€1.45 Billion Deal: GSK and CureVac Redefine mRNA Partnership Amid Strategic Realignment

On July 3, GSK and CureVac revised their mRNA vaccine collaboration licensing agreement.The new agreement grants GSK full rights to develop, manufacture, and commercialize influenza and COVID-19 candidate vaccines, including combination vaccines.At the same time, CureVac retains exclusive rights to other undisclosed infectious disease targets that have been preclinically validated from the previous collaboration, as well as the freedom to independently develop or collaboratively develop mRNA vaccines in any other infectious disease indications.

As part of the deal terms, CureVac will receive an upfront payment of 400 million euros, along with milestones and royalties potentially reaching up to 1.05 billion euros.

The cooperation between the two parties can be traced back to July 2020. Amid the pandemic, mRNA was regarded as a key hope for the development of COVID-19 vaccines and was highly sought after. CureVac, one of the "mRNA giants," completed a pre-IPO financing round worth up to $640 million, surpassing the total amount of all previously disclosed financings. Investors included the German federal government (acquiring 23% shares for 300 million euros), GSK, the Qatar Investment Authority, and another undisclosed investor.

In the strategic cooperation agreement signed in 2020, GSK invested £130 million (approximately €150 million) in CureVac, with an upfront payment of £104 million (approximately €120 million), acquiring 9.2% of the shares. CureVac is also eligible to receive up to £277 million (approximately €320 million) in development and regulatory milestone payments, up to £329 million (approximately €380 million) in commercial milestone payments, as well as tiered royalties on product sales.At the same time, the two parties will research, develop, manufacture, and commercialize up to five mRNA-based vaccines and monoclonal antibodies targeting infectious disease pathogens.GSK will fund CureVac's R&D activities related to the collaboration projects. CureVac will be responsible for the preclinical and clinical development, as well as the phase I trials of these projects, while GSK will take charge of further development and commercialization.

As a Biotech known for its research and innovation, CureVac made a significant step in capacity layout at the time, vigorously promoting its commercial-scale production facilities. In the strategic cooperation signed in 2020, CureVac will be responsible for the GMP manufacturing of candidate products, including commercialization, and will retain the commercial rights to all candidate products in selected countries.

According to the new licensing agreement signed this time, all rights to several clinical-stage influenza and COVID-19 candidate vaccines (including combination vaccines) will be fully transferred to GSK. CureVac will focus on the development of mRNA vaccines in the field of oncology and other disease areas, returning to technical research and early pipeline development.

On the same day the new agreement was disclosed, CureVac announced the launch of a "strategic reorganization," focusing resources on high-value mRNA pipeline opportunities, and cutting approximately 30% of its workforce to create a more streamlined and agile organization of "appropriate scale." As of the announcement, CureVac had about 1,000 employees.

According to overseas media Endpoints News, "As a legacy of the COVID-19 pandemic from a few years ago, we built a fairly large pandemic-based infrastructure, but we never fully rectified the situation," said Alexander Zehnder, CEO of CureVac.This move marks "the natural next phase," bringing CureVac back to its roots in the research, development, and innovation of mRNA vaccines.

CureVac expects this restructuring to result in approximately €150,000 in one-time restructuring costs, including employee severance payments, benefits, and related expenses. CureVac anticipates that operating costs will be reduced by more than 30% starting from 2025, which includes a reduction of approximately €250,000 in personnel costs.Based on this, the 400 million euros in upfront payments and up to 1.005 billion euros in additional payments from the new licensing agreement, along with tiered royalties and other revenues, will extend the company’s cash runway to 2028, together with cost savings.

It is not difficult to see that the key to CureVac's transformation of the cooperation model lies in reducing the late-stage R&D expenditure, returning to early-stage R&D, and seeking more long-term and sustainable cash flow during this challenging period. On the other hand, after separating the influenza and COVID-19 related pipelines, CureVac will focus more on oncology, its key area, and freely advance or collaborate on preclinical vaccine projects."CureVac's real advantage lies in technology, research, and early development. When the pipeline enters the later stages of development, our goal is still collaboration."

Behind CureVac's significant cost reduction and efficiency enhancement, as well as the shift in research focus, lies the fiercely competitive global mRNA market among leading companies.In 2021, CureVac's COVID-19 vaccine development plan encountered consecutive failures, missing the first wave of commercialization opportunities. Meanwhile, Moderna and BioNTech capitalized on the momentum, quickly achieving emergency authorization for their COVID-19 mRNA vaccines, transforming from small Biotech companies into pharmaceutical enterprises with a market value of tens of billions.

In May this year, Moderna's mRESVIA was approved for marketing, becoming the world's first non-COVID mRNA vaccine to be approved. It is competing for what is considered the "last blue ocean" in human infectious diseases and is part of the Respiratory Syncytial Virus (RSV) vaccine market, which the WHO has listed as the highest global priority. Data from CIC shows that the global market size for RSV drugs is expected to grow from $1.8 billion in 2020 to $12.8 billion by 2030, with a compound annual growth rate of 21.4%.

At the same time, the oncology market that CureVac wants to "turn around" has become somewhat crowded.Modern's first mRNA personalized cancer vaccine, mRNA-4157, in combination with Merck's anti-PD-1 monoclonal antibody (Keytruda), advanced to Phase III clinical trials in July of last year. BioNTech, which started with tumor vaccines, also has multiple pipelines that have entered the clinical stage.

In terms of quantity and speed, CureVac has fallen behind. Currently, the only mRNA vaccine pipeline in the clinical stage is CVGBM, which is based on the second-generation mRNA backbone developed using its proprietary technology platform and is currently in Phase I clinical trials. According to announcements, it is expected that by the end of 2025, there will be two or more clinical candidates, with plans to initiate at least two new Phase I trials by the end of 2026.

But on the technical side, CureVac has its unique advantage — low dosage. According to reports, its vaccine product can elicit a strong immune response at a very low dose.Based on this advantage, the raw material and time costs for CureVac's vaccine production may have a unique competitive edge. For instance, in the case of the COVID-19 mRNA vaccine, during Moderna's Phase I clinical trials, the tested injection dose was 100 micrograms, whereas CureVac's vaccine only requires 2 micrograms to trigger antibody and T-cell immune responses.

In addition, CureVac, founded in 2000, has accumulated hundreds of patents. "Globally, only a few companies possess a complete intellectual property mRNA technology platform and have achieved end-to-end R&D operations." CureVac is one of them.

If CureVac needs a comeback story, GSK is looking for a tale of solidifying its "kingpin status" in infectious disease vaccines and continuing its legacy. As the "leader" in the global infectious disease vaccine market, GSK boasts over 60 vaccine pipeline assets.

Following the update of this licensing agreement, GSK will obtain full rights to multiple influenza and COVID-19 vaccine candidate assets (including combination vaccines), including a seasonal flu vaccine in Phase II clinical trials, a coronavirus disease vaccine candidate in Phase II clinical trials, and a COVID-19 vaccine candidate in Phase I clinical trials.GSK anticipates that additional Phase II data on the seasonal influenza pipeline will be released in the second half of 2024, with the initial launch expected around 2026. The company estimates peak annual sales of the flu vaccine and combination vaccines to exceed $3 billion.

GSK Chief Scientific Officer Tony Wood said in a press release that, so far, the data obtained from these candidate vaccines show promising prospects and have the potential to become "best-in-class" mRNA vaccines. The report states that GSK believes "this deal is about gaining full control of those vaccines that we think are the most promising and best suited for mRNA applications."

In addition, GSK will continue to develop and optimize its mRNA capabilities through investment and collaboration, including technologies such as AI/ML-based sequence optimization, and nanoparticle design and manufacturing.Behind GSK's continued bet on innovative vaccines in infectious disease areas such as mRNA, there may also be anxiety stemming from its current competitive challenges.

On June 26, the US CDC's Advisory Committee on Immunization Practices voted to approve a new routine vaccination recommendation for RSV: the target population for RSV vaccination was adjusted from 60 years and above to 75 years and above. The US CDC also emphasized that only individuals aged between 60 and 74 who are at high risk of severe respiratory syncytial pneumonia need to receive the RSV vaccine.

Previous studies and consensus have considered young children under 5 years old, adults aged 65 and above, immunocompromised patients, and those with lung or heart disease as susceptible populations for RSV. GSK stated that ACIP has not yet voted on vaccination for adults aged 50-59, and GSK is working to advance clinical data to support future policy decisions. However, the nearly halved eligible population for the vaccine has cast a shadow over the once-booming RSV vaccine market.

Meanwhile, the RSV competition between GSK and Pfizer enters a new phase. The patent litigation at the forefront has yet to conclude, and now Pfizer has captured the UK market, often considered GSK’s backyard. On June 24, the UK government announced the launch of an RSV vaccination program, stating that it had selected Pfizer as the supplier to provide 5 million doses of the RSV vaccine Abrysvo over the next two years.

The key to winning this battle lies in the expansion of Abrysvo's target population, namely, the FDA approval last year for its use in pregnant women at 32 to 36 weeks, making it the first RSV vaccine for pregnant women to protect newborns. At the same time, high-risk adults and people aged 2-18 are positioned as new extended targets.

Of course, GSK is no exception. Currently, the EMA has accepted its regulatory application for expanding the use of its RSV vaccine Arexvy to include adults aged 50-59 at high risk of RSV, with a decision expected in the second half of this year.

Looking further ahead, mRESVIA, the world's first approved non-COVID mRNA vaccine, is already catching up.