Vaxart Inc

NASDAQ:VXRT

Earnings Call Analysis

Earnings Call Transcript 2024-Q2

[Operator]

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 [e-mail]. 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.

[Edward Berg, executive]

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?

[Steven Lo, executive]

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 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 IIb COVID trial and conversations with FDA for 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 spend time with all of the functions in our company and can confirm a deep commitment to advancing our science and to focusing on driving execution across the entire organization. It has been a strategic imperative of ours, particularly given the challenges of a biotech company that's innovating groundbreaking technology. This technology is also the reason why I joined Vaxart. I believe in the transformational potential of our oral pill vaccine platform. After 5 months as CEO, I have great confidence in our team who are hard at work with the goal of bringing solutions to solve some of society's greatest infectious disease threats.

At the halfway point of 2024, I am quite pleased to report that we have delivered on the goals that we set out to accomplish by midyear. Starting with our COVID program, as we announced in June, 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 through Project NextGen's $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 serves to highlight the promise of our platform. It also underscores the opportunity we have to reimagine how vaccines are manufactured and distributed globally and the urgency of our mission. As James will detail shortly, we continue to have an ongoing and productive dialogue with FDA and pending their alignment, we will initiate this Phase IIb trial.

Turning to our norovirus program, we achieved meaningful progress over the past 12 months and are poised to take the next step in this program. In late April, we announced positive top line results for our Phase I clinical trial focused on lactating mothers, which can potentially help us achieve our long-term goal of protecting infants through passive antibody transfer. As a reminder, this trial was partially funded by the Bill & Melinda Gates Foundation. In addition to these recent compelling data, we previously reported encouraging Phase II results from our norovirus challenge study. Our norovirus program remains an essential 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 a highly contagious virus and is the leading cause of acute gastroenteritis symptoms such as vomiting and diarrhea. It sickens approximately 21 million people in the United States each year, including 15% of children under age 5 who contract norovirus annually.

Without an approved vaccine against norovirus, people will continue to miss work to care for their children affected with this disease. Furthermore, according to data from the NIH, adults at least 65 years old are at high risk for severe symptoms and clinical outcomes, including longer disease duration and death. The economic annual disease burden of norovirus is $10.6 billion in the United States alone. At this time, 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 touch briefly 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 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 that focuses 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. The science is still being proven, but we remain committed to advancing our programs. We look forward to keeping you posted on our ongoing discussions with FDA, sharing updates from our BARDA-funded Phase IIb 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 of our COVID-19 and norovirus programs.

[James Cummings, executive]

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 IIb clinical trial. We believe this funding is significant for 2 key reasons. First, it enables us to further validate our platform and our program in a large clinical trial against an mRNA comparator. And two, 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. 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 for absorption and are particularly vulnerable to infection. It is our belief 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'll provide details of our trial design and where we currently stand in initiating this study. The Phase IIb clinical trial is a double-blind, multicenter, 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, 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.

As part of the subject baseline characteristics, at least 25% of the participants should be at high risk for disease, and we expect all subjects who have had an mRNA injection in the past and probably some infection of COVID. The study will measure efficacy for symptomatic and asymptomatic disease. It will measure systemic and mucosal immune induction and the incidence of any adverse events. The primary endpoint is relative efficacy of Vaxart's COVID-19 vaccine candidate compared to one approved mRNA comparator for the prevention of symptomatic disease. Primary efficacy analysis will be performed when all participants have either discontinued or completed a study visit 12 months post vaccination.

We anticipate that it will take about 6 months to complete enrollment. An interim analysis for vaccine efficacy may be performed when 255 clinical COVID-19 cases have been reached. For 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 take weekly swabs. These data points will enable for a quick 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 IIb clinical trial as early as the second half of 2024, pending alignment with the FDA. We've addressed many of the FDA's questions to date and remain engaged with their regulatory team. This process does take some time to complete, but we must ensure that we are aligned with the FDA before we can initiate the study. As previously announced, we completed the preparations of our manufacturing processes before 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 received constructive feedback from the FDA on our data for potential correlative protection and next steps for our norovirus program. Our dialogue with the FDA also reviewed our clinical findings to date, which include our dose-ranging Phase II study of our bivalent norovirus vaccine candidate and our Phase II challenge study of the G11 component of our bivalent norovirus vaccine. Presently, the FDA requested additional information that will lead to further discussion and feedback. We're in the process of submitting the information, and that will determine next steps once we finished our discussions with the FDA.

I'll now hand the call over to Phil Lee, our Chief Financial Officer, for a brief discussion of our financials. Phil?

[Phillip Eric Lee, executive]

Thank you, James. The details of our financial results for 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 was primarily from revenue recognized or work performed under Vaxart's contract with BARDA awarded in January 2024. Revenue in the second quarter of 2023 was primarily from revenue recognized or work performed under Vaxart's grant from the Bill & 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 the $64.7 million payment will be used to continue study startup activities for the COVID-19 Phase IIb 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.

[Operator]

[Operator Instructions] And we'll take our first question from Charles Duncan from Cantor Fitzgerald.

[Elaine Kim, analyst]

This is Elaine Kim on for Charles. For the norovirus program, can you provide more color on the additional details that was requested by the FDA? And how do you anticipate the design of the Phase IIb trial will be in comparison to prior Phase II studies that you've conducted?

[Steven Lo, executive]

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

[James Cummings, executive]

Thanks, Steve. So as you'd expect, the FDA is reviewing our preclinical and clinical norovirus data. At this time, we're not providing detailed information as to the nature of FDA discussions. That's ongoing, and that's consistent with practices, I think, of most companies, which don't disclose specific details when there are ongoing discussions with the agency. When we can share next steps for norovirus program, after those discussions have finished, we'll certainly put that out. And you asked, I think the second portion of that was what impact that would have on the Phase IIb trial, and that again, depends on the details around those discussions.

[Operator]

[Operator Instructions] Okay. And 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.

[Edward Berg, executive]

Thank you. We have questions that have been submitted. The first is, what steps remain in order to initiate the Phase IIb COVID study? And related to that, what additional information is needed from the FDA before getting their approval to start the study? And I think Dr. Cummings, if you can address this one?

[James Cummings, executive]

Thank you. We continue to have ongoing and very productive dialogue with the FDA. We have addressed some of the comments and look forward to resolving the remaining ones soon. However, as I said before, like most companies, we will not be providing detailed information as to the nature of these ongoing discussions. We have substantially completed the preparations of our manufacturing processes in advance of the launch of this trial, and we have sufficient vaccine supply produced in order to go forward. Other key activities in the startup of the trial would include trial site activation and subcontracting with various vendors. We plan to provide an update as warranted. Thank you.

[Edward Berg, executive]

Thanks. A follow-up question again on our Phase IIb COVID trial for Dr. Cummings, once the Phase IIb COVID trial initiates, describe the subject enrollment process? What are the challenges that you might face in recruiting 10,000 adults for the study?

[James Cummings, executive]

Thanks. We view this as really an opportunity for our very experienced clinical trial management team to demonstrate our ability to recruit. In enrolling 10,000 subjects for this trial, we expect the demographics of this study to be representative of the population of the United States, with 25% of the participants considered at high risk of severe COVID-19 disease. And some of those factors would be things like diabetes, coronary artery disease, asthma, obesity with a BMI of greater than 30, increased age and chronic kidney or lung diseases.

[Edward Berg, executive]

Thanks. Next question is again on the COVID trial and the contract. This is the contract with ATI. For Phil, what was the $64.7 million payment for, and what milestones do you need to achieve for the COVID Phase IIb study in order to earn the additional funds from BARDA for -- through ATI?

[Phillip Eric Lee, executive]

So the $64.7 million payment that we had received was because we had actually already achieved a single milestone in that ATI contract, you're referring to the -- up to $453 million contract because we executed a contract with the CRO. The remaining contract funding is actually not tied to specific milestones, but rather we will be reimbursed for costs and earn a fee as we continue to prepare, initiate and really execute this COVID-19 Phase IIb trial.

[Edward Berg, executive]

Thanks, Phil. Our questions -- the questions submitted on the norovirus program mirror the analyst questions. So we'll skip that for the moment and go to other questions. We have one on RSV. RSV is no longer included in your development pipeline. Can you please elaborate on that decision? And I think that Steve, if I can ask you to answer?

[Steven Lo, executive]

Yes. So the company always continually reviews our candidate pipeline to determine what's the -- what are the best strategic opportunities out there, and we'll make decisions based on various factors, including what the market and competitive dynamics are, our resources and timing. For now, we're focused on some of the more important opportunities that can advance our science while generating data in the near-term. And therefore, as an example, being highly focused on our COVID-19 program because of our contracts with BARDA that gives us potentially up to $453 million in funding is certainly a reason why we would shift the priority towards COVID.

[Edward Berg, executive]

Thanks, Steve. Another question for you. How has your experience with Vaxart in the past 5 months supported your initial decision to join the company back in March?

[Steven Lo, executive]

Yes. So I'm delighted to be here. And as I stated in some of the comments, I'm impressed with the opportunities that we have to advance our science. And frankly, we've already been able to accomplish some near-term goals in the first half of 2024. As mentioned, our agreement with BARDA, as well as having some opportunities as we continue to work with the FDA on norovirus. And our plan right now is to continue to execute for the second half of the year. So it's going to be an exciting but important time for the company.

[Edward Berg, executive]

Thanks. A question for Sean, Dr. Tucker, this is with all the news about avian flu. Are you planning to progress that program? And are you planning to -- or aiming to secure funding to make such progress?

[Sean Tucker, executive]

Yes. Obviously, we're working on making improvements to all of our vaccine constructs and testing these preclinically, and we will be optimistic or opportunistic, I should say, in the pursuit of funding to these vaccine candidates, including avian influenza.

[Edward Berg, executive]

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?

[Steven Lo, executive]

Yes. So we always believe that our oral pill [ mucosal ] technology is going to be the key differentiator from some of the currently approved COVID-19 vaccines. And I think it's evident in the fact that we were awarded a Project NextGen award to proceed with this COVID-19 trial. So we're, of course, very optimistic. And I think as long as we continue to execute, as well as move forward with this trial, it's going to be very transformative for the company. So again, I think we are feeling like we're very aligned with the government in terms of what their goals are, and we're delighted to proceed.

[Edward Berg, executive]

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

[Operator]

Certainly. And we do have an additional phone question, and it comes from Mayank Mamtani from B. Riley.

[Unknown Analyst]

This is [ Ali ] for Mayank Mamtani. So thanks for taking our question, and congrats for the progress. So I just had a couple of quick questions. Is there a reason to believe your norovirus vaccine is more robust against the emerging norovirus strains? And I was wondering if you could comment on the recent failure by HilleVax Phase IIb trial. And how do you position yourself in the norovirus landscape?

[Steven Lo, executive]

Great. Well, thanks again for that question. And yes, we've been thinking through what's happened with HilleVax quite a bit. And what I'll do is I'll turn it over to Sean to provide some comments there.

[Sean Tucker, executive]

Sure. Yes. I mean, again, we believe that the HilleVax data, which in their vaccine candidate produced a strong serum response, really underscores our point that generating mucosal response may be critical to develop an effective vaccine for norovirus. Remember that injected vaccines do not typically elicit these sort of responses. Our existing data demonstrates our candidates with both the serum and mucosal response, and we believe this is going to allow us to be much more successful. Also keep in mind that our program is right now focused on healthy adults and not on infants, which renders the comparison between the 2 programs, maybe a little bit less relevant.

The other question you asked is about cross-reactivity, and I can tell you one of the things that I think is important about having an IgA response is that we have shown and others have shown these can be much more cross-reactive. And we think that gives us better potential to address things that happen when new strains or new outbreaks occur.

[Operator]

Excellent. Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time, and have a great day.