CSL stacks up $4.5B in chips — with a $200M ante — to wager on the next-gen mRNA wave

Australian pharma giant CSL is making a late bid for mRNA glory, and they’ve lined up one of the also-ran US Covid-19 biotechs touting their own particular tech twist to partner with.

CSL Seqirus, the big vaccines arm of the global player, is shelling out $200 million in cash and putting up another $4.3 billion in milestones — including a hefty $1.3 billion for development goals — to ally itself with Arcturus Therapeutics. Joe Payne’s San Diego-based biotech — where Payne had to mount a counter-coup to wrest back control of the company from some rebellious board members in 2018 — is just coming off a $63 million BARDA contract, where they’re putting their mRNA tech to work on the flu.

Together they’ll work on Covid-19, flu, pandemic prep and three unnamed respiratory infectious diseases. And working together, CSL — which operates in 20 countries — says they can position themselves as the next-gen player to turn to for future pandemics and seasonal outbreaks.

The news lit a fire under Arcturus’ share price $ARCT, which surged 30% ahead of the bell Wednesday.

Paul McKenzie

CSL COO Paul McKenzie noted the deal gives them a partner for their ongoing mRNA work which has proved it can deliver “late-stage clinical supplies at scale.”

In April, Arcturus failed to impress much of anyone with its late-arrival Phase III data for their Covid-19 vaccine ARCT-154. Its 55% efficacy rate preventing symptomatic illness was respectable, and within the range of efficacy required for an approval, but unable to steal much attention at the expense of the two dominant mRNA vaccines from Moderna and Pfizer/BioNTech.

There were much better marks on preventing severe disease, at 95%. But demand for Covid vaccines has been falling swiftly, with booster campaigns falling far short of expectations. And that made the data something of a non-event on Nasdaq.

All that has dulled enthusiasm for the biotech, a marked skepticism which was on display recently as Baird’s Joel Beatty dissed the company:

We continue to be cautious on this stock. We see a low probability that the company’s COVID-19 vaccine program will go on to be approved and competitive in any large market. Also, we’re cautious on the likelihood that the ARCT-810 trial will accelerate enough to generate substantial phase 2 data within the company’s cash runway.

Paul Perreault

Paul Perreault’s CSL, though, occupies a strategically critical position on the Pacific Rim, and his team clearly believes that the future demand for new mRNA vaccines could be immense, as new pandemics threaten on top of ongoing seasonal demand for vaccines.

Arcturus also offers a potential edge over the big global competition, with its focus on self-amplifying mRNA that they assert allows for much smaller doses that can last longer — which could be a major factor for any fresh outbreak of an unexpected virus.

“Importantly, it is another step towards our long-term aim to advance public health by developing and commercializing enhanced vaccines for influenza and multi-pathogen pandemic preparedness,” added Steve Marlow, CSL Seqirus general manager. “The collaboration also provides a pathway to offer a Covid-19 booster, providing another differentiated option to healthcare providers and governments around the world.”

Just about every major vaccine player, from Sanofi to GSK, has been forging new alliances in the field as mRNA disrupts a huge market once controlled by a handful of players. Arcturus may be late to that game, but they’re stepping up in style today.

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