Since its IPO in mid-August, CureVac N.V. (NASDAQ:CVAC) is taking investors on a wild ride. CVAC stock exploded out of the gate, topping $85 intra-day. Yet the market is unkind to investors since then. Investor interest is waning. Founded in 2000, the biomedical research company is developing a new class of drugs. Based on messenger RNA (mRNA), CureVac seeks to develop a therapeutic vaccine or agent without any complicated reformulations.
As a recently publicly-traded company, investors have no financial data to look at to estimate CureVac’s fair value. Despite that, what news releases will move shares?
Vaccine Data Readout To Move CureVac Stock
Even though the firm has no vaccine on the market, countries are lining up pre-orders. For example, the European Union is set to order 225 million Covid-19 vaccine doses from CureVac. The EU Commission President said, “Each round of talks that we conclude with the pharmaceutical industry brings us closer to beating this virus. We will soon have an agreement with CureVac.”
Data readouts from the company are what matters next. EU officials are also looking at Moderna (NASDAQ:MRNA) and BioNtech (NASDAQ:BNTX) for vaccines. This suggests that investors have more than one scenario to plan out. If CureVac is the first to market with a working vaccine, it will win more orders from its competitors. The company will have to ramp up production, increasing capital expenditures to build plants and form supply deals with manufacturers.
If Moderna and BioNtech, both of which are developing mRNA-based vaccines, beat CureVac to market, then its stock may fall. CureVac will still have firm deals in place because countries will not want only one vaccine supplier.
Cash on Hand
The nearly 13.3 million shares sold at $14 – $16 at the IPO adds around $200 million in cash. The over-allotment of ~2 million shares adds another $30 million. The cash balance is an important data point for biotech investors. The more cash CureVac has, the more time it has to run clinical studies and spend on research and development before selling more shares.
On July 17, Kreditanstalt für Wiederaufbau, Glaxo, and Qatar Holding invested EUR 560 million in exchange for 36% of the shares.
The biotech firm has more than just Covid-19 prophylactic vaccines under development. Per Slide 4 on the Securities and Exchange Commission SEC filing, it is working on disruptive, low doss vaccines for rabies (CV7202), Lassa, Yellow Fever, Respirational Syncytial Virus, and other infectious diseases. It has collaboration with GlaxoSmithKline (NYSE:GSK) and the Bill and Melinda Gates Foundation. The firm also has affiliations with Harvard Medical School and Yale.
Last year, CureVac posted revenue of $17.4 million. It lost $99.9 million while burning through $87 million in cash. R&D costs were $41.7 million and $43.2 million for the year ended 2018 and 2019, respectively. Increased efforts to develop a Covid-19 vaccine suggests that these costs, along with general and administrative expenses, will rise, too.
Opportunity
The Covid-19 vaccine company list is getting longer with each passing quarter. Moderna is the best known among the players. Plus, it raised billions in the last year and has the support of the National Institutes of Health (NIH). So, investors need to weigh CureVac’s overall portfolio of drugs in development. The firm has two drugs on the way to a Phase 1 clinical trial in the oncology space. CV8102 targets cutaneous melanoma. CV9202 targets non-small cell lunch cancer.
In the protein therapy space, which involves gene editing, it has therapies under development for liver metabolic disorders, ocular diseases, and lunch respiratory diseases. All of these are in the pre-clinical discovery phase, so CureVac is a long way from bringing a product to market.
Price Target
Tipranks did not list any recent analyst ratings on CVAC stock. Investors may only apply the recent pre-order to estimate its future revenue potential. With 225 million doses ordered from the EU, revenue could top $5.6 billion at $25 a dose. This is a pure guess: if subjects need two doses at $10 a dose, then revenue drops to $2.25 billion.
Disclosure: On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article.
