Since the beginning of the year, shares of German biotech CureVac (CVAC) are up 43%. That is far better than the industry benchmark's gain of just 1%, as measured by the iShares NASDAQ Biotechnology ETF (IBB 0.06%).
Vaccine drugmaker stocks have done really well when they successfully attain regulatory clearance for their candidates. Can investors get rich just off a small bet on CureVac's potential to do that?
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What's the status quo?
CureVac's vaccine candidate, CVnCoV, is still in phase 2b/3 clinical trials as vaccination programs are ramping up across all developed nations. Despite the setback, the company still has room to ship hundreds of millions of doses to vastly under-vaccinated countries in Eastern Europe and Latin America, where it's conducting the 40,000-participant vaccine study. CureVac expects to file for Emergency Use Authorization (EUA) for the vaccine from the U.S. Food and Drug Administration in early June.
On May 28, CureVac announced that its independent Data Safety Monitoring Board (DSMB) had found no safety issues associated with CVnCoV during the first interim analysis of the investigation. Therefore, it recommended the study proceed as scheduled.
As per CureVac's study protocol, the trial could be stopped at the first interim analysis if the vaccine's efficacy reaches 85.7%. Since the study is progressing to the second interim analysis, we can deduce CVnCoV did not hit that benchmark. Conversely, the trial would have been stopped for futility if the vaccine candidate's efficacy was less than 13.3%. The second interim analysis has much narrower margins, less than or equal to 41.4% for futility and greater than or equal to 64.6% for high efficacy.
What's the outlook?
The study design was finalized last December and did not consider the highly infectious, highly resistant B.1.617 variant strain that is now rampaging across the globe. In a recent study, Pfizer-BioNTech's coronavirus vaccine Comirnaty induced neutralizing antibodies in 79% of the population after the first dose. However, that number fell to just 32% against the B.1.617 variant. Researchers observed a similar drop in comparative antibody levels after the second dose.
Since the trial's primary endpoints evaluate CVnCoV's effectiveness against COVID-19 of any severity, not just serious/critical illness (where vaccines tend to be the most effective), there is an elevated risk that CureVac may not hit those benchmarks during the second and final analysis. Keep in mind that Pfizer-BioNTech's vaccine met the high efficacy threshold on the first interim analysis (against the original coronavirus strain).
What does it mean for the stock?
Given its market cap of $21.62 billion, investors are definitely expecting a lot out of CureVac. The company has made a lot of progress this year, including increasing its cash balance to 1.497 billion euros (with no debt), lifting its U.S. export restrictions for vaccine materials, etc. It has 405 million doses of preorders from the E.U. for CVnCoV, with the capacity to produce 1 billion doses next year.
However, its lack of product revenue would mean CureVac has a lot to lose if it cannot bring in CVnCoV to market. Though not directly comparable, there is already a vaccine on the market which is 78% effective against variant strains overall and 100% effective against serious illness caused by them. Investors should pay attention to the DSMB's next move. If the trial continues as scheduled after the second interim analysis -- that could spell out trouble. For now, there is too much uncertainty in its future to warrant CureVac a millionaire-maker biotech.
