IPO Launch: CureVac Proposes $200 Million IPO Terms

IPOStreet

CureVac (CVAC) has filed to raise $200 million from the sale of its common stock in an IPO, plus another $118 million from a concurrent private placement, according to an amended registration statement.

The firm is advancing a number of programs for the development of drugs and gene therapy for large and rare diseases.

CVAC says its Phase 3 trial for a Covid-19 vaccine will publish results in Q4 2020 and the IPO enjoys strong investor support.

CureVac was established in Tubingen, Germany, to develop mRNA-mediated treatment options for cancers, viral diseases including Covid-19 and protein-based gene-editing therapies.

Management is led by Franz-Werner Haas, LLD, LLM, who has been with the firm since 2012 and was previously SYGNIS Pharma AG's vice president of operations and chief compliance officer.

Below is a short description video about skin cancer:

Source: Osmosis

One of the lead candidates at the company, CV8102, is being developed to treat skin and head and neck melanoma, adenoidcystic carcinoma and squamous cell cancer.

The current status of the drug development pipeline at the company is as follows:

curevacpipe

Source: Company F-1 Filing

Investors in the firm have invested at least $472 million and include Dievini Hopp BioTech, Kreditanstalt fur Wiederaufbau and Glaxo Group Limited (GSK).

The global market for melanoma treatments is expected to reach $5.9 billion by 2023, according to a Research And Markets 2018 market research report.

This represents a forecast of 12.62 per cent CAGR ( Compound Annual Growth Rate) between 2018 and 2023.

Continued exposure to ultraviolet light and population ageing are key elements driving this expected growth leading to reduced immune system functioning.

The HNSCC (Head and Neck Squamous Cell Carcinoma) market is also expected to reach $4.5 billion by 2027, growing at a forecast 17.3 percent from 2020 to 2027.

Major competitive companies supplying or developing treatments include:

  • BioNTech
  • Moderna
  • eTheRNA Immunotherapies
  • Translate Bio
  • GlaxoSmithKline
  • Sanofi
  • AstraZeneca
  • Merck
  • Arcturus Therapeutics
  • Ethris
  • Genevant Sciences

Recent financial results from CureVac are such that its revenue was primarily from licensing its proprietary platform and receiving milestone payments; R&D and G&A expenses are typical for a biopharmaceutical company in the IPO stage.

Below are the company's financial results for the past two and ¼ years (Audited IFRS for full years):

curevacpl

Source: Company registration statement

The enterprise had $51.3 million in cash and $235.2 million in total liabilities as of March 31 , 2020. (Interim (Unaudited)

CVAC intends to sell 13.33 million shares of common stock at a midpoint price of $15.00 per share for gross proceeds of approximately $ 200 million, not including the sale of customary underwriter options.

Existing investor Dietmar Hopp has expressed an interest in buying another roughly $118 million at the IPO in a concurrent private placement. This is a clear indication of support for the IPO valuation from investors.

Assuming a successful IPO at the midpoint of the proposed price range, the enterprise value at IPO for the company would be about $2.7 billion.

Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 7.56%.

It plans to use the net proceeds as follows according to the company's most recent regulatory filing:

We currently intend to use the net proceeds from the offering and the concurrent private placement, together with cash and cash equivalents on hand as follows: I to fund the Company's mRNA vaccine program against SARS-CoV-2 through the completion of Phase 3; [ii] to fund the expansion of the Company's short term manufacturing capabilities; [iii] to advance the Company 's lead oncology program, CV8102, through the completion of the Phase 2 clinical trial; [iv] to advance the Company's vaccine program, CV7202 in rabies through the completion of the Phase 2 clinical trial; [v] to invest in further development of the Company's mRNA technology platform and to advance the development of other preclinical and clinical programs; and [vi] the remainder for working capital and general corporate purposes.

The presentation of the company roadshow by the Management is not available.

BofA Securities, Jefferies, Credit Suisse, Berenberg and Kempen & Co are listed underwriters of the IPO.

Commentary

CVAC is seeking U.S. capital market funding for its ambitious mRNA pipeline of drug treatment candidates.

The firm is particularly seeking to advance its SARS-CoV-2 vaccine program through the completion of its Phase 3 trial.

Management expects results in the fourth quarter of 2020 from that trial, assuming no delays.

The market opportunities for these various treatments in the aggregate is large but would take another entire post to detail. The overall value is estimated at the world's tens of billions of dollars.

Management has comprehensive partnerships with major pharmaceutical companies and top academic organizations, and there is considerable scientific support or interest in the firm's programs in this regard.

BofA Securities is the lead left underwriter and IPOs led by the firm over the last 12-month period have generated an average return of 53.1% since their IPO. This is a top level performance during the period for all major underwriters.

As to valuation, management is proposing to value the firm at a high value which is out of the typical U.S. biopharma range of $250 million to $500 million.

Like so many biopharma firms, CVAC is trialling a Covid-19 vaccine, so a bet on the IPO is, in part, a bet on its ability to achieve a successful outcome from that trial, presumably by the end of 2020.

The existing investor's continued support of the IPO at the current valuation is an important signal to prospective IPO investors.

For life science investors with a six-month hold timeline, my opinion on the IPO is a BUY at up to $15.00 per share.

Expected IPO Pricing Date: August 13, 2020.

Glossary Of Terms

(I have no position in any stocks mentioned as of the article date, no plans to initiate any positions within the next 48 hours, and no business relationship with any company whose stock is mentioned in this article. IPO stocks can be very volatile in the days immediately after an IPO. Information provided is for educational purposes only, may be in error, incomplete or out of date, and does not constitute financial, legal, or investment advice.)

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