CureVac: Back To Square One

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Today, we're circling back to a development company called CureVac N.V.The company recently agreed to a deal with GSK plc, that involved a huge upfront payment, as well as potential milestone payouts ...

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(NASDAQ:CVAC). My first and only article on this overseas-based biotech concern was in November of last year. I concluded that piece by saying I would avoid the stock for now, but the story is one I would return to at some point in the future. That turned out to be the right investment call, as shares have continued to decline since this name was first put in the spotlight. There has been some recent major news flow around the company earlier this summer, and I also received an inquiry from a Seeking Alpha follower on what's next for the company, prompting a revisit. An updated analysis follows below. Seeking Alpha CureVac N.V. is headquartered in Tübingen, Germany. In early July, the company made a transformative move and substantial change in CureVac's direction. The company entered into an agreement with giant British drugmaker GSK plc (GSK). GSK plc acquired all rights to develop CureVac's mRNA candidate vaccines for influenza and COVID-19. CureVac got a large upfront payment of €400M from GSK plc as part of this arrangement. CureVac can also receive up to €1.045 billion in additional milestone payments, as well as royalties on any commercialized sales. This new deal replaced all aspects of the previous collaboration agreement CureVac already had with GSK plc. CureVac also announced it was laying off approximately 30% of its staff as a result of this deal. Management at CureVac basically hit the great reset button when it closed this deal with GSK plc, as its development efforts are all the way back to square one. CureVac now has a massive cash hoard. It can also pursue additional undisclosed and pre-clinically validated infectious disease targets from the prior collaboration with GSK. CureVac can also find other partners and pursue other mRNA vaccines that were not part of this large transaction with GSK plc. In addition, CureVac's ongoing litigation against Pfizer (PFE) and BioNTech SE (BNTX) is not affected with this deal with GSK plc. It does appear CureVac's case suffered a setback in London's high court this week on that front. The follows another setback in a German court late last year. CureVac provided guidance that it plans to have two new candidates in clinical development by the end of 2025 and conduct two Phase 1 studies by the end of 2026. Like previously stated, CureVac went all the way back to square one around its pipeline by taking the huge cash deal with potential milestone payments and royalties with GSK plc. Outside of pre-clinical development, CureVac does have one candidate in early-stage clinical development. That's a messenger-RNA-based cancer vaccine dubbed CVGBM. The company began dosing patients in an open-label study last year evaluating CVGBM to treat brain tumor glioblastoma. This trial is focused on safety and tolerability. The company presented initial results of this study at the ESMO Congress last month. This is how leadership summarized that data.  Preliminary immunogenicity results demonstrate the induction of cancer antigen-specific T-cell responses in 77% of evaluable patients following CVGBM monotherapy.  84% of immune responses were de novo, observed in patients without pre-existing T-cell activity against encoded cancer antigens. CVGBM was generally well tolerated up to the highest tested dose level of 100 µg with no dose-limiting toxicities. Most common adverse events were mild to moderate systemic reactions such as headache, fever and chills, which resolved within 1–2 days post injection. 100 µg was selected as the recommended dose for the dose expansion phase, which recently started enrollment.  Analyst Commentary and Balance Sheet: The analyst community is still mostly wary of the prospects for CureVac, despite its recent actions. In mid-August, Leerink Partners reiterated its Hold rating on the stock with a $3 price target. Early in September, Deutsche Bank did the same while lowering its price target to $3.90 a share from $5 previously. JMP Securities seems to be the lone current bull on the stock as they maintained their Buy rating and $16 price target on CVAC on Sept. 16 noting the recent trial results from its vaccine candidate CVGBM are \"especially in terms of immunogenicity, are quite promising and suggest that the vaccine is capable of inducing strong antigen-specific T-cell responses in a significant proportion of patients.\"   April 2024 Company Presentation The company ended FY2023 with just more than 400 million euros in cash and marketable securities on its balance sheet, after burning through some 93 million euros for the fiscal year to support all operational activities. That does not include the €400M upfront payment from the deal with GSK plc. The 30% reduction in workforce accompanying that move will obviously reduce the company's cash burn rate going forward as well. Just over 2% of the outstanding float of the shares are currently held short. Conclusion: So, where does that leave investors? The best way to describe this - that it's in limbo. The good news is, with the upfront payment from GSK, CureVac should have slightly more cash on hand than the stock's current market capitalization. CureVac could potentially earn substantial milestone payments and royalties from its recent deal from GSK. However, a recent article threw cold water on that preposition, noting CureVac was far behind on the mRNA vaccine front compared to Pfizer, Moderna (MRNA) and BioNTech SE which all have developed approved COVID mRNA vaccines. It should be noted that a few weeks ago, GSK did announce it was moving the messenger-RNA-based flu vaccine candidate acquired from CureVac into late-stage development following successful Phase 2 results.   Company WebsiteCureVac, after its deal with GSK, is kind of like a developmental company that chose to IPO way too early at this point. The company does have a ton of cash on its balance sheet, one candidate moving on to the next stage of Phase 1 development, and some other pre-clinical efforts. CureVac's litigation efforts look like they will come to naught based on recent setbacks. The deal with GSK is a wildcard as far as potential milestone payouts and royalties.  CureVac is a \"sum of the parts\" story where it's quite difficult, if not impossible, to put any sort of realistic value on any of CureVac's efforts given their early stage. The biggest positive is CureVac is well funded to push all these programs forward. Making this a name I will likely revisit in 2027 when the company hopefully has pushed CVGBM into mid-stage development and has a couple of other candidates that have produced Phase 1 results to analyze. I'm passing on any investment recommendations around the stock at this time for those reasons.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2474236698"}