CureVac Earnings: Early-Stage mRNA Pipeline Makes Progress; Shares Undervalued

CureVac CVAC reported its second-quarter results, and it is continuing to make progress across its early-stage mRNA pipeline. The company reported quarterly revenue of EUR 7.6 million, primarily driven by revenue from its GSK collaboration agreement. We maintain CureVac’s fair value estimate of $15.40 per share, no-moat rating, and extreme uncertainty rating. The stock is trading at an attractive discount to our fair value estimate for long-term investors with a high degree of risk tolerance.

As an early-stage biotech company, CureVac continues to heavily invest in its pipeline candidates. During the quarter, CureVac initiated a phase 2 study in COVID-19 with monovalent and bivalent modified mRNA vaccine candidates, which is in collaboration with wide-moat GSK. The companies plan to release data from this study in the first half of 2024. We assign this program a 35% probability of approval and forecast it could reach the market as early as 2025. Additionally, CureVac is developing an infectious disease program in collaboration with GSK.

CureVac reported cash and cash equivalents of EUR 538 million at quarter-end, which is up from EUR 495 million at the end of 2022. The increase was mainly driven by nearly EUR 220 million in net proceeds raised in a follow-on offering in February 2023, which management anticipates will extend its cash runway into 2025. We think the company is in a stable financial position at least for the next couple of years thanks to its ability to raise capital by issuing shares and receiving milestone payments as its pipeline progresses.

There is significant uncertainty related to regulatory approvals for CureVac’s largely early-stage pipeline and lack of approved products, so the company warrants no-moat and Extreme Uncertainty Ratings. We continue to believe there is uncertainty around CureVac’s defenses against other novel mRNA vaccine makers due to Moderna and BioNTech’s first-mover status in the mRNA COVID-19 vaccine market.