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Valneva Stock Jumps 83% On Opportunistic Pfizer Buy Of 8.1% – What Next?

Tim Worstall
Tim Worstall trader
Updated 21 Jun 2022

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Key points:

  • Valneva's has a series of disasters, collapsing the stock price
  • Pfizer has bought in with 8.1% of the company
  • Valneva's stock is up 83% in response

Valneva (NASDAQ: VALN) stock has jumped 83% premarket this morning off the back of a highly opportunistic purchase of 8.1% of the company by Pfizer (NYSE: PFE). This is obviously, given the purchase price, a good deal for Pfizer, but it also provides some certainty and underpinning for Valneva.

It has to be said that Valneva's not been having a good time of it lately. Which, given that it's a vaccine maker in the middle of a pandemic isn't all that good a look. For if a vaccine maker can't make money when governments are throwing money around with gay abandon then when can it?

For example, Valneva did have an agreement with the British government over vaccine development. But that got canned back in October, on the basis that there didn't seem to be a vaccine arriving as a result of the program. Back just last week there was a final settlement of that contract and Valneva stock fell 10% on the announcement – the settlement didn't go Valneva's way that is. The British contracts were generous to vaccine developers but they were also conditional – produce a working vaccine or we'll not continue.

Also Read: Five Best Pharmaceutical Stocks To Watch In 2022

Valneva also had problems with the same vaccine development with the European Union. The idea was to develop a whole, inactive, virus vaccine rather than use the mRNA techniques used elsewhere. That is, to use old vaccine development methods to produce something that would be free of any possible problems used by the new method. The problem would be the development timescale – years longer that is. That contract was then cancelled, on the basis of not performing, and there was a deal that might revive it in some form. That then all fell apart on the 13th of this month, June.

So, the Valneva stock price has been falling steadily over the past couple of weeks, from $25 per share down to the around $14 of yesterday – a step down with each new piece of news.

The Pfizer deal though is to point out that there is still a vaccine development business in there. There's a chikungunya vaccine that seems to work well if it can be made consistently. But that's not really a rich world disease so while such a vaccine would be highly useful, perhaps not amazingly profitable. On the other hand there's that JV with Pfizer to produce a Lyme Disease vaccine. That's what this development is about today. Pfizer is to invest another $95 million into Valneva for 8.1% of the stock. This will support the Lyme developments which is expected to enter a late stage trial in autumn this year.

Pfizer was, of course, able to take advantage of the recent falls in the Valneva stock price to buy in at €9.49 – call that $10 among friends.

For Valneva though this does provide an underpinning. Sure, we could say that Pfizer's been able to buy in cheap, which they have. But Pfizer has also bought in. So we've an independent validation of the idea that there's value in there. Which is, of course, why the Valneva stock price has jumped that 83% back to $25 and change.

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.