition it faces in the market.

Conclusion

In conclusion, Valneva’s compelling attributes, including its strong pipeline, collaboration with Pfizer, prospective positive regulatory developments, and prudent business strategy, make it an enticing investment choice for long-term investors. Moving forward, we believe the market is likely to redirect its attention away from Valneva’s COVID-19 portfolio and focus more on its Lyme disease and CHIKV candidates with lucrative $100-500m peak sales opportunity, leading to upward trends in the stock over the next 12-24 months. In terms of financials, Valneva has a healthy balance sheet, with cash reserves of approximately $290M, equating to a 1-2 year cash runway, reassuring investors.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of VALN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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