Vaxart, Inc. Q2 FY2024 Earnings Call

Greetings and welcome to the Vaxart Business Update and Second Quarter 2024 financial results conference call. A question and answer session will follow management's opening remarks. Individual investors may submit written questions to IR at vaxart.com. As a reminder, this conference is being recorded. I would now like to turn the webcast over to your host, Ed Berg, Senior Vice President and General Counsel.

Good afternoon and welcome to today's call. Joining us from Vaxart are Steven Lo, Chief Executive Officer, Dr. Sean Tucker, Founder and Chief Scientific Officer, Dr. James Cummings, Chief Medical Officer, and Phil Lee, 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, its product development, and regulatory progress, including statements about its ongoing or planned clinical trials. Actual results could materially differ 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 Steven Lo. Steve?

Thanks, Ed, and thanks to all of you for joining us this afternoon. Today, I look forward to sharing updates on the recent progress that we have made for both our COVID and norovirus programs and detailing our upcoming milestones. I'll then turn the call over to James for a more in-depth discussion of our planned BARDA-funded Phase 2b COVID trial and our conversations with FDA regarding norovirus. Finally, Phil will cover our financial update before we open the call for your questions. Since I joined Vaxart in March, I've had the opportunity to engage with all the functions in our company and can confirm a deep commitment to advancing our science and focusing on driving execution across the entire organization. This commitment has been particularly important, given the challenges of a biotech company innovating groundbreaking technology—the very reason I joined Vaxart. I believe in the transformational potential of our oral pill vaccine platform. After five months as CEO, I am quite pleased to report that we have delivered on the goals we set out to accomplish by mid-year. Starting with our COVID program, we were thrilled to receive one of the largest BARDA contracts to-date under Project NextGen. The award, valued at up to $453 million, is part of a $5 billion initiative by the Department of Health and Human Services to develop new innovative vaccines and therapeutics that provide broader and more durable protection against COVID-19. Earning this award highlights the promise of our platform and underscores the opportunity we have to reimagine how vaccines are manufactured and distributed globally. It also reflects the urgency of our mission. As James will detail shortly, we continue to have ongoing and productive dialogue with the FDA, and pending their alignment, we will initiate this Phase 2b trial. Turning to our norovirus program, we made significant progress over the past 12 months and are poised to take the next step. In late April, we announced positive top-line results for our Phase 1 clinical trial focused on lactating mothers, which can potentially help us achieve our long-term goal of protecting infants through passive antibody transfer. This trial was partially funded by the Bill and Melinda Gates Foundation. We've also previously reported encouraging Phase 2 results from our norovirus challenge study. Our norovirus program remains a crucial component of our overall strategy and pipeline, and we continue to be confident that our program will yield positive results that will contribute to global health. Norovirus is highly contagious and is the leading cause of acute gastroenteritis, causing symptoms like vomiting and diarrhea. It sickens approximately 21 million people in the United States each year, including 15% of children under age five who contract norovirus annually. Without an approved vaccine against norovirus, people will continue to miss work to care for their children affected by this disease. Additionally, according to data from the NIH, adults aged 65 and older are at high risk for severe symptoms and clinical outcomes, including longer disease duration and death. The annual economic burden of norovirus in the U.S. is estimated at $10.6 billion. We continue to have an active dialogue with the FDA that includes sharing additional requested information. We look forward to continuing our constructive discussions that will help inform the regulatory pathway and clinical next steps for this program. Now, I would like to briefly touch on our financial position as a clinical stage biotech company. It takes significant financial resources to achieve our ultimate goal of commercializing a groundbreaking novel vaccine. By extending our runway into 2026, we have enhanced our capital position, allowing us to invest in innovation and continue to advance towards realizing our corporate goals. As pioneers in the oral vaccine space, we believe our differentiated approach focusing on mucosal immunity will be key to our success. The promise of a mucosal vaccine that is cross-reactive against various strains may be better at preventing disease transmission, especially for mutating viruses, than existing vaccines. For public health, this is a crucial need in keeping people safe from infectious diseases. While the science is still being proven, we remain committed to advancing our programs. We look forward to keeping you updated on our ongoing discussions with the FDA, sharing updates from our BARDA-funded Phase 2b COVID trial, and detailing the next steps in our norovirus program. I'll now turn the call over to James to provide a further review of the recent progress in our COVID-19 and norovirus programs.

Thanks, Steve. Echoing Steve's comments, we appreciate the funding provided by BARDA for Vaxart to evaluate our oral pill XBB COVID-19 vaccine candidate in a Phase 2b clinical trial. We believe this funding is significant for two key reasons. First, it enables us to further validate our platform and program in a large clinical trial against an mRNA comparator, and second, it demonstrates strong interest from the U.S. government as BARDA recognizes the need for a next-generation COVID vaccine. We're excited to have earned their support. We continue to build a body of compelling data for our COVID vaccine candidate, and we believe that this trial will demonstrate that our vaccine candidate improves immune responses at mucosal surfaces, which are the surface linings found inside the nose, inside the mouth, along the eyes, and among other sites in the body that are particularly vulnerable to infection. Our belief is that the cross-reactivity of our vaccine candidates' mucosal immune responses could have a significant impact against evolving variants, with a better safety and tolerability profile versus the mRNA comparator. Now I will provide details of our trial design and our current status in initiating this study. The Phase 2b clinical trial is a double-blind, multi-center, randomized comparator-controlled study to determine the relative efficacy, safety, and immunogenicity of Vaxart's oral pill COVID-19 vaccine candidate against an approved mRNA COVID-19 injectable vaccine in adults previously immunized against COVID-19 infection. The study design anticipates enrolling approximately 10,000 healthy adults aged 18 years and older in the United States, with 5,000 receiving Vaxart's COVID-19 vaccine candidate and an additional 5,000 receiving an approved mRNA comparator. At least 25% of the participants should be at high risk for severe disease, and we expect all subjects to have had an mRNA injection in the past and likely some COVID infection as well. The study will measure efficacy for symptomatic and asymptomatic disease, along with systemic and mucosal immune induction, and the incidence of any adverse events. The primary endpoint is the relative efficacy of Vaxart's COVID-19 vaccine candidate compared to an approved mRNA comparator for the prevention of symptomatic disease. Primary efficacy analysis will be performed once all participants have either discontinued or completed a study visit 12 months post-vaccination. We anticipate it will take about six months to complete enrollment. An interim analysis for vaccine efficacy may be performed upon reaching 255 clinical COVID-19 cases. For the designed endpoints, we will look for cross-reactivity, including blood, saliva, and nasal responses. Our study will also analyze safety, tolerability, and immunogenicity, specifically focused on systemic and mucosal response. Subjects will use electronic diaries to take notes and will conduct weekly swabs. These data points will facilitate a prompt analysis for a study of this large size, and an Independent Data and Safety Monitoring Board, or DSMB, will review the safety data of all study participants. Funding from Project NextGen supports trial preparations, work with the CROs, overhead, and other trial-related costs. We meet with BARDA frequently to ensure that we are aligned on trial execution. Currently, we expect to initiate the Phase 2b clinical trial as early as the second half of 2024, pending alignment with the FDA. We've addressed many of the FDA questions to date and remain engaged with their regulatory team. This process takes time to complete, but we must ensure alignment with the FDA before we can initiate this study. As previously announced, we completed preparations of our manufacturing processes before the trial launch and now expect to enroll the first patient in the second half of 2024. Now I'll share an update on our FDA discussions regarding our norovirus program. We've received constructive feedback from the FDA on our data for potential correlative protection and the next steps for our norovirus program. Our discussions with the FDA have also reviewed our clinical findings to date, including our dose-ranging Phase 2b study of our bivalent norovirus vaccine candidate and our Phase 2 challenge study of the G11 component of our bivalent norovirus vaccine. The FDA has requested additional information that will lead to further discussions and feedback. We're in the process of submitting that information, which will determine next steps once our discussions with the FDA are complete. I'll now hand the call over to Phil Lee, our Chief Financial Officer, for a brief discussion of our financials.

Thank you, James. The details of our financial results for the second quarter of 2024 are summarized in today's press release. Revenue for the second quarter of 2024 was $6.4 million compared to $1.4 million in the second quarter of 2023. Revenue in the second quarter of 2024 primarily derived from work performed under Vaxart's contract with BARDA awarded in January 2024. Revenue in the second quarter of 2023 was primarily from work performed under Vaxart's grant from the Bill and Melinda Gates Foundation. Vaxart ended the second quarter of 2024 with cash, cash equivalents, and investments of $62.6 million. Subsequent to the close of the quarter, we received a payment of approximately $64.7 million from BARDA. Proceeds from this payment will be used to continue study startup activities for the COVID-19 Phase 2b clinical trial. Based on our current plan, Vaxart continues to anticipate cash runway into 2026. Thanks everyone for your time today. We will now open the call for your questions.

We'll take our first question from Charles Duncan from Cantor Fitzgerald.

Hi. This is Elaine Kim on for Charles. Thank you for taking our questions. For the norovirus program, can you provide more detail on the additional information requested by the FDA, and how do you anticipate the design of the Phase 2b trial will compare to prior Phase 2 studies that you've conducted?

Hi, Elaine, thanks for the question. I'm going to go ahead and turn that over to James since he provided some of the comments.

Thanks, Steve. As you would expect, the FDA is reviewing our pre-clinical and clinical norovirus data. At this time, we're not providing detailed information on the nature of FDA discussions as that is ongoing. This is consistent with the practices of most companies that do not disclose specific details when there are ongoing discussions with the agency. Once we can share next steps for the norovirus program after those discussions, we will certainly put that out. You also asked about the impact that this would have on the Phase 2b trial, and that again depends on the details of those discussions. Thank you.

There are no further questions at this time over the phone. I'd like to turn the floor to Mr. Berg to address the written questions.

Thank you. We have questions that have been submitted. The first is, what steps remain to initiate the Phase 2b COVID study, and what additional information is needed from the FDA before getting their approval to start the study? Dr. Cummings, could you address this one?

Thank you. We continue to have ongoing and productive dialogue with the FDA. We have addressed some comments and look forward to resolving the remaining ones soon. However, as I said before, like most companies, we will not provide detailed information on the nature of these ongoing discussions. We've substantially completed the preparations of our manufacturing processes in advance of the trial launch, and we have produced enough vaccine supply to proceed. Other key activities for trial startup include trial site activation and subcontracting with various vendors. We plan to provide updates as warranted. Thank you.

Thanks. A follow-up question again on our Phase 2b COVID trial for Dr. Cummings: once the Phase 2b COVID trial initiates, can you describe the subject enrollment process and any challenges you may encounter in recruiting 10,000 adults for the study?

Thank you. We view this as an opportunity for our very experienced clinical trial management team to demonstrate our ability to recruit and enroll 10,000 subjects for this trial. We expect the demographics of this study to be representative of the U.S. population, with 25% of the participants considered at high risk of severe COVID-19 disease. Some of those factors would include diabetes, coronary artery disease, asthma, obesity with a BMI over 30, increased age, and chronic kidney or lung diseases.

Thanks. Next question is again on the COVID trial and the contract with ATI. For Phil, what was the $64.7 million payment for, and what milestones must be achieved for the COVID Phase 2b study to earn additional funds from BARDA through ATI?

The $64.7 million payment we received was because we had actually achieved a single milestone in that ATI contract. You're referring to the up to $453 million contract. This payment was a result of executing a contract with the CRO. The remaining contract funding is not tied to specific milestones but will reimburse costs and earn a fee as we prepare, initiate, and execute the COVID-19 Phase 2b trial.

Thanks, Phil. The questions submitted on the norovirus program mirror the analyst questions, so we'll skip that for the moment and address other inquiries. One question pertains to RSV. RSV is no longer included in your development pipeline. Can you elaborate on that decision? Steve, could you answer this?

Yes. The company continually reviews our candidate pipeline to identify the best strategic opportunities and make decisions based on various factors, including market dynamics, our resources, and timing. For now, we're focused on the more critical opportunities that can advance our science while generating data in the near term. For example, we are highly focused on our COVID-19 program due to our contracts with BARDA, which potentially provide up to $453 million in funding. This is certainly a reason why we would shift priorities toward COVID.

Thanks, Steve. Another question for you: how has your experience with Vaxart in the past five months supported your initial decision to join the company back in March?

Yes, I'm delighted to be here. As I mentioned in some of my comments, I'm impressed with the opportunities we have to advance our science. We have already accomplished some near-term goals in the first half of 2024, including our agreement with BARDA and continuing to work with the FDA on our norovirus program. Our plan is to continue executing in the second half of the year, making it an exciting, albeit important time for the company.

Thanks. A question for Dr. Tucker: with all the news about avian flu, are you planning to progress that program, and are you aiming to secure funding to make such progress?

Hi, yes. We're working on making improvements to all our vaccine constructs and testing these pre-clinically. We will be opportunistic in pursuing funding for these vaccine class candidates, including avian influenza.

Great. One last question for Steve: how do you see Vaxart's platform fitting into the government's vision for next-gen vaccines and pandemic preparedness?

We believe our oral pill mucosal technology will be a key differentiator from currently approved COVID-19 vaccines. This is evidenced by our award from Project NextGen to proceed with the COVID-19 trial. We are very optimistic about this and as long as we continue to execute and advance this trial, it's going to be transformative for the company. We feel very aligned with government goals and are pleased to proceed.

Great. I'd like to turn the call back over to the operator.

Certainly. We do have an additional phone question, which comes from Mayank Mamtani from B. Riley.

This is Ali for Mayank Mamtani, so thanks for taking our question and congrats on the progress. I have a couple of quick questions. Is there reason to believe your norovirus vaccine is more robust against emerging norovirus strains? I was also wondering if you could comment on the recent failure of HillVax's Phase 2b trial and how you position yourself in the norovirus landscape. Thank you.

Thanks again for that question. Yes, we've been thinking through what happened with HillVax quite a bit. I'll turn it over to Sean to provide some insights on that.

Sure. We believe that the HillVax data, which showed their vaccine candidate produced a strong serum response, underscores our point that generating mucosal responses may be critical for developing an effective vaccine for norovirus. Remember that injected vaccines do not typically elicit these types of responses. Our existing data demonstrates our candidates with both serum and mucosal responses, which we believe will lead to greater success. Also, keep in mind that our program currently focuses on healthy adults and not on infants, making the comparison between the two programs perhaps less relevant. Regarding cross-reactivity, one key aspect of having an IGA response is that we have shown, along with others, that these can be much more cross-reactive. We believe this provides better potential to address new strains or outbreaks.

Excellent. Thank you, ladies and gentlemen. This concludes today's teleconference. We appreciate your participation. You may disconnect your lines at this time and have a great day.