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Valneva (VALN) Stock Declines 59% in 3 Months: Here's Why

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Shares of Valneva (VALN - Free Report) have dropped 59.7% in the past three months substantially underperforming the industry’s 23.2% decline.

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Currently, the only marketable product in Valneva’s portfolio is VLA2001, its inactivated COVID-19 vaccine, which is authorized for use in Bahrain, the United Arab Emirates and the United Kingdom.

Though VLA2001 is yet to receive marketing approval from the European Union (“EU”), a marketing authorization application (“MAA”) for VLA2001 is currently under review with the European Medicines Agency (“EMA”). VALN also secured an advance purchase agreement (“APA”) from the European Commission (“EC”) last year in November for the supply of VLA2001 doses to the EU member states once the vaccine is granted marketing authorization.

One of the terms of this APA provides the EC with the right to terminate the agreement if VLA2001 does not receive marketing authorization in the EU by Apr 30, 2022. Last month, the EC decided to exercise this right and communicated its intent to terminate the APA.

Following the receipt of the above notice of intent, Valneva had 30 days from May 13, 2022 to either secure the marketing authorization for VLA2001 from the EMA or propose an acceptable remediation plan. Although the EMA is yet to make a decision on the MAA for VLA2001, the Committee for Medicinal Products for Human Use is expected to take a final vote next week.

Last week, Valneva proposed a remediation plan, which is yet to be accepted by the EU and its member states. However, VALN stated that preliminary, unofficial volume indications received from the EC would not be sufficient to ensure the sustainability of its COVID-19 vaccine program, even though some of the EU member states have confirmed their interest in securing VLA2001 doses.

Hence, Valneva will not be able to enter into an amendment to the APA, which could allow a reduced order. This is likely to lead to the termination of the APA with the EC. Earlier this week, the company also announced that it reached a settlement with the U.K. government concerning the termination of a supply agreement for VLA2001.

The MAA filing in the EU is based on the positive top-line data from the pivotal phase III Cov-Compare study, which Valneva announced last October. The Cov-Compare study compared VLA2001 to AstraZeneca’s (AZN - Free Report) COVID vaccine, AZD1222. Data from this study demonstrated the superiority of VLA2001 over the AstraZeneca vaccine.

The study achieved both co-primary endpoints two weeks after the second dose of vaccination. VLA2001 produced superior neutralizing antibody titer levels to AstraZeneca’s AZD1222. Further, VLA2001 demonstrated the same effectiveness as AZN’s AZD1222 in neutralizing antibody seroconversion rates more than 95%.

Valneva is also evaluating VLA2001 as a homologous and heterologous booster. Last month, it initiated a clinical study evaluating a heterologous booster dose of VLA2001 in patients who completed their primary vaccination regimen with an mRNA-based vaccine or natural COVID-19 infection.

Apart from VLA2001, Valneva is evaluating other vaccines in its pipeline for Lyme disease and chikungunya.

VLA15, Valneva’s vaccine candidate for Lyme disease, is being prepared in collaboration with Pfizer (PFE - Free Report) . Valneva and PFE completed phase II studies, evaluating VLA15 in both adults (aged 18 years and above) and pediatric participants (from five years to 17 years). Based on data from these phase II studies announced by VALN earlier this April, both Pfizer and Valneva plan to proceed with a phase III study of the vaccine in both pediatric and adult participants, which is expected to start in the third quarter of 2022.

Valneva entered into collaboration with Pfizer in 2020 to develop and commercialize VLA15.

Zacks Rank & Stock to Consider

Valneva currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the overall healthcare sector is Alkermes (ALKS - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Alkermes’ 2022 loss per share has narrowed from 13 cents to 3 cents in the past 60 days. Shares of Alkermes have risen 3.4% year to date.

Earnings of ALKS beat estimates in each of the last four quarters, the average being 350.5%. In the last reported quarter, Alkermes delivered an earnings surprise of 1,100%.

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