Arcturus Therapeutics’ (ARCT) surprise vaccine deal with the government of Singapore Wednesday has helped lift shares of the small-cap biotech 26% in two days. It’s also made an even bigger fan out of investment banker H.C. Wainwright.
Yesterday as you may recall, Arcturus announced that it is partnering with Duke-NUS, a partnership between the Duke University School of Medicine and the National University of Singapore, to develop a COVID-19 vaccine to prevent infection by the coronavirus. The government of Singapore will pay for the vaccine’s development — $10 million to be paid part up-front, part upon achievement of unspecified “development milestones.” And Singapore will get first dibs on any vaccines produced (plus potential royalties on vaccine sales outside of Singapore).
Why is Singapore going with Arcturus — and Duke-NUS — to lead its vaccine efforts?
As Duke-NUS Medical School Dean Professor Thomas M. Coffman explains: “Duke-NUS has been on the front lines in the fight against COVID-19, developing the first serological tests for COVID-19 and was among the first groups to isolate and culture the virus. The partnership with Arcturus Therapeutics combines complementary strengths as we work together to fight this global outbreak.”
In cooperation with the Medical School, Arcturus will bring to bear its “STARR Technology platform” (STARR stands for “self-transcribing and replicating RNA”) which combines self-replicating RNA (to produce vaccine) with the company’s LUNAR nanoparticle non-viral delivery system “to produce a vaccine response at much lower doses compared to traditional mRNA vaccines.”
According to the company, this ability to immunize people with smaller doses means “a single GMP-manufactured production batch” of vaccine should theoretically permit Arcturus to immunize many more people than would otherwise be possible, and at lower cost. Indeed, Wainwright analyst Ed Arce adds that it’s even possible that Arcturus’s vaccine will be so effective and efficient that vaccination may not require a second (booster) shot.
Commenting on the Singapore deal in particular, Arce noted that “Arcturus’ proprietary mRNA manufacturing process is fully-optimized … scalable … and has already been applied in multiple GMP batches of highly pure RNA in its lead LUNAR-OTC program.” Furthermore, says Arce, Arcturus “has an established partnership with Providence Therapeutics (private) on the development of personalized cancer vaccines, as well as a couple other agreements in process with Big Pharma for prophylactic vaccines” — so the company, while small, is no novice to the field of vaccine development.
Arce believes Arcturus will be ready to begin pre-clinical testing of its vaccine “soon.”
Perhaps most importantly for investors, there’s a near-term catalyst that could transform the news of the Singapore collaboration into (even more) immediate stock gains. To wit, Arcturus is due to file its 10-K annual report with the SEC next week, and is expected to provide “full details” on its collaboration in that report. Once that news becomes public, the stock could well react positively to the publication.
In Arce’s view, all of this confirms the analyst’s previous “buy” rating on Arcturus stock, and his belief that Arcturus shares could be worth about $18. Of course, thanks to the enthusiasm over Wednesday’s announcement, the stock already costs more than $18 today…
Let’s see if Wainwright remains as enthusiastic about the stock once that fact sinks in.
All in all, Arcturus stock has a resounding “yes” on Wall Street. TipRanks analytics show that out of 4 analysts, all four are bullish. The average price target of $22.25 shows a potential upside of about 22% from current levels. (See Arcturus stock analysis on TipRanks)