Novavax, Inc. (NVAX) Earnings Call Transcript & Summary

Well, great. Well, thanks for joining us for the next session. I'm Matthew Harrison, one of the biotech analysts here at Morgan Stanley. Very pleased to have the team from Novavax with me. I just need to read a brief disclaimer statement before we get started. Please note that this webcast is for Morgan Stanley's clients and appropriate Morgan Stanley employees only. This webcast is not for members of the press. If you're a member of the press, please disconnect and reach out separately. For important disclosures, please see the Morgan Stanley research disclosure website at morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. So I think before we get started, I'm going to turn it over to John at Novavax, and he's going to make some brief opening comments, and then we'll jump right into Q&A.

Great. Matthew, thanks very much for having us today, and thanks, everybody, on the line for joining us this afternoon. My name is John Trizzino. I'm the Chief Business Officer and Chief Financial Officer for Novavax. Just briefly before we kick off this fireside chat, we're excited to talk about all of our programs and the advancements in our COVID vaccine development. But just a couple of highlights. We've moved very aggressively on all of our activities for our COVID vaccine, CoV2373. Phase I results have been presented, and we're in the midst of our Phase II trial. To date, we received over $2 billion of non-dilutive financing from CEPI, Coalition for Epidemic Preparedness and Innovations (sic) [ Coalition for Epidemic Preparedness Innovations ], plus the $1.6 billion from Operation Warp Speed driving our aggressive effort to develop a vaccine. NanoFlu continues to be a priority for the organization, having successfully completed our Phase III and met all of our primary objectives for that trial. And we look forward to submission for our BLA. There's a bit of work left to do. We've been impacted by the pandemic but are eager to reengage, and NanoFlu continues to be a value-added priority. Balance sheet is strong. We finished last quarter with over $600 million in cash, giving us the motivation and the wherewithal to aggressively move forward on all fronts. Matthew, thanks very much for letting me have an opening statement.

Yes, of course. Great. Thanks for doing that and look forward to the Q&A.

I thought maybe a good place to start is that there are obviously a lot of COVID vaccines in development out there. Maybe you could just comment on what you think are the key differentiating features of your efforts for your vaccine?

This is Greg Glenn, I'm the President of Research and Development. I think the hallmark of our vaccine, early on in the program, we had -- we made about 30 different constructs to make a recombinant vaccine. So it allowed us a lot of flexibility. We evaluated their immunogenicity, their stability and the productivity and the expressions. Just to note, our expression system, recombinant antigens made with this insect cell is the base of a licensed product. So there's a lot of experience with this. So I'd say the hallmark of our vaccine is that it's very immunogenic. And you can see that has been manifested in our clinical data, published recently in New England journal. It's stable so we can use it with a normal cold chain and the production system is very productive. We'll talk to John in a little bit. We can project that we can make many millions of doses. So safe, immunogenic for patients, I think that's really a distinguishing feature of our vaccine, high neutralizing antibody titers, very strong CD4 T cells.

Okay. Great. And I believe you use an adjuvant with your vaccine as well. Maybe can you just describe the adjuvant and what we know about that?

Sure. So it's a key partner. Since the recombinant antigen is a nanoparticle to full-length glycoprotein, it is very pure. So in effect, it does provide a danger signal like [ ACE ]. So the adjuvant added is Matrix-M. It's a saponin. Saponins have been around in adjuvant for many, many years. The particular tweak we add is we put it into a nanoparticle, and we've got fractions that have a really good balance between adjuvant [ safety ] and reactogenicity. So lots of clinical experiences that are prior to this. You may know we unblinded a Phase III pivotal trial of our NanoFlu. That included Matrix-M. So we've had a lot of clinical experience with this. So you'll see in our data, it's key to inducing highly functional immunity, especially to neutralize the antibody and CD4 T cells that we've reported on.

Okay. Great. And then I think you touched on this, but maybe you can just go in a little bit more detail, how many exposures do we have to that adjuvant? And just as people think about safety or potential risks, how would you describe that?

Well, the adjuvant compound itself saponins are our licensed products, including our drug, the insect cell recombinant. So when the FDA looks at that, they gave the platform a lot of credit. In terms of exposure, it's about 3,000 exposures prior to this. Obviously, we're going to develop many, many more exposures. I think you'll see in the New England Journal, our safety profile, the reaction is so first of all, no SAEs, no serious adverse events. And then in terms of reactogenicity, a little bit of local pain and tenderness and then a little bit of fatigue. The vast majority of our subjects reported nothing or mild symptoms. So really good safety profile. And I'd say the hallmark of this, it's important and maybe necessary in older adults, where the overall -- there's overall some immune suppression. And again, our immune [ sinensis ] -- again, when we reported on our Phase III Flu data, that was the population we're in. It's over 65. I'd say one of the remarkable features in the data is just the sheer low level of T cell -- CD4 T cells, which supported antibody reduction and the induction of very robust T cells with the adjuvanted nanoparticle vaccine.

Okay. Okay. That's very helpful. So you've referenced a couple of times you've obviously published the Phase I data, and that's available in the New England Journal. Maybe could you just briefly talk about both the titer levels that you're able to achieve against the antibodies, especially on the neutralizing antibody titers. And then your view on the T cell response, especially CD4 versus CD8?

Yes. So if I can get people to look at Slide 9, that has our wild-type neutralization antibody titers. And the way that slide is structured, this is -- in columns, we have a placebo. In the first column, the antigen by itself in the adjuvanted vaccine given twice what's either 5 or 25 micrograms to spike and then a single dose. And what you can see there is, first of all, this assay is a wild-type neutralization assay and uses a conservative readout of 100% reduction in the side of that effect. And you can see, if you look at Column 1, placebo, there's no preexisting immunity. You might hopefully expect the unadjuvanted, in the next column, get some responses, but markedly increase when you add the adjuvant and the second dose gives you another log increase in the neutralizing antibody. So the 5-microgram dose versus the 25-microgram dose, you can't see a difference. And I think that what that tells you, we know that this was not a surprise because we worked with a very similar situation with our Ebola vaccine. So a lot of the lessons learned in our Ebola, it was a glycoprotein nanoparticle, Matrix-M adjuvant naive population. We saw a dose-sparing there, where if you use 50 or 5 micrograms, you couldn't see the difference. And we know that, that is -- you're at the peak of the response in the S curve. And so by going down in animals, we clearly show dose response, but here, we're not seeing a dose response. And that tells you you're at a peak response. So 5 micrograms, nice problem to have because then we can really increase the supply. The other reason I think this is at the peak of the response you can get within the system is in the far corner within the last column, we have convalescence here. We got sera from Baylor College of Medicine. We asked for sera from subjects who are PCR positive and symptomatic, and they were inpatient. You can see there, they actually sorted by severity of illness. We didn't know this before we provided this blinded sera to the University of Maryland did this assay, but they sort by severity, which would be -- which would go with [ my premise ]. As a physician in this area, I think if you have a severe infection in any of these Type 1 fusion protein diseases like RSV or flu, we generally -- that generally confers protection. And these antibodies are -- suggest that, that's kind of at the peak response you can get. And if you look over at 5 micrograms, most of our subjects are clustering at the upper end of this convalescent sera. And so I think together, that's telling us the antibody response is really about at its max as measured by the wild-type neutralization. If I can just take another few seconds on the next slide, same data now in a reverse cumulative distribution plot. You see on the y-axis, the percentage of subjects, and on the x-axis, the titer. And so higher is more people and to the right is more antibody. And if you look at our circle around -- at a titer of 1,000, about 94% of the subjects have a high titer. That bodes very, very well for protection. I'll just say, in general, in this particular low niche of these types of viruses, we know neutralization works. It's worked with the monoclonal antibodies, palivizumab, motavizumab, some other derivatives in randomized clinical trials, high level of protection. So we know that neutralization antibodies are very likely to be protected. Now we measure CD4, and that's also in our New England Journal, we measure the CD4 responses. They -- CD4 responses, T cell, they tend to support the antibody response. They give you a higher quality. So they increase the affinity and they give you higher levels and they create memory. So we saw a very robust T cell response. You can see that in Slide 12. They were -- with the adjuvant being really critical for induction of those T cell responses. We're looking at CD8. Immunity engages both arms in immune systems, so CD8s are effector cells that allow clearance from the lungs. In my view, they're kind of ancillary. We have -- we suspect they're possibly protective or can help but they're certainly not the ideal thing for prophylaxis. So if you have a vaccine, and you don't get good neutralizing antibody responses, I'm not sure I would develop that. However, if you have both arms, it could be a plus. So we have cells, we're looking at data. We've kind of done some work with Scripps Institute to try to generate that data. And we'll see in the future if we can generate CD8. We do in animals with the spike protein with Matrix-M, and we'll see if that's a key of a factor that is. Going forward, it would be interesting. There may be a chance to see what impact adding T cells might have, but it's actually pretty complicated to generate immune correlate. So I just -- again, I would go very strongly in the favor of making neutralizing antibodies.

Okay. Great. They're helpful comments. I guess one thing -- that I -- that would just be helpful to clarify. I think the assay that you guys are using to measure neutralizing antibodies is different than some of the assays that other people have used and -- cross trial comparisons aside, right, because it's hard to compare cross trial. Maybe if you could just provide some detail on that?

Yes, yes, yes. I mean, they're all different. So this is -- we went to a coronavirus expert, Matt Frieman, University of Medicine -- Maryland College of Medicine. He had a BSL-3 lab, a lot of expertise. So he's able to grow the virus. And it's a conservative assay. So what you do is you mix virus with cells. And it's 100%. So there's no kind of gradation here. Sometimes people do 50% or 80%, it's 100%. So it's pretty conservative. I think that the best reference for the fact were -- had a good response, as I mentioned, the dose-sparing. So we seem to be maxed out and then comparing to convalescence sera. And not to be overly critical because it was hard to get convalescent sera. But when I look at others, they're mostly mild. And so they will kind of be down the other end of this scatter plot we have, whereas ours are moderate to severe, I think that's much more indicative of what might be protective. And so it's going to be interesting. We're in the unprecedented modern bake-off of technologies, aren't we? And I feel very optimistic based on the data we're seeing and the preclinical data where we see protection, both the lung and the nose and some other factors. I think that we should be very optimistic that our vaccine could come out on top in terms of efficacy. But that remains to be seen. These assays are all a little different, as you mentioned. It's a little hard to cross compare, but there's no question at least we're reporting very high antibody compared to everyone else. One last thing on that. It's important you can make antibodies to spike protein, but they may not be functional. And one way to look at that is the correlation between the 2. If you look at our New England Journal paper, there's a correlation, it's 0.95. That's almost perfect. That means that the antibodies we're making are functional, I'd say some of the other technologies have a much lower relationship between the antibodies they're inducing and this functional measure. And again, that makes me feel very optimistic about the vaccine that we're promoting in the efficacy studies.

Great. Thank you for that and thanks for the clarity. I guess, maybe one other question. Given what you see and with the adjuvant in vaccine, I mean, have you thought about possibilities of a single-shot as opposed to 2? Or what are your thoughts around that?

Well, it's interesting. We have a lot of argument about that at the beginning of all these development programs. And I always thought I'm a pediatrician by training. And so most of our regimens are prime and boost, including flu. For example, the first time you see a child that hasn't been immunized, you give them a day 0 [ of 28 ]. That's how the immune system works. You prime, you come back, and with the boost, you get this massive increase in affinity and quality of antibodies. I mean this is a viral disease. It's serious, and we have a great infrastructure for immunization. So why not do the optimal in a reasonable short period of time? Don't have your boosts out at 6 weeks, but boost. And I'm not saying everyone listen to me, but that argument won the day. So that's a way to get a higher quality response. It's just basic immunology. So you see everybody's kind of gone towards that, even the kind of the viral vectors at first, they were -- I think they were asked to do a 2-dose regimen, try to improve immune response. And the other thing about the recombinant vaccine we have, we can boost. It really -- there's no vector immunity, so you -- which makes it harder to boost. We can really boost. So to me, it's kind of a no-brainer that we're boosting. And actually, if you look at slide -- we talked a little bit about the interval. If you look at Slide 11, you can see there that it's mainly to look at persistent response. You can see that we chose a pretty good spot for boosting there at day 21. It seems to be, if you look at the 1-dose regimen there in the middle, it's not going up after day 21. That's kind of one of the principles you look for is, catch the immune response when it's starting to wane or it's stable, that's usually the optimal time to boost. So day 21 is kind of the minimum 3-week gap, it's about the minimum you go for, for a boost. I think that it just has taken advantage of the way the immune system works to do that. And we want a vaccine that works well, maybe blocks infection, certainly has a high efficacy, and I think that's the way to go with a dosing strategy.

Okay. Okay. Great. Maybe we can jump as we start to think about the Phase II and Phase III program, but maybe quickly before we do that, data in older adults above 55 or 60 or 65, I don't remember where your cut off was...