This stock more than tripled in its first day of trading as a public company and peaked a day later at more than five times its initial public offering price. That may sound like a story from the dot-com bubble, when we were all terrified that our computers would fail to recognize the new millennium as the calendar turned 1999 into 2000. But actually, this rocket-ship stock came public recently: CureVac (NASDAQ:CVAC) made its debut in August.
The German biotechnology company is using messenger RNA (mRNA) -- which can be described as the instructions cells use to translate DNA into action -- to develop a vaccine for COVID-19. The company has some heavyweight backing, including the Bill & Melinda Gates Foundation, the founder of software maker SAP (NYSE:SAP), the German government, and GlaxoSmithKline (NYSE:GSK). Not enough celebrity for you? The company also has a manufacturing agreement with Tesla (NASDAQ:TSLA) to build molecule printers in Germany. More about that in a bit.
A face in the crowd
The mRNA approach is proving popular as a way to tackle the novel coronavirus. There are currently six mRNA vaccines in human trials around the world, including the headline-grabbing Moderna (NASDAQ:MRNA) candidate. Despite a crowded field, CureVac has reason to be hopeful. In January, the company demonstrated its capability with positive results in early clinical trials for a rabies vaccine. Management leveraged this success into a candidate aimed at preventing COVID-19. Although CureVac's current candidate needs to be frozen, management is aiming for one that can be stored closer to room temperature, at 36 to 46 degrees Fahrenheit.
A year before the pandemic, the company announced a partnership with the Coalition for Epidemic Preparedness (CEPI) to develop an RNA printer. This technology would not only be able to produce vast quantities of vaccine fast, it would do so at significantly less cost, and it could be used in a pharmacy setting or in regions with severe outbreaks. The company is named with Tesla on a patent to create a bioreactor which would create the needed RNA vaccine without the currently required amount of staff and manual handling.
The scientific method
Management received approval to begin phase 1 trials on June 17, and that phase 1 study is currently ongoing in Germany and Belgium. CureVac also has a phase 2a clinical trial going that includes 690 healthy adults aged 18 to 60 in Peru and Panama. Each will be given a prime shot, and then a booster after 28 days. The trial is designed to select a dose level and measure the immune response. Management plans to launch a phase 2b/3 study of 30,000 volunteers globally in late November.
It's notable that CureVac is a German company. That country has outperformed its European neighbors in fighting the coronavirus pandemic to date, led by its scientist-in-chief, Chancellor Angela Merkel, who has a doctorate in quantum chemistry and has proven her scientific chops during this pandemic. In sharing complex scientific ideas in an easy-to-understand way, German authorities were transparent about what they didn't know, building trust with the population. Merkel provided updates to the public, based on data, and deferred to experts when possible. Most notably, the country rapidly rolled out testing -- even developing the test that the World Health Organization would ultimately adopt -- and released contact tracing apps for citizens to notify others if they tested positive. In fact, the country's response to the pandemic has been so good, it is often called the "German anomaly."
In March, a German newspaper reported that U.S. President Donald Trump had offered the company $1 billion for exclusive rights to the vaccine. Although the report was disputed, Germany's minister of the economy said the company would get all the help it needed. This turned out to be true, as the German government moved quickly to take a 23% stake in the vaccine maker for $337 million.
Why investors should care
Although the company's CEO exuded confidence after the March meeting in the White House -- offering a vaccine timeline of a few months -- he was ousted just a few weeks later in favor of one of the company's founders. Perhaps that aggressive commitment had something to do with the decision.
Although no vaccine using mRNA technology has ever been proven safe and effective and subsequently licensed for human use, CureVac is taking a careful approach that could pay off in the end. Trials have screened out anyone with a possible complicating factor, like smoking, and they require 14 participant check-ins over the course of a year to ensure data quality and clear results.
In a recent interview, the company's head of vaccine development, Dr. Lidia Oostvogels, admitted the pressure is high but sounded upbeat: "So far, so good. I'm excited and eager to go ahead." The most updated timeline has the vaccine available by mid-2021. With trials of other candidates facing delays due to enrollment issues and adverse events, it may be this company's emulation of Merkel's methodical, detailed approach to the virus that leads to the first approved mRNA vaccine.