GlaxoSmithKline to get a 10% stake in CureVac for £130 million

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Jul 20, 2020
  • GSK to invest £130 million in CureVac to get a 10% stake in the German firm.
  • GlaxoSmithKline's investment values CureVac at £1.27 billion.
  • CureVac is scheduled to list on Nasdaq in September or October.

GlaxoSmithKline (LON: GSK) said on Monday that it will invest £130 million in CureVac to get a 10% stake in the Tubingen-based biotechnology company.

Shares of GSK were reported about 1.5% down in premarket trading on Monday and tanked another 1% on market open. At £16.50 per share, the company is currently about 7% down year to date in the stock market after recovering from an even lower £13.74 per share in late March. Learn more about how to choose winning stocks.

CureVac received £273 million in state-backed funding

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As per the sources, the two companies which boast financial backing from Bill Gates, will collaborate to work on five monoclonal antibodies and mRNA-based vaccines for infectious diseases.

Both companies are already committed to using similar technologies to develop an effective treatment for COVID-19. GSK published its financial results for the fourth quarter in February that came in weaker than the experts’ forecast for sales and earnings.

GSK’s investment valued CureVac at £1.27 billion. The German company received £273 million in state-backed funding earlier this year. Last month, CureVac had expressed plans of listing on Nasdaq in July. Excluding the recent boost from GSK, the biotech company has received £68 million of additional funding from Europe since June.

Sources also confirmed on Monday that CureVac is now expected to launch its initial public offering (IPO) in September or October. The company has already named Jefferies, Credit Suisse, and the Bank of America as the lead underwriters for its offer. The IPO is also likely to value CureVac at £1.27 billion.

CureVac to explore all financing options

The German biotech company said it will explore all financing options but declined to comment any further on its plans of going public. The banks are yet to make an official statement on CureVac’s IPO as well.

The agreement with GSK also makes CureVac eligible for tiered royalties on sales and up to £606 million of milestone payments. The existing Rabies and COVID-19 vaccine research programmes of the German company are not included in its deal with GSK.

GSK performed fairly upbeat in the stock market last year with an annual gain of more than 12%. At the time of writing, the world’s largest vaccine maker has a market cap of £82.81 billion and a price to earnings ratio of 15.39.

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