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

Welcome to the Morgan Stanley Global Healthcare Conference. I'm Jeff Hung, one of the biotech analysts. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to our -- your Morgan Stanley sales representative. For this session, we have from Novavax, Filip Dubovsky, Chief Medical Officer; and John Trizzino, Chief Commercial Officer and Chief Business Officer. Welcome.

Thank you.

Thanks, Jeff. Good to be here.

For those who may not be familiar with Novavax, can you provide a brief introduction?

Sure. Novavax is now a late-stage development for vaccines. Primary focus at the moment is COVID vaccine. As many of you already know, with the work that we've done over the past year in significant clinical trials, demonstration of efficacy, scale-up of our manufacturing and regulatory pathway. And obviously, also in development of other vaccine candidates recently having announced a clinical trial start of our combo vaccine for our COVID vaccine and NanoFlu candidate.

Great. So what differentiates 2373 from other COVID vaccines?

Well, it's the first -- or the latest-stage common protein vaccine that's really in the clinic and has shown efficacy. We have a couple of Phase III studies we've reported on. They're independently powered Phase III studies. One was in the U.K. that had 15,000 people randomized 1:1. And the second study was in the U.S. and Mexico that had roughly 30,000 individuals randomized 2:1. And what we showed -- and all those studies were unique because when we conducted the studies, variants started to emerge. In the U.K. study, we had the B.1.1.7, which was the Alpha variant that came out. And during the U.S. study, we had a number of different variants, which popped up while we were collecting efficacy endpoints. So uniquely for -- we are able to establish efficacy, not only against the Wuhan, the original strain, but also against the variants that popped up during our collection period. And what's really interesting about the studies is that we're remarkably consistent. Our primary efficacy endpoints were within 1 percentage points of each other between the 2 studies. And that really demonstrates that we had a very consistent product that works well irrespective of the variants that cropped up. In the U.K, we showed that efficacy against the Alpha variant was 86%. In the U.S., we had a value of 94% efficacy against the Alpha variant. And when you combine all [ the variants ] of concern and interest in the U.S., we had a point estimate of 93%. And also, the -- our endpoint was against mild, moderate and severe disease. And that's slightly different than maybe some of the other sponsors have looked at. For us, we had 100% in the U.S. study, 100% protection against all moderate and severe disease irrespective of whether they were variants or they were more prototype-like.

Great. And then you kind of touched upon this, but what evidence do you have that the vaccine cross-reacts against variants?

Yes. I mean it's -- really the strongest evidence we can have and that's demonstration of efficacy against the variants. And this is -- we've put out the specific variants that occurred in the study, but really the ones that we had the most of that we're able to generate estimates of points of efficacy against were the Alpha variants. And those were the values that I just quoted and that we published on. We have additional data that's coming from other studies where we look at immune responses against variants and we -- what we see is that even after primary vaccination, we do get functional immune responses against all the variants we've probed it against, that would be Alpha, Beta and as well as Delta.

And then can you talk about your strategy around those variants? Like how should we be thinking about that?

Yes. So we took a two-pronged strategy. One of them was to develop variant vaccines. And we've certainly done that, and we've taken a number of these into preclinical evaluation and published on some of that. And we will be shortly starting a study of a couple of different variants in Australia to both its bivalent products as well as monovalent products to understand how they perform in people. But when we looked at our boosting data from a Phase II study we did in Australia and the U.S., we saw not only that we induced immune responses against the variants we probed against, but when we boosted, we generated really very, very high levels of immune responses, better than we did with the primary vaccination, which gives us a lot of comfort that we'll have efficacy against the variants that -- when they do crop up. And obviously, we have additional studies that are ongoing, which will confirm that in the clinic.

Right. And can you talk about your ACE2 inhibition assay and what you've seen, particularly with the Delta variant? And I guess associated with that, there's actually a question from the audience in terms of how much patient data do you have against Delta variant specifically?

Yes. So in the efficacy data that we've disclosed so far, we did not have any Deltas. Not any of the 617.2s. I believe we had a 1.617.1, which was like a Delta light. So we don't have any direct efficacy evidence that we've disclosed so far. What we have shared is the immune -- just the data that we induced. And this is against the ACE2 inhibition assay. So this is a pretty stringent assay. And what it does is it examines or probes the ability of the antibodies that are made with vaccination. Did we induce with a vaccine that was -- against a prototype its ability to block the interaction between the Alpha, Beta and Delta spike protein in the human ACE2 receptor? And obviously, that is the way that the virus enters the cell. So you can block that interaction, then you can block infection and subsequently disease. And pretty much what we showed is that the immune responses that we had against Beta and Delta were very comparable to that, which we saw against Alpha. In fact, the Delta ones were numerically higher than what we saw against Alpha. And against Alpha, we had vaccine efficacy between 86% and 94% in our 2 Phase III studies. So that gives us a fair amount of confidence that we will have efficacy against the other variants.

Great.

And I'll also say that this -- these data are available on our website from our August 5 presentation.

Okay. So you've studied a boosting capability and you kind of talked about this, like you recently announced the data from the 6-month booster study. What did you see? And then, I guess, how do you think about 6-month versus 12-month boost and what factors need to be considered?

So I guess a couple of points. So when you -- when we think about boosting, you're really fighting 2 phenomenon. One of them is waning immunity from your primary vaccination series. And the other one is the merchants of their different variants, which may be less susceptible to your vaccine than what you vaccinated with. And both of those come into play. We -- antibodies, this is very predictable. You start up high and you go low, it's a normal rate of decay. And when you reach the threshold, which no one knows when it is, then you become susceptible to the disease again. What we do know from vaccines that don't generate high levels of antibody or generate poor quality antibody is those people are getting sick. The people are getting sick faster than people who are vaccinated, for instance, with mRNA vaccines that induce high levels of antibody. So that leads us to believe that you need not only high levels of antibody but quality levels of antibody. And that's what we've demonstrated our vaccine does. So this -- our 6-month boost not only increased the levels of antibody -- neutralizing antibody very much 3x to 5x higher with our primary vaccination series, and that means you're going to have a longer duration of protection. It will take longer for that antibody to decay. But more importantly, when we look with our ACE2 inhibition assay, we got everybody. Absolutely everybody who was boosted had high levels of ACE2 inhibition against all 4 of the variants we tested against. And that gives us a high level of confidence that this should translate into efficacy against the variants with boosting. Now as far as subsequent boosting, I do believe that we're going to be in a situation of annual vaccination in the future. That's just my take on the science. We know from other human coronaviruses that, [ that's a period of the -- that ] infections happen. We know from early challenge studies that people could be reinfected with the same coronavirus a year later when they were challenged with it. So my sense is that we're going to be with this coronavirus for a while. The variants aren't going away. And we're in for a vaccination for a while now.

Your partner study remain ongoing in the U.K. that provide an opportunity to boost 2373 on top of other regimens. Can you walk us through those studies and why is that important?

Yes. So it's important for a number of reasons. Certainly, from a very basic science perspective, there's reason to believe that boosting with a recombinant protein like we have is beneficial. So in general, you can induce a higher level of immunity than you can with homologous vaccination. So that's a positive in and of itself. And of course, people have -- many people have received 2 doses of other sponsors' vaccines. So we're going to be in a position to be able to generate high levels of antibody for people who've been vaccinated with other platforms. So that's the reason. And I guess from a -- from our partners' perspective, these are studies that were sponsored by the Vaccine Taskforce. In the U.K., there is a couple of different academic institutions and there are a number of them. Some of them are looking at heterologous vaccination. So a single dose of either mRNA or adeno vector boost to do with our -- or with the second dose of ours. And so we're looking at real boosting regimes. So 2 doses of either mRNA or 2 doses of adeno boosted with a dose or half a dose of our vaccine. And the idea there is to look for immune responses. And the notion is that they should be able to provide policymaking bodies like JCVI in the U.K. or ACIP in the U.S. with enough data to be able to provide policy recommendations for how to use the vaccines.

And then maybe if we can take a step back, just coming back to the Delta variant. There is a follow-up question from the audience. When you submit to the FDA, will efficacy data be available for the Delta variant?

The primary package that we will be submitting to the FDA for emergency use authorization will be for adults. And that data, as I described, does not have Delta efficacy data in it.

Okay. And then I guess on the topic of filings, when do you expect to get approval from the EMA and how many doses are you planning to deliver?

Yes. That -- let me take a step back a little bit more kind of macro level, and I'll come back and address some of those specific questions. But I think it's important to remind everybody that over the last 12 months, we've built out an entire global manufacturing capacity in 8 different facilities in 7 different countries, and that's quite an extensive effort. And of course, that then is related to all of the regulatory authorities that we've been speaking with around the globe from the European Commission to U.K. to U.S. to Canada, et cetera. And what -- where we kind of are now is all these things begin to kind of converge together. And what we've already publicly announced is through our partnership with Serum Institute, we've already filed in India, Indonesia and the Philippines. And therefore -- in addition to that, we're going to be making multiple additional filings over the next couple of months. And so that's important to understand in the context of all of these regulatory conversations are taking place on a regular basis. They're multiple presubmission meetings, U.S.-based, U.K.-based, EMA-based. And what's happening is we're getting this very solid, confident alignment across all of these regulatory authorities from these conversations, getting input from them about modifications that need to be made so that we have confidence that when we do make the filing, we'll get a quick review and a quick review approval. So therefore, you're having -- these filings are converging. So what I'd like to do is instead of kind of just putting a pin on the calendar on a certain date for a specific filing and say that you're going to be seeing these filings happening with -- again, within the next couple of months from today across the spectrum of all the regulatory authorities that we're dealing with at the moment. As far as total doses are concerned, we've said several times that we're, again, at a macro level that between us and including Serum Institute, we'd be at a run rate of about 100 million doses per month by the end of this quarter, by the end of the third quarter. And that by the end of Q4, we'd be at an increased run rate of about 150 million doses per month. I think people should think about the fact of total available supply for all of 2022 would be at minimum 2 billion doses.

Great. And you kind of answered this next question, but I'm going to go ahead and just ask it again anyways. So in terms of the regulatory approvals in multiple geographies, can you talk about the status of your rolling submissions and what does the rest of the year look like in terms of prioritizing those submissions?

Yes. So it will -- this will give me a chance to kind of reiterate the point, which is great, and that is these will be occurring over the next couple of months. We've received tremendous feedback and collaboration with all the regulatory authorities that we're speaking with. And so therefore, we'll see all of these EMA, U.K., Canada, Australia occurring within this next couple of months' time frame.

Okay. And then you've had additional announcements recently on expanding your global reach with 2373. How many doses are covered by advanced purchase agreements in the different geographies?

Yes. So let me run through those various components. So we have some 400 million doses in advanced purchase agreements with again, New Zealand, Australia, Canada, U.K., EMA and others, right? European Commission was announced a few weeks ago at up to an additional 200 million doses that's included in that number. We have 1.1 billion doses that's -- that has been announced as part of the COVAX Facility, 350 million of those doses coming from Novavax and 750 million coming from Serum Institute. And then they are still part of the original Operation Warp Speed funding of $1.75 billion, there's 110 million doses committed under that agreement as well. Now that -- the number of doses that I'm talking about are expected to be supplied between licensure and then Q2 of next year, right? We are already engaging in conversations about incremental procurement for the second half of '22 as well as early '23, especially given current vaccination rates around the globe and also in recognition of the fact that boost strategy will create incremental demand to what we already know as well.

Great. And then can you talk about your manufacturing capacity. You kind of talked about how by the end of the month, you want to reach 100 million doses and then by the end of December, 150 million doses. What progress have you made to ready your supply chain? And what remains outstanding to reach those goals?

Yes. So I think it's important, again, for me to reiterate. We -- in January of '20, right? We were virtually at no manufacturing capacity. And so we have built that out over 7 different countries of contract manufacturing organizations, a facility in the Czech Republic that we own, partnerships with Serum Institute, SK Bio, Takeda in Japan, Biofabri in Spain. And this comprehensive network of just antigen, not to mention the facilities that we've stood up [ in tech transfer ] for the supply of our adjuvant have been critical to the amount of capacity that we're creating. And so I think it's a robust supply network. And there's a significant amount of effort that goes into the scale-up of that manufacturing and also the cadence, meaning how many batches can you produce in any particular period of time. So you're not only scaling up to manufacture a large scale, but then you're also creating a process by which you can do these runs and in a very efficient manner and condense the period of time that you're running these individual batches. And so that's critically important as well. As far as the raw materials, which is I think what you're alluding to in supply chain, is -- has challenged us earlier in the year. At least at the moment, we feel like we have a handle on all of the raw materials. Although I'm sure you not only would hear from us, but the other vaccine manufacturers that, that's something that we need to keep a close, watchful eye on to make sure that there is sufficient enough media and filters and other raw materials available for production. But at the moment, we're confident in having a control over that.

And then maybe a question on the combination vaccine. Earlier this week, you announced the start of the Phase I/II study of the combination vaccine for influenza and COVID-19. What is the significance of this program? And can you talk about the opportunity for the combination?

Maybe I'll briefly outline the study and then John can talk about the opportunity. So previously, a little bit over a year ago, Novavax announced the success of a Phase III study with our quadrivalent influenza vaccine. And we're given a licensure pathway by the FDA. And then, of course, COVID happened. So this is an obvious opportunity to combine COVID with flu. It uses the same platform and the same adjuvant system. So it's a natural marriage for us to pursue this. And there's obviously advantages to having a single vaccine that can work against 2 different diseases. The study we're doing now is one where we're going to be defining the exact dose and how much of each of the components we need to put in there to induce the optimal immune response and the best schedule for us to use to deliver the vaccine. And that study just started in Australia. It's looking at many, many different levels of each of the antigens. And coming out of that will be, I think, our final formulation to push forward towards commercialization.

I think as you think about where COVID vaccination is going, right? There's still a lot of work to be done for initial regimen vaccination. There's still work to be done from a boost standpoint and understanding what the durability of protection, how frequently we'll need to boost, whether it's 6 months or we'll go into some annual cycle. But I think at some point, over the next 24 to 36 months, we'll have a better understanding on how those things will function together. What we do believe, though, is that over that period of time. It will probably start looking like an annual, seasonal vaccination and no better match than to put it alongside of influenza, especially our influenza candidate. It's a recombinant protein nanoparticle, the same for both. We're using our novel Matrix-M adjuvant in that product candidate. So for us, it naturally fits together. But also from a public health need, it naturally fits together. The flu vaccine market has struggled with poorly effective vaccines, especially in the older adult populations and immunocompromised populations. And we believe this combination vaccine will provide a better solution to that and then do it within one shot.

Okay.

I was just going to add that we've also released this data that is part of our U.K. Phase III study. We had a substudy with -- that combined our product with another influenza vaccine. And it didn't really impact the efficacy of our COVID vaccine. So we have high levels of confidence that this combo approach will be successful.

Okay. Great. Maybe in the last couple of minutes, we'll try to get some of the audience questions. So one of the questions that we have was on the economics of the Takeda deal, if there's anything you can talk about that.

There's an element -- there's a profit-sharing element in the part of the deal that's been announced. We're exploring the opportunity for expansion of the Takeda deal. We're constantly looking for manufacturing capacity around the globe. We have a number of partners already that are Serum Institute and a number of our other contract manufacturers. I think Takeda presents itself as a great opportunity for Japan, but also potentially presents itself as an opportunity for incremental supply.

Okay. And then maybe one last question from the audience, just kind of like we're catching. So anything on FDA feedback or any updates that you have on the FDA submission or the WHO filing? There's been a few questions on those.

Yes -- no. The FDA, I think we provided some guidance about Q4. We're standing by that. Again, there's still tremendous progress and feedback from FDA interaction with our colleagues there. But Q4 still sounds about right as far as the guidance for filing. The second part of your question was...

WHO?

WHO. Yes. So again, still actively engaged with them. We should expect to see something breaking there soon. But again, a little bit of uncertainty, but continue to engage. There is -- there's -- there has been ongoing conversations as well as continuing flow of data, but there's one more step that we need to do to finalize that submission.

Okay. Well, great. Maybe in the last like 30 seconds. Are there any aspects of the Novavax story that you think investors underappreciate?

That's a -- boy, that's a great question. And the answer is yes, just because you're a few months behind -- 9 months behind from the first dose, first doesn't mean you're best and second place doesn't mean that you don't have a good solution. And so I think sometimes a little bit slower but surer wins the race. We feel we've got a great product. Our clinical data demonstrates that we have a great product. I think that this pandemic is going to go on for quite some period of time, well into '23 and then a commercial opportunity after that. And so I think a few months of difference really don't change the valuation proposition. And I think Novavax is -- will make a mark on the COVID vaccine space as it should, based upon the data that we've shared on our successes to date.

Great. Well, looks like we'll have to leave it there. Thank you so much for your time.

You're welcome. Thanks for having us.

Bye now.

Bye.