Analyst Initiates Arcturus: Sees Attractive Growth Trajectory with Vaccine Franchise Despite Competition

William Blair analyst Myles Minter has initiated coverage of Arcturus Therapeutics Holdings Inc ARCT with an Outperform rating and a fair value estimate of $71

The analyst notes the company's established partnership with vaccine producer CSL Seqirus ($200 million upfront; deal value up to $4.5 billion) to commercialize COVID-19 and flu mRNA-based vaccines. 

Arcturus can leverage nondilutive capital from this partnership to progress its wholly-owned therapeutics pipeline with current assets in ornithine transcarbamylase (OTC) deficiency and cystic fibrosis (CF), both of which will have clinical data readouts in the remainder of 2023. 

Minter says the vaccine franchise provides a growth trajectory at an attractive valuation relative to larger comps with declining COVID-19 revenues. Vaccine profit share to Arcturus could also provide an upside to the company's current cash runway into 2026.

The analyst also says Acturus's STARR samRNA vaccine platform could enable lower dosage and increased durability relative to conventional mRNA.

Arcturus represents a significant opportunity across multiple indications if Alexion's platform and purification techniques prove successful considering the valuation disconnect to peers like Moderna Inc MRNA and BioNTech SE BNTX.

Arcturus contends with significant rivalry in the mRNA vaccine sphere from companies that have advanced further in developing vaccines for COVID-19, influenza, and other respiratory ailments. Pfizer Inc PFE/BioNTech's Comirnaty and Moderna's Spikevax have seized control of the COVID vaccine market in the U.S. and several other regions, establishing standards for safety and efficacy. 

Beyond COVID and influenza, these major competitors, such as Pfizer and Moderna, due to their vast scale and resource allocation, may attain regulatory approval ahead of Arcturus for other viral infections or may devise therapies with superior clinical benefits. 

It could potentially hinder Arcturus' capacity to market or sell its products effectively. If given the green light, the vaccine candidates from Arcturus and CSL will also encounter competition from the current standard-of-care influenza vaccine.

Price Action: ARCT shares are up 3.07% at $34.88 on the last check Monday.

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