July 20, 2020 / 6:33 AM / 22 days ago

UPDATE 2-GSK buys 10% of CureVac in vaccine tech deal

* GSK invests 130 mln stg, CureVac could get further 606 mln stg

* CureVac's mRNA experience complements GSK's expertise - exec

* CureVac IPO expected in the autumn (Rewrites, adds source, CureVac comment on IPO)

By Pushkala Aripaka and Arno Schuetze

July 20 (Reuters) - GSK is to buy a 10% stake in German biotech company CureVac for 130 million pounds ($163.67 million), the two companies said on Monday, in a deal that bets on new technologies already being used in potential COVID-19 vaccines.

GSK and CureVac, backed by Microsoft billionaire Bill Gates, will work on developing up to five so-called mRNA-based vaccines and monoclonal antibodies (mAbs) for infectious diseases, they said.

The deal points to a valuation of more than $1.6 billion for CureVac as it prepares for a stock market launch this year.

For GSK, the world's biggest vaccine maker, it adds to the company's raft of investments in technologies that may fight future outbreaks.

mRNA vaccines use ribonucleic acid (RNA), a chemical messenger that evokes an immune response when injected by instructing cells to make proteins that mimic pathogens.

The approach, also being deployed in experimental COVID-19 vaccines by BioNTech and partner Pfizer and Moderna , is yet to be approved in any therapy.

"CureVac's experience complements our own expertise," said Roger Connor, President of GSK Vaccines.

GSK shares fell 1.6% to 1,633.2 pence by 0743 GMT.

After a 300 million euro ($343.77 million) investment by the German government CureVac had planned to list on Nasdaq this month, a document seen by Reuters in June showed.

It has since received 75 million euros in European funding, in addition to the GSK boost.

CureVac is now planning a stock market listing in September or October, led by Bank of America, Credit Suisse and Jefferies, which is likely be able to command a similar valuation to that signalled by GSK's investment, people familiar with the matter said.

CureVac declined to comment on the IPO but said it remained open to all financing options. The banks declined to comment or were not immediately available for comment.

The GSK deal makes CureVac eligible for milestone payments of up to 606 million pounds and tiered royalties on sales.

The transaction does not include CureVac's existing COVID-19 and rabies vaccines research programmes. ($1 = 0.7943 pounds) (Reporting by Aakash Jagadeesh Babu in Bengaluru and Caroline Copley and Arno Schuetze in Frankfurt; Editing by Vinay Dwivedi/Patrick Graham/Jane Merriman)

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