GlaxoSmithKline plc GSK announced that it has entered into an agreement with Germany’s CureVac for the research, development, manufacturing and commercialization of up to five mRNA-based vaccines and monoclonal antibodies (mAbs), targeting infectious disease pathogens.

This strategic collaboration will complement Glaxo’s self-amplifying messenger RNA (mRNA) capabilities with CureVac’s integrated mRNA platform for treating infectious disease.

Per the agreement, Glaxo will make an upfront payment of £104 million in cash, a one-time reimbursable payment of £26 million and an equity investment of £130 million, thus acquiring nearly 10% stake in CureVac.

CureVac will also be eligible to receive development/regulatory based-milestone fees up to £277 million, commercial milestone payments of maximum £329 million and tiered royalties on net sales of the product.

Meanwhile, Glaxo will be responsible for funding R&D activities related to the development projects under the above-mentioned collaboration. CureVac will lead the preclinical- and clinical-development through phase I studies, following which Glaxo will take over further development and commercialization processes.

Per the press release, CureVac’s existing COVID-19 mRNA and rabies vaccines research programs are not included in the collaboration with Glaxo.

Shares of Glaxo have declined 11.5% so far this year against the industry’s increase of 2.6%.

Last month, Glaxo signed a collaboration contract with privately-held Medicago to develop and evaluate a COVID-19 vaccine candidate. The candidate will be produced using Medicago’s recombinant Coronavirus Virus-Like Particles (CoVLP) and Glaxo’s pandemic adjuvant system.

We remind investors that Glaxo already inked several collaboration deals to make its pandemic adjuvant technology available to partners including those scientific ones in North America, Europe and China who are making adjuvanted COVID-19 vaccine candidates. The company decided to enhance its manufacturing capacity at sites across Europe and North America, which will allow it to make 1 billion doses of the adjuvant.

Glaxo has a similar collaboration with Sanofi SNY to combine their innovative technologies for the development of an adjuvanted COVID-19 vaccine. The vaccine candidate is expected to enter clinical studies in the second half of 2020.

Zacks Rank & Stocks to Consider

Glaxo currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the large cap pharma sector include Bayer Aktiengesellschaft BAYRY and AbbVie Inc ABBV. While Bayer presently sports a Zacks Rank #1 (Strong Buy), AbbVie carries a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bayer’s earnings estimates have been revised 4.3% and 4.2% upward for 2020 and 2021, respectively, over the past 60 days.

AbbVie’s earnings estimates have moved 1.2% and 1% north for 2020 and 2021, respectively, over the past 60 days. The stock has rallied 12.4% year to date.

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