Pfizer has reached an agreement that will have it investing $95 million in Valneva through a purchase of VALN stock. That will go into effect tomorrow and will result in Pfizer owning an 8.1% stake in the company.
The investment from Pfizer will have Valneva issuing new shares of VALN stock. As a result, current shareholders will see their stake dilute by roughly 8.1%. For example, a 1% shareholder will have a 0.919% stake in the company after the funding agreement goes through.
The funding deal between Valneva and Pfizer is connected to a Lyme disease vaccine candidate in development. Pfizer is helping fund research of this vaccine and the current plans have the two companies looking toward a Phase 3 clinical trial.
With this new funding deal, there are some changes to the collaboration between the two companies. For example, Valneva is now funding 40% of the Phase 3 clinical trial, as compared to the prior 30%. It will also get tiered royalties between 14% and 22%. The previous agreement had these royalties starting at 19%.
Thomas Lingelbach, CEO of Valneva, said the following about the funding deal boosting VALN stock higher today:
Pfizer’s investment in Valneva highlights the quality of the work that we’ve done together over the past two years and is a strong recognition of Valneva’s vaccine expertise. This subscription agreement will contribute to our investment in the Phase 3 study while limiting the impact on our cash position.
VALN stock is up 88.1% as of Tuesday morning.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.