Pfizer takes stake in Lyme disease partner ahead of key study

Dive Brief:

• Pfizer will spend 91 million euros, or about $95 million, to take an 8% stake in French vaccine maker Valneva to help support development of a Lyme disease shot the two companies are developing. Pfizer and Valneva plan to begin a late-stage trial of the vaccine by September.
• The companies reported positive Phase 2 safety and immune response data in adults this February and in children in April. If the planned Phase 3 trial succeeds, Pfizer and Valneva could ask for Food and Drug Administration approval in 2025, potentially helping Valneva build out a product line that includes vaccines for two other insect-borne diseases.
• Pfizer’s cash influx, announced Monday, could also help Valneva bounce back from the disappointment of its COVID-19 vaccine. Though the company signed advanced purchase agreements with governments and gained emergency authorizations in Bahrain and the U.K., the European Commission recently signaled it would cancel its purchase contract, jeopardizing up to 590 million euros in projected revenue.

Dive Insight:

Under the Lyme vaccine deal signed in April 2020, Pfizer paid $130 million upfront and promised as much as $178 million in milestone payments. For its part, Valneva agreed to pay 30% of development costs and lead development through the end of Phase 2 testing, while Pfizer was in charge of Phase 3 and commercialization.

Under the revised agreement, Valneva ups its responsibility for the remaining development costs to 40%. The two companies will also restructure the commercial payouts by adjusting the royalty rate, but adding up to $100 million in flat-fee payments based on the achievement of certain sales goals. Of the $178 million in milestone payments that were promised under the original pact, only $10 million have been paid, and $25 million is due when Pfizer begins the Phase 3 trial.

The 91 million euros will increase Valneva’s cash holdings, which as of March 31 amounted to 311 million euros. The company recorded 349 million euros in 2021 revenue, although only 63 million euros were from product sales. The remainder came from licensing and advance purchase agreement payments for its COVID-19 vaccine, including around 253 million euros to supply the U.K. government. The U.K. has terminated that supply agreement.

By taking an 8% stake, Pfizer becomes Valneva’s third-biggest shareholder after life sciences investor Groupe Grimaud and the French government’s investment arm, Groupe Caisse des Dépôts et Consignations. Existing shareholders will see their investments reduced in value by 8% due to the increase in the number of outstanding shares.

Valneva’s U.S.-listed shares jumped by more than 80% on Tuesday, the first trading day since the news was announced.

Those shares have tumbled from a high above $67 last November as the company’s COVID-19 work has fizzled, however. Unlike the messenger RNA vaccines of Pfizer and Moderna or the viral vector shots of Johnson & Johnson and AstraZeneca, Valneva has relied on an older technology — inactivated whole viruses — that it was slower to develop.

The cancellation of the U.K. supply agreement, which the two sides settled last week, and the likely cancellation of the European Commission pact has meant the company won’t continue to develop the vaccine for the European market unless individual countries place big enough orders. The company expects the European Medicines Agency’s human drugs committee will vote on whether to authorize the shot this week.

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