K CureVac N.V. 2021-09-30 --12-31 2021 Q3 0001809122 false 0 0 0 0 0 0 0 0 0 0 0 0 0.12 ​ ​ ​ CureVac N.V. Unaudited Interim Condensed Consolidated Financial Statements As of

6-KCureVac N.V.2021-09-30--12-312021Q30001809122false0000000000000.12

Unaudited Interim Condensed Consolidated Financial

As of September 30, 2021 and December 31, 2020

and for the nine months ended

September 30, 2021 and 2020

Interim Condensed Consolidated Statements of Operations and

Other Comprehensive Income (Loss)

Interim Condensed Consolidated Statements of Financial Position

Interim Condensed Consolidated Statements of Changes in Shareholders' Equity

for the nine months ended September 30, 2021 and 2020

Interim Condensed Consolidated Statements of Cash Flows

1. Corporate Information

CureVac N.V. ( CureVac or CV or the Company ) is the parent company of CureVac Group ( Group ) and, along with its subsidiaries, is a global biopharmaceutical company developing a new class of transformative medicines based on the messenger ribonucleic acid (mRNA) that has the potential to improve the lives of people.

The Company is incorporated in the Netherlands and is registered in the commercial register at the Netherlands Chamber of Commerce under RSIN 861149336. The Company's registered headquarters is Friedrich-Miescher-Strasse 15, 72076 Tuebingen, Germany. The major shareholder and ultimate parent company of the Group is dievini Hopp BioTech holding GmbH & Co. KG (dievini), which is an investment company dedicated to the support of companies in health and life sciences.

On August 14, 2020, the Company completed an initial public offering (IPO) on the Nasdaq Global Market; in connection with the IPO, the Company underwent a corporate reorganization by which CureVac N.V. became the parent holding company with 100% interest in CureVac AG. Prior to the reorganization, CureVac AG was the parent holding company of the Group; as part of the reorganization, CureVac B.V. was formed and existing shareholders of CureVac AG subscribed for new common shares in CureVac B.V. and agreed to transfer their respective shares in CureVac AG to CureVac B.V. as a contribution in kind against issuance of the common shares in CureVac B.V. shares (share split) on a 1-to-133.0778 basis. As a result, CureVac B.V. became the holding company of CureVac AG, while the existing shareholders had a 100% shareholding in CureVac B.V. Effective with the IPO, CureVac B.V. changed its legal form and became CureVac N.V. and the common shares of CureVac B.V. were converted to common shares of CureVac N.V. These interim condensed consolidated financial statements and corresponding financial statement notes reflect the retrospective effect of the share split, where applicable.

2. Basis of preparation

The interim condensed consolidated financial statements for the nine months ended September 30, 2021 have been prepared in accordance with IAS 34 Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual consolidated financial statements and should be read in conjunction with the Group's annual consolidated financial statements as at December 31, 2020 and 2019 and for the three years ended December 31, 2020. The interim condensed consolidated financial statements were authorized by the Management Board for presentation to the Supervisory Board on December 16, 2021. The Group's interim condensed consolidated financial statements are presented in Euros ( EUR ). Unless otherwise stated, amounts are rounded to thousands of Euros, except per share amounts.

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2020. The new and amended standards and interpretations applied for the first time as of January 1, 2021, as disclosed in the notes to the consolidated financial statements as at December 31, 2020, had no impact on the interim condensed consolidated financial statements of the Group as of and for the nine months ended September 30, 2021. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the United States, the European Union and around the world. In response, the Group began development of CVnCoV, its mRNA-based COVID-19 vaccine candidate, for which it initiated a Phase 1 clinical trial in healthy volunteers in June 2020, a Phase 2a clinical trial in older adults in September 2020 and a Phase 2b/3 clinical trial in December 2020. The connection with the CVnCoV development, the Group signed agreements providing for government grants and for future supply of vaccine. Additionally, in the first half of 2021, the Group signed agreements to expand its existing manufacturing capacities at its headquarters in Tuebingen, thereby allowing for broad-scale manufacturing of CVnCoV and other mRNA-based vaccines, and to collaborate with pharmaceutical partners to develop and manufacture vaccines against SARS-CoV-2 variants. In February 2021, the Group announced initiation of a rolling submission with the European Medicines Agency (EMA) for CVnCoV and was in late-stage clinical testing. In April 2021, CureVac initiated a rolling submission to Swissmedic, the Swiss regulator for therapeutic products including vaccines, of CVnCoV for use in Switzerland.

In June 2021, the Group reported the final analysis for its Phase 2b/3 HERALD study in which CVnCoV demonstrated an overall vaccine efficacy of 48% against COVID-19 disease of any severity.

Later in 2021, the European Medicines Agency (EMA) informed the Company that it would not start reviewing the file before 2022. As a result, CureVac estimated that the earliest possible approval of CVnCoV would come in the second quarter of 2022. By this time, CureVac and GSK expect candidates from the second-generation vaccine program will be progressing through clinical development. On October 12, 2021, CureVac announced the strategic decision to focus its COVID-19 vaccine program on the development of second-generation mRNA vaccine candidates in collaboration with GSK and to withdraw its first-generation COVID-19 vaccine candidate, CVnCoV, from the approval process with the EMA. The decision is aligned with the evolving dynamics of the pandemic response toward greater need for differentiated vaccines with the gradual transition from an acute pandemic to an endemic SARS-CoV2 environment.

Current clinical studies with CVnCoV, including a Phase 1 study in Germany, a Phase 2a study in Peru and Panama, a Phase 2b/3 (HERALD) study in Europe and Latin America, and a Phase 3 study in participants with comorbidities in Belgium, continue with the scheduled safety follow-up times for all trial participants as per the respective trial protocols.

As a direct consequence of CureVac's notification of the European Commission (EC) of the withdrawal of the application with the EMA for CVnCoV, the EC Advanced Purchase Agreement, which was predicated on employing CVnCoV to address the acute pandemic need, was automatically terminated. CureVac remains in contact with the European Commission and is supportive of its public health efforts.

CureVac remains committed to the long-term fight against COVID-19 and aims to leverage CVnCoV learnings and infrastructure to be at the forefront of delivering advanced second-generation vaccines together with GSK. These are expected to provide more flexible protection against emerging COVID-19 variants and to offer new mRNA approaches to other infectious disease vaccines such as flu, as well as potential combination vaccines against different viruses. Second-generation clinical development is expected to start within the next few months.

As the Group is currently devoting significant resources to the development of COVID vaccines, such development may impair the ability to timely progress other product candidates in clinical trials or into clinical trials from their current preclinical stage. In addition, enrollment in other programs may be delayed as a result of the COVID-19 pandemic and could have a negative impact on revenue recognition related to non-COVID-19 collaborations. For instance, the Group's flu program with Bill & Melinda Gates Foundation was delayed. The partial disruption, even temporary, may negatively impact the Company's operations and overall business by delaying the progress of its clinical trials and preclinical studies. The Group's operations, including research and manufacturing, could also be disrupted due to the potential of the impact of staff absences as a result of self-isolation procedures or extended illness. However, the Group has taken a series of actions aimed at safeguarding its employees and business associates, including implementing a work-from-home policy for employees except for those related to its laboratory and production operations. The Group has been running COVID PCR (polymerase chain reaction) tests on a weekly basis for employees on the premises.

3. Notes to the consolidated financial statements

3.1 Revenue from contract with customers

The Group recognized the following revenues:

Of these revenues, all of which were recognized over time as part of collaboration agreements, during the nine months ended September 30, 2021, EUR 49,878k (September 30, 2020: EUR 41,545k) related to delivery of research services combined with an IP license (recognized from the upfront payments as further illustrated in the table below), EUR 1,400k(September 30, 2020: EUR 401k) related to delivery of products and EUR 10,488k (September 30, 2020: EUR 884k) were recognized from those research and development services considered distinct within the agreements.

In the nine months ended September 30, 2020, revenue primarily consisted of EUR 34,854k recognized upon termination of the collaboration with Eli Lilly.As a result, and on the termination date of the License and Collaboration Agreement, EUR 33.1 million in contract liabilities from the upfront payment were recognized as revenue as no further performance obligation remained.

In the nine months ended September 30, 2021, EUR 20,470k in revenue was recognized under the collaboration agreement with GSK, entered into in July 2020, for the research, development, manufacturing and commercialization of mRNA-based vaccines and monoclonal antibodies targeting infectious disease pathogens. Another EUR 17,845k in revenue was recognized under a new collaboration with GSK, entered in April 2021, for the developing next generation mRNA vaccines for COVID-19 with the potential for a multi-valent approach to address multiple emerging variants in one vaccine, and under which GSK paid the Group an upfront payment of EUR 75,000k in May 2021.

In August 2014, the Group entered into an Exclusive Collaboration and License Agreement, which it refers to as the Boehringer Agreement, with Boehringer Ingelheim, whereby it granted Boehringer Ingelheim exclusive global rights for development and commercialization of its investigational therapeutic mRNA vaccine BI 1361849 (formerly CV9202) formulated with a legacy protamine technology. The Group received an upfront payment of EUR 30,000K, as well as, an option fee payment of EUR 5,000K and an additional EUR 7,000K in development milestone payments, all of which are non-refundable and non-creditable in the event of expiry or termination of the agreement. In June 2021, Boehringer Ingelheim provided notice of its intention to terminate the Boehringer Agreement, with such termination to become effective on November 17, 2021. Refer to Note 17, for additional information regarding this termination subsequent to September 30, 2021. Upon termination of the Boehringer Agreement, the rights and licenses granted by the Group to Boehringer Ingelheim will revert back to the Group, provided that Boehringer Ingelheim has the right to sell off existing inventory of BI 1361849 for a certain period. In addition, Boehringer Ingelheim must assign to us all regulatory approvals or applications and grant us a non-exclusive, cost-free, perpetual and worldwide license to intellectual property held by Boehringer Ingelheim that has been used in the development, manufacture or commercialization of BI 1361849 or any other product developed under the Boehringer Agreement. As of the date of these interim financial statements, the Group and Boehringer Ingelheim are assessing options to continue an R&D collaboration based on the exchange of the legacy protamine technology with state-of-the-art LNP based formulations. As a result of the announced termination, the remaining contract liability, related to the upfront payment, is being recognized over a shorter period through the termination date. For the nine months ended September 30, 2021, EUR 9,990k (September 30, 2020: EUR 1,400k) was recognized as revenue related to this agreement.

The Group has received upfront payments which were initially deferred and are subsequently recognized as revenue as the Group renders services over the performance period. Below is a summary of such payments and the related revenues recognized:

* Translated at the currency exchange rate prevailing on the transaction date.

Trade receivables are non-interest bearing and are generally settled within 30 to 45 days. Besides the upfront payments, under the collaboration agreements, contract liabilities also contain an option fee payment and an additional development milestone payment of EUR 12 million, in total, from Boehringer Ingelheim; refer to Note 17 for additional information relating to these amounts following September 30, 2021.

**As of September 30, 2021, 450 million in contract liabilities relating to the EU APA were classified as current assets due to the expectation for them to be recognized within one year from this date (non-current assets at December 31, 2020); refer to Note 17 for additional information relating to these amounts following September 30, 2021

The cost of sales consists of the following:

During the nine months ended September 30, 2021, cost of sales increased compared to the same period of 2020 mainly due to activities for production processes for the Group's CVnCoV vaccine candidate. The increase of EUR 161,128k in cost of sales was also driven by recognition of expenses related to ineffective set-up activities and settlement costs related to the termination of several CMO contracts.

3.3 Selling and distribution expenses

Selling and distribution expenses consist of the following:

Personnel expenses mainly include salary and salary-related expenses, during the nine months ended September 30, 2021 of EUR 777k (September 30, 2020: 288k) and share-based payment expense of EUR 166k (September 30, 2020: 467k).

3.4 Research and development expenses

R&D expenses consists of the following:

During the nine months ended September 30, 2021, research and development expenses increased in comparison to the same period of 2020 mainly due to an increase in development expenses from the Group s CVnCoV program. These expenses consist primarily of cost incurred to CROs involved in the CVnCoV development. As of September 30, 2021, the Group had no development expenditures that met the requirements for capitalization. Under the grant from BMBF, the Group earns income (recognized in other operating income) for certain eligible expenses incurred for COVID-19 vaccine development; refer to Note 3.6 for more information on amounts recognized from this grant in the nine months ended September 30, 2021.

Personnel expenses mainly include salary and salary-related expenses, during the nine months ended September 30, 2021 of EUR 24,637k (September 30, 2020: 13,227k) and share-based payment expense of EUR 572k (September 30, 2020: 2,986k).

3.5 General and administrative expenses

General and administrative expenses consist of the following:

Personnel expenses mainly include salary and salary-related expenses, during the nine months ended September 30, 2021, of EUR 19,492k (September 30, 2020: 11,900k) and share-based payment expense of EUR 10,547k (September 30, 2020: 3,947k). During the nine months ended September 30, 2021, third-party services expenses increased, compared to the same period of 2020, mainly due to consulting services for product launch readiness. The increase in Other mainly result from insurance costs of EUR 5,256k, mainly related to director and officer liability insurance (September 30, 2020: EUR 742k):

3.6 Other operating income

During the nine months ended September 30, 2021 and 2020, income from grants with government agencies and similar bodies resulted from the following:

German Federal Ministry of Education and Research (BMBF)

In 2020, the Company received a grant from BMBF to support the development of its COVID-19 vaccine candidate for which it was determined that the arrangement contained two components: a grant component (in the scope of IAS 20) and a supply component (in the scope of IFRS 15). With regard to the grant component, during the nine months ended September 30, 2021, the Group has recognized grant income in the amount of EUR 64,031k (September 30, 2020: nil). As of September 30, 2021, the unrecognized grant component of EUR 1,187k (December 31, 2020: EUR 28,630k) is presented in (current) other liabilities. Refer to Note 17 for additional information regarding this grant subsequent September 30, 2021.

Coalition for Epidemic Preparedness Innovations (CEPI)

In January 2020, CureVac and CEPI entered into a collaboration to develop a vaccine against the new coronavirus SARS-CoV-2. The aim of the cooperation is to safely advance vaccine candidates into clinical testing as quickly as possible. The agreement builds upon the existing partnership between CureVac and CEPI to develop a rapid-response vaccine platform and included additional initial funding of up to USD 8,300k. In May 2020, CEPI increased its grant award to the Group for SARS-CoV-2 vaccine development to up to USD 15,300k.

For the nine months ended September 30, 2021, CureVac recognized the reimbursement by CEPI of approved expenses of EUR 30k (September 30, 2020: EUR 10,565k). As of September 30, 2021, EUR 1,294k in grant funds received have been deferred and are presented within other liabilities (December 31, 2020: EUR 1,325k).

Bill & Melinda Gates Foundation (BMGF)

For the nine months ended September 30, 2021, CureVac recognized EUR 246k (September 30, 2020: EUR 449k) from the amortization of the grants on a straight-line basis. As of September 30, 2021, 1,918k in grant funds received have been deferred and presented within other liabilities (December 31, 2020: EUR 2,164k).

4. Issued Capital and Reserves

According to the Company's articles of association, the Company's authorized shares are divided into 386,250,000 common shares and 386,250,000 preferred shares, each having a nominal value of EUR 0.12.

As of September 30, 2021, no preferred shares had been issued and all issued common shares issued and outstanding were fully paid. However, in certain events, BMGF has the right to require the Company to redeem or facilitate the purchase by a third-party of all common shares it holds and Genmab has the right to subscribe once for common shares at a certain price under an anti-dilution and down round-protection clause effective through February 2022.

All payments received from shareholders in excess of the nominal value of the shares issued and net of transaction costs are recognized in capital reserves. Capital reserves also consists of recognition of share-based payments and the equity components of convertible loans. The Company may only make distributions, whether a distribution of profits or of freely distributable reserves, to shareholders to the extent shareholders' equity exceeds the sum of the paid-in and called-up share capital plus any reserves required by Dutch law or by the Company's articles of association.

In February 2021, the Group completed a follow-on public offering whereby it sold 5,000,000 common shares at a price of USD 90.00 per share. In addition, the underwriters exercised their option to purchase an additional 750,000 common shares at this same price less the underwriting discount. The aggregate proceeds, net of underwriting discounts, received by the Group from these transactions were EUR 426,652k. Additional offering costs for legal, accounting, printing and registration fees of EUR 22,590k were recognized as reduction to capital reserve against the proceeds from the offering.

Under the Prior VSOP plan, and following the Group's IPO and corporate reorganization, upon vesting of virtual shares granted under the plan, the holder is able to exchange his or her virtual shares (in whole or in part) for cash or shares of CureVac N.V., at the discretion of the Company, subject to the occurrence of certain predefined events. The economic burden of such an exchange was to be borne exclusively by those shareholders already invested in CureVac AG as of October 1, 2015 ( Funding Shareholders ); as such, these Funding Shareholders were required to transfer to the Company, in exchange for no consideration, sufficient common shares for the Company to issue against exercises of virtual shares. With the Company's IPO having taken place on August 14, 2020, an exit event was triggered with 10% of the vested virtual shares becoming exercisable at the end of the lock-up period, which is 180 days after the initial listing, i.e. on February 10, 2021. As of March 10, 2021, the beneficiaries (i.e., holders of virtual shares) exercised all of their 759,677 exercisable virtual shares and the Company received 759,677 common shares from the Funding Shareholders on that day. During the nine months ended September 30, 2021, 366,622 shares were transferred to beneficiaries upon exercise of options under the Company's various equity plans. At September 30, 2021, the Company still held 3,032 treasury shares.

The number of shares issued and outstanding developed as follows:

5. Share-based payments

During the nine months ended September 30, 2021 and 2020, the Group recognized share-based payments expenses of EUR 11,285k and EUR 7,399k, respectively, as follows:

Nine months ended September 30,

Expense recognized for the equity-settled programs was as follows:

Nine months ended September 30:

On November 16, 2020, CureVac granted 266,155 options to the Chief Scientific Officer (CSO). Furthermore, on December 1, 2020, CureVac granted 266,156 options (in 3 tranches) to the company`s Chief Business Officer (CBO) and Chief Commercial Officer (CCO). All grants were made at no cost under the terms of a new long-term incentive plan (LTIP) put in place by Curevac N.V. Options will be settled in shares of Curevac N.V. At September 30, 2021 none of the options granted to the CSO and CBO/CCO under the LTIP were exercised at that date. On July 1, 2021, CureVac granted 20,000 options to the Chief Operations Officer (COO). Furthermore on August 1, 2021, CureVac granted 30,000 options to the Chief Development Officer (CDO). All grants were made at no cost under the terms of the long-term incentive plan (LTIP) put in place by Curevac N.V. Options will be settled in shares of Curevac N.V. At September 30, 2021 none of the options granted to the COO and CDO under the LTIP were vested and hence, were not exercisable at that date. The expenses recognized for employee services received under the LTIP during the nine months ended September 30, 2021, is in an amount of EUR 10,075k and is included in general and administrative expenses.

For the nine months ended September 30, 2020, share based payment expenses of EUR 2,551k recognized in general and administrative expenses resulted from the 805,520 unvested awards, granted to the former Chief Executive Officer (CEO), immediately vesting in March 2020 due to the discontinuation of his service contract. The remaining expense results from additional grants under the New VSOP and continued vesting of grants under the Prior VSOP.

On August 14, 2020, the Company filed with the SEC a registration statement on Form S-8 registering common shares, issuable pursuant to the CureVac N.V. Long-Term Incentive Plan ( the LTIP ), New VSOP and Prior VSOP.

At the Annual General Meeting in June 2021, grants to two supervisory board members for their outstanding work and advice in connection with the clinical development of CVnCoV were approved. The supervisory board members will receive RSU's equal to a EUR value of 100K and 150K. The related share-based payments expense is recognized in general and administrative expense.

Exercise of share-based payments

Also, for the New VSOP plan, the IPO was a triggering event, by which all outstanding options, under the plan, became exercisable; 55,932 options were exercised on February 11, 2021 at an average share price of USD 114.17 (EUR 94.15). Shares to the value of the participant's personal tax obligation are withheld and shown as repurchase of those shares. From April up to September a total of 425,203 options were exercised with a weighted average share price of USD 58.13.

6.1 Intangible assets

During the nine months ended September 30, 2021, the Group acquired intangible assets of EUR 2,273k (nine months ended September 30, 2020: EUR 5,879k). The acquisitions during the nine months ended September 30, 2021 and 2020 mainly related to licenses, software and prepayments made to acquire those.

6.2 Property, plant and equipment

During the nine months ended September 30, 2021, property, plant and equipment increased by 93,786k from the balance at December 31, 2020. This increase was due primarily to the purchase of technical equipment and machines and other equipment of EUR 8,907k (September 30, 2020: EUR 5,013k) as well as additional amounts recognized as construction in progress of EUR 84,384k for Company-owned equipment physically located at CMO facilities in Germany and the remaining amount mainly for Company's GMP facilities.

Inventories include the following:

During 2021, the Company began production of vaccine doses which are recorded in inventory as of September 30, 2021 as the costs were determined to be recoverable under existing arrangements regardless of whether regulatory approval is obtained.