The dark horse of the vaccine race may be this French biotech

As the battle with Covid-19 rages around the world, a small French biotech has a possible solution for the long-term war against the virus and the rapidly spreading mutations.

The company, Valneva SE, has a vaccine that could be more variant-proof, giving it an edge over other shots in what may be an annual campaign against a disease that's already killed more than 3 million people. The first participant in its phase three trials will be dosed this week. If successful, that could lead to an approved shot in the fall.

Valneva's shot is the only candidate in clinical trials in Europe that uses a tried-and-true vaccine technology involving an inactivated version of the whole virus it's targeting. Inactivated vaccines — a century-old approach adopted for flu and polio — take a sample of the disease that has been killed and use it to stimulate an immune response without creating infection.

With all the other Covid-19 vaccines in the region focused on the virus's spike protein, the shot could protect against variants that might compromise others, making it the perfect booster.

The company already has a deal with the U.K. to supply up to 190 million doses. Kate Bingham, former head of the U.K.'s Vaccine Taskforce, says that if the shot is successful it will probably be used as a winter booster for older adults.

"Having that broader antigenic real estate from a whole virus vaccine really matters," she said. "Viruses mutate. So by having a broader immune response, which you get with a whole vaccine, you can potentially provide that ongoing protection."

The healthcare implications in a post-Covid world are huge. And for Valneva, with a $100 million listing planned on Nasdaq this year, the financial stakes are high. The U.K. contract is worth up to 1.4 billion euros ($1.7 billion), more than 10 times its annual revenues last year. 

The company said Thursday that it will sell about 7.1 million shares in the offering, and use the proceeds to fund the Covid vaccine as well as the development of other products in its pipeline.

The path to success is not straightforward, though. Due to the more onerous development involved with an inactivated approach, the Valneva vaccine was always going to be later into the clinic than other shots, which means its advanced trials are starting in the U.K. when more than half the country has already been vaccinated.

As a result, the vaccine is being tested head-to-head with a shot from AstraZeneca Plc and the University of Oxford, rather than a dummy placebo, and must show an equal or superior antibody response.

"There is no development without risk," said Chief Executive Officer Thomas Lingelbach, who doesn't know how the chance of regulatory approval would be affected if the shot was even slightly less effective than the Astra vaccine. "To be honest with you I don't even like to think about that scenario."

It's not the first time the 57-year-old has taken a risk.

In summer 2012, when he was CEO of Austrian biotech Intercell AG, Lingelbach met Franck Grimaud, the chief executive of French company Vivalis, at one of Vienna's oldest restaurants. Both businesses were struggling, and a London banker had suggested the pair get together to discuss a possible tie-up.

By the end of their meal at Ofenloch, they decided that together they could become a key specialist vaccine company focused on developing inoculations for diseases with limited preventive or therapeutic treatment options.

"In one evening we put everything on the table, where we are strong, where we are weak, and why it would make sense to join," said Grimaud, who is now Valneva's president and chief business officer. "We did what we said during this meeting."

When the pandemic hit last year, the company had two approved travel vaccines in its portfolio, one for Japanese encephalitis and another for cholera. Two more, against Lyme disease and Chikungunya, a virus contracted from mosquitoes, were in the clinical phase. As soon as it became clear Covid-19 wasn't going away quickly, the Valneva executives saw an opportunity to capitalize on the company's experience.

With Pfizer Inc., Moderna Inc. and Oxford pursuing messenger RNA and adenovirus vaccines, there was a gap for an inactivated approach. In April 2020, as much of Europe went into lockdown and infections climbed rapidly, the company started work on a shot using its Japanese encephalitis platform.

The idea was it would be "complementary to the other vaccines, either in terms of sub-population — immunosuppressed, pregnant women, children, or, and we see it more and more emerging, the fact that inactivated vaccines could make sense as a booster," said Grimaud, 55.

The U.K. quickly signed up to buy the shot and invested in a Valneva manufacturing site in Scotland. Human trials started in December and reported positive data this month — producing significant levels of antibodies in more than 90% of participants and raising no safety concerns.

Another potential deal with the European Commission, in the works since the third quarter of 2020, ended this month. The company is now focusing on bilateral deals with individual EU countries.

Lingelbach won't go into details but alludes to problems European officials had with the U.K. getting priority treatment — a factor baked into the British deal from the start. A spokesman for the European Commission said it's aware of Valneva's position and in discussion with member states on how to proceed. The company didn't meet certain conditions for a deal, he said.

"Despite a lot of effort we have not made progress," Lingelbach said. "It has gone in circles, and circles and circles."

The company has also had discussions with Australia and Canada about possible orders.

Other inactivated Covid-19 vaccines exist beyond Europe. China's Sinovac Biotech Ltd. and Sinopharm have also used the approach. While the Sinovac vaccine initially posted an efficacy figure of about 50% — lower than other vaccines and around the minimum regulatory threshold needed — more real-world data suggests the number could be higher. Sinopharm's inactivated shots have both reported efficacy above 70%.

In an ideal world, the Valneva vaccine would be tested against another inactivated shot, said Lingelbach, but because there isn't an approved one in the West the Astra vaccine was the next best comparator. Adjustments have had to be made to take account of different dosing schedules and the age restriction on the Astra shot in the U.K.

Alongside the possibility that the Covid vaccine could be a regular booster shot providing sustainable revenue, the company is also hoping its Lyme and Chikungunya vaccines will both be in use by 2025, moving the company into a different league.

Valneva has added hundreds of staff and plans to go from output of about three million vaccines a year to more than 100 million next year if the Covid shot is successful.

"It's not the same game," said Grimaud. It's "what makes us wake up every morning, but sometimes not sleep at night as well."

Disclaimer: This article first appeared on bloomberg.com, and is published by special syndication arrangement.