Valneva Reports Strong Business Performance in First Nine Months Company Increases Financial Guidance for Full Year 2016 Nine Months financial performance ahead of initial expectations:

  • Total revenues and grants grew to €70.7 million in the first nine months of 2016 (vs.

    €60.7 million in the same period of 2015) benefiting from a more than 60% increase of IXIARO®/JESPECT®revenues to €40.1 million.

  • Valneva reported a positive EBITDA of €3.5 million in the first nine months of 2016 (vs. an EBITDA loss of €4.3 million in the same period of 2015) despite a slightly negative EBITDA of minus €1.2 million in the third quarter of 2016 (vs. €1.0 million positive EBITDA in the same period of 2015).

  • Nine months 2016 net loss was impacted by a non-cash impairment charge on acquired intangible assets following the discontinuation of the Pseudomonas program in Q2.

  • Positive operating cash flow of €8.0 million in the first nine months of 2016 brought cash position to €40.3 million as of September 30, 2016 (vs. €37.3 million as of September 30, 2015).

  • Strong nine months performance was driven by revenue and EBITDA growth in the first two quarters of 2016, while third quarter 2016 revenues and grants slightly decreased to

    €19.4 million (vs. €21.5 million in the third quarter of 2015) due to usual quarterly fluctuations.

    2016 Outlook Based on the Company's strong year to date financial performance, Valneva raises its FY 2016 operating guidance:

  • The Company now expects EBITDA profit of €1-5 million in FY 2016 compared to its previous guidance of less than €5 million of EBITDA loss, while still investing around

    €25 million in R&D.

  • Valneva narrows its revenue guidance to the upper end of the previously communicated range and now expects FY 2016 IFRS revenues to reach between €95 and €100 million with product sales of between €75 and €80 million and a gross margin on product sales higher than 50%.

    Key upcoming clinical milestones

  • Following successful completion of Phase II and comparison of its data with the only more advanced vaccine program targeting primary prevention of Clostridium difficile Infections, Valneva continues to seek a partner and is in discussion with several potential partners. The Company has therefore revised its expected timelines for entering into a partnering deal to 2017.

  • Valneva confirms it will initiate a Phase I clinical trial of its Lyme borreliosis vaccine candidate before the end of 2016. The Company will hold a Key Opinion Leader conference and live webcast for investors on Lyme in New York on December 12, 2016.

  • Valneva expects to launch a second clinical program in 2017 from its promising pre- clinical portfolio which includes vaccine candidates against Chikungunya and Zika.

Thomas Lingelbach, President and CEO and Franck Grimaud, Deputy CEO of Valneva, commented,"We are excited that our financial performance clearly confirms the company's transition towards financial self-sustainability while maintaining significant investments in promising R&D programs including much-needed vaccines such as our Lyme disease vaccine candidate. Besides further anticipated growth of our product sales, the ongoing R&D partnership discussions, including those on our C. difficile vaccine candidate, may provide additional upside going forward." Key Financial Information

(unaudited)

€ in thousand

3 months ended September 30,

9 months ended September 30,

2016

2015

2016

2015

Revenues & grants

19,354

21,468

70,741

60,682

Net profit/(loss)

(7,007)

(5,164)

(46,467)

(4,218)

EBITDA1

(1,209)

1,039

3,463

(4,307)

Net operating cash flow

4,155

(6,054)

7,990

(19,032)

Cash, short-term deposits and marketable securities, end of period

40,293

37,258

40,293

37,258

Lyon (France), November 9, 2016 - Valneva SE ("Valneva" or "the Company"), a leading independent pure play vaccine company, reported today its consolidated financial results for the first nine months and third quarter of the year ending September 30, 2016. The financial report, including the condensed consolidated interim financial report, is available on the Company's websitewww.valneva.com

A webcast for financial analysts, fund managers, investors and journalists will be held today at 2:00 pm (CET). A replay will be available on the Company's website. Please refer to this link: http://edge.media-server.com /m/p/jv2idge8

Commercialized vaccines JAPANESE ENCEPHALITIS VACCINE (IXIARO®/JESPECT®) Nine months 2016 revenues increased by more than 60% compared to same period in 2015

In the first nine months of 2016, IXIARO®/JESPECT®revenues grew 61.2% to €40.1 million (including €39.9 million of product sales and €0.2 million of royalties) compared to €24.8 million in the first nine months of 2015. Nine months 2016 revenues benefited mostly from additional revenue margins under the Company's new sales and distribution network. In the third quarter of 2016, IXIARO®/JESPECT®product sales were €9.8 million compared to €9.7 million in the third quarter of 2015. The 2016 third quarter sales were lower than the two previous quarters as a result of usual quarterly sales fluctuations driven by order patterns of major clients such as the US government and key distributors. Based on the strong nine months IXIARO®/JESPECT®

1 EBITDA (Earnings bef ore interest, taxes, depreciation and amortization) w as calculated by excluding depreciation, amortization and impairment of tangible and intangible assets as w ell as gains from bargain purchase ("negative goodw ill") from the operating loss.

revenues, Valneva expects its full-year 2016 IXIARO®/JESPECT®revenues to exceed

€50 million.

CHOLERA / ETEC- DIARRHEA VACCINE (DUKORAL®) A strong third quarter

DUKORAL®revenues in the first nine months of 2016 grew to €14.9 million compared to

€12.6 million reported by Valneva in the first nine months of 2015. The revenue increase was recorded despite the fact that Valneva largely suspended promotional efforts during the first part of 2016 to include the product monograph updates agreed with Health Canada. In the third quarter of 2016, DUKORAL®revenues rose to €5.1 million (including €5.0 million of product sales and €0.1 million of royalties) compared to €4.4 million in the third quarter of 2015 as Valneva resumed active promotion of the product in its main market in Canada.

Valneva confirms its expectation to meet its DUKORAL®full year 2016 revenue goal of approximately €23 million (compared to €26.3 million on a pro-forma basis in 2015). The Company will continue to invest in growing the DUKORAL®vaccine by way of promotional efforts and geographic expansion.

Technologies and services EB66®CELL LINE GE Healthcare and Valneva Collaboration Delivers Optimized Cell Culture Medium for Vaccine Production in EB66®cell-line New Research agreement with IDT Biologika

GE Healthcare and Valneva recently announced the launch a new cell culture medium, CDM4Avian, to optimize virus productivity in Valneva's proprietary EB66®cell-line. The new medium is chemically defined, fully characterized and animal derived component free, offering efficient cell growth and virus replication. GE Healthcare and Valneva believe that this state-of the art medium will further ease the regulatory processes for new products developed in EB66®cells.

Valneva also welcomes the European Medical Agency's decision to issue new guidelines to allow the production of live attenuated vaccines in immortal cell-lines such as EB66®allowing Valneva's partners to now utilize the EB66®cell line to develop and manufacture vaccines including Modified Vaccinia Ankara-based vaccines, measles and oncolytic vaccines. Until now, only inactivated vaccines could be developed in EB66®cells in Europe. Valneva expects these new guidelines to open new, untapped markets for the EB66 cell line.

Valneva continues to license its technology for the manufacturing of human and veterinary vaccines. In the third quarter of 2016, the Company signed a new research agreement with German animal health firm IDT Biologika GmbH allowing IDT to use the EB66®cell line to research new veterinary vaccines. This new agreement with IDT follows the recent signing of a commercial agreement with IDT's subsidiary Gallant Custom Laboratories Inc. to develop, manufacture and commercialize vaccines for the prevention of influenza virus in poultries and fowl adenovirus using the EB66®cell line.

Clinical vaccine candidates

Valneva's current proprietary clinical pipeline includes vaccine candidates against Clostridium difficile (Phase II completed), and Lyme borreliosis which is expected to enter Phase I before the end of 2016.

CLOSTRIDIUM DIFFICILE VACCINE CANDIDATE - VLA 84 Phase II, including more recent follow-up data until Day 210, reconfirms our competitive Phase III ready asset - Company expects partnering deal to occur in 2017

Clostridium difficile (C. difficile) is the most common infectious cause for nosocomial diarrhea in Europe and the US. There are an estimated 450,000 cases ofC. difficile in the US annually2. Currently, no vaccine againstC. difficile is commercially available and antibiotic treatment of the established disease has significant limitations with recurrence in ~20% of cases. Valneva estimates that the total market potential for prophylacticC. difficile products may exceed US$1 billion annually.

Valneva previously announced that it successfully completed Phase II development of its C. difficile vaccine candidate and that the final results confirmed the previously announced positive topline data that it presented at the American Society of Microbiology's annual meeting, ASM Microbe 2016, on June 17, 2016 in Boston.

The Phase II study design had been agreed in advance with regulators with the aim of supporting a subsequent progression into Phase III. The program's Phase III readiness was confirmed through an independent Scientific Advisory Board (SAB).

The comparison with published Phase II data3from the only more advanced vaccine program targeting primary prevention of Clostridium Difficile Infections (CDI) indicates that Valneva´s VLA84 provides a comparable immunological profile. Supported by the competitive data comparison, Valneva continues to seek a partner and is in discussion with several potential partners. The company has therefore revised its expected timelines for entering into a partnering deal to 2017.

LYME BORRELIOSIS VACCINE CANDIDATE - VLA 15 Phase I clinical trial expected to commence by the end of 2016 Valneva to hold a Lyme disease KOL event in New York on December 12, 2016

Currently, there is no licensed vaccine available to protect humans against Lyme disease, a multi systemic tick-transmitted infection that is increasingly common in the US and Europe.

Valneva has developed a multivalent vaccine candidate which addresses OspA, one of the most dominant proteins expressed by the bacteria when present in a tick. Pre-clinical data showed that this vaccine candidate can provide protection against the majority of Borrelia species pathogenic for humans 4.

Valneva expects to commence a Phase I trial before the end of 2016. The single-blind, partially randomized, dose escalation Phase I study trial will be conducted in the US and Europe. The primary objective will be to evaluate safety and tolerability. Immunogenicity, measured by

2 Lessa et al, Burden of Clostridium dif f icile Inf ection in the United States. N Engl J Med 2015;372:825-34.

3 G. de Bruyn et al. Vaccine 34 (2016) 2170-2178

4 http://journals.plos.org/plosone/article?id=10.1371/journal.pone.0113294

Valneva SE published this content on 09 November 2016 and is solely responsible for the information contained herein.
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