CureVac(CVAC) - 2023 Q3 - Quarterly Report

Interim Condensed Consolidated Financial Statements Interim Condensed Consolidated Statements of Operations and Other Comprehensive Income (Loss) The company reported an increased net loss for both the three and nine months ended September 30, 2023, compared to the same periods in 2022, primarily driven by higher operating losses despite increased revenue in the three-month period Consolidated Statements of Operations (kEUR) | Metric | 3M Sep 30, 2022 | 3M Sep 30, 2023 | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :---------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Revenue | 11,212 | 16,483 | 55,731 | 31,191 | | Operating loss | (52,380) | (54,036) | (127,947) | (186,193) | | Net loss for the period | (47,567) | (48,681) | (120,245) | (173,514) | | Net loss per share (EUR)| (0.25) | (0.22) | (0.64) | (0.79) | - Net loss for the nine months ended September 30, 2023, increased by 44.3% to EUR 173,514 thousand from EUR 120,245 thousand in the prior year[5] Interim Condensed Consolidated Statements of Financial Position As of September 30, 2023, total assets slightly decreased, while total equity increased and total liabilities significantly decreased compared to December 31, 2022, mainly due to a reclassification of provisions and changes in contract liabilities Consolidated Statements of Financial Position (kEUR) | Metric | Dec 31, 2022 | Sep 30, 2023 | | :------------------- | :----------- | :----------- | | Total assets | 860,472 | 842,566 | | Total equity | 533,253 | 602,265 | | Total liabilities | 327,219 | 240,300 | | Cash and cash equivalents | 495,797 | 464,145 | - Total liabilities decreased by EUR 86,919 thousand, primarily due to a reclassification of contract termination provisions from non-current to current and a decrease in trade and other payables[7][59][61] Interim Condensed Consolidated Statements of Changes in Shareholders' Equity Shareholder's equity increased from EUR 533,253 thousand at January 1, 2023, to EUR 602,265 thousand by September 30, 2023, primarily due to proceeds from the issuance of share capital, partially offset by the net loss for the period Changes in Shareholders' Equity (kEUR) | Metric | Balance as of Jan 1, 2023 | Net Loss | Issuance of share capital (net) | Balance as of Sep 30, 2023 | | :-------------------------- | :------------------------ | :------- | :------------------------------ | :------------------------- | | Total equity | 533,253 | (173,514)| 235,840 | 602,265 | - The issuance of share capital (net of transaction costs) contributed EUR 235,840 thousand to equity during the nine months ended September 30, 2023[9] Interim Condensed Consolidated Statements of Cash Flows Net cash used in operating activities slightly decreased, while net cash used in investing activities significantly decreased, and net cash provided by financing activities substantially increased for the nine months ended September 30, 2023, compared to 2022, leading to a smaller net decrease in cash and cash equivalents Consolidated Statements of Cash Flows (kEUR) | Activity | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :-------------------------------- | :-------------- | :-------------- | | Net cash flow (used in) operating activities | (237,091) | (224,282) | | Net cash flow (used in) investing activities | (72,559) | (40,791) | | Net cash flow provided by financing activities | 29,873 | 232,302 | | Net increase (decrease) in cash and cash equivalents | (279,777) | (32,770) | - Net cash provided by financing activities increased significantly from EUR 29,873 thousand in 2022 to EUR 232,302 thousand in 2023, primarily due to proceeds from the issuance of shares[11] - Net cash used in investing activities decreased by 43.8% to EUR 40,791 thousand, mainly due to lower purchases of property, plant and equipment and intangible assets[11] Notes to the Interim Condensed Consolidated Financial Statements 1. Corporate Information CureVac N.V. is a global biopharmaceutical company focused on developing a new class of transformative medicines based on messenger ribonucleic acid (mRNA). The company is incorporated in the Netherlands with its registered headquarters in Germany, and Dievini Hopp BioTech holding GmbH & Co. KG is identified as the largest shareholder and de facto parent - CureVac N.V. is a global biopharmaceutical company developing mRNA-based medicines[12] - Dievini Hopp BioTech holding GmbH & Co. KG is the largest shareholder and de facto parent, controlling 37-46% of shares and voting rights[13] 2. Basis of preparation The interim condensed consolidated financial statements are prepared in accordance with IAS 34 and are consistent with the accounting policies from the 2022 annual statements, with no material impact from new standards. The company acknowledges economic uncertainties from COVID-19 and the Russia-Ukraine conflict, which could affect operations and patent rights, but no material direct impact is expected from the latter - The interim condensed consolidated financial statements are prepared in accordance with IAS 34 Interim Financial Reporting and are consistent with the accounting policies from the Group's annual consolidated financial statements as of December 31, 2022[14][16] - The COVID-19 pandemic may impair the ability to timely progress other product candidates in clinical trials and could negatively impact non-COVID-19 collaborations[17] - The Russia-Ukraine conflict has not had a material direct or indirect effect on operations but may limit or prevent the maintenance of patent applications and issued patents in Russia[18] 3. Notes to the Consolidated Statements of Operations This section details the components of revenue, cost of sales, selling and distribution, research and development, general and administrative expenses, and other operating income, highlighting significant changes and their drivers for the reported periods 3.1 Revenue from contracts with customers Total revenue decreased significantly for the nine months ended September 30, 2023, primarily due to lower contributions from GSK collaboration agreements Revenue by Customer (kEUR) | Customer | 3M Sep 30, 2022 | 3M Sep 30, 2023 | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :------- | :-------------- | :-------------- | :-------------- | :-------------- | | GSK | 9,705 | 15,935 | 52,746 | 28,691 | | CRISPR | 1,060 | 249 | 1,646 | 1,303 | | Genmab | 447 | 298 | 1,339 | 1,197 | | Total| 11,212 | 16,483 | 55,731 | 31,191 | - For the nine months ended September 30, 2023, total revenue decreased by 44% year-over-year, primarily due to lower revenue from GSK collaboration agreements, which included significant upfront payment recognition in the prior year[19][20] Contract Liabilities (kEUR) | Customer | Dec 31, 2022 | Sep 30, 2023 | | :------- | :----------- | :----------- | | GSK | 102,804 | 89,491 | | CRISPR | 929 | 697 | | Genmab | 3,575 | 2,383 | | Total| 107,308 | 92,571 | 3.2 Cost of sales Cost of sales decreased for the nine months ended September 30, 2023, mainly due to reduced material costs, despite an increase in personnel expenses Cost of Sales (kEUR) | Category | 3M Sep 30, 2022 | 3M Sep 30, 2023 | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Personnel | (5,207) | (9,178) | (19,076) | (26,737) | | Materials | (12,079) | (7,919) | (48,962) | (20,550) | | Third-party services | (4,513) | (4,989) | (24,030) | (16,827) | | Total | (24,079) | (24,281) | (103,992) | (70,770) | - Cost of sales decreased for the nine months ended September 30, 2023, primarily due to lower material costs from reduced write-offs of raw materials, partially offset by increased personnel expenses in the manufacturing organization[23] 3.3 Selling and distribution expenses Selling and distribution expenses increased for the nine months ended September 30, 2023, primarily driven by higher personnel costs Selling and Distribution Expenses (kEUR) | Category | 3M Sep 30, 2022 | 3M Sep 30, 2023 | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :-------- | :-------------- | :-------------- | :-------------- | :-------------- | | Personnel | (906) | (782) | (1,467) | (2,812) | | Other | (94) | (145) | (320) | (342) | | Total | (1,006) | (940) | (1,825) | (3,172) | - Selling and distribution expenses increased for the nine months ended September 30, 2023, mainly due to higher personnel costs[24] 3.4 Research and development expenses Research and development expenses significantly increased for the nine months ended September 30, 2023, largely due to the absence of prior year's reversals and gains, coupled with higher personnel costs and an acquisition Research and Development Expenses (kEUR) | Category | 3M Sep 30, 2022 | 3M Sep 30, 2023 | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Materials | (6,200) | (3,783) | (29,618) | (12,999) | | Personnel | (9,478) | (11,765) | (24,326) | (35,335) | | Third-party services | 7,472 | (5,813) | 28,525 | (17,586) | | Total | (12,512) | (27,245) | (34,934) | (82,363) | - R&D expenses significantly increased for the nine months ended September 30, 2023, primarily due to the prior year's reversal of provisions for onerous contracts (EUR 36,769 thousand) and a gain from GSK taking over Novartis capacity (EUR 25,059 thousand), as well as increased personnel expenses and the acquisition of Frame Pharmaceuticals in the current period[25][26] 3.5 General and administrative expenses General and administrative expenses decreased for the nine months ended September 30, 2023, mainly attributable to a reduction in corporate service workforce General and Administrative Expenses (kEUR) | Category | 3M Sep 30, 2022 | 3M Sep 30, 2023 | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :------------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | Personnel | (9,000) | (6,728) | (27,971) | (22,470) | | Third-party services | (6,810) | (6,507) | (19,607) | (19,380) | | Legal and other prof. serv| (1,895) | (1,336) | (7,215) | (7,410) | | Total | (26,341) | (18,574) | (78,019) | (64,106) | - General and administrative expenses decreased for the nine months ended September 30, 2023, mainly due to a lower workforce in corporate service functions[27] 3.6 Other operating income Other operating income significantly decreased for the nine months ended September 30, 2023, primarily due to the absence of substantial compensation from GSK recognized in the prior year Other Operating Income (kEUR) | Category | 3M Sep 30, 2022 | 3M Sep 30, 2023 | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :---------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Compensation for CMO/Material | 418 | 89 | 34,379 | 1,891 | | Sale of equipment | — | 477 | 310 | 961 | | Grants and other reimbursements| 273 | 274 | 377 | 514 | | Total | 694 | 917 | 35,901 | 4,365 | - Other operating income significantly decreased for the nine months ended September 30, 2023, compared to 2022, primarily because the prior year included substantial compensation from GSK (EUR 20,500 thousand for set-up activities and EUR 12,000 thousand for prepayment reimbursements) related to the Novartis CMO agreement[29][30] 4. Issued Capital and Reserves The company's issued common shares increased significantly during the nine months ended September 30, 2023, due to an at-the-market (ATM) offering program and a follow-on public offering, raising substantial net proceeds and increasing capital reserves - In the first quarter of 2023, 1,748,218 shares were issued under the ATM program, raising USD 17.5 million in net proceeds[33] - In February 2023, a follow-on public offering sold 27,027,028 common shares at USD 9.25 per share, generating EUR 219,832 thousand in net proceeds[34] Common Shares Issued and Outstanding | Date | Number of Shares | | :------------------- | :--------------- | | December 31, 2022 | 194,997,091 | | September 30, 2023 | 223,923,708 | 5. Share-based payments Share-based payment expenses remained relatively stable year-over-year for the nine months ended September 30, 2023, totaling EUR 6,273 thousand. Significant awards were granted under LTIP Stock Options and RSUs, and several executive departures led to accelerated vesting of unvested awards Share-based Payment Expenses (kEUR) | Category | 3M Sep 30, 2022 | 3M Sep 30, 2023 | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :------------------------ | :-------------- | :-------------- | :-------------- | :-------------- | | Cost of sales | — | 98 | — | 245 | | Selling and distribution | 91 | 93 | 152 | 246 | | Research and development | 390 | 441 | 480 | 1,202 | | General and administrative| 2,189 | 862 | 5,548 | 4,083 | | Other operating expenses | 188 | 206 | 275 | 497 | | Total | 2,858 | 1,701 | 6,455 | 6,273 | - In April 2023, 144,379 options were granted to the newly appointed CEO under the new long-term incentive plan (LTIP)[41] - Departures of the former CEO, a Supervisory Board member, the CSO, and the upcoming departure of the CBO & CCO resulted in accelerated vesting of their unvested share-based awards[49][50] 6. Fixed Assets The company's intangible asset acquisitions significantly decreased, while property, plant and equipment increased, primarily driven by investments in technical equipment and the GMP IV facility 6.1 Intangible assets Acquired intangible assets significantly decreased for the nine months ended September 30, 2023, primarily related to licenses, software, and prepayments - Acquired intangible assets decreased significantly to EUR 2,610 thousand for the nine months ended September 30, 2023, from EUR 24,224 thousand in the prior year, mainly related to licenses, software, and prepayments[52] 6.2 Property, plant and equipment Property, plant and equipment increased due to substantial investments in technical equipment and the Company-owned GMP IV facility - Property, plant and equipment increased due to purchases of technical equipment and machines (EUR 7,690 thousand) and construction in progress (EUR 32,918 thousand), primarily for the Company-owned GMP IV facility (EUR 30,427 thousand)[53] 7. Assets held for sale The company is disposing of certain CMO equipment no longer planned for use, with EUR 580 thousand net book value sold during the nine months ended September 30, 2023 - Assets held for sale, primarily CMO equipment, had a gross book value of EUR 29,531 thousand and a written-down value of EUR 10,467 thousand as of December 31, 2022, with EUR 580 thousand net book value sold by September 30, 2023[54] 8. Inventories Inventories, consisting solely of raw materials and supplies, slightly decreased due to write-offs and R&D usage, partially offset by new purchases Inventories (kEUR) | Category | Dec 31, 2022 | Sep 30, 2023 | | :---------------- | :----------- | :----------- | | Raw materials and supplies | 23,989 | 23,300 | - Inventory decreased by EUR 689 thousand, primarily due to further write-offs and the usage of raw material for R&D purposes, partially compensated by purchases of raw material[55] 9. Prepaid expenses and other assets (current) Prepaid expenses and other current assets decreased, largely due to lower receivables for GSK compensation and reduced tax claims Prepaid Expenses and Other Current Assets (kEUR) | Category | Dec 31, 2022 | Sep 30, 2023 | | :---------------- | :----------- | :----------- | | Total | 40,287 | 25,453 | | GSK compensation | 5,595 | 1,412 | | Tax claims | 24,840 | 9,744 | 10. Financial assets and financial liabilities The fair values of short-term financial instruments like cash, trade receivables, and payables approximate their carrying amounts. The company holds significant liquid funds in cash and cash equivalents across multiple banks and entities to manage negative interest penalties and foreign currency risk - Fair values of cash and cash equivalents, trade receivables, trade payables, and other current liabilities approximate their carrying amounts due to their short-term maturities[57] - The Group maintains significant liquid funds as cash and cash equivalents, distributed amongst several banks and legal entities to reduce negative interest penalties and manage foreign currency exchange risk (USD 67,711 thousand and CHF 576 thousand)[63][64] 11. Trade and other payables Trade and other payables significantly decreased, primarily due to payments made to raw material suppliers Trade and Other Payables (kEUR) | Category | Dec 31, 2022 | Sep 30, 2023 | | :---------------- | :----------- | :----------- | | Total | 73,463 | 12,570 | - The decrease of EUR 60,893 thousand in trade and other payables was primarily due to payments to raw material suppliers for invoices received before December 31, 2022[59] 12. Other liabilities and provisions Other liabilities decreased due to lower accruals, and contract termination provisions were reclassified from non-current to current as they are expected to mature within one year - Other liabilities decreased by EUR 9,422 thousand primarily due to lower accruals for outstanding invoices[60] - Contract termination provisions of EUR 61,320 thousand were reclassified from non-current to current provisions due to an expected maturity within one year[61] 13. Income tax The company recorded an income tax expense for the nine months ended September 30, 2023, primarily attributable to its Swiss and Belgian subsidiaries - The increase to an income tax expense for the nine months ended September 30, 2023, was primarily attributable to the income tax expense of CureVac Swiss AG and CureVac Belgium S.A[62] 14. Disclosure of financial instruments and risk management The Group maintains significant liquid funds in cash and cash equivalents across multiple banks and legal entities to finance R&D activities, reduce negative interest penalties, and manage foreign currency exchange risk, particularly for USD and CHF holdings - The Group requires significant liquid funds for financing its COVID-19 and influenza research and development activities, maintaining funds as cash and cash equivalents[63] - The Group holds cash and cash equivalents of USD 67,711 thousand and CHF 576 thousand, which are exposed to foreign currency exchange risk, and intends to settle US dollar expenses using these funds[64] 15. Earnings per share Basic and diluted net loss per share for the nine months ended September 30, 2023, was EUR 0.79, an increase from EUR 0.64 in the prior year, calculated based on an increased weighted average number of shares outstanding Net Loss Per Share (EUR) | Period | 3M Sep 30, 2022 | 3M Sep 30, 2023 | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :----------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Net loss per share | (0.25) | (0.22) | (0.64) | (0.79) | Weighted Average Shares Outstanding | Period | 9M Sep 30, 2022 | 9M Sep 30, 2023 | | :----------------- | :-------------- | :-------------- | | Weighted Avg Shares| 188,020,542 | 219,781,884 | - Since the conversion of options to ordinary shares would decrease loss per share, they are considered antidilutive, resulting in diluted earnings per share equaling basic earnings per share[66] 16. Related party disclosures The company disclosed various consulting agreements and transactions with related parties, including current and former management board members, supervisory board members, and entities where its largest shareholder holds a stake - Antony Blanc (Managing Director) received EUR 47 thousand in compensation via Clarentis SRL for services in 2023 (9M)[67] - Franz-Werner Haas (former CEO) received EUR 65 thousand under a consulting agreement for the nine-month period ended September 30, 2023[69] - CureVac purchased technical equipment from Immatics Biotechnologies GmbH, a company where dievini (CureVac's largest shareholder) held 22.4% of shares[74] 17. Subsequent events In October 2023, CureVac dosed the first participant in the Phase 2 part of its seasonal influenza study, following the selection of a promising modified mRNA vaccine candidate, which triggered a EUR 15,000 thousand development milestone invoice to GSK - In October 2023, the first participant was dosed in the Phase 2 part of the ongoing Phase 1/2 study in seasonal influenza, following the selection of a promising modified mRNA vaccine candidate[75] - This event triggered a EUR 15,000 thousand development milestone invoice to GSK[75]