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

Thank you. Thanks, everyone, for joining us for the JMP Securities Life Sciences Conference. My name is Roy Buchanan, a biotech analyst. We have with us today, Pierre Kemula, Chief Financial Officer of CureVac, tell us a bit about CureVac.

So I'm actually going to start since we have the CFO up here, start on cash. I think we had about 2 years of cash in our model. Can you just describe where you are in cash, how far it gets you? There's a little bit more cost for this CVnCoV wind-down than we expected in 1Q. What's the outlook for that going forward? Is there more remaining?

Great. Well, thank you, Roy. Good morning to everyone. It's a pleasure to be here. So happy to take the question, of course. So we ended Q1 with EUR 658 million of cash. We have no debt, right? So we feel that it gives us another, I would say, up to 2 years of cash ahead of us. I think you should think of CureVac as you cannot copy/paste what we did last year and the year before, looking forward where we ramped up the capacity, we run a 40,000 subject trial, et cetera, et cetera. So looking forward, where we are, we have active trials with GSK, a partner in infectious diseases, they pick up some of the costs or all of the cost, and we pay 50% of the COVID efforts. So thinking of the cash needs, looking forward are different from the past, right? So that's the first point I wanted to make. Indeed, as last year, we had build up capacity for the first-generation vaccine that we pulled. We had, of course, secured raw material. We had some commitments, right? And we actively negotiated with our partners over the last 2 months, right? So what you saw in Q3 -- sorry, Q4 of us. In Q1 are basically the big part of this readjustment back to no first-generation vaccine. And I think the biggest part of that is out of the way now. So we have most of that cash, which is ready for use and R&D ready.

Okay. Great. And you also recently announced a pandemic preparedness contract from the German government. Maybe describe that a little bit. Does that fully fund the completion of your GMP 4 facility? And how does that work?

So I think what, the German government walked away with after COVID is that countries should have access to faster vaccine, if possible, right? And 1 way to do that and what we have learned is when a new technology comes up is you need to create capacity and have the raw materials, et cetera, ready to go. And that was the other challenge, of course, beyond the vaccines for the pandemic. So taking that into account, the German government set aside about EUR 3 billion for different active industry to be able to provide, I would say, steady capacity, right? And also, if you can make a vaccine, you develop a vaccine to buy up to 80 million doses, right? So the whole thing starts in 2024, and then we'll get an yearly payment for GMP 4, which is our commercial stage plant, right? And so basically, that will pay for having the plant. So initially, we were doing the plant anyway, and now we have the ability to have that plant paid for. So I think that makes a lot of sense. At the same time, we will have capacity that we use for anything we want. But if a pandemic comes along, we have to stop, and we need to have raw materials to be able to churn out 80 million doses. So if nothing happens, we just get, I would say, yearly payments. We didn't disclose the amount, but yes, it would, of course, finance the plant.

Okay. And this is for any target?

It's for COVID 3, COVID 2, it's for any other targets, right?

Or smallpox?

Exactly. Exactly. It's for anything. I think that's the -- these bigger countries, they feel that they have -- they need to have access to fast capacity. There are technologies today, notably in Germany, right, and beyond taking us, of course, on that context.

Okay. Great. And this GMP 4 production, maybe just talk a little bit more about what that enables you to do, how much capacity that gives you? Is that going to be done by the end of the year? And you have a very robust manufacturing capacity in Europe. Have you thought about the U.S. or elsewhere in the world, diversifying or spreading that out a bit?

So in terms of industrial strategy, what we've done is it was clear a need that we need to scale up and have more capacity. But we did that, plus another thing, we scaled down with that printer. So I'll get back to that. So the idea is to be able to churn out year in, year out, several hundred millions of doses. And this is really what GMP 4 allows us to do at a low dose vaccine, right? So of course, for different therapeutic applications, you may have much higher doses. So I'm talking about vaccines now. So it's important to have this big plant, which is able to bring a lot of the volume out. We have the smaller plants, which are good for clinical trials, right? And all that is the same process, so you can change plants with that problem. And 1 plant is multiple products right in messenger RNA. So that's an important thing. So you are able to load that plant with any vaccine you want, right? So I think we are running for capacity. Everybody does. We'll get there. The plant would be ready in 2022, I think, '23, but we have to be fully ready and approved for the German that would be in place in 2024, right? So we are working out that capacity and at the same time, to be more nimble and fast in the clinic, we also have this small printer, where we can do several grams per week. So that's already a lot of material. The idea is to have a small box that can do the whole chain, right, from -- to a finished filled vial, right? So this -- we're working on it at the time being. And the idea here is just to have faster access to human -- to go to a human straight away in the clinic or it's a much faster on nimble, but also opening up a new, I would say, business where you could have printers in hospitals or care centers where you could have the ultimate vision is, of course, individuals vaccines, cancer vaccines, where you need a small dose for 1 subject, right? So you need to have the whole scale, and that's what we're trying to address.

So that's a separate subsidiary, right? When do you think that could be products from the RNA printer could be applied in a clinical trial or is that going to happen this year? Is that more next year?

It's going to happen fast because we plan to have the GMP approval of at least the mRNA part of the machine this year, right? So that can technically go into humans. It won't formulate a full and finish there. But at least we have the main part of the machine, which will be approved, I think, later this year. So we would be able to do a clinical trial any time from the end of the year or next year on with that material.

Great. Okay. Okay. Let's move on to the -- some specific programs. First, let's do oncology. A couple of exciting announcements very recently, the myNEO partnership and the Frame acquisition. It sounds like they're complementary to each other and your core mRNA platform clearly signals your commitment to oncology. Can you just walk us through the differences between the 2 companies, what they bring to the table? And in the case of Frame, why did you acquire the company versus partnering with them?

Yes. Thank you. I mean we were very busy in vaccines for the last 2 years, right? Probably 2 years in vaccines, and we can't do anything else because all the resources were focused on that. It is strategically very important for us to use the value of mRNA as broad as we can, right? So the next natural candidate beyond infectious disease is naturally oncology, where you want to trigger an immune response. So this is the logic behind it. And we wanted to -- we have the technology, right? But we -- what we felt we needed is have access to more targets, right? And this is exactly the acquisition of Frame, which is a derisked acquisition, I would say, because we basically pay the first -- the half of the EUR 32 million in shares at closing, right? So it's a dilution of 0.5%. But we continue to finance the rest of the EUR 16 million as we move forward into derisking the platform. So I think that's -- it makes a lot of sense from a company perspective. And so what they do basically is they've looked at mutations in the DNA in cancer patients, and they see that you have a frame shift you can encode for these things. And they had a peptide approach. We think we are much better suited to be able to create with our backbone in these vaccines, right? So the idea is to really internalize a target engine, and so we can try more things in the clinic fast, and they belong to us, right? myNEO is the same thing. It's a bit different technology where there's even more here, I would say, bioscience. And so they are fully complementary. And the idea, of course, is to try as many things as we can in the clinic for cancer patients.

Okay. Great. And clearly, you guys are focused on T cells for oncology that makes sense. I think you're planning to have a candidate announced this half. Is that still on track? Are you going to need to integrate these new technologies first before you get the first candidate?

So I think no, these are parallel tracks. I mean we also have to bear in mind that Frame is a small shop. I'd say it's a 15-people shop. They are based in Amsterdam. We will keep them in Amsterdam. We will invest there to make sure we can foster the technology. But the idea of oncology is to have access to more targets to actually buy companies for targets. But the idea that we do in the short run is to do a proof of technology study where we show strong T cell activation, and there will be more to come in the second half, correct?

Okay. Great. And so maybe you can't say anything about this, but you have several approaches in your slide, shared neoantigens, tumor-associated antigens. And recently, describe personalized neoantigens. How do you prioritize those? And it sounds like maybe those are all run in parallel. Is there any that are more of a focus than the others?

So we have ongoing 8102, right, which is the current vaccine that we have in Phase I, extended Phase I. It will read out before the end of the year, right? So this is a noncoding messenger RNA. It's a strong immune modulator and it's injected directly in the lesion. We'll have data there. We have strong responders as we showed before. We need to understand why is it that we have so strong responses. There's a lot of biopsy work going on at the time being and we'll report on that later on. And sorry, what was the question just before that?

Just how you prioritize the...

So for us, so we have that, right? That's a priority because we need to know where we stand and to define the next steps that we database, of course. We will show in a proof-of-concept trial that we have this strong T cell active patients. We believe we have, right? And then in parallel, since the other acquisitions or all deals are early, we need to do all the early work, talks package, et cetera, et cetera, to make sure we can go to the clinic. So that will come a bit after.

Okay. How do you -- if you -- you've seen quite a bit of data from 8201 already. We continue to see good data. How do you see that going forward? Does that become kind of a -- it's called an RNA adjuvant. Are you going to combine it with the other programs? Is that the idea eventually or...

So first, we see how it works as a stand-alone product, right? So we have 40 subjects, 10 of them were just a product alone. We see that exactly as a stand-alone product, but of course, it comes of checkpoints today, right? So let's see what the data gives out. The patients are pretty advanced, right? So they have not responded to checkpoint either. So the bar is actually pretty high. But we have to start to the end and then move forward and treatment of cancer treatment. So this is what we are looking at. I think we have to look at the data. And if we do get a clear understanding of why these responders are so good, somewhat really outstanding. If we can define the mechanism behind that, why are these guys are really better responding, then you have a clear set of things you can do for the Phase II, right, and the right target population. So these are the things that we look on, but I think we need to look at the data first.

Okay. Do you think you could start the Phase II next year for 8201? Is that...

I mean yes, if the data supports, we need to go faster. Correct.

Okay. So for the oncology programs in general, you've partnered with GSK on the infectious disease side. How do you think about partnering the oncology program? Are you going to keep those all in house, maybe you have too many, how do you think about partnering there?

So it is interesting how the partnering has evolved in M&A over the last 2 years, right? So we were, of course, needing to stamp the technology with bigger partners in the past. It is probably a bit less the case today. We'll see how these targets move forward in the clinic and there may be larger partners interested by the data. So I think it probably will go that way as opposed to the other way. And that's a real shift today in what we feel we know we can do. So expect probably us to go and find stuff, of course, to leverage the platform. But at the same time, once we have more data, and of course, we'll see the burden depending on the data, right, of how much it is to push a product to the final stage and we'll be discussing probably with the bigger guys.

Okay. Great. All right. I want to segue a little bit to the infectious disease side of things. You've revamped the COVID program, your infectious disease approach, including modified mRNA. I guess how do you think about the -- what can you say about the modified approach? Do you intend to have that available for every program, even oncology? Do you have freedom to operate there? How do you think about that?