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

Hello. Good morning, and welcome to the Cantor Global Healthcare Conference for 2021. My name is Charles Duncan. I'm a Managing Director and Senior Biotechnology Analyst with the firm's equity research department. And today is day 3 of the annual conference. And I have to say, wow, what a year it has been since we've last hosted our clients in the fall of 2020. So it's a pleasure to introduce the next presenting company that is Novavax. And with me today, I have Greg Glenn, the Chief Guru or Vaccine Guru, actually the Vice President of R&D. Greg, good morning. Good to see you.

Good morning, Charles.

And I also have John Trizzino, the company's Chief Commercial Officer, who actually used to be the Chief Financial Officer as well. John, nice to see you.

Yes. Nice to see you, too. Thanks for having us.

Thank you for joining us. And wow, what a year it has been for a lot of reasons. But particularly Novavax, I would say that it's been a challenge for a lot of people for a bunch of reasons this last year. But we have seen some very interesting innovation being driven by biotech companies, including, as you know, an RNA-based vaccine, some work that you folks have done certainly in that space as well as the recent approval of potentially the first disease-modifying agent in Alzheimer's. So I guess I'm wondering for you, you had to work probably double time, and I guess I'm wondering what is the source of inspiration and resilience that you've relied on to make this all happen in the last year to keep your staff moving forward?

Yes. It's a great question, and it has been an amazing year. People who are in vaccines, who go into vaccine research are at heart public health people, so they want to make a difference. And if you look at the landscape of history of medicine, there's just nothing like vaccines in terms of modifying, improving the quality of life, saving children, big list, very impressive accomplishments. So that I think drives people into my field. And then, of course, I had the speech when we hire people, which I'll refer to John as we've had to build a company, is that where can you go to do something noble interest and interesting. And so this is a very noble profession. If you succeed, you save millions of lives. I was a pediatrician and seeing patients before I went into vaccine development, and I realized that you could see in 20 children a day and over your career, you might reach close to 1 million. But with the vaccine, you could have such a broad effect. So that's one thing, public health, that gets people out of bed. Can you make a difference? And we can maybe get on this a little bit later, but that's for us, it's a global view. This is a global problem. I'd say the second interest -- part interesting is that this is science around these viruses. It's fascinating, and we were working on that area before the pandemic arise. So we were working on the flu. Flu has such similar facets. The virus changes, and it comes and goes, causes severe illness. And we were solving for that with flu when COVID came around. And so we put that aside, took the lessons from flu, and I think the manifestations of our problem solving in terms of clinical efficacy are really actually kind of a surprise to me. I didn't think it was possible to prevent any symptom. I thought, yes, hospitalization and maybe severe illness, but we're preventing COVID illness if you look at the analysis for strain match at 96% to 100%. So that is remarkable. So it had been very interesting problems all around, the spike protein presenting it as a good vaccine and seem very gratifying to see the evidence come out that this works so well. And I think that's broadly felt, and I think our nanoparticle technology has really been proven as the -- as an important concept here this past year. So with that, I think we ought to talk about the year in terms of we've been building the technology development of vaccine, but the company has also had the very large task to build a company and finance it. And maybe you can turn that to John just to talk a little bit about that journey.

Yes. It's been amazing. If we just think back 1 year, 1.5 years ago to where Novavax was, perhaps, John, maybe you can characterize that relative to even the number of folks on board, the manufacturing and the level of R&D and characterize it relative to today.

Yes. We're speaking up on about 20 months into this effort. And while it's become commonplace, we read about them in the new papers every day. We see it in the broadcast, media and news on a constant basis. But we should remind ourselves of what it's been like for the last 20 months. Novavax was than a company awaiting its Phase III NanoFlu data, which turned out to be very successful. We achieved all of our endpoints in our Phase III trial, but that was back burnered because of all of the work that needed to be done for the pandemic. We had about 150 people. We're in 2 small facilities and hopeful and optimistic about our future, and what gets thrown in all up is a significant challenge to respond to the COVID-19 crisis. And we did in a significant way. Immediately, Greg fires up the engines, which is discovery group had already had tremendous experience with coronaviruses and SARS and MERS and was able to respond very quickly. And because of the industry attention and the public health attention to our recombinant protein nanoparticle, we were able to attract a significant amount of retention right out of the gate from organizations like CEPI and the U.S. government to aggressively fund our program. So now almost 20 months later, we're over 1,200 people globally, manufacturing in 7 different countries, have had clinical trials in excess of over 50,000 subjects participating, robust clinical data and efficacy demonstration of our ability to have cross reactivity and protection against the variant strain. And it's a completely different story today, I think. And most importantly, maybe in all that growth and all those accomplishments is the profound satisfaction that we all have here at Novavax for what we've done and what we've been participating in. And especially, as Greg said, those people that have been in the vaccine industry a long time, it's very satisfying and rewarding to have this opportunity in your career to contribute to global public health.

It really is amazing, especially when you think about some of Greg's earlier observations in terms of public health and the statement that there really is nothing like the vaccine industry in terms of making an impact certainly over the last 100 years or so and even the last, call it, yes, 100 weeks, certainly. But I guess my question is, do you think that this is the beginning of the end or the end of the beginning? Are we going to face more pandemics? Are we going to face more infectious disease outbreak? Is this a sustainable model generally, but then also specifically for COVID? What's your perspective on the current pandemic and the need for these kind of technologies?

I'll say a few words and then maybe John. I think it's a person working with viruses, this is not a surprise that it's around, it's seeded through the global population. I think that the rapidity and the speed with which is spread has been a surprise. This is a particularly infectious virus and it's virulent, so I think it's a little bit of a surprise as well. So now it looks like it's here to stay. It's in different populations like flu. We expect it to continue to evolve. So I'm optimistic that widespread vaccination really could control the worst sequelae of this, but I do think it's going to be a continued ongoing public health problem.

Yes. Like we said, 20 months in, Charles, we're still in the pandemic. And by definition, it's global in effect and significance. And so it isn't going away anytime soon. We still have a pandemic to solve for. Before we even think about what's next, we're still in a pandemic, right? Even though there are multiple high-income countries that have good vaccination rates, not great. I mean, even the U.S. at 55% or 60% still has 40% of the population, similarly in Europe and other countries. But you have the rest of the world that is very low double digit and some single digit vaccination rates that has to be treated, that has to be vaccinated. And the work that we're doing through Serum Institute and CEPI and the COVAX Facility is making sure that as soon as we do get licensed, significant hundreds of millions of doses will be going in that direction. Then what you have is a situation post pandemic where we believe there's going to be a need for revaccination. Whether that's 6 months or 1 year is kind of yet to be determined because, as Greg said, we're learning every day about what the dynamics and epidemiology of this virus is. But I think it's pretty clear that either a combination of durability of protection or variant strains, there's going to need to be revaccination, which is why we're also looking at the benefit of a combination COVID flu vaccine as well, while we're introducing our COVID vaccine into the general population around the globe.

Well, I want to talk to you about that combination because I'm quite intrigued. And you -- but you just touched on a question that I had relative to the commercial opportunity, if you will, which is really the unmet need, the clinical opportunity. So where do you see the biggest source of impact that you can serve here? If we're talking together at the Cantor '22 Healthcare Conference, what will you look back on and say, "Okay. Here's what we've achieved in terms of making an impact," specifically on COVID before we go beyond that?

Yes. Let me just talk from a commercial perspective. I think there are -- while Pfizer and Moderna have done a great job, right, they were there on the scene. 12 months in, they had a vaccine. They should be applauded for the amazing work that they've done. It's a good vaccine, but there's a need for our vaccine. There's a need for a protein-based vaccine. There's a need for a vaccine that has a better reactogenicity profile that has the ability to deliver product at similar cold chain as to the rest of the vaccine space. And having to worry about either frozen or a lyophilized product, it's easier to handle. And I think the world would benefit from having something -- a different technology. And I think our technology is significant on 2 fronts, not only our antigen, but our adjuvant, which doesn't get a lot of coverage sometimes. But the adjuvant is a critical element to what we're doing, and it's a unique adjuvant, right? And I think there, again, it's important to be talking about this pandemic and the solution and need for this vaccine in this pandemic, but we should also be talking about emerging infectious disease strategies going forward and platform technologies like ours that can respond quickly to whatever the future has in store for us.

Yes. I have to say I've been astonished at the apparent lack of diversification of the technology platforms with regard to approvals, and we'll get to approvals here in a minute. But I do want to ask Greg a question about the protein-based vaccine. I mean, John alluded to this very nicely, some of the points of differentiation, but if you could just spend a moment on the science. Why do you think the nanoparticle, the protein-based nanoparticle as well as the adjuvant could prove to be a winner relative to, say, other approaches, including RNA or virus vaccine -- virus-enabled vaccine?

So that's great. Thank you for a great question. So I think just harking back to what one tries to do with a vaccine is you'd like to replicate the robust immune response you get to an infection, but obviously without the sequelae. And so this is -- finding the balance between safety -- and just to distinguish safety as long-term effects, reactogenicity, which is sort of the short-term effects and getting the immune response is very important. Right off the bat, we saw in the development of our recombinant full-length nanoparticle adjuvant vaccine, kind of a mouthful, is that we were at a place where the dose was very small. In other words, we could go up as far as we could in the dose to a point where we could no longer increase the immune response. And so I would say we do not have a dose-limiting toxicity. We're creating the maximal possible immune response. You can kind of plot that by an S curve, and so that's a real advantage from a safety and reactogenicity standpoint. That allows you to operate in the space where, for like example, mRNA can't. They very early on discovered that you just can't go up to very high doses because it was quite reactogenic, and there are some safety issues around that. So I think that's a feature of the way we make our vaccine. It's a full-length protein. It looks just like it does in a virus. Matrix-M provides a danger signal, and the combination gives you this very robust response and recognition of parts of the protein that are conserved. So as the virus goes through all these changes, we, like we did with our flu vaccine, present this protein in a way that we have immune responses to constant features of the spike protein. And as we just saw from our recent boosting data, we could even -- without boosting, we were getting responses that really go across the board in terms of Delta, Beta, Alpha and so on. So those features are driven by the technology. It's a full-length protein. No one else makes a protein like this, and it's not easy, but we do it well. And no one has an adjuvant in our view that has a really good safety profile like this. So that combination, I think, explains our great data, explains why there's a lot of demand waiting for us. And I think over the long haul, the recombinant adjuvant technology is going to prove to be a real winner for deployment.

So it seems that from a technical perspective or a clinical data perspective, you have at least a viable vaccine, if not perhaps a class leader at least for COVID. You've also demonstrated some pretty interesting data in influenza as well. I'm wondering if you could touch on that and then we'll come back to the concept of boosting, combination and the future.

Yes. I mean, we -- when we started, as John said, we were just on the cusp of unblinding Phase III data, where the theme of our flu vaccine was to present a full-length nanoparticle. And just like we see with COVID, flu evolves. The virus evolves, which is well known. And we were presenting this full-length nanoparticle in a way that portions of the protein, in this case, HA, that are highly conserved, that don't change are being seen by the immune system and reacted to. And so you get that very constant immune response to, for example, the virus H3N2, which was really going to rapid evolution. The evolution was driving a lot of hospitalization and poor vaccine performance because vaccines have not historically done a good job of presenting the conserved epitope. So we've -- a lot of detail around that thesis manifested in flu. And now I would say to -- that those principles are turning out to be driving a broad -- broadly protective immune response with COVID. So that is the basis -- that is the fundamental basis for the technology and actually why I came to the company over 12 years ago. I was really excited by this prospect and its ability to solve for these very difficult to protect against changing viruses.

And Greg, congratulations to you and the broader Novavax team on the recent publication of that data as well.

Thank you. Yes. We had nice editorial on that on our flu -- Phase III flu vaccine.

Yes. So why don't we talk a little bit about 2373 and the march to the market with that candidate? So of, I guess, if you could start, John, what is the official, if you will, guidance or goals with regard to emergency use authorizations and then manufacturing here in the near term?

Right. So the latest kind of guidance we've been giving is that we work diligently over, as you can imagine, the last 6 or 9 months to kind of refine the final regulatory package that was being -- that is planned to be submitted soon, and part of that was a couple of release assays that were particularly challenging given the construct of our vaccine that Greg mentioned before, and he can elaborate on that a little bit later. But the combination of our recombinant protein nanoparticle, its nanoparticle structure, the particle structure of our Matrix adjuvant presented some challenges in those assays, which have now been resolved. They've -- both of those release assays have been validated. And though we're in process of testing those assays against product prior to the submission of the final CMC package. But along the way, we've been having multiple conversations with the regulatory authorities around the globe, FDA, EMA, MHRA, regulatory agencies in Canada, Australia, India, WHO, and all that input has been extremely valuable. So now we have this alignment with the regulators, right? You never get approval, but you get alignment and input from them that you include in the document. And we feel confident right now that what we've got is the best and most robust plan forward to make those submissions. But what it's also done is it's created this kind of converging of the time lines around those submissions because now, this package is virtually the same in all of these regulatory authorities, but for the facility that's being assigned to that filing, at least initially. So we had thought we were going to see MHRA a little bit sooner than some of the others, but it kind of looks like it's going to be coming together over the next month or so now, where you're going to be seeing all those filings going in a relatively kind of condensed period of time. We always find it difficult to kind of put a pin in the calendar on exactly when that's going to be, so that's why we're giving you the kind of the guidance that we are. U.S. FDA, because of some of their requirements and a little bit of a waiting period after they get a chance to look at some of the data, might be a little bit longer before we file the EUA application. But in that case, the next logical question is EUA still going to be available. And we believe, based upon the interactions that we're having with FDA, that it will be. So no concern that, that drug is going to be pulled out from under us, assuming we get the filing in a reasonable period of time.

And I want to talk to you about the release assays. But just on that last point, if EUA happens to go by the wayside, do you have plan B? Could you file a BLA -- a full BLA with the explanation that it...

Yes, we can. Now also keep in mind that we've also -- and this is significant, too. We've now filed for the same product, although manufactured by Serum. And those regulators around the world requirements are all slightly different, none are better or worse. They're just different. So we're in India. We're in Indonesia. We just began our filing for WHO with Serum Institute. So it's beginning to happen. Now as far as the cutoff for EUA versus BLA, that's been the pathway all along is that we're going to go to BLA, and you have to have a 6-month safety database at the end of the Phase III trial before you could submit the BLA. So that's somewhere in the Q1 time frame. So mid to early Q3 next year would be a reasonable time frame for full licensure.

Okay. That makes sense. Why don't we talk a little bit about those release assays. John mentioned that the issues have been resolved, so that is good to hear, with regard to the establishment of the release assay and perhaps optimization. Now you're testing against product. I guess, if I could ask Greg, the release assays, it just seems like it has taken longer or maybe has been more difficult with your product than some of the others. And I guess, is that a function of capacity constraint or some nuance in the science with regard to not only having to deal with 2 components, but also having to really analyze the kind of characteristics of the antigen?

Yes. I think the vaccine no doubt is -- has a complex formulation. It's 2 particles, and the complexity is what drives the efficacy. So it's a very, very good way to induce a natural looking antigen that looks like a virus. Viruses can be a real bear to release, so we at least do not -- are not having to deal with a lot of the issues around controlling viruses. But it is complex because it's a 3-dimensional protein in a structure in a particle. And Matrix itself, as John mentioned, is also a nanoparticle. Well understood scientifically. We've done a lot of publishing. You can see we published in science, in nature. Obviously, the clinical data and then doing a journal. So the manifestation of this effort is a very, very good immunogen. So what -- maybe just drilling down a little bit more to that, what the spike protein does in nature is -- and explains its infectivity is a spike protein binds to receptor on a human cell, and that interaction is extremely high affinity. And it's based on having a proper structure. So we were able to incorporate that first step, that really relevant step to the pathogenicity of the virus into making sure our vaccine look identical, if you will, to what it would look like in a virus. And that's been -- that's where the challenges lies. It's getting that optimized, and we knew very early on that, that happens. It distinguished between -- for example, we look at different constructs actually at the very beginning and use that principle to sort out for the one we have, which turns out to be extremely stable, extremely immunogenic. So it's a good choice. But getting that optimized was one of the challenges. As John mentioned, we're there. We have it validated, which is amazing. And I think you kind of touched on another point, which John was touching on, is building the infrastructure for testing and evaluation and coming up with these tests in a validated quality systems, et cetera. We've had to build that over the past year. So that has also been one of the reasons it's taken us some time, it's just having the resources, having to rely on outside labs, for example, just not ideal. And all that's coming to a place where we control it inside. We have the validated assays. And I think John mentioned we're really moving along with testing our lots now, and we think that this is surely going to come to a close.

Okay. Very good. Well, we'll look for that visibility here in the near term. Appreciate you sharing that with us. In the last, call it, 3 minutes, I wish we had another 30 minutes because we -- there's a lot to talk about with regard to Novavax, and I appreciate your time thus far. But if we could just talk a little bit again about the release assays. Do you feel confident that the product candidate that you had tested or evaluated in clinical studies was the product that you thought it was and then secondarily is reflective of the product that you're manufacturing? And then I want to talk to you briefly about upcoming data with regard to booster and pediatric use.

Yes. So the other side of that is there's a lot of robustness to our product, and the best case for that is we did 2 randomized placebo-controlled trials, large trials certainly by historical standards, very large trials, 1 in the U.K., 1 in the U.S. And if you look at the results, they are almost a carbon copy for each other. The overall efficacy is 90%, where you have match strains for the -- that match the sequence in the vaccine. It's 96% to 100% against variance is about 92%. That was -- one trial was done with a 50-liter scale material from our very early work with Emergent. The second was done at a 2,000-liter scale at our North Carolina CMO. So that -- and we need -- one of the issues we have is to do the work to link back the product we're making today with comparabilities. We have a very complex, very robust look at these nanoparticles linking it back, using that as our reference. So we're very confident that the product we're making today, that's deployed in India, that's in the 7 sites, as John mentioned, is very much -- the performance is very, very similar to what we saw in these 2 randomized clinical trials with different scales and different geographies. I think you've seen a real consistency in the performance of our product based on the manufacturing and the product being comparable.

Last question in the last minute. Can we talk about the timing of data for, say, first of all, booster? You're running a trial where you're before and after another technology and secondarily, the pediatric use data. And then we could also final -- finally talk about potential for combination with NanoFlu. John?

Yes. So there's a couple of studies that are -- there's a lot of studies going on. Some of those are not being sponsored by us, and some of them are. So I think you might be referring to the Com-COV2 study, which is a mix and match and then the CoV-Boost study, which is looking at the heterological boost benefit. Let me comment there. I think we're waiting on the publication. We would expect to see that coming within the next few weeks, and so I think we'll talk more about it once the data is published. But what's the goal here, right? The goal here is you want to be able to boost on top of somebody else's vaccine back to a protective level of immunity, right? And then you want to have a better reactogenicity profile, which we think we do already. And then lastly, the benefit of the use of our adjuvant is we're seeing significant benefit relative to lower reactogenicity and a better safety profile. So I think those are the 3 things that we're looking to see kind of coming out of those studies and would reasonably expect kind of that we will. As far as the pediatric studies are concerned, we're stepping down into 12- to 18-year-olds. That study is now fully recruited, and we're collecting that data. We should expect to see that data by the end of the year, early next year. And we're going to continue to step down, but that's going to take some time. But we're pursuing all those initiatives, as we have already talked about the need to do so for the U.S. as well as for the rest of the world.

Okay. Very good. We are unfortunately out of time. Like I said, I wish I had another 30 minutes to talk to you folks. I appreciate the opportunity to do so this morning. I appreciate all the hard work that you've done in the last couple of years to establish another platform, and wish you luck with the upcoming filings. Thank you, John. Thank you, Greg.

Thanks, Charles. Appreciate it.

Good day.

Bye-bye.