Vaxart, Inc. Q2 FY2023 Earnings Call

Greetings, and welcome to the Vaxart Business Update and Second Quarter 2023 Financial Results Conference Call. A question-and-answer session will follow management's opening remarks. Individual investors may submit written questions to ir@vaxart.com. As a reminder, this conference is being recorded. I would now like to turn the webcast over to your host, Brant Biehn, Senior Vice President and Business Operations. Thank you. You may begin.

Good afternoon, and welcome to today's call. Joining us from Vaxart are Andrei Floroiu, our Chief Executive Officer; Dr. Sean Tucker, our Founder and Chief Scientific Officer; Dr. James Cummings, our Chief Medical Officer; and Phil Lee, our Chief Financial Officer. Before we begin, I would like to remind everyone that during this conference call, Vaxart may make forward-looking statements, including statements about the company's financial results, financial guidance, its future business strategies and operations and its product development and regulatory progress, including statements about its ongoing or planned clinical trials. Actual results could differ materially from those discussed in these forward-looking statements due to a number of important factors, including uncertainty inherent in the clinical development and regulatory process, and other risks described in the Risk Factors section of Vaxart's most recently filed Annual Report on Form 10-K and also on other periodic reports filed with the SEC. Vaxart undertakes no obligation to update any forward-looking statements after the date of this call. I'll now turn the call over to Andrei Floroiu. Andrei?

Thank you, Brant, and thank you to all of you for joining us today. On today's call, we will highlight the recent progress we have made on our norovirus oral pill vaccine program. We'll also look ahead for remaining planned milestones for the second half of the year, and briefly discuss our COVID program before opening the call to your questions. During the second quarter, we are pleased to report positive preliminary top line results from our Phase 2 dose ranging study for our bivalent norovirus oral vaccine candidate within our stated timeline. James will provide a review of that data and what it means for this potentially groundbreaking vaccine. It is important to point out that this data builds on the growing body of evidence that validates Vaxart’s platform as we explore the potential advantages of mucosal vaccination. All our vaccines are designed to trigger mucosal immunity. And this is a very important distinctive feature of our platform. The clinical data we have generated thus far across our multiple programs suggests that mucosal vaccination could provide several important advantages; broader, cross-variant protection, reduction in viral transmission, more durable protection, and a broader immune response through the activation of both serum and mucosal immunity. The other important distinctive feature of our vaccines is the oral pill format. The potential advantages of oral pill vaccines are so fundamental that making them a reality could radically change how we think about vaccines and vaccination globally. Oral pill vaccines would allow us to vaccinate a lot more people faster, more easily and painlessly than we are doing today with injectable vaccines. This vision is the future of vaccination that we are working so hard to achieve. Across Vaxart, we are excited about the potential of our norovirus vaccine program. We believe we have the most advanced norovirus vaccine candidate in clinical development that is both formulated for oral administration and designed for delivery to the gastrointestinal system. Norovirus is a significant public health issue in developed countries, and there is no approved vaccine. More than 21 million people are infected in the U.S. each year, resulting in an annual disease burden of more than $10 billion in the U.S. alone. And the virus continues to be a leading subject of infectious disease this summer, as the number of cases has spiked to at least a three-year high. We believe our norovirus vaccine program has the potential to address this major issue and the significant disease burden that norovirus carries. Looking ahead, we have two important clinical milestones this year, and we remain on track to achieve them both. First, we anticipate reporting top line data from the ongoing Phase 2 challenge study of our G11 norovirus vaccine candidate in the third quarter of this year. And then we look forward to initiating the Bill & Melinda Gates Foundation funded clinical trials to evaluate the ability of our norovirus vaccine candidate to induce antibodies in breast milk and the transfer of antibodies to young infants. Before I turn the call over to James, I want to provide a brief update on our COVID program. To date, Vaxart’s COVID-19 vaccine construct has demonstrated a favorable immune profile. Vaxart continues to make progress on this program, and we believe based on the mucosal cross-reactivity data we have seen in our time constraints, that there may be a pathway to develop an oral and improved coronavirus vaccine. We’re assessing next steps and will provide updates as they become available. Recently, the White House announced the new Office of Pandemic Preparedness and Response Policy. We're very encouraged by the U.S. government's proactive approach to pandemic preparedness and strongly support global efforts to get ahead of the next global health crisis. As we cope with a post-emergency phase of the pandemic, we must build stronger defenses against future infectious diseases and other stresses we face. Vaxart believes a cross-protective vaccine could improve our ability to combat future pandemics and is committed to that effort. As you can see, we strongly believe in the potential of our technology and what it could mean for global public health and are excited about the opportunities that lie before us. Now, I'll turn the call over to James for a more detailed review of our norovirus program.

Thanks, Andrei. We made significant clinical progress in the second quarter, highlighted by the positive preliminary top line data that we reported from the Phase 2 dose ranging study for our bivalent norovirus oral vaccine candidate. We believe these data show promise for this vaccine candidate and more broadly, our vaccine platform. Recall that this candidate contains two genotypes, G11 and G24, both of which have caused the majority of norovirus disease in humans over the past 20 years. As a reminder, this study enrolled 135 healthy adults at three sites in the United States. The first 10 sentinel subjects received open-label, high-dose vaccine, and the remaining subjects were randomized to high or low dose vaccine or placebo. Each of the double-blinded vaccine arms had 50 subjects and the placebo arm had 25 subjects. The primary endpoints were safety and immunogenicity in order to determine a dose level for Phase 3 development. Now let's take a moment to review the results. As we described in detail in our July announcement, the preliminary results of the trial showed robust serum immune responses across all doses at day 29 relative to day one. Both vaccine doses showed a similar increase in serum antibody responses, with no statistical difference between the medium and high dose arms. At day 29, increases in serum IgA, serum IgG, and BT50 for both the G24 and G11 strains in the vaccine arms were similar to those seen in previous norovirus studies conducted by Vaxart. The results also demonstrate that the bivalent norovirus vaccine candidate was well tolerated with a favorable safety profile that included no vaccine-related serious adverse events or SAEs, and no dose-limiting toxicity. Adverse event rates for both doses were similar to placebo. I'd like to point out that the preliminary data were for serum responses. Mucosal and cell-based assay data will be available at a later date. The totality of the data from this bivalent study and the data we expect from our ongoing norovirus challenge study will help inform our selection of dosage levels in a larger Phase 2b study and could support an end of Phase 2 meeting with the U.S. FDA, potentially in 2024. I'll now turn to the Phase 2 G11 norovirus challenge study, which is measuring the safety, immunogenicity, and efficacy of our monovalent norovirus vaccine candidate. This study may also help identify a correlative protection between immune responses to the vaccine and a reduction in the risk of norovirus infection and/or acute gastroenteritis secondary to norovirus. Enrollment in this ongoing double-blinded study is now completed, and we continue to expect to unblind the study and report top line data during the current third quarter of 2023. We continue to believe in the potential of our bivalent norovirus candidate as we proceed toward a BLA submission. We look forward to updating you on our progress in the coming months. I'll now hand the call over to Phil Lee, our CFO for a brief discussion of our financials. Phil?

Thanks, James. The details of our financial results for the second quarter of 2023 are summarized in today's press release. Revenue for the second quarter of 2023 was $1.4 million compared to no revenue in the second quarter of 2022. Revenue in the second quarter of 2023 was primarily from revenue recognized for work performed under Vaxart’s grant from the Bill & Melinda Gates Foundation. Vaxart ended the second quarter of 2023 with cash, cash equivalents, restricted cash and marketable securities of $67.9 million compared to $71.8 million as of March 31, 2023. The decrease was primarily due to cash used in operations as we advanced our norovirus program, which was partially offset by $13.6 million of net proceeds from a public offering completed in June 2023. The offering extends the company's expected cash runway into the third quarter of 2024. On behalf of all of us at Vaxart, I'd like to thank you for your time today. We will now open the call for your questions.

Thank you. We will now begin the question-and-answer session. Our first question comes from Charles Duncan with Cantor Fitzgerald. Please go ahead with your question.

Hi, Andrei and team. Congratulations on the quarterly progress. So earlier this quarter, you announced preliminary top line data from the Phase 2 dose ranging study for the bivalent norovirus vaccine candidate that you touched on during the prepared remarks. When you look at the immunogenicity data generated by this study and you compare it to the responses observed, let's say, after a natural infection to either strain, how do you feel about the response? And do the data suggest that you need to go lower or higher in dose, or do you believe you have the right dose in hand?

I'll take that one. Thanks. So we're fairly pleased that the data from that study to date is consistent with previous norovirus study results. You recall in the preliminary top line data we announced in July, we showed robust serum immune responses across all doses at day 29 relative to day one. The mucosal and the cell-based assay data, that's pending and will be available at a later date. Once we've assessed that data, I think we can make a stronger decision moving forward.

All right, James. Thanks. And also, what are your thoughts on a one-dose regimen versus a two-dose regimen for this program?

I think for adults, a one-dose regimen.

All right. And as we move into 3Q, we're anticipating seeing data from the norovirus challenge study. Just wondering if you can sort of lay out what you would like to see perhaps from a qualitative perspective rather than quantitative that you would find encouraging and would like to take to the agency for the end of Phase 2 meeting?

I don't want to project the data results before we have them. Certainly, if we stay on track with what we've seen in previous studies and note robust responses from mucosal or cell-based assays, that would be very encouraging. And then also, we're looking forward to the data that we should announce later in Q3 of this year in terms of the G11 challenge. So that will be inclusive of that for a decision we made as well.

Okay. Just one last question. When do you expect to start the next study after your Phase 2 meeting? Also, do you think Vaxart will lead the program on its own, or are you considering bringing in a partner?

I'll cover the first part, then Andrei will take over. From my perspective, we would like to review the data from this study and the G11 challenge study before approaching the FDA. The second part of a larger study would eventually lead us to discussions regarding the end of Phase 2 with the FDA, which could happen as early as 2024. Andrei, would you like to address the second part of that question?

Sure. So given that our closest competitor in the norovirus space, Vaxart has noted earlier this year late-stage vaccine assets such as the norovirus programs are of interest to many large pharma and medium-sized pharma, and we will obviously entertain those discussions once we have the data. And as you can appreciate, there are advantages and disadvantages to partnering and going it alone. And we're open to evaluating the options and decide which ones will maximize value and bring the vaccine sooner to patients.

All right. I look forward to the challenge study data, and thank you for taking our questions.

Our next question comes from Mayank Mamtani with B. Riley Securities. Please proceed with your question.

Good afternoon team. Thanks for taking our questions and congrats on the progress. So just for the monovalent challenge study, kind of your execution and enrollment has gone from what I can tell faster than your original expectations. So could you just comment on the learnings you may have executing on this study and time of the year when you get these infections, and how could you apply some of this to additional, obviously, maybe challenge study work you may have to deal with your bivalent or maybe at some point execute the next norovirus, so would love to hear some commentary around that? And then on the mucosal data that you may look to report incremental to your dose ranging bivalent data that you already presented, could you just remind us what you had seen previously with your prior concert so that we are able to kind of bracket some scenarios here for what we may see on IgA? And when would you look to present that? Is there a medical conference you're targeting? And then I have a financial question in follow-up.

Yes. Thanks, Mayank. So I'll take the first portion, may have Sean Tucker, CSO, chime in on the mucosal immunity as he is a world expert in mucosal immunity. So in terms of the learnings from the challenge study, recall that the challenge studies typically are much more aggressive than what you'd see in nature in the real world. The sample size for this study is built primarily for descriptive statistical analysis as we're looking to understand really the mechanics of how this vaccine works. And to do this, we have a number of measures we're looking at, including a decrease in the severity of acute gastroenteritis caused by norovirus, a decrease in viral shedding, what our vaccine’s impact or effect could be on infectivity, and then the effect on disease severity? So these are all things I think that from a clinical or global health standpoint are very important. Along with that, we're looking at safety and immunogenicity and the potential for taking a look at what a correlative immunity might be. For those on the call are listening in, norovirus gastroenteritis is traditionally thought to be more seasonal in presentation. So you certainly have more norovirus by and large for seasonal distribution in the winter months. That said, there are outbreaks of norovirus that continue really at any time of the year. One only has to take a look at the CDC website here in the United States where the WHO’s very robust database or the New York Times to take a look at when outbreaks occur, either in nursing homes or in cruise lines, etc. So I think that there is some seasonality to the traditional spread of norovirus, but it is a viral infection that impacts people year-round. And because of that, I think we’ll look at executing challenges in the future should they be needed, both when the challenge model is available and we think that we have the best opportunity to recruit individuals to move forward in the study. As you mentioned, we're very fortunate to move this study forward and to be able to deliver the data on time. So we're very excited about that. For the mucosal immunity question, you asked specifically in terms of I think what we're looking at in terms of the mucosal immunity for the 202 study. For the 202 study, we don't yet have that mucosal immunity. That would be upcoming, right? And for the historical mucosal immunity, I'd asked Dr. Sean Tucker if he'd like to just make a small comment on that, as he ran that program at the time. Sean?

Sure. Yes, it's a good question. So previously, we've reported that we get a mucosal response around somewhere between 2 to 10 fold increases if you're working with specific vaccine candidates, or we even talked about nasal responses, and you get a number of subjects that respond up to over 90% or in terms of ASC count, or in terms of the nasal response, if we look at it really carefully. So our expectation is that the G11 will see a similar mucosal response as well.

Got it. I appreciate the helpful comprehensive answer there. Just on the financial runway kind of extension that you guided to, to 3Q next year. Could you clarify how much incremental non-diluted funding you're baking in there, be it from the Gates Foundation or even any other forms of government funding?

Sure. In terms of our runway guidance, it is primarily based on our current plans and the existing grant from the Gates Foundation. Once we receive the data from the 201 study, we will assess the next steps and any additional spending that may be necessary. For now, our guidance is grounded in our current plans and the existing grant, with no new grants anticipated at this time.

Okay, got it. Thanks team for taking our questions and look forward to the data shortly here from the challenge study.

Thank you, Mayank.

Our next question comes from Roger Song with Jefferies. Please proceed with your question.

Good afternoon. This is Liam Chong on for Roger Song. Thank you for taking our questions. Our first question is about the upcoming Phase 2 challenge data. So could you give us some color on what would be the go, no go decisions for the Phase 2 challenge data?

I can give you some color as opposed to go, no go. I think we'd have to talk as a team. But certainly, we're looking at several endpoints and indicators, so looking at a decrease in severity of acute gastroenteritis. I mentioned before that a challenge study is very aggressive compared to what someone sees in nature. So we're trying to ensure that those who could get sick would get sick, right? But we're looking for a decrease in severity of acute gastroenteritis secondary to norovirus, potentially a decrease in shedding. And I think that shedding is important because that could then be somewhat of a surrogate for decreasing shedding, decreased transmission, or may affect infectivity I think is going to be very important. And again, I tie that to viral shedding. And then disease severity, right? So how ill are people actually getting? I think we're looking at all of those items along with the immunogenicity and the safety, but also trying to tease out, if we can, what a correlative immunity might look like. And I think those are the things that we're considering as we look at that dataset.

Sure. Thank you. This is very helpful. So in terms for the larger Phase 2 study, do we have any guidance? And could you provide some color on the study design?

Sure. So I can give you some thoughts. We would look at the evidence we see from both the 202 study that we're discussing now, but we’re waiting on more data, as well as the impact of the data we see from the 201 challenge study. And taking a look at both of those I think we'll be able to determine or help determine what size of a study might look like. One of those factors that may impact it is if we're able to determine a correlative, right, having a correlative in hand would mean decreasing the size of, if not the Phase 2, certainly the Phase 3. So the Phase 2b study would be larger. You'd have enough people enrolled to ensure that you have a safety set that would be acceptable to the FDA. I don't necessarily want to speak for the FDA, but certainly it would be larger than the study we had done now. And we would be ready to execute once we have those data in hand and have met internally. Hope that answers your question.

Got it, great. Thank you. Maybe a quick one for last. So in terms for the pivotal Phase 3, I know that probably you don't have much information. So what age populations would be prioritized, if you can comment on that?

Sure. I’ll speak specifically to that question or generally about the Phase 3, right? Again, that Phase 3 would depend on the results of the 201 challenge study. The Phase 2 is about 2b study at the end of Phase 2 meeting with the FDA. We take the guidance of the agency literally to heart. We're all interested in providing a solution for what is now unanswered, which is there's no approved vaccine for norovirus. I think that we'd address the timing for the Phase 3 once we have more visibility informed by those milestones. In terms of where we're at right now, we have tested in this study the vaccine in those aged 18 and older, and I think that's what we're looking for, as we march forward, but that would depend on Phase 3 design, which would be based on conversations with the FDA.

Thank you. I think that's all from us. Thanks.

There are no further audio questions at this time. I'd like to turn the call back over to your host, Brant Biehn.

Thank you very much. We received many questions in advance through various channels, and I believe most of those have already been addressed by Charles and Mayank. However, there's one that I don't think has been fully answered yet. James, this one is directed to you. Do you anticipate any expedited path to commercialization, such as an Emergency Use Authorization or a smaller Phase 3 study for norovirus? Additionally, what is a realistic timeline for commercialization? James?

Fair enough. Thanks, Brant. So we continue to address the potential options and the timing for commercialization once we have more visibility informed by these study results that we're just discussing now. Based on those results, those data and interactions with regulatory agencies, we will determine the best plan and timeline for commercialization.

That's fantastic, James. Thanks. And another one I don't think we hit on during the call and James this is also going to be for you. Please remind us what you're looking for in the infant study and potential implications for your norovirus program. James?

Sure. Thank you. So it's unknown how norovirus infectivity and spread would be impacted or affected by a vaccine. As I mentioned, there's no currently approved vaccine against norovirus. However, there are some studies that suggest that if you vaccinate children, you can also improve the health of adults. You might not be able to protect against all illness, but we know that children acquire disease and can infect their families. So that's one of the pieces we're looking at.

Fantastic. Thanks, James. So that's the majority of the other norovirus questions have been asked already and answered by you. So thank you so much for that. I think investors and people on the line that have further questions can take a look at our fireside chat platform on the Investor section of our website and to go ahead and post additional questions. And we'll follow up at a fireside chat meeting in the near future and answer those questions. So at this point, we'll close the meeting. Thank you.

This concludes today's conference and webcast. You may disconnect your lines at this time, and we thank you for your participation.