GLAXF - CureVac: Potential Of mRNA Tech Beyond Covid-19 Vaccine Development

2023-04-25 14:16:04 ET

Summary

• Positive preliminary results were released by CureVac N.V. from both the flu and Covid-19 vaccine programs back in January of 2023.
• GlaxoSmithKline is an established partner to advance both the Covid-19 and flu prophylactic vaccine programs.
• The global influenza vaccine market is expected to reach $10.12 billion by 2030.
• Other clinical candidates being advanced in phase 1 studies from the CureVac N.V. pipeline are CV7202 for rabies and CV8102 for oncology.

CureVac N.V. ( CVAC ) is a great speculative biotech play to look into. That's because of its potential with the use of its messenger RNA (mRNA) technology. It has already developed a partnership with GSK plc (GSK) aka GlaxoSmithKline in advancing prophylactic vaccines for Covid-19 and the flu. However, should the Covid-19 vaccine succeed, I wouldn't pin investment hopes on this alone. What I would look more towards too would be the flu vaccine candidate being advanced.

Owning this biotech is going to be more of a long-term name because of its extensive pipeline. While Covid-19 vaccine sales have started to slip and will continue to drop, CureVac does have the ability to use its technology towards other indications. For example, it is advancing a prophylactic vaccine candidate by the name of CV7202 for rabies in a phase 1 clinical study. In addition, it has the scope and capability of using its mRNA technology towards targeting other indications like cancer. Speaking of which, it is advancing a clinical candidate by the name of CV8102 in a phase 1 study for the treatment of patients with advanced melanoma, cutaneous squamous cell carcinoma, head and neck cancer, adenoid cystic carcinoma, and other tumor lesions. Final results from this phase 1 study are going to be released in the 1st half of 2023.

Not only that, but what makes this biotech ideal is that it was able to complete a $250 million offering back in February of 2023 as well. This means that it has plenty of cash to advance several of its clinical candidates.

Partnership With GlaxoSmithKline For Flu And Covid-19 Vaccine Candidates

I believe that the main clinical program in the pipeline would be the advancement of several prophylactic vaccine candidates being advanced for the treatment of patients with flu and Covid-19. Covid-19 is caused by SARS-CoV-2, which first emerged back in December of 2019. It is a severe disease because of the millions of deaths it had caused worldwide, plus giving long-term symptoms to those who were affected as well. It can easily be spread from person to person and as such several measures have been implemented to help reduce the spread such as masks and washing hands constantly.

There are many vaccines now that are readily available for patients to take. You have Spikevax from Moderna ( MRNA ) and then Comirnaty from Pfizer ( PFE )/partner BioNTech ( BNTX ). Each company has developed vaccines for Covid-19. Pfizer, though, does also have an oral Covid-19 drug by the name of Paxlovid.

My feeling and probably your takeaway with respect to the advancement of CureVac's Covid-19 vaccines of CV0501 (modified vaccine) and CV2CoV (unmodified vaccine) is that they should be considered okay trade opportunities. In other words, good news from either of these candidates might move the stock on positive news announcements, but as far as long-term impact goes, they won't weigh heavily. As such, you shouldn't really only rely on this as your entire investment thesis, but instead see if other programs in the pipeline are advanced over time.

Why do I make such a claim? Well, it's because as I stated in the beginning above, the Covid-19 vaccine market is starting to drop considerably. Consider that Pfizer, which has been selling Comirnaty Covid-19 vaccines, says that revenue for it is going to drop by 64% in 2023. Along with its oral Covid-19 drug Paxlovid expecting to see a 58% drop in revenue as well during this same year.

The other indication being done in collaboration between CureVac and GlaxoSmithKline would be the flu virus. This is what traders/investors should put more focus upon for the investment thesis. That is, to create prophylactic vaccines for the flu virus. The two clinical candidates for this indication are known as FLU SV mRNA (modified vaccine) and CVSQIV (unmodified vaccine). These vaccine candidates, like the Covid-19 vaccine ones above, are also being explored in phase 1 trials. However, I believe this to be a better opportunity because of the growth possible with this indication. The global influenza vaccine market is expected to reach $10.12 billion by 2030. This is an attractive global market opportunity, compared to Covid-19 which is expected to decrease in the coming years.

Thus, my reasoning for putting more emphasis on the flu vaccine program, compared to the Covid-19 vaccine program that CureVac has. The flu virus is also known as seasonal influenza and like Covid-19 it is a viral infection that can be fatal. Especially, when it comes to high-risk groups like those with diabetes or other medical conditions. There are several symptoms that seasonal influenza patients experience, such as:

• Chills
• Muscle aches
• Fatigue
• Fever
• Headaches
• Cough
• Congestion,

It is a pretty big population as well, because there are more than 3 million U.S. cases per year in the United States. The focus on a vaccine would be on prevention of people obtaining this virus. Thus, the focus from many pharmaceutical companies is to create a prophylactic vaccine to prevent the flu. Once someone has the flu, rest and fluid might be enough to overcome it. However, for the elderly and other immune compromised patients it is not best to fight it out. Thus, why an annual vaccine shot would be important. Not only would a vaccine prevent the flu virus, but it would limit how much damage it could inflict upon a patient.

This program is coming along well for both the development of a vaccine for Covid-19 and the flu. While both of these programs are in early-stage phase 1 clinical studies, there were positive results released for both of these studies. However, there is one important note to make based on the positive results that were released for both of these indications, which is that it was achieved in older adults. That is, adults who were the age of 60 and above. In addition, such data was obtained advancing the modified constructs I highlighted above, which were CV0501 and Flu-SV-mRNA for Covid-19 and the flu respectively. When it came to CV0501 being deployed as a modified vaccine for Covid-19, it was shown that it was able to boost antibody titers against the BA.1 and ancestral variant strains of the virus in adults age 65 and above. Then, when it came to the FLU-SV-mRNA vaccine, it elicited antibodies about 2.23 times more than licensed vaccine comparators used in adults between the ages of 60 to 80.

One important thing I want to mention is that this was preliminary efficacy data. Even though it did cause the stock price to increase slightly on the release of this news, it is still going to be important to see if such data holds up in later press releases with respect to the targeting of both of these indications. While this preliminary data was positive, there is a more important factor to consider, and that is whether GlaxoSmithKline remains committed to advancing both of these modified vaccine candidates into additional trials in 2023.

Financials

CureVac N.V. ended December 31, 2022 with $544.80 million in cash and cash equivalents. The good news is that this company may not need to raise cash during the rest of this year. The reason why I state that is because it enacted a public offering back in February of 2023. That is when it sold a total of 27,027,028 share of its common stock at a price of $9.25 per share for total gross proceeds of approximately $250 million before deducting expenses. It is seeing a decrease in costs for its first generation Covid-19 vaccine program using CVnCoV, but expects that it may still have some cash outflows as it continues to wind down CMO contracts in the coming year. Even in the face of this winding down of CVnCOV, along with all the other pipeline expenses it expects to incur, CureVac N.V. still believes that it now has enough cash to fund its operations into mid-2025.

Risks To Business

There are several risks that CureVac N.V. traders/investors should be aware of before investing in this biotech. The first risk to consider would be with respect to the advancement of both the flu vaccine program. While positive preliminary results were released, which is noted above, there is no guarantee that the other studies will end up being successful. The same can be said about results coming from the Covid-19 vaccine program as well.

A second risk to consider would be market opportunity for both of these indications. Especially, the Covid-19 vaccine program because Pfizer and many other companies are already expected to see a sharp decline in Covid-19 vaccine sales in 2023. A third risk to consider would be with respect to the other programs in CureVac's pipeline. There is no guarantee that the ongoing phase 1 clinical programs, using CV7202 and CV8102 for rabies and oncology respectively, will end up being successful.

The final risk to consider would be with respect to the ongoing partnership that CureVac N.V. has with GlaxoSmithKline. That's because should the flu vaccine and Covid-19 vaccine programs falter, then it's quite possible that the partnership could end up being terminated. CureVac N.V. would no longer be eligible to receive any milestone payments, nor receive funding help to advance these programs forward.

Conclusion

CureVac N.V. is a great speculative biotech to look into. That's because it has huge potential with a prophylactic flu vaccine it is developing. The global influenza vaccine market is expected to reach $10.12 billion by 2030. CureVac was able to release positive data for both the flu and Covid-19 vaccine programs.

However, again, I must emphasize that the future for this company is likely going to ride on the advancement of the flu vaccine candidates FLUSVmRNA and CVSQIV. If it is able to advance the Covid-19 vaccine program to completion that might be a value adding event, but as I stated above Covid-19 vaccine sales are starting to decline. Especially, with Pfizer citing its estimate that Comirnaty vaccine sales are going to drop by 63% in 2023. CureVac N.V. does at least have other programs in its pipeline, for instance, a phase 1 study advancing CV7202 for rabies and then a phase 1 study for CV8102 for the treatment of patients with advancement melanoma, cutaneous squamous cell carcinoma, head and neck cancer, adenoid cystic carcinoma and other tumor lesions.

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