Valneva : Reports Strong Revenue Growth and Positive EBITDA in H1 Confirming the Company’s Trend towards EBITDA Break-even

• Total revenues and grants grew to €51.4 million in H1 2016 (vs €39.2 million in H1 2015) as IXIARO®/JESPECT®sales doubled to €30.1 million following the successful establishment of the Company's new marketing and distribution network

• DUKORAL®sales grew to €9.8 million in H1 2016 (vs €8.1 million from the vaccine acquisition date in H1 2015);

• The Company recorded the first royalties from the sales of a human vaccine produced on the EB66®technology in H1 2016

• EBITDA improved to €4.7 million in H1 2016 (vs. a €5.3 million EBITDA loss in H1 2015);

• As expected, high net loss in H1 2016 was driven by non-cash impairment charges on acquired intangible assets following the Pseudomonas clinical results in Q2

• Positive operating cash flow in the second quarter brought cash position to

  €38.7 million at the end of June 2016 (vs. €33.4 million at the end of Q1 2016)

  New Agreements

• Valneva announces the signing of a commercial license agreement for the use of its EB66®technology with Gallant, a subsidiary of German animal health firm IDT Biologika GmbH, and several new research license agreements

• Valneva just recently signed a Marketing & Distribution Agreement for Seqirus' (formerly BioCSL) flu vaccines Sandovac®and Fluad®in Austria

  Recent R&D newsflow

• At the end of July, Valneva announced the successful completion of the Phase II study for its Clostridium difficile vaccine candidate and is currently in partnering discussions for financing the Phase III trial

• Valneva also announced in July that the Company signed a €25 million loan agreement with the European Investment Bank to support its R&D activity including the research and development of its Lyme Borreliosis and Zika vaccine candidates.

  › The Company confirms it expects to launch the Phase I clinical trial of its Lyme Borreliosis vaccine candidate by the end of 2016

  › Valneva recently announced the successful generation of a highly-purified Zika vaccine candidate and is now looking for a co-development partner to start the clinical trials

  2016 Outlook Valneva re-affirms its FY 2016 financial outlook:

• 2016 IFRS revenues expected to reach €90 to €100 million, with product sales between €70 and €80 million - reflecting up to 30% growth over 2015 product sales;

• Improved revenues due to Valneva´s new global marketing & distribution network are expected to lead to a gross margin on product sales of approximately 50% in 2016;

  • Valneva will continue to strive towards financial self-sustainability and expects to reduce its EBITDA loss to less than €5 million in FY 2016 while continuing to invest around €25 million in R&D this year.

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/wp4kodbe

In the first half of 2016, revenues from IXIARO®/JESPECT®product sales doubled to

€30.1 million compared to €15.3 million in the first half of 2015. The increase was strongly driven by the capturing of additional revenue margins under the new sales and distribution network, notably in the US, German, UK and Canadian private markets, and from shipments to the US military related to the 2 year supply contract awarded in the first quarter.

In March 2016, Valneva announced the signing of a $42 million contract with the US Government's Department of Defense to supply IXIARO®doses to the US military over a two- year period to protect the nearly 360,000 US military and civilian personnel and their families working and living in endemic countries.

Based on first-half sales, the observed demand pattern in the travel markets and anticipated further supplies to the US military, Valneva re-affirms its FY 2016 guidance of IXIARO®/JESPECT®product sales reaching approximately €50 million.

DUKORAL®sales in the first half of 2016 grew to €9.8 million compared to €8.1 million reported by Valneva in the first half of 2015, despite the negative transitional impact of the change in the product monograph in Canada and the fact that Valneva largely suspended promotional efforts during the fourth quarter of 2015 and the first quarter of 2016 to include the updates in the indication and labeling.

Valneva confirms its expectation to achieve 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.

Valneva's EB66®cell line, which is derived from duck embryonic stem cells, is a highly efficient platform for vaccine production and today represents a compelling alternative to chicken eggs for large scale manufacturing of human and veterinary vaccines. Valneva's EB66®cell-line has become increasingly profitable and the Company expects growing cash-contributions from this technology.

In the second quarter of 2016, Valneva recorded its first royalties from the sale of EB66®- based pandemic influenza vaccines under its partnership with GSK.

During the first six months of 2016, Valneva also signed several new agreements for its EB66®cell line including a commercial license agreement with Gallant Custom Laboratories Inc., a Canadian subsidiary of the German animal health firm IDT Biologika GmbH.

Valneva expects to sign additional EB66®license agreements in the second part of 2016.

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 in the later part of 2016.

During the second quarter of the year, Valneva announced that the Phase II/III trial results for its Pseudomonas aeruginosa vaccine candidate (VLA43) did not confirm prior Phase II and

interim analysis findings which had shown a clinically meaningful vaccine effect of all-cause mortality reduction. As a result, the Company decided to discontinue the program.

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 of C. difficile in the US annually1. Currently, no vaccine against C. difficile exists and antibiotic treatment of the established disease has significant limitations with recurrence in ~20% of cases. Valneva estimates that the total market potential for prophylactic C. difficile products may exceed US$1 billion annually.

At the end of July 2016, Valneva 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.

VLA84 was immunogenic at all doses and formulations tested, in that Immunoglobulin G (IgG) and functional (neutralizing) antibody responses were seen. The study met its primary endpoint in terms of identifying the dose/formulation with the highest seroconversion rate against both toxins A and B and confirmed the favorable safety profile observed in Phase I. Final Phase II results included the follow-up on the 500 study participants out to Day 210.

The Phase II study design had been agreed in advance with regulators with the aim of supporting a subsequent progression into Phase III. Valneva has confirmed Phase III readiness through an independent Scientific Advisory Board (SAB) and is now ready to support an end-of Phase II meeting (EOP2 meeting) once the final Phase III design is agreed with a potential partner. The Company reaffirms its expectation to find a partner for its

C. difficile program by the end of year.

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 humans2.

Valneva expects to commence a Phase I trial towards the end of 2016. The single-blind, partially randomized, dose escalation Phase I study trial will be conducted in the US and Europe. Besides its primary objective of evaluating safety and tolerability, immunogenicity, measured by observing IgG antibodies specific against six OspA serotypes, will also be monitored for different dose groups and formulations at different time-points.

1 Lessa et al, Burden of Clostridium difficile Infection in the United States. N Engl J Med 2015;372:825-34.

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