CureVac N.V. (CVAC) Earnings Call Transcript & Summary

Good morning, good afternoon, and welcome to our conference call. My name is Sarah Fakih, and I'm the Vice President, Investor Relations at CureVac. Please let me introduce today's speakers. On the call with me are Franz Haas, the Chief Executive Officer of CureVac; Pierre Kemula, our Chief Financial Officer; and Antony Blanc, our Chief Business and Chief Commercial Officer. Please note that this call is being webcast live and will be archived on the Events and Presentations section under Investor Relations on our website. Before we begin, a few forward-looking statements. The discussions and responses to your questions on this call reflect management's view as of today, Friday, February 5, 2021. We will be making statements and providing responses to your questions that state our intentions, beliefs, expectations or predictions of the future. These constitute forward-looking statements for the purpose of the safe harbor provisions. These statements involve risks and uncertainties that could cause actual results to differ materially from those projected. CureVac disclaims any intention or obligation to revise any forward-looking statements. For more information, please refer to our filings with the U.S. Securities and Exchange Commission. I will now turn the call over to Franz.

Thank you, Sarah. Ladies and gentlemen, a warm welcome to this conference call from all of us here at CureVac. In this presentation, we will provide you with an overview of our recently announced COVID-19 partnerships and the synergies being created by joining our respective expertise to provide broader and faster protection against the current and future viral infections and threats. We all believe these collaborations will create short-term and long-term value for our company. Since development of our first mRNA-based COVID-19 vaccines began 1 year ago, the world has made tremendous advances to better understand the nature of the virus. mRNA technology has emerged as a key technology to rapidly provide potent, flexible and easy-to-manufacture vaccines. And that, without a doubt, will have a long-lasting impact on the way we will globally address and prepare for future preparedness and for the vaccine development in general. CureVac will deliver on COVID-19 supported by 3 key partnerships and the value they create by enabling the joint development of a broad pipeline of both first- and second-generation COVID-19 vaccines. Please let me start to highlight the contribution of these partnerships by clarifying the differences between our first- and second-generation COVID-19 vaccines and how we define them. Our first-generation vaccines are being developed to tackle the current pandemic, stating with a focus on the initially dominant strain of COVID-19. When we say first generation, we are referring to the vaccines which apply to the same mRNA backbone, meaning the same mRNA setup as our lead vaccine, candidate CVnCoV, which is currently in late-stage Phase IIb/III clinical testing. Our second-generation vaccines refer to vaccines applying a new mRNA backbone or setup, which differs from the setup of our leading first-generation candidate, CVnCoV, and which is generated on the basis of our learnings from CVnCoV over the last year. The aim of our second-generation vaccine program is to further improve on important mRNA characteristics such as protein expression level, low-dose immune activation and stability. The second-generation lead candidate is currently being developed at CureVac and has shown strong preclinical potential. As shown here, both our first- and our second-generation vaccines are not only geared towards addressing the current pandemic but also are intended to address both current and future emerging variants. This will, however, cover multiple approaches, including vaccines that address specific mutations and multivalent vaccines, which combine several antigens. We are using CVnCoV backbone to develop new variants of our lead vaccine candidate, which will protect against emerging virus variants such as the current South African strain. Manufacturing of a CVnCoV version can be realized within several weeks only, and availability will be facilitated on the basis of existing CVnCoV clinical data. Both generations of our COVID-19 vaccines are designed to address central concepts to battle the challenging landscape of the COVID-19 pandemic as well as prepare for future pandemics. With the support of our recently announced partners and partnerships, we feel prepared to cover the full spectrum of the vaccine approaches. To better understand how these partnerships create substantive value for CureVac and the importance of each of our recently announced partnerships, I would like to provide you with these 4 central messages. First, with Bayer, we have a powerful pharma partner at our side whose operational expertise and infrastructure will enable us to advance and deliver our first-generation vaccines. This includes our lead vaccine candidate, CVnCoV, as well as new versions of CVnCoV being generated to address mutations in the SARS-CoV-2 spike protein. CVnCoV, as well as all derived first-generation vaccines, are wholly owned by CureVac, and CureVac will be the market authorization holder for these vaccines in the EU. Second, with GSK, we have the support of the world-leading vaccine expert with whom we will jointly advance vaccine candidates that leverage our second generation of mRNA setup. This includes second-generation mRNA vaccines encoding for the original spike protein, spike protein mutations and the development of multivalent or so-called combination vaccines. The latter being particularly interesting in view of our initial collaboration with GSK, which we entered into in July last year, 2020, in the field of non-COVID infectious diseases. Cost and profit for all second-generation COVID-19 vaccines under the GSK partnership are equally shared between both companies. We fully anticipate the collaboration with GSK will be a strong and sustainable value driver for CureVac going forward and beyond COVID-19 pandemic. Third, the U.S. government and its Vaccines Taskforce set up by the Department of Business, Energy and Industrial Strategy has been at the forefront of variants, surveillance and scientific variant expertise during the pandemic from the beginning. Our collaboration, which we announced earlier today, will grant us access to the best-quality scientific input to define critical questions such as, what is the most relevant strain to address in a new vaccine? Or what combination of strains has the highest current or future relevance and is a target of the broadest protection? The scientific insight we will receive through this collaboration will provide a fast track to select the most relevant mutations for both our first- and second-generation vaccines. In return, CureVac will tech transfer our manufacturing processes to enable fast manufacturing for the U.K. in the U.K. Over the following slides, please let me remind you of the details associated with each of these value-driving partnerships. I'm now on Slide 4 to show you a summary of our strategic collaboration and how it works and services with Bayer, which began in the early January of this year. For our development -- for the development of our lead generation vaccine candidate, CVnCoV, we chose Bayer as our ideal partner based on the operational expertise, infrastructure and key territory operations of this highly experienced and global pharma partner company. This will allow us to accelerate market readiness of CVnCoV as well as potential new versions of CVnCoV addressing spike protein mutations. Within the scope of this agreement, Bayer will add execution power and critical competencies to our setup with additional headcounts in the range of several hundreds. This covers areas such as clinical operations, regulatory affairs, pharmacovigilance and supply chain performance, which represent important pieces of the puzzle to bring our first-generation vaccine to a broad population of people worldwide. On Slide 5, you can see an overview of the GSK partnership we announced on Wednesday, February 3. This partnership builds on our existing strategic mRNA technology collaboration for non-COVID infectious diseases which we entered into with GSK in July 2020. Spurred on the emergence of new viral variants that has the potential to affect the efficacy of the first-generation COVID-19 vaccines, GSK and CureVac seek to jointly accelerate efforts to stay one step ahead of the pandemic. Through novel second-generation vaccine approaches, we aim to offer broader protection against a variety of different SARS-CoV-2 variants and to enable a quick response to new variants as they emerge in the future. The partnership exclusively targets second-generation vaccines and those with the potential of a multivalent or even combination approach to address multiple emerging variants in one vaccine. To achieve this challenging goal, we are looking for a partner with a strong vaccine experience and are proud to be collaborating with the world's largest vaccine company. Our partnership of second-generation COVID-19 vaccines with GSK will begin immediately with the target of introducing a vaccine in 2022, subject to regulatory approval. Slide 6 provides you with an overview of our collaboration with the U.K. government. This collaboration combines the following: on the one hand, CureVac's resources and technological expertise in mRNA vaccine development; and on the other hand, the world-class scientific insight and expertise in genomics and virus sequencing of the U.K. government's Vaccines Taskforce and the U.K.'s network of experts in SARS-CoV-2 vaccine research and development. It's just great. The objective of our collaboration with the U.K. government and the Taskforce, which we only announced today, is to access the most impactful scientific insights to assess emerging variants and jointly generate new variants of vaccine candidates against those selected. This is expected to contribute to mitigate the effects of the current pandemic and help prepare against future SARS-CoV-2 outbreaks by working on multiple variants of vaccines. As part of the agreement, CureVac and the U.K. Taskforce -- Vaccines Taskforce will continually track epidemiology and assess multiple virus variants for potential development of both first- and second-generation COVID-19 vaccines. New variants and versions of our lead vaccine candidates, CVnCoV, will -- which will protect against the emerging virus variants such as the current South Africa strain, could become available in fall 2021. As clinical development of our vaccine candidates advances, the U.K. government will also support expediting clinical trials, with the goal of securing Emergency or Conditional Marketing Authorization for jointly selected vaccines as well as manufacturing and distribution of resulting vaccines in the U.K. and its territories. Let me hand over now to Pierre to go through the commercial framework and effects of these deals.

Thank you, Franz, and hello to everyone on the call. On Slide 7, please let me walk you through the details of the commercial frameworks in how the described partnership work. Within the terms of the Bayer deal, we are closer to a service agreement where we pay an undisclosed fee to access Bayer's international infrastructure, expertise and manpower. As Franz explained earlier, this collaboration is a key success factor for our broad clinical, commercial CVnCoV rollouts and delivery. CureVac will hold the market authorization in the EU, the U.K. and Switzerland, while Bayer has an option to be market authorization holder in other geographies. The recently announced extension of the GSK partnership focusing on the second-generation COVID-19 vaccine is billed differently. Here, CureVac will receive an upfront of EUR 75 million and potential milestone of another EUR 75 million. The companies will equally split the cost and margin derived from the COVID-19 -- sorry, COVID vaccines built on the second-generation backbone. Our partner, GSK will be market authorization holder in most geographies. Today, we also announced a third and R&D-focused collaboration with the U.K. government and its widely recognized Vaccines Taskforce. Here, each party will bear its own R&D costs. CureVac will tech transfer its manufacturing processes, and in exchange, will have access to the broad and valuable scientific expertise and concrete clinical output to jointly generate vaccine, addressing the most relevant variants. Lastly, the U.K. government will purchase 50 million doses of our vaccine. Turning now to Slide 8, and just to remind you of our broad and decentralized manufacturing approach and to update you on the current capacity guidance for '21 and '22. We are currently building a pan-European network of highly experienced partners for each of the key manufacturing steps of our mRNA, including manufacturing of the mRNA itself, formulation and fill and finish. Just as mRNA is a platform technology for flexible encoding of any protein, manufacturing is also a platform process. Since the encoded information within mRNA is the only that varies, i.e., no changes to the backbone, manufacturing applies the same process and equipment for every mRNA vaccines and therapeutic, and this significantly increases the manufacturing flexibility. The manufacturing platform is, therefore, a key component in the advancement of the broad COVID-19 vaccines. In terms of capacity, our manufacturing network will allow us to provide up to 300 million doses of CVnCoV in 2021. For 2022, we have updated our expected manufacturing capacity from formerly 600 million doses to up to 1 billion doses based on the increased partnership support or partner support and further network optimization. The manufacturing platform approach also applies to our RNA Printer, a mobile and fully automated manufacturing unit, which covers the entire GMP-grade mRNA vaccine production process. We believe that with the decentralized and flexible manufacturing, the RNA Printer has the potential to further support pandemic preparedness and containment directly at outbreak sites. With this, let me hand over to Franz for the summary of today's messages.

Thank you, Pierre. Let me quickly summarize today's key messages before we move into the question-and-answer session. Three recently announced partnerships support our continued development of a broad pipeline of both first- and second-generation COVID-19 vaccines. The Bayer partnership centers on our first-generation vaccines, and particularly, the development, manufacturing and distribution of our lead candidate, CVnCoV, which is currently in late-stage clinical trials. The GSK partnership announced this week focuses on second-generation vaccines and opens the door for the development of multivalent vaccines, which have the potential to address multiple COVID-19 variants in a single vaccine. And lastly, the partnership with the U.K. government will be critical for the expertise on genomic for virus sequencing as we advance our strategy to address both current and emerging COVID-19 variants. All 3 partnerships position us well for the current and future pandemic preparedness. Our manufacturing capabilities, bolstered by these recent partnerships, will continue to grow in '21 and 2022. This includes our in-house capabilities and our pan-European network as well as the RNA Printer as a model for future pandemic preparedness. With this, I would like to conclude our presentation and would now open the webcast to your questions. Thank you very much.

[Operator Instructions] Our first question comes from the line of Seamus Fernandez with Guggenheim Securities.

This is Evan Wang on for Seamus. First, a question on the next-gen vaccine effort. Just wondering, what is the opportunity for kind of greater efficacy, specifically for SARS-CoV-2, given the kind of [ upscale ] observed from the original strain? Was this specifically in response to data on mutants or has this been in the works for a while? And then I have a follow-up.

Yes. Perhaps, Mariola is taking over, our Chief Technology Officer.

So if you ask about changes in the next generation, as mentioned here, there are changes in the backbone of messenger RNA. Yes, specifically in the encoded non-coding areas, yes, that means the protein encoded is still the same, yes? But there is always a possibility also to use this backbone, yes, for the future variants, what we also presented.

This is maybe to complement the answer. We have been working on the second generation since the start, yes.

Got it. And just wanted to confirm, will a multivalent approach also be tested with the first gen or just the second gen? And then what is the kind of regulatory pathway for either new variants or multivalent under the first gen and then under the second gen? Will the second gen kind of require larger trials, just given the new backbone or will there be an expedited process?

Yes. So we will test, and the best thing is different approaches, yes, so a cocktail combination. We will do this for first generation and next generation. All of this is important also to support and enable clinical trials, yes? And we are also under discussion with regulators on what is the path, yes, to bring here not only the new variants on the already tested backbone. Yes, this is straightforward, yes, and we have a lot of our good hints here, but also to be able to introduce changes in the backbone, yes, which really are done and optimized, yes, to even lower dose, yes, in profitability and immunogenicity.

Our next question comes from the line of Eun Yang with Jefferies.

So the collaborations with the GSK and the U.K. government, it seems like for variant strains of COVID-19 vaccine development, to me, there seems some overlap. So can you kind of clarify if there is overlap and how they -- how you share the information between the 2 parties? And the second question is on multivalent vaccine. So the first-generation vaccine, you have a much lower dose than other messenger RNA vaccines on the market. But this said, you also saw higher grade 3 events in Phase I compared to placebo. So how do you think of potential challenges with the multivalent approach?

The first question, I will refer to Antony Blanc, our Chief Commercial Officer and Chief Business Officer. And with regard to the multivalent vaccines and how this works, it will be answered by Mariola. Antony?

Yes, absolutely. So there's no overlap between the U.K. collaboration and the GSK one in the sense that the variants that we develop in the R&D with the U.K. collaboration can be equally used on a first-generation platform and a second-generation platform. In fact, it will be faster to get them into the first-generation platform because of the state of development of that first generation. And it will be a nearer jump also from a regulatory point of view. But the same variants or other ones much later will also be able to be loaded onto the second-generation backbone.

Okay. Then let me explain this multivalent vaccine approach, yes. We saw nice immune responses with very low doses. Even if we are now at 12 microgram for our CVnCoV candidate, yes, we also saw good responses even with lower doses, yes? Therefore, it will be tested, yes, what is the final dose we will need for the multivalent vaccines. And we think we have here the advantage here to have this low-dose efficacy. And for sure, in reaction, you need to keep in mind here that what we see and what it seems yet to be the case that this reactor we observed in the first Phase I study maybe is not really representative, yes? So from all the experiences we have now and many trials running now in parallel on the huge amount of people, yes, the reactor profile seems to be better, yes? Therefore, we are very optimistic that with our multivalent vaccine and with our low dose, multivalent vaccine approach will be profitable.

So perhaps, just to add to this one, it's really that the collaboration with the U.K. government with the Taskforce is really providing the content, what is the new variant to go with, which we can demand on the first generation as well as on the second generation. And then to really get the optimized vaccine, which is, therefore, also important that there's a tech transfer for manufacturing that this can be done rapidly.

Can I ask you one more question? So it's not related to the partnerships, but you are enrolling patients -- people and individuals in Phase III currently. And I don't know if you can answer this, but are you seeing the variant COVID-19 cases in your study?

So we don't have that information now for sure, but you can be sure that we do everything we have to include sequencing of virus material to be able to say what kind of virus infection are we facing here in our trial. This is absolutely key and important information. And the goal is you have to have this data together with our efficacy data to have really differentiated look.