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

Great. So good morning, everyone, and thank you so much for joining the Novavax presentation and discussion at the SVB Healthcare Conference. My name is Dave Risinger, and I cover diversified biopharmaceuticals. And it's my pleasure to welcome John Trizzino and Filip Dubovsky. I'm going to give them a very brief introduction and then pass it to Filip to go through some slides. So John Trizzino is Executive Vice President, Chief Business Officer and Chief Commercial Officer, with responsibility for global commercial strategy and execution and oversight of IT, investor public relations and corporate affairs. He has extensive experience in publicly held companies and in vaccines. Since rejoining Novavax in 2014, he's held roles of increasing responsibility, including Chief Financial Officer and Senior Vice President of Commercial Operations. Filip Dubovsky is Executive Vice President, Chief Medical Officer, with responsibility for medical and clinical affairs and related activities at Novavax. A recognized leader in vaccine development, Dr. Dubovsky brings more than 20 years of infectious disease experience to the company. He joined Novavax from AstraZeneca, where he was Head of Clinical Engagement and Policy and also Deputy Health -- sorry, Deputy Chief Medical Officer for Clinical Affairs. So with that, once again, thank you for taking the time out of your super busy schedules to be with us here today, John and Filip. Filip, why don't I turn it over to you.

Thanks. Can we have slides, please? Okay. First of all, thanks, everyone, for joining us this morning. Can we move to Slide 2, please? And before I begin the presentation, I need to remind you that I will be making forward-looking statements during this conference, which are based on our current expectations. We encourage you to reference the risk factors in our SEC filings for additional details. Let's go to the next slide, please. So what's displayed here is our clinical development plan we've had for our COVID vaccine, and it really encompasses 4 studies. Starting at the bottom, we did a Phase I/Phase II in Australia, and that establishes dose level and define the safety and immunologic phenotype. And in this study, we've continued boosting these subjects, and we'll talk about that a bit later, but we boosted them at 6 months and again at 12 months. Then we did a small Phase II study in South Africa, which was our first look at efficacy, before jumping into our 2 pivotal Phase III studies, one in the U.K. and a large one in the U.S., and these were independently powered. And in these studies, we've continued doing clinical work. We've crossed the subjects over in the U.K. study. The U.S. study, we crossed them over and boosted the adults. We've started a pediatric expansion study, which we reported on recently, and that pediatric expansion study is ongoing now. So why don't we move to the next slide to just remind you of what we saw in our efficacy studies. And here they are, here are the 2 results. And one remarkable thing about these studies, even though they were done at different times in different populations, the overall efficacy is remarkably consistent, within 1 percentage point of each other. And you need to remember that when we did these studies, this is when variants emerged. So both of these studies, the majority of the cases that we detected were caused by either variants of concern or variants of interest. When you look at the next line down, which is the [ matched ] strains. So these are strains -- I'm sorry, previous slide -- are matched strains. So these are strains which are most like what the vaccine was made against. So if you were to have tested our vaccine before the variants emerged, like some of the other sponsors have done -- these are the kind of results we think you could have seen. In the U.K. study, 96% efficacy in the U.S. study, 100% efficacy. We saw no cases of any disease against those which were matched. As far as variants, we had enough cases of Alpha in the U.K. study to determine a point estimate efficacy, same in the U.S. And when we lumped them all together in the U.S., we had 93% efficacy against VOCs, VOIs. And we had a broad range. We had Alpha, Beta, Gamma, Epsilon, Iota. So we had a bunch of different VOCs, VOIs. We've never seen a case of severe disease in our vaccine group, 100% efficacy in the U.S. study. In the U.K. study, we didn't have enough cases to determine it, but all the cases were in the placebo group. And finally, in high-risk populations, those with medical comorbidities, we really maintained our efficacy; we didn't see a diminution in our response in the high-risk population. Next slide, please. What I'm showing here is some of the data we have from our boosting. And what we did here is we actually looked at the immune responses to all the variants. On the left-hand side, you can see the immune responses after 2 doses, so prototype, which the vaccine was built against, Beta, Delta, Alpha and Omicron. And what you can see is that 100% -- we had 100% seroconversion after 2 doses in all the participants, even against all the variants. But I've marked in those bars is there where we had efficacy from our Phase III studies. And when we boosted them at 6 months, you can see we had a big jump of 5 to 11 fold over the 2 dose. And you can see that's well above the levels that were associated with protection, both for the Alpha as well as the prototype strains, after 2 doses. Next slide, please. We've also recently presented our data on our clinical efficacy in children. Overall, there is an 82% efficacy against the Delta variant alone. When we look at safety, we didn't really see any difference from the adult populations. The vaccines were well tolerated. The immune responses, however, were higher than what we saw in adults, both from a neutralizing immune response as well as IgG response. We achieved the primary effectiveness criteria. And I want to remind you that the way the FDA has instructed us to design these studies is, while we look at clinical efficacy, the main endpoint is to show the immune responses are non-inferior to those in adults. And not only were they non-inferior, they were actually superior than those for adults, [ to highlight ] the Delta efficacy as well as overall efficacy. And really, when we look at young children versus older children, they maintain their efficacy level irrespective of age. Next slide. John, maybe I can hand this over to you.

Great. Thank you. Thanks, Filip. As you all can see that with the data that Filip just presented, in the context of that great data we realized a significant number of regulatory approvals over the last several weeks and couple of months now. And the list is long, from a World Health Organization emergency use listing through the European Commission, the 27 member states, U.K., New Zealand, Australia, Singapore, Indonesia, Philippines, India. I think this is kind of a very -- a testament to the success that we've had with all the clinical data that we have accumulated and that Filip just summarized for you all. We also have many others that are in process and, of course, optimistic about receiving those approvals in a short period of time. Of course, most notably is U.S. FDA, that we have now, by the end of January, had submitted our emergency use authorization application, and others moving along quickly, and we should expect those soon as well. Next slide, please. Again, in the context of all the data that Filip showed, right, we know that we have excellent efficacy and safety profile for primary vaccinations. And so these become the pillars of our commercial strategy and where we see dose demand coming from. There still remain a number of high percentages across the globe where primary vaccination is needed. We also know that many of the booster programs that are in process right now will drive demand for our product. And we have, as Filip just noted, again, data to support the use of booster vaccination. And of course, the data that was presented last week on pediatric vaccination, we'd be using that to have label changes as well as -- or policy support to enable us to be doing pediatric vaccination in the 12- to 17-year-old population as soon as possible. As we've mentioned a number of times, right, we're engaged across the globe with our equitable access through the COVAX Facility and the Gavi organization in order to get doses out to multiple countries around the globe that remain at a very low vaccination rate. The next slide, please. So here's just a little bit of a quantification of that for everybody to consider. And as we look at the 3 pillars that I just talked about, primary vaccination, boosters and pediatric vaccination, and then we did a high-level analysis across high-income countries, upper middle income countries and low-income countries. And what we can see is that there's a varying degree of vaccination that has been completed. So a greater than 70% of primary vaccinations in the high income countries, but still enough of a percentage remaining that there remains an opportunity for the primary as well as booster dosing. And while booster dosing is moving along nicely in many countries, there still remains a gap and an opportunity for us to vaccinate. Similarly with the pediatric vaccinations, many of those recommendations are now in place and vaccination is moving along. But again, here's an opportunity for us to get the primary vaccination as well as the booster in that population. The picture worsens from a vaccination standpoint relative to upper and low countries, but that just highlights that there's still a significant global demand. And as we know, with Omicron now circulating and the potential for other variants in the future, there remains a high demand for ongoing vaccination and a high demand for a high quality and safe demonstrated safety profile for our vaccine as well. So let me leave it there. We can open it up for questions.

Thank you very much for that initial framework, very helpful. Maybe we could pivot to just a couple of specific questions, and we'll go from there. So with respect to actual approvals and launches, when are you expecting the U.S. EUA approval and launch in the U.S.?

I guess I can take a crack at that. I mean, we don't really know how fast the FDA is going to move. They have the complete package in front of them. We are answering questions as they send them to us. So we know how [ fast they approved ] the other sponsors. We're obviously in a different place than we were at the beginning of the pandemic. So only time will tell. But soon, we hope. And we don't really see any blockers to us at this stage.

And once we do have that approval in place, we are ready to begin shipping product into the U.S. So I think it presents itself to be a great opportunity for us to look at where we are in the U.S. Again, from a primary vaccination standpoint, there is an opportunity for those that have been vaccine hesitant. There's still a strong opportunity in booster dosing for the U.S., whether it's the third dose or the fourth dose or beyond that. I think it's a chance for those that have been looking for an option to mRNA to choose our vaccination for the booster dosing and, of course, the pediatric market as well. So U.S. will present itself as a significant opportunity for us.

Got it. And just staying on potential launches. So could you provide an outlook for Europe?

Yes. So Europe really has presented itself to be very positive, right? So we received that approval, I think, that was our first Novavax approval outside of the India and Indonesia approvals coming through the Serum License. And there was -- 27 million doses has been disclosed that probably the number of doses that will be in Europe in Q1, and then for those that have not already heard, there was an incremental 42 million dose commitment made by The European Commission. For the second quarter, there were also a number of very supportive policy statements that have been made from many countries, Germany, Italy, for example, that have come out with policy statements in support of the use of Nuvaxovid. As far as shipment against those doses, we have been shipping from January into our European Distribution Hub and so that's been happening quite regularly now, and there are still some kind of final approvals that have to be done as well as in-country testing and so we would expect those to be wrapped up in the coming weeks and, therefore, shots in arms following thereafter.

And just to understand, would you expect to be booking revenue for the 27 million in the first quarter? Or no, because they may not all be released in the first quarter?

Yes. So that's a good fine point. We're -- we haven't given specific guidance on Q1 and likely won't be, because as we're kind of rolling out these first doses, there's still approvals coming, so there is a lot of in-process activities, right? So whether it's precisely billed in Q1 or early Q2, I think the most important thing to know is that production is ongoing, shipments are taking place to stage it for those countries and sitting in those warehouses ready for use. But I think we need a little bit more time to know exactly what we will see as far as Q1 revenue.

Okay. And then just to step back to the manufacturing issues and the resolution of those. Could you provide a framework at a high level and sort of drill down and give us an update in terms of where things stand today?

Yes. I think that's getting a lot of attention. And prior to all the regulatory submissions, there were a number of things that we had talked about, about assay development work, which is not uncommon and normally takes a fairly significant amount of time, that we made our way through in quite a nice fashion. By the time we got to the harmonized regulatory submissions across all of the countries, right, so every one of the countries that we've been talking about in the presentation had virtually an identical regulatory submission and CMC section for using product made at Serum Institute. So by the time we got to those regulatory submissions, those manufacturing questions had been answered. We are now manufacturing significant product on a daily and weekly basis and shipping that product to where it needs to be. So for example, in addition to the European Distribution Center, just this past week, with having the Australian approval in our hands, we were able to move product into Australia. That product was then approved very quickly, and our first vaccination took place in Australia last week.

Got it. Congratulations. So then could you just frame the Serum Institute manufacturing? And with respect to that supply in Europe, it's all of the 27 million coming out of the Serum Institute. And then could you talk about your own manufacturing and just sort of juxtapose the 2 relative to one another?

Yes. All along, our strategy has been to create, and we have created, a global manufacturing infrastructure that for 2022, we would expect to have supply of 2 billion doses, right? Serum is a part of that, and we realized as we were putting the regulatory submissions together that it was going to be easier and faster for us to use a single manufacturing site for the CMC section for at least the initial filings. It remains our plan for all of those manufacturing facilities to be added to those regulatory submissions on a country-by-country basis, to enable us to tap into that global manufacturing capacity. Right now, Serum is shouldering the burden of that responsibility while we're in the process of updating all those filings, but there is substantial production capacity coming out of Serum and more than enough to satisfy all our obligations until those other sites come online and are approved at each of those regulatory filings.

And could you add a little more color on those other sites, please?

Yes. So we have our own facility in the Czech Republic. We've got a licensing arrangement with SK Bio that -- all of these have been previously disclosed. Takeda has a licensing arrangement as well. We have other facilities in the U.S. and the U.K. that are under contract manufacturing conditions. So again, we're -- we haven't been giving specific guidance about capacity coming out of each of the facilities, but have previously talked about kind of the robust infrastructure that we've created to provide for that 2 billion doses of supply.

Okay. And which one of those that you just mentioned is the furthest along and would be likely to be the next approved after the product that comes out of the Serum Institute?

Yes. I think the cadence of that, we probably don't want to get into too much detail about what's happening facility by facility. I think they're all moving along in a fairly significant way. In Korea, we have received some approval and shipment. And so I think it's exciting to see SK moving along. Our CZ facility is a robust facility and will provide substantial capacity. And so all of them are moving along quite nicely.

Okay. And you talked about the efficacy of your vaccine, which is highly compelling. Could you talk about additional read-outs ahead that will provide more color on its coverage of additional variants? So for example, the new stealth Omicron variant, for example?

Yes. So clearly, we don't have efficacy studies that are ongoing that will capture that. We do, in some of our boosting studies in the U.S. are capturing illness. But since all those are crossed over, we don't have a placebo group to compare them to, so those analyses become quite difficult. For instance -- so what do we know? I've shared with you today that pretty much in the U.S. against any of the variants that circulate at a time, we had high levels of efficacy. And I further detailed [ antibody ] responses are able to hit pretty much all the variants that we've tested. And I don't see that the variations in the Omicron would really be that different. So we recognize that -- so to specifically answer your question, I think a lot of that efficacy data against the emerging variants that are emerging now and will be in the future are really going to come from effectiveness studies that will be post-market licensure studies, right? So those are planned. These are commitments we've made to regulatory agencies, and we'll be doing those. We recognize that additional variant vaccines may be beneficial. It isn't clear yet if the one we have in hand can't do the job. But on the off chance that we need a Omicron variant, we're in the process of manufacturing that. We've talked about that publicly before, and we're going to be starting those studies towards the end of this quarter.

Okay. And so with respect to that, where you just left off, when should we expect data or updates on that opportunity?

I think you'll be hearing other sorts of data from us prior to that. You may be hearing additional data that's coming out. As you know, we still have ongoing studies. All of those studies are ongoing, and it is collecting -- being collected and being processed for filing. So I suspect you'll be seeing more of that data, additional efficacy, safety and immuno data, coming out of the Phase III studies in the U.S., Mexico as well as the U.K. and South Africa, additional boosting data coming out of the Phase I, Phase II in Australia and U.S.

Got it. And then just so that we have a simple framework, not that you need full approval to sell what you've committed to, but how long will it take for you to secure full approval in the U.S.? And what is -- what will be pending after the EUA approval that will be necessary?

Yes. So let me parse that out a bit. I think our initial EUA application globally has been for adults greater than 18 years of age, and that's what the approvals have come through for up until now. Our first variation is likely to be in the adolescents. That study has read out. We've detailed the results, and we've committed to doing that this quarter, having the filings complete. How long the review is, of course, will vary regulatory agency by regulatory agency. Our -- close to that is going to be our boosting data, and that will be boosting data which will support the further use of our vaccines as multiple doses, not just a 2-dose regime. After that, I think, is when you're going to be seeing the BLA. The requirements for the BLA are different than for EUA, mostly because they need a long-term safety and efficacy follow-up, so when that data is collected, we'll be filing that.

And could you also comment, Filip, on the potential durability of your vaccine versus the mRNA vaccines? Because there have been questions about the durability of protection that the mRNA vaccines offer.

Right. So we haven't disclosed any durability data, mostly because we're collecting it right now. But we have shown that our immune responses drop over time, and this is no surprise. This is well known. Antibodies have a certain kinetic. They drop over time. We've shown data through 6 months. And that's why we boosted at 6 months because we need to get our antibody levels up. So in a sense, I think we're going to be in the same situation of all the platforms. There's no magic to this. And we expect to be boosting and expect to be boosting regularly. And in my opinion, annually after that. This isn't going to go away. We're going to be with this for a while. And in fact, that's one of the reasons we are working on our combination approach with influenza. We think it's an obvious opportunity to have a single healthcare visit to provide protection against both illnesses.

Great. And then stepping back to, I guess, more of the supply and more of the commercial side, John, could you just help us understand, number one, with respect to the supply that will initially come out of the Serum Institute, how much will they make available to you versus allocate to their own regions such as in India? Is there any limitation on the amount of supply that you can access from them? And then second, with respect to the economics, could you just help us understand the differential economics if you're sourcing from the Serum Institute versus sourcing from one of your own facilities or contracted facilities?

Yes, sure. So first of all, there -- as I mentioned before, there's a substantial production capacity coming out of Serum Institute. And as you can imagine, we work very closely with them on that production capacity and the cadence at which product is coming out from a drug product perspective and where it's going. So we've laid out a very clear plan on what our dose demand is. As we've publicly disclosed, they have some obligations to the COVAX Facility as well as their own APAs. They have nonexclusive license rights into upper middle income countries, and so there's a potential allocation there that we share from a royalty standpoint that would be recorded as revenue on our books relative to those sales to upper middle income countries. So from a supply standpoint, we've mapped out exactly what's going where, and if there are any additional needs, which we've discussed with them going into India, that's been planned for as well. So we don't foresee any risks to the supply coming out of India for the near term, as well as Q3 and Q4 as some of those other facilities come online and get regulatory approval to -- for us to use them across the network as well.

Great. That's helpful. And then -- maybe we could go back to sort of how you started your discussion, John. You talked about a significant opportunity among some vaccine-hesitant people, and second, you talked about a large booster opportunity. So with respect to the vaccine hesitant, how significant do you see that opportunity to be? It's not clear to me among the vaccine hesitant just how they would be convinced that the Novavax vaccine is one for them. And then with respect to the Booster opportunity, just how you see that potentially playing out over time?

Yes. Thank you for the question, because I actually love talking about this because I think that there's a bit of misunderstanding in the marketplace, one, globally what the demand is going to be for COVID vaccines now and into the future over the next couple of years, which I think is clear. No matter what comments are being made in the media from others, whether the pandemic has -- what the life and legs left is of the pandemic, I think, is yet to play itself out. I'm not convinced nor is anybody else, because there's not enough data to prove, that suddenly the pandemic is going to end and then we don't have to worry about COVID anymore. I think it's -- the data suggests that it's pretty clear that this virus isn't going away anytime soon, that there remains a potential for variant strains to surface. I think it's clear that booster dosing is needed, and I think it's also pretty clear that at least for some period of time into the future, as Filip mentioned before, there's going to be a need for an annual revaccination. So I think that there's a significant public health need as well as market demand for the product going forward. Specifically related to our strategic imperatives about where doses are coming from, as you saw in some of our high-level data collected, that there still remains some amount of unvaccinated. We've actually done some market research to determine what we think that percentage is -- and it's a moving target, but I think that there's enough there to be a substantial amount of doses that are going to come from yet the unvaccinated -- and let's remember that for every one that's unvaccinated at this point, there's 3 -- at least 3 potential doses in '22 that could come from that vaccination of someone who was hesitant before. As far as boosting is concerned, there remains a number of opportunities, right? We have data that suggests that we can be used in a multiple of heterologous situations, not only mRNA, but places where AZ vaccinations were done or J&J vaccinations were done, or even others, whether it's Sputnik or Sinovac vaccines, where have underperformed from an efficacy standpoint, we have the opportunity to boost those. And once we get into that boost regimen, then we'll also have the follow-up opportunity for follow-on boosting. And I think this is where it becomes a really important shift in market as we enter that booster market and then get that second and third booster that sets the stage for us being the preferred vaccine for annual revaccination. Of course, similarly in the pediatric space, we have data that shows that its demonstrated safety profile is good in the pediatrics as well as in the adults. And so I think if you really evaluate where that opportunity is, it's significant and would therefore expect that Nuvaxovid will be capturing market share along the way because of these opportunities.

That's very helpful. And I think that's a great way to finish up. Unfortunately, we are out of time. Maybe you could just leave us with when the next corporate update will be, when do you expect to provide guidance, et cetera.

So we have our earnings call coming up. We'll be announcing the exact date in the next few days. Guidance is something that we're still evaluating. So we have not yet made a decision about when we would provide guidance. As I said earlier, what's happening in Q1 is kind of -- we're engaging in the market across multiple countries. And so I think when we get closer to the earnings call, we'll make that decision about guidance.

Right. Okay. Thank you so much. Once again, I appreciate you joining us and taking the time out of your busy schedules. And with that, we will sign off.

Great. Thank you.

Bye-bye.

Thanks again.