Arcturus Inks Deal with Israel For Covid-19 Candidate; Analyst Sees 25% Upside

Arcturus Therapeutics announced that it has entered into a definitive agreement with the Israeli Ministry of Health for the supply of its Covid-19 vaccine candidate.

Arcturus Therapeutics (ARCT) said that under the terms of the deal, delivery to Israel of the doses of its mRNA vaccine candidate LUNAR-COV19, also known as ARCT-021, is conditional upon achievement of near-term clinical and regulatory milestones. Financial terms weren’t disclosed. Shares rose 6.6% to close at $62.65 on Friday.

San Diego-based Arcturus is a clinical stage company focused on ribonucleic acid (RNA) medicines and vaccines and has developed an internal messenger RNA platform. It specializes in the discovery, development and commercialization of therapeutics for rare diseases and vaccines.

“We are pleased to have executed the definitive supply agreement with the Israeli Ministry of Health. Arcturus is honored to play a key role in Israel’s COVID-19 vaccination strategy,” said Arcturus CEO Joseph Payne. “We value the Israeli Ministry of Health’s commitment to our differentiating mRNA vaccine candidate and we look forward to advancing the development of ARCT-021.”

Israel is the second country, in addition to Singapore, to secure supply of the ARCT-021 vaccine. Arcturus said it is in active discussions with other government in major markets and other parts of the world. In collaboration with its manufacturing partners, Arcturus is in the process of manufacturing millions of doses in 2020 and positioned to supply hundreds of millions of doses annually thereafter, the company added.

Shares of Arcturus have soared 27% since the company on Aug. 11 announced that it has started dosing of its Covid-19 vaccine candidate in a Phase 1/2 study. (See Arcturus stock analysis on TipRanks)

H.C. Wainwright analyst Ed Arce reiterated a Buy rating on the stock with a $78 price target (25% upside potential) saying that he expects the agreement with Israel to be a bellwether for additional government purchase agreements in the coming months.

“LUNAR-COV19 has the potential to be a safe and effective single dose vaccine without a necessary booster shot, due to the advantages provided by Arcturus’ self-transcribing and replicating mRNA (STARR) technology and its LUNAR lipid-mediated delivery vehicle,” Arce wrote in a note to investors. “With the Phase 1/2 study’s dosing recently initiated, we continue to project US approval of LUNAR-COV19 in 2H21 via an Emergency Use Authorization (EUA).”

Arce added that Arcturus is expected to deliver an initial 1 million LUNARCOV19 doses to Israel and in addition, the country has the right to purchase more LUNAR-COV19 doses in two additional tranches.

All in all, the stock has a resounding 5 Buy ratings versus 1 Hold rating from Wall Street analysts covering the stock in the past three months resulting in a Strong Buy consensus. Following this month’s rally, the $66 average price target now indicates upside potential of about 5.4% from current levels.

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