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Here’s What Pfizer & Valneva Announced on Monday
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Here’s What Pfizer & Valneva Announced on Monday

Story Highlights

Pfizer and Valneva’s efforts to treat the wide-spreading Lyme disease are appreciable. Investors will be intrigued to know about the announcements the two companies made on Monday.

American healthcare behemoth Pfizer Inc. (NYSE: PFE) and French vaccine maker Valneva SE (NASDAQ: VALN) caught the market’s attention on Monday after announcing the signing of an Equity Subscription Agreement.

The two companies also provided an update on their collaboration agreement related to VLA15, a vaccine candidate for Lyme disease.

Shares of Pfizer were down 2% to close at $46.53 on Friday, while Valneva’s ADRs dropped 13.5% to $13.71.

Equity Subscription Agreement

As per the Equity Subscription Agreement, Pfizer will purchase an 8.1% stake in Valneva for €90.5 million ($95 million). This investment by Pfizer values each share of Valneva at €9.49 per share (derived by taking the average of the share prices on the preceding 10 trading days).

Valneva will invest the money from Pfizer in Phase 3 of the Lyme disease program. This equity agreement will be completed on June 22, and Phase 3 of the Lyme project will be initiated in Q3 of 2022 by Pfizer.

The two companies also amended the collaboration and license agreement signed in April 2020. The changes require 40% of the remaining development costs to be paid by Valneva and tier royalties within the range of 14% to 22% to be paid by Pfizer to Valneva. Earlier, the cost-sharing percentage was set at 30% for Valneva and the royalty payment percentage was at 19% for Pfizer.

Furthermore, the association promises a sales-based reward of nearly $100 million to Valvena and a $25 million payment at the start of Phase 3 of the Lyme program.

By 2025, Pfizer might consider filing a Biologics License Application with the U.S. Food and Drug Administration (FDA). This filing is contingent upon the proper initiation and closure of VLA15’s Phase 3 study.

Management’s Comments

Valneva CEO, Thomas Lingelbach, said that the subscription agreement “will contribute to our investment in the Phase 3 study while limiting the impact on our cash position.”

Meanwhile, Pfizer’s Senior Vice President and Head of Vaccine Research & Development, Kathrin U. Jansen, said, “We are excited to continue partnering with Valneva on the development of VLA15 and look forward to working together to progress the program with the goal of bringing forward a vaccine that could help prevent this debilitating disease.”

Stock Ratings

On TipRanks, Pfizer has a Moderate Buy consensus rating based on six Buys and nine Holds. PFE’s average price target of $58.92 suggests a 26.68% upside potential from current levels. Over the past year, shares of Pfizer have increased by 18%.

Bloggers’ Sentiment

The TipRanks tool reveals that the financial bloggers are 94% Bullish on PFE, compared with the sector average of 70%.

Similarly, financial bloggers are 100% Bullish on VALN.

Conclusion

Pfizer’s association with Valneva will help the two healthcare companies work toward providing an effective solution to Lyme disease.

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