Vaxart Inc

NASDAQ:VXRT

Earnings Call Analysis

Earnings Call Transcript 2023-Q3

[Operator]

Greetings, and welcome to the Vaxart Business Update and Third 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, Ed Berg, Senior Vice President and General Counsel. Please go ahead, Ed.

[Edward Berg, executive]

Good afternoon, and welcome to today's call. Joining us from Vaxart are Andrei Floroiu, Chief Executive Officer; Dr. James Cummings, Chief Medical Officer; Philip Lee, Chief Financial Officer; and Brant Biehn, Senior Vice President of Business Operations. 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 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 Andre Floriou. Andre?

[Cezar Floroiu, executive]

Thank you, Ed, and thank you to all of you for joining us today. On today's call, we'll highlight the recent clinical progress we have made on our norovirus autofill back in program. We will also provide a look at our planned milestones and briefly discuss our COVID program before opening the call to your questions. During the third quarter, we took important steps to validate our mucosal vaccine platform. We released encouraging top line data from 2 Phase II trials of our norovirus program. First, from our Phase II dose-ranging study for our bivalent nourovirus oral vaccine candidate and then from our Phase II norovirus channel study. The data we generated from both of these trials will drive the next steps for this program, which we believe has the potential to transform both how we think of norovirus and the vaccination paradigm as you know. James will go over the scientific findings from these trials in more detail. But beforehand, there are a few key points I'd like to share in terms of what we have learned at this stage of our norovirus program. First, our oral field vaccine candidate has the potential to reduce the rates of norovirus infection, acute gastroenteritis and viral shedding. These were key results from our recent challenge study. We believe that when we substantially reduce shedding, we dramatically slowed down the rate of transmission. That is an incredible potential benefit of these vaccines. Second, we believe this data validates the potential of our oral tablet norovirus vaccine program. We now have completed 8 clinical trials for norovirus, all of which showed that our vaccines induced strong immune responses and are safe and well tolerated with no vaccine-related serious adverse events. We are confident in Vaxart platform and a lot of our programs specifically as we aim towards a registrational Phase III study. And third, we believe we have established clinical proof of concept for our oral field platform via now 2 human channel studies, one for norovirus and the other for influenza. In each case, we demonstrated that our oral field vaccine technology has a clear and consistent impact on a number of important metrics such as reducing the rate of infection, illness and shedding. We continue to believe we have the most advanced nounovirus vaccine candidate in clinical development that is both formulated for oral administration and designed for delivery to the gastrointestinal system. A pill vaccine could truly change how we invest in it globally, how we make vaccines, how we distribute them and how we are ministerial. Not to mention that also that many more people who take vaccines that are not mill-based while the more and more regions of the world could have access on oral pill that does not have the coaching and infrastructure requirements of injectables. I want to emphasize the impact of the disease we are fighting against. Norovirus recently was named the leading cause of foodborne adult illness during the joint food and agriculture organization and the World Health Organization expert meeting on microbiological risk assessment in Rome, Italy. And norovirus is the leading cause of gastroenteritis. This is a disease with an economic burden in excess of $10 billion annually in the U.S. alone and of over $60 billion globally. Norovirus infections affect young children and the elderly disproportionately. Recently, we dosed the first subject in our previously announced clinical trial to evaluate the ability of our norovirus vaccine candidate to induce antibodies in breast milk and transfer of antibodies to young infants. We are excited about the potential for this study as bases oral norovirus vaccine field may make it possible for mothers to protect their infants against this highly contagious disease that has serious health consequences. And now for a brief update on our COVID-19 program. We continue to make progress on a potential COVID vaccine, and we believe that cross reactivity of our current construct suggests a pathway for developing a pan coronavirus vaccine. Several recent forecasts project new COVID variance to continue to appear exacerbating the persistence of the serious threat to public health. Given our prioritization of the norovirus program, we are assessing next cess for the COVID program, which could include a number of options. We look forward to providing the information once we determine the path forward for this important program. I'll now turn the call over to James to review the recent progress for our norovirus program.

[James Cummings, executive]

Thanks, Andre. We made great clinical strides in our norovirus program during the third quarter, announcing top line data from 2 separate Phase II trials. We believe the data that we've shared to date is promising for this vaccine candidate and for our vaccine platform overall. I'd now like to provide you with a high-level summary of both studies. First, I'll start with the data from our Phase II dose-ranging study of our bivalent norovirus vaccine candidate. Recall that this candidate contains 2 genotypes, G11 and G24, both of which have caused the majority of norovirus disease in humans over the past 20 or so years. The primary endpoints were safety and immunogenicity in order to determine a dose level for our Phase III development. The preliminary results of the trial showed robust CRM 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 Page 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. These 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. Turning to the Phase II G11 norovirus challenge study, which measures the safety, immunogenicity and efficacy of our monovalent norovirus vaccine candidate. The primary objectives were to determine the clinical efficacy of our monovalent norovirus vaccine candidate compared to placebo to protect against norovirus acute gastroenteritis or AGE, caused by the Norwalk Strain challenge inoculum and to evaluate the VP1 specific IgA antibody secreting cells or ASCs, the HPGA blocking antibody and the VP1 specific serum IgA and serum IgG responses to the vaccine. This was a double-blinded, randomized, placebo-controlled study in which healthy volunteers received a single oral dose of our norovirus vaccine candidate that targets the G11 strain of norovirus or they received placebo on day 1. On days 29 and 30, participants were challenged with the G1 strain of norovirus and then assessed for infection, norovirus AGE and the immune responses through day 57. This study met 5 of its 6 primary endpoints. The results show a statistically significant 29% relative reduction in infection. A 21% relative reduction in norovirus AGE that was not statistically significant and an 85% relative reduction in viral shedding, which was a prespecified study endpoint in the vaccinated cohort compared with placebo. As we noted in the data announcement, we believe these results support the potential for our neurovirus vaccine program to provide significant public health benefits. We also believe these are important findings that support the potential use of our oral pill vaccine technology and enabling a vaccine for norovirus. As I've very mentioned, we dosed the first subject in our Phase I clinical trial, evaluating Vaxart's oral pill bivalent norovirus vaccine candidate focused on safety and immunogenicity and lactating mothers. This is an important step towards Vaxart's goal of developing a vaccine that may reduce the significant global health threat norovirus poses, especially to children under 5 years of age. Norovirus sickens approximately 21 million people in the United States each year and 15% of children under age 5 contract norovirus annually. We believe an oral pill, norovirus vaccine may make it possible for others to protect their infants against this highly contagious virus. In terms of next steps for the norovirus program, additional analyses of the data from our previous norovirus trials are ongoing, and these will help us in determining how we go forward. Next steps for registration would include a Phase IIb dose confirmation study of our bivalent candidate in order to obtain sufficient safety data to inform an end of Phase II meeting with the FDA in the United States. We remain on track for the FDA meeting by the end of 2024. I'll now hand the call over to Phil Lee, our Chief Financial Officer, for a brief discussion of our financials. Over to you, Phil.

[Phillip Eric Lee, executive]

Thank you, James. The details of our financial results for the third quarter of 2023 are summarized in today's press release. Revenue for the third quarter of 2023 was $2.1 million compared to no revenue in the third quarter of 2022. Revenue in the third quarter of 2023 was primarily from revenue recognized for work performed under Vaxart scrap from the Bill and Melinda Gates Foundation. Vaxart ended the third quarter of 2023 with cash, cash equivalents, restricted cash and marketable securities of $53 million compared to $67.9 million as of June 30, 2023. The decrease was primarily due to cash used in operations as we advanced our programs. The company continues to anticipate current cash runway into the third quarter of 2024. Thank you all for your time today. We will now open the call for your questions.

[Operator]

[Operator Instructions] Our first question today is coming from Mayank Mamtani from B. Riley.

[Mayank Mamtani, analyst]

If I can ask a couple of clarifying questions on the correlate of protection, additional analysis that is going on. Just maybe we could get if there's any color there you could share. And are you looking at both the monovalent and bivalent data sets for the core protection? And do you need this for the Phase IIb dose confirmation study.

[James Cummings, executive]

Thank you. This is James Cummings. I'll take those. So in terms of the correlative protection, we're continuing that analysis from our challenge study. As you may recall, that challenge study was a monovalent vaccine versus a matched monovalent strain of challenge inoculum. As we mentioned, we're confident we'll have a correlative protection, and that analysis is ongoing. When it comes to the data sets that are being used, we certainly would look towards the challenge study as finding that correlate of protection. We will certainly look at other studies and analyses from the past as to where that correlate lies. But the determination of the correlate is based on the challenge study at this time. And then how that might impact a Phase IIb or more importantly, a Phase III study would be based on dialogue with the FDA. While we hope to garner from a Phase II study of Phase IIb would be additional safety data to bring us to an end of Phase II meeting with the FDA, which is, as I mentioned, still online for still on schedule for end of 2024.

[Operator]

[Operator Instructions] Our next question is coming from Ian Chan from Jeffries.

[Unknown Analyst]

This is Leon for Roger. A couple of questions from us. So I guess the first one is about the potential Phase II or the Phase IIb study. So any color on the study design in terms of number of the enrollment and timing and those...

[James Cummings, executive]

This is James. I'll take that question. So the Phase IIb study design may be impacted somewhat by some of our further analyses but will be used to beef up the overall numbers for an end of Phase II meeting with the FDA. That said, it would be somewhere along the lines of at least 400 or so, maybe more individuals who had received test article and then moving forward. And that would be the direct look at the safety and immunogenicity of that study.

[Unknown Analyst]

So maybe another question I remember -- I think I mentioned that you'll potentially do another like 5 billion challenge study. So what are the current considerations around that?

[James Cummings, executive]

Certainly. So currently, we've done and reported on the norovirus G11 strain challenge, and I look forward to reporting that further analysis out to the community. In dialogue with the FDA, we will then make a decision on moving forward with that correlate to impact the Phase III study design. And if needed, an additional challenge study with G24 could be executed. But at this time, it's not a requirement. If it were to be executed, it could be done in parallel with a Phase IIb study. We'll have more information on that once we have the correlate identified and have had those initial discussions with the FDA.

[Unknown Analyst]

Got it. Maybe one quick one on the Phase I study design. So I know you mentioned that the measurement of transmission reduction into Phase III and the importance of that. So any feedback from the agent around that part for the transmission reduction?

[James Cummings, executive]

So what we had reported on was actually a large decrease in viral shedding, which we believe may lead to a decrease in transmission, utilizing standards of public health policies. That said, we only have the data on the viral shedding, which is statistically significant at an 84% relative reduction. That data would then be further gathered in a Phase III study.

[Operator]

I would now like to turn the call back to Brant for further questions.

[Brant Biehn, executive]

you very much, operator. So we've got a number of questions that have come in from various sources from our shareholders and other interested parties. A number of them are norovirus related. I think we've had some of them answered already. There was certainly a lot of interest in the correlative protection and also when a Phase III trial for norovirus is going to happen, but I think James have already answered those. Here's one that I will ask you, James, a little bit more clarification on norovirus. So the question is, can you provide us with an update in terms of where you are in analyzing the additional noro data in the past -- it goes on to a path forward to a Phase IIb trial. But I think the time line for additional oral data is the most important here. Shortly.

[James Cummings, executive]

So currently, we're evaluating more immune responses and data on an individual subject level within that study. We look forward to sharing those details to the analysis once completed.

[Brant Biehn, executive]

Thank you, James. Here's one for you really talking about the future of the organization. The question is specifically, do you have plans in 2024 to introduce any new product candidates... Andre?

[Cezar Floroiu, executive]

Thank you, Brant. So as we look into 2024, our focus will remain on identifying the best ways to progress our existing clinical pipeline, which is now composed as many of you know, of the norovirus, the pan coronavirus and the flu programs. And we believe that doing this would create more than enough catalysts and opportunities for value creation for a company of our size.

[Brant Biehn, executive]

Thank you Andre. Okay. We've got a number of questions about how much money we have. Phil, this one's going to come to you. So specifically, the question is, do you intend to initiate the Phase IIb trial with existing cash? Or will you need to raise additional capital to fund this trial, Phil?

[Phillip Eric Lee, executive]

So just to recap, we are currently conducting additional analyses of the data of our norovirus trials. And once we have determined the path forward for the program, we will provide an update on next steps. And in that, we may include updating our cash runway guidance if appropriate. Okay, thank you Phil.

[Brant Biehn, executive]

Back to clinical. And James, this one is on the lactating mother study. So it's the question for the locating mother study, what is your time line to top line data.

[James Cummings, executive]

Thanks. We'll have a better sense of timing for data from this study as we move closer to full enrollment. To date, we've enrolled 7 subjects into that study.

[Brant Biehn, executive]

Perfect. And there's an add-on question to that as well, James, please remind us how the data from the locating mother study fits into the overall development program for the norovirus Canada.

[James Cummings, executive]

So immunizing lactating mothers may provide increases in the norovirus ediaglobulins in the breast milk, and that could help protect the nursing infant. And that's -- that's really part of our strategy to protect this vulnerable population.

[Brant Biehn, executive]

Fantastic. Lots of questions about this one. So Indresen coming to you about additional funding from outside sources, specifically BARDA or other governed U.S. government. So I'll give you the question, and there's a lot of ways that this has been asked. But do you have an update on Project NextGen funding? And could you still receive funding from BARDA or NIH for this program? Andre?

[Cezar Floroiu, executive]

Yes. So if we were to have a concrete update, we would share that with you, so we don't. But we remain optimistic. We remain of the opinion as we have said multiple times in the past that the U.S. government to support our pan coronavirus program. Looking at the programs that have received funding as part of the NextGen program, we continue to believe that our pan coronavirus program should be supported because it does provide several potential advantages, distinct advantages over those programs. So again, we remain of this belief that if the U.S. wants to significantly improve its ability to fight future dynamics, our program should be supported. And we will update you when we have any specific updates to share.

[Brant Biehn, executive]

Great. Thanks, Andre. James, another one for you. Back to the World Vaccine Congress. So the question is, are there any updates from the World Vaccine Congress that you can share, James?

[James Cummings, executive]

Sure. Thanks. So our data from the norovirus challenge was very well received. When it was contrasted to what the impact of our candidate vaccine might be went up against natural infection. And the key part here is natural infection generally results from exposure to 10 to 100 virus particles. Don't forget the challenge inoculum was 1 million virus particles. So we think it's likely that the overall protection level in a natural infection will be enhanced because there's far less virus to protect against.

[Brant Biehn, executive]

Excellent. Thank you very much. Phil, is another financial question regarding the gate study. So the question to you, Phil, is how much revenue is left to be recognized from the GATE study and over what time span? Phil?

[Phillip Eric Lee, executive]

Sure. Thanks, Brian. So we recognized grant revenue in the period of which the related costs are incurred and services are rendered. So at this point, we really have recognized the vast majority of the current grant from the Bill & Melinda Gates foundation revenue. I currently expect to recognize the remaining $79,000 in the fourth quarter of 2023.

[Brant Biehn, executive]

Excellent. Thank you, Phil. Okay. And operator, that closes our Q&A.

[Operator]

If so, then you may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.