Vaxart Inc

NASDAQ:VXRT

Earnings Call Transcript 2023-Q2

[Operator]

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 [e-mail]. 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.

[Brant Biehn, executive]

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?

[Cezar Floroiu, executive]

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 will also look ahead to our 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 record positive preliminary top line results from our Phase II dose-ranging study for our bivalent oral vaccine candidate within our stated timeline. James will provide a review of the 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 to explore the potential advantages of mucosal vaccination.

Oral 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 suggest that because of vaccination could provide several important advantages, broader cross-[study] and 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 deliveries 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 stories across the country this summer as the number of cases have spiked to at least a 3-year high. We believe our norovirus vaccine program has the potential to address this need and the significant tremendous disease burden that norovirus carries.

Looking ahead, we have 2 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 II Challenge Study of our GII norovirus vaccine candidate in the third quarter of this year. And then we look forward to initiating this year the Bill & Melinda Gates Foundation funding clinical trials to evaluate the ability of our norovirus vaccine candidates to induce antibodies in breast milk and 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 constructs have demonstrated a favorable immune profile. Vaxart continues to make progress on this program, and we believe based on the mucosal [across the] activity data we have seen in our current constructs, that there may be a pathway to develop an oral and beta coronavirus vaccine. We are assessing next steps and will provide updates as they become available.

Recently, the White House announced a new office of pandemic preparedness and response policy. We are 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 the post emergency phase of the pandemic, we must build stronger defenses against future infectious diseases and other threats we face. Vaxart believes a cross protective vaccine could improve our ability to fight 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 for the opportunities that lie before us. Now I'll turn the call over to James for a more detailed review of our norovirus program.

[James Cummings, executive]

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 II dose-ranging study for our bivalent norovirus vaccine candidate. We believe these data we have seen to date show promise for this vaccine candidate and more broadly, our vaccine platform. Recall that this candidate contains 2 genotypes, GII and GII.4, 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 3 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 III 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 1. 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 GII.4 and GII 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 II meeting with the U.S. FDA, potentially in 2024.

I'll now turn to the Phase 2 GII norovirus Challenge Study, which is measuring the safety, immunogenicity and efficacy of our monovalent norovirus vaccine candidate. This study may also help identify a correlate of 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 unwind 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?

[Phillip Eric Lee, executive]

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 Vaxart, I'd like to thank you for your time today. We will now open the call for your questions.

[Operator]

[Operator Instructions] My first question comes from Charles Duncan with Cantor Fitzgerald.

[Charles Duncan, analyst]

So earlier this quarter, you announced a preliminary top line data from the Phase II 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 the study and you compare it to responses observed, let's say, after a natural infection to either strain. How do you feel about the response? And does the data suggest that you need to go lower or higher in dose? Or do you believe you have the right dose in hand?

[James Cummings, executive]

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 21. The mucosal and the cell-based assay data, that's pending. And that will be available at a later date. Once we've assessed that data, I think we can make a stronger decision moving forward.

[Charles Duncan, analyst]

All right, James. And also, what are your thoughts on a one-dose regimen versus a 2-dose regimen for this program?

[James Cummings, executive]

I think for adults a one-dose regimen.

[Charles Duncan, analyst]

Right. And as we move into 3Q, we're anticipating seeing data from the norovirus [Town] 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 Phase II meeting.

[James Cummings, executive]

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 noro-GII challenge. So that will be inclusive of that for a decision to made as well.

[Charles Duncan, analyst]

Okay. And then just last question, sort of, again, I know that you have to have your end of Phase II meeting, but when do you sort of anticipate or expect to operationalize the next study? And do you see Vaxart driving the program alone forward? Or you have thoughts of bringing in a partner?

[James Cummings, executive]

I'll take the first half and then pass the second half back to Andrei, if that's okay. I think that from my standpoint, again, we'd like to see the data from this study as well as the [201] Challenge Study before going to the FDA. The second portion of a study, a larger study, would then lead us to a Phase 2b -- would lead us to the end of Phase II discussions with the FDA. And as I mentioned before, that could be as soon as 2024.

Andrei, do you want to comment on the second section of that question?

[Cezar Floroiu, executive]

Sure, sure. As our closest competitor in the norovirus space, [indiscernible], has noted earlier this year, late-stage vaccine assets such as the norovirus programs out of interest to many large pharmas and medium-sized pharmas and will obviously entertain those discussions once we have the data. And as you can appreciate, there are advantages and these advantages to partnering and going it alone, and we are open to evaluating the [indiscernible] which will maximize value and bring the vaccine sooner to patients.

[Charles Duncan, analyst]

All right. I look forward to the Challenge Study data.

[Operator]

Our next question is from Mayank Mamtani with B. Riley Securities.

[Mayank Mamtani, analyst]

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 the 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 do with your bivalent or maybe at some point, execute on the [indiscernible] study. 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 in the [university] data, could you just remind us what you had seen previously with your prior construct, so that we are able to kind of bracket some scenarios here for what we may see on IDA? And when would you look to kind of present that? Is there a medical conference you're targeting? And then I have a financial question as a follow-up.

[James Cummings, executive]

Yes. So, I'll take the first portion and have Sean Tucker, our CSO chime in on the mucosal immunity as he is a world expert in mucosal immunity. So, in terms of the learnings from the Channel Study, Channel Studies typically they're much more aggressive than what you'd see in nature in the real world. The sample size for this study was 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 a 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 core immunity might be.

For those on the call or 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 on any month of the year. One only has to take a look at the CDC website here in the United States, or the WHOs 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 than that attacks people year round. And because of that, I think that we'll take a look at executing Challenge 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 the -- I think the -- what we're looking at in terms of the mucosal immunity for the 202 study. And 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 ask Dr. Sean Tucker, if you'd like to just make a small comment on that as he ran that program at the time. Sean?

[Sean Tucker, executive]

Sure. Yes, it's a good question. So previously, we've reported that we get a mucosal response around somewhere between 2 to tenfold increases if you're working at fecal or we even talked about nasal responses, and you get a number of subjects that respond up to over 90% 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 GII will see a similar mucosal response as well.

[Mayank Mamtani, analyst]

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

[Cezar Floroiu, executive]

Phil, do you want to take this?

[Phillip Eric Lee, executive]

Sure. So, I think in terms of our extended runway guidance, it's really based on our current plans and our existing grant for the Gates Foundation, right? So, we -- again, once we see the data from the 201 study and really determine the path forward for the study, then we'll kind of determine the next steps and incremental spend as needed. But for now, it's all based on our existing plans and existing grant and no new grants at this time.

[Mayank Mamtani, analyst]

Okay. Got it. Look forward to the data shortly here from the Challenge Study.

[Operator]

[Operator Instructions] Our next question comes from Roger Song with Jefferies.

[Liang Cheng, analyst]

This is Liang Cheng on for Roger Song. Our first question is about the upcoming Phase II ace 2 Challenging data. So could you give us some color on what would be the [go, no-go] decisions for the Phase II Challenging data?

[James Cummings, executive]

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, you would decrease transmission, or you may. Effect on 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 a can what a correlative immunity might look like. And I think those are the things that we're considering as we look at that data set.

[Liang Cheng, analyst]

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

[James Cummings, executive]

Sure. So, I can give you some thoughts. We would look at the evidence we see of the data that we are seeing from both the 202 study that we're talking about, that data. We have some of that data in hand now, but waiting on the mucosal 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 the size of the study might look like. One of those factors that may impact it is if we are able to determine a correlate, right? Having a correlate in hand would mean decreasing the size of, if not the Phase II certainly the Phase III.

So, 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. And I don't necessarily want to speak with 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. I hope that answers your question.

[Liang Cheng, analyst]

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

[James Cummings, executive]

Sure. I'll speak specifically to that question are generally about the Phase III. Again, that Phase III would depend on the results of the GII Challenge Study, the Phase 2b study and the end of Phase II meeting with the FDA. We take the guidance of the agency literally to heart as we're all, I think, interested in providing a solution for what is now on answered, which is there's no approved vaccine for norovirus, right? I think that we addressed the timing for the Phase III 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 18 and older, and I think that's what we're looking for as we march forward. But that would be dependent, the Phase III design, would be dependent on conversations with the agency, the FDA.

[Operator]

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

[Brant Biehn, executive]

Thanks very much. So, we had a lot of questions that had been sent in previously ahead of time on various channels. I think most of those have now been asked between Charles and Mayank. So, I'm going to -- here's one that I don't think has been answered completely yet, James. This one's coming to you. Do you see any accelerated path to commercialization, such as an EUA or a smaller Phase III study for norovirus and what's a realistic time line to commercialization, James?

[James Cummings, executive]

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

[Brant Biehn, executive]

That's fantastic, James. And another one, I don't think we hit on during the call, and James this one 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?

[James Cummings, executive]

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.

[Brant Biehn, executive]

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 Investors section of our website and can 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.

[Operator]

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