PFE - CureVac: Failing To Live Up To Its Initial Hype

2023-11-30 17:15:31 ET

Summary

• CureVac N.V. has experienced a significant decline in shareholder value since going public in 2020 during the height of the covid pandemic fear.
• The company has a partnership with GSK plc to develop vaccines for Covid-19 and the flu, providing a source of revenue.
• CureVac has multiple compounds in development.  A closer look at this vaccine concern follows in the paragraphs below.

I'm not afraid of death; I just don't want to be there when it happens ."? Woody Allen.

Today, we put CureVac N.V. ( CVAC ) in the spotlight for the spotlight for the first time. This developmental concern is based across the pond. This vaccine focused firm came public with much fanfare during the height of pandemic fear back in 2020.

As you can see below, initial hopes have been dashed and the stock has destroyed a huge amount of shareholder value since becoming a public company. However, CureVac does have a developmental partnership with drug pian GSK plc ( GSK ) to advance prophylactic vaccines for Covid-19 and the flu. The partnership does provide a source of revenues as CureVac advances its pipeline. An analysis follows below.

Company Overview:

CureVac N.V. is headquartered in Germany. This clinical-stage biopharmaceutical company is focused on developing various transformative medicines based on messenger ribonucleic acid [MRNA]. The company came public in mid-2020 during the height of the Covid panic. The stock currently trades just above $5.25 a share and sports an approximate market capitalization of $1.2 billion.

The company has a unique dual-variant approach to its mRNA development, as it employs both unmodified and modified mRNA for development. Another potential advantage is that its pipeline has stability at regular fridge temperatures, making logistics and storage much simpler.

The company has several compounds in development. Currently, both a mono and bivalent candidate are being evaluated in a Phase 2 study and has just over 400 test subjects and recently completed enrollment. Initial results from this effort should come out in the first quarter of 2024.

CureVac also has a multivalent mRNA candidate under development for the seasonal flu. The company recently initiated the Phase 2 portion of a Phase 1/2 study that should have results out sometime in 2024.

CureVac is also moving into oncology research. It has an RNA Printer that the FDA has received a license for manufacturing of candidates. It also has a candidate in early " proof of concept" Phase 1 development to treat glioblastoma. A recent article on Seeking Alpha tackled the company's cancer vaccine efforts. The rest of CureVac's potential candidates are too early in development to be germane to this analysis.

Third Quarter Results:

The company posted its third quarter numbers on November 14th. CureVac had net loss for the quarter of €47.7M. Revenues for the quarter came in at €11.2 million.

Analyst Commentary & Balance Sheet:

Since third quarter results were posted, both JMP Securities ($18 price target) and Leerink Partners ($12 million) have reissued Buy ratings on the stock. Deutsche Bank ($8 price target) has maintained its Hold rating on the equity.

Approximately three percent of the outstanding float in the shares are currently held short. The company ended the third quarter with €464.1 million of cash and marketable securities on its balance sheet. Management stated in the Q3 conference call that this funding gives CureVac a " solid basis to continue to execute on their programs and priorities till mid-2025 ."

Verdict:

The company lost $1.45 a share on just under $74 million worth of revenues in FY2022. The current analyst firm consensus has losses falling to $1.06 a share in FY2023 on a similar revenue number. They project similar losses in FY2024 on a median revenue projection of $94 million. Both sales and loss estimates for the next year vary widely due to the current 'lumpiness' of the CureVac's revenue sources it should be noted.

The initial promise of mRNA Covid vaccines from both Pfizer ( PFE ) and Moderna ( MRNA ) generated tens of billions of dollars in sales for both companies, but failed to live up to their hype. They neither protected an individual from getting or transmitting the coronavirus. The massive taxpayer/governmental support behind their initial rollouts has also faded substantially. A good portion of the population harbors concerns about the side effects of these mRNA vaccines as well.

This has led to a huge drop-off in compliance as new mRNA boosters became available to treat new variants of the coronavirus. Most Western countries saw better than 70% compliance to the initial shots. That has fallen to low to mid-single digit compliance for the latest boosters. This has caused both Pfizer and Moderna to slash Covid-related vaccine sales projections drastically in recent quarters.

So, while CureVac N.V.'s mRNA candidates might have some inherent advantages in this space, I put little value on them absent a huge new outbreak of Covid. Flu shots have also had historically low compliance rates, so I am somewhat of the same mind on that front. CureVac also appears to be spending a lot of effort to defend a broad and diversified intellectual property portfolio around its development as well, based on commentary in its latest earnings calls transcript .

The company's other efforts have some potential but are earlier stage candidates with many years before any potential commercialization. Therefore, CureVac might be a story to keep an eye on as these other candidates progress. However, I am not inclined to any position in the stock at this time.

The best work that anybody ever writes is the work that is on the verge of embarrassing him, always ."? Arthur Miller.

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