Categories Analysis, Health Care, IPO

CureVac (CVAC): Another COVID-19 stock that attracted investors

In recent times, investors have been betting on the biotech companies that are in the race to develop the COVID-19 vaccine. The front runners in this space like Moderna (NASDAQ: MRNA), Inovio Pharmaceuticals (NASDAQ: INO), and Novavax (NASDAQ: NVAX) have got a lot of attention from Wall Street since the outbreak of the pandemic. Another player who joined in the competition is CureVac (NASDAQ: CVAC). The German-based clinical biopharmaceutical company went public last Friday and had skyrocketed 383% in two days from its IPO price of $16.

Overview

The clinical-stage biopharmaceutical company CureVac was founded in 2000 and is headquartered in Tubingen, Germany. CureVac develops medicines based on messenger ribonucleic acid or mRNA. The company’s lead clinical programs include CV8102, which is in Phase 1 clinical trial for the treatment of four types of solid tumors and CV7202, which is in Phase 1 clinical trial for potential vaccination against rabies.

However, all the eyes are on the company’s rapidly advancing mRNA vaccine program against coronavirus, for which CureVac had initiated a Phase 1 clinical trial in healthy volunteers in June 2020. The outcome of this trial is expected in the fourth quarter of 2020.

CureVac generates revenues from upfront licensing payments, product sales and compensation for research and development services, all of which relate to its license and collaboration agreements.

CureVac, which had 484 employees worldwide as of June 30, 2020, promoted its acting CEO and COO Dr. Franz-Werner Hass as CEO and appointed Igor Splawski as Chief Scientific Officer earlier this month.

CureVac (CVAC) IPO - Financials

Financials

Since its inception, CureVac had incurred significant losses. For the year ending December 31, 2019, CureVac’s net loss widened to EUR99.9 million from EUR71.2 million in the prior year. Revenue rose 35% in 2019 to EUR17.4 million. The company finances its operations primarily through private placements of equity securities, issuance of convertible debt, grants from government agencies and similar bodies and payments for collaborative research and development services.

Successful IPO

CureVac raised about $213 million by pricing its shares at $16 each and started trading at $44 per share on Friday. CVAC stock jumped 249% and closed at $55.90 on its debut day. With the day’s high at $85, CureVac shares continued its bullish run yesterday by rising 38% to $77.20, making it one of the successful IPOs of 2020. Schrodinger (NASDAQ: SDGR) that went public in early February has soared 298% since its IPO and Inari Medical (NASDAQ: NARI) that went public in May this year surged 275% since its IPO. It’s worth noting both of these companies belong to the healthcare industry.

Also read: Novavax (NVAX) stock tumbles despite beating bottom line estimates in Q2

CureVac plans to use the proceeds from this offering to:

  • Fund clinical development of mRNA vaccine program against COVID-19
  • Advance rabies vaccine program CV7202
  • Advance oncology program CV8102
  • Advance the development of other preclinical and clinical programs
  • Invest in the further development of the mRNA technology platform
  • Expand the manufacturing capabilities

COVID-19 vaccine

Upon the outbreak of the COVID-19 pandemic, the company’s focus shifted to developing a vaccine candidate against COVID-19. The company has been working closely with many organizations, including the Coalition for Epidemic Preparedness Innovations (CEPI), on the development of this vaccine candidate.

In a recent interview with Borse Online, CureVac’s CEO Franz-Werner Haas stated that the plan is to get the approval in the first half of 2021. He added, “We do not rule out accelerated approval, but it can only be granted in close cooperation with the authorities.”

Collaborations

CureVac entered into strategic partnerships with Genmab, Arcturus, Acuitas, CRISPR Therapeutics, Boehringer Ingelheim, GSK, the Bill & Melinda Gates Foundation, CEPI and Tesla Grohmann, among others. 

Under the agreement signed with GSK in July 2020, CureVac will collaborate with GSK to research, develop and commercialize prophylactic and therapeutic non-replicating mRNA-based vaccines and antibodies targeting infectious disease pathogens.

GSK is required to pay CureVac an upfront payment of EUR120 million and a manufacturing capacity reservation fee of EUR30 million following a certain regulatory milestone event. The company is also eligible to receive between EUR28 million to EUR45 million in development milestone payments, EUR32 million to EUR35 million in regulatory milestone payments and EUR70 million to EUR100 million in commercial milestone payments.

Risk factors

CureVac has never reported “profit” since its inception and the company expects to incur losses in the future until it succeeds in the development and commercialization of its product candidates. As of now, CureVac’s revenue generation depends on the license payments for its proprietary technology platform and milestone payments set by the partners for the development of product candidates. The completion of clinical trials will depend on the outcome of those trials and approval of regulatory agencies like the FDA and EMA. Also, the company’s focus on finding the vaccine for COVID-19 has and will delay the other clinical trials.

Final verdict

When more clinical trial data is out, most probably, by the end of this year, we will get an idea of how these companies have advanced in the development of COVID-19 vaccines. Apart from whoever crosses the finish line first in this race, the followers will also get their share of pie based on their progress and speed. CureVac is expected to be one such successful company in this group.

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Disclaimer: The views and opinions presented here are of the author alone and does not represent the views of AlphaStreet

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