Vaxart, Inc. (VXRT) Earnings Call Transcript & Summary

Hi, everyone. This is Ed Berg, I'm General Counsel for Vaxart, and I'm here today with Andrei Floroiu, CEO of the company.

Hello, everybody. I'm glad to be here. Thank you for taking the time to listen to us.

And today, we're here to answer shareholder questions. Thank you, everyone, for submitting your questions. Before we get started, we'll take care of business as a public company. So of course, I'd like to remind everyone that during this discussion, Vaxart may make forward-looking statements, including statements about the company's financial results, financial guidance, its future business strategies and operations and its product development and regulatory progress, including statements about its ongoing or planned clinical trials. Actual results could materially differ from those discussed in those forward-looking statements due to a number of important factors, including uncertainty inherent in the clinical development and regulatory process and other risks in the Risk Factors section of Vaxart's most recently filed annual report on Form 10-K and on other periodic reports filed with the SEC. Vaxart undertakes no obligation to update any forward-looking statements after the date of this discussion. Well, thank you, Andrei, again, for being here. And let's get started, why don't you tell us a little bit about yourself.

Sure. Thank you, Ed. So Andrei Floroiu, I'm originally from Romania, most of the U.S. 20 years ago in 1995. I started working in Biopharma about 20 years ago. I started working with vaccines about 8 years ago and have been CEO of Vaxart for 3 years now. And let me just tell you a little bit about myself. So I was originally trained as a computer engineer, and I specialized partially in artificial intelligence, this was back in Romania. I then moved on to designing microprocessors and network security and I obtained the Masters of Science in Computer Engineering at University of Maryland. And I worked a little bit in Network Security and Cryptography at IBM. And then I decided to switch to finance. So I got the MBA from the working school and that took me a step closer to Biotech actually. So I started working for McKinsey & Company in New York, and that's when I got introduced to biopharma by advising big pharma, mostly the big pharma companies, but also biotech companies. So this was a bit over 20 years ago. And I then move on to Wall Street and started the biotech investment strategy at The Invus Group in New York. So that was a very interesting time because I started to see a lot of samples of successful and saving by the companies. And what I observed was that it wasn't necessarily as much because of their science, but it was very often because of decisions. So successful companies made robust unbiased strategic decisions, 1 unsuccessful, 1 [indiscernible]. And also the other major factor was raising and allocating capital. So again, that's what differentiate a successful and unsuccessful company from my perspective. So during that time, I started to also helped [ buy ] the companies as a large institutional investor. And that was very exciting and I started being associated with some great successful drugs such as TYSABRI from Biogen and Soliris from Alexion, one was in multiple sclerosis, the other one was in PNH. And so I wanted to later on to take those lessons combined with the insights of development a McKinsey to industry, and that's why I started working on vaccines. First involved with GSK's Shingrix monetizing a royalty to that vaccine and turned out to be very successful. I didn't have a hand in making the medicine successful, but I was just involved in the monetizing that royalty. And then I worked quite a bit on cancer vaccines, the antigen vaccines are very exciting but very challenging space and then I joined Vaxart. So during these 3 years, we completely transform the company when I came here Vaxart was 11 people, almost entirely outsourced. And as you know, we became a fully vertically integrated company with over [indiscernible] 170 employees, a 15x growth. We raised over $14 billion, which allowed us to do 2 things: One, we started 7 clinical trials. And second, we have the capital to internalize a lot of the capabilities that we thought is going to enable us to be successful in the long term. So that brings us to where we are today.

Thanks, Andrei. We're going to get to the shareholder questions now. And let's start with the sort of broadest scientific question, which is on the VAAST platform. So in regard to this platform, share where we are with, a shareholder ask, validating the VAAST platform to an FDA standard?

Okay. So not sure what up to FDA standard means, but all the clinical work we do is according to FDA regulations and standards as many biotech [indiscernible] as probably know by now. So we have a platform, we have a few clinical trials. I think the most advanced clinical data set we have is that from flu where we had a Challenge study funded by the U.S. government by BARDA. And in that trial, we've shown that our vaccine, which looks like this, just in case people don't know, so this is not an aspirin, it's actually our oral vaccine. So we've shown there that an oral pill vaccine can be as protective as the leading injectable against flu, Fluzone from Sanofi, which is quite a big deal, right? It's marginal pill that you can take just with the glass of water that's as protective for that particular strain using the challenge as an injectable. And what was exciting was, it was statistically the 2 vaccines were similar Vaxart's vaccine strain did superior. And it also was deemed that our vaccine was likely to reduce transmission more than the injectable. So that started the process of highlighted advantages of our oral tablet vaccine that go beyond it being a pill and more having to do with [indiscernible]. Now our other clinical programs, let me tell you a little bit about them. So second 1 is norovirus. We have run 6 clinical trials so far and generated very exciting data. And now we're in the midst of 2 more clinical trials, one of which is a challenge study, which you could see that as a proxy for efficacy when the data is out. And finally, our third clinical program is COVID where we generated exciting data from both Phase I and Phase II [indiscernible]. And so our goal is to continue to find ways to progress all these programs.

So when you think about the platform, or -- what you're saying is essentially that you're developing multiple programs using this platform. And we're talking about progress. So let's go with the first of -- the program that we as a company have said that we are prioritizing, and I'll ask you why are we prioritizing norovirus?

Okay. So yes, we announced earlier this year that we are prioritizing norovirus. Part of this matter of focus had to do with limited resources that we have as a company. I don't want to say that we all believe strongly in all oral programs, clinical programs at least, but we have to choose even given limited resources and we chose to focus on norovirus for multiple reasons that we believe are very compelling. First of all, it's an unaddressed market that also has a very large economic burden here in the U.S., $10 billion alone annually globally, probably it's $60 billion. There is very limited competition. So there is only one, at least in the West, only one advanced clinical program, and that's an injectable program. The data we have generated so far across 6 clinical trials, is very encouraging. We've shown there a strong immunogenicity similar to natural infection, which is kind of what we want to do. We've shown that these response are long lasting. And very interestingly, we've shown that the immune responses in elderly adults are very similar to those in younger adults, which is 80 people of injectable vaccine. So that would be an advantage in this important population. And when you put it all together, we believe that our vaccine can have significant advantages -- potential advantages to our only competitor, which is an injectable. So the responses in elderly is one of them, the potential to reduce transmission is another one, and but also because of our form factor, we have the opportunities to maximize the incoming value here because we're going to use 2 different formulations in elderly adults, which is our typical formulation versus kids. So kids below the year of 5, which is an important segment here, they can't swallow pills. So what we're going to do is we're going to use this micro tab that we can put in a [ purell ] or something like that, that kids can ingest. So yes lots of interesting reasons to focus there. And importantly, we've seen a line of sight to creating significant value here by advancing this product so yes.

Can you just remind our shareholders where we are on the development? And what the upcoming data readouts are and when they are to be expected?

For norovirus?

For norovirus.

So we have 2 very important data readouts that are coming shortly this year. So one of them is the top line data from our dose regime, bivalent dose regime study that we said is going to come out in midyear, so a few weeks from now. And the second one is the top line data from our challenge study, monovalent challenge study, which we said is going to come out in Q3.

And in your opinion, what would success look like for those upcoming readouts?

So success here can come in multiple shapes, if you want. But I would say broadly, the success is data that's going to continue to encourage us to advance these programs towards approval and commercialization. And would also include data that's going to grow the body of evidence, solidating our platform and also showing -- continuing to support the potential advantages of mucosal vaccination.

With regard to that data, what data will determine the plan for a Phase III trial? And how long could that trial potentially take?

So the way biotech works and the way we want to operate as a company is continue to be science-driven and data-driven. So we need to see the data from these 2 trials to then the final plans for Phase III. And then we go and discuss also with the FDA, and that's how we know, how the design is going to look like, the size of the trial, the length of the trial, the endpoints, all these things. So it's hard to tell without turning these 2 cards phaseout.

Thank you. There's also another norovirus trial that the company announced that is partially funded by the Gates Foundation. Can you tell us about what's happening with that study?

So yes, so that study is -- it's actually very interesting. What we want to do there, we want to show that you can vaccinate infants younger than 6 months old by basically vaccinating their mothers. So their mother just take a pill with a glass of water. And then from their breast milk, they give the antibodies to the infants and we're going to show that, that transfer can happen and that will be pretty exciting. And also, what's exciting about this while we do it with a norovirus vaccine you can potentially extrapolate into the [indiscernible].

And can you tell us a little more about the timing of that study?

So what we said there is that we're going to start this trial this year, and we are on track to just -- and we're going to announce when we know that.

Thank you. Well, let's turn our attention to COVID and corona viruses. The company announced that it's undertaking an effort to develop an oral coronavirus vaccine. What's the status of that effort? And how come it's been in this effort on COVID been in the works for a long time. Where are we with regard to development with regard to COVID and corona viruses just generally?

Yes, yes. So yes, so we started this program about 3 years ago. I want to remind everybody that we're did a Phase I trial with S and N. Cross chart, again we did a Phase II trial with S-Only cross chart that data came out late last year. And both of these data sets look quite interesting in that what we realize is that the people who respond our vaccine, which was Wuhan-based, also show the responses to a wide array of other corona viruses. And that led us to believe that the our vaccine has the potential that injectables don't to be cross-reactive, right? So as the COVID pandemic kind of started to end, we said, okay, well, it doesn't matter because there are going to be other pandemics. And we believe that vaccine that is cross-protective has the potential to improve our ability to fight future pandemics and in pandemic determinants. So we changed our focus on just COVID-19 to pandemic determinants and pan-corona viruses. And this was the next step, the next clinical step in the development program was U.K. challenge study where we wanted to do something that was very exciting actually, which is we wanted to vaccinate people with the Wuhan-based vaccine and then challenge them with Omicron. So through that trial we're very excited in trying to prove that our vaccine can cross protect, which no other vaccine has been able to show. However, as financial markets became a lot more challenging, and our access to capital was challenged like most small biotech companies, we have to press the pause button on that because we couldn't see anymore -- a way to generate return on investment, right? So governments weren't interested in funding and supporting work on COVID, there is no clear way to sell COVID vaccines, right, no available buyer [ that is going to return ] and also interest from strategic partners again. So we just thought it would not be prudent for us to continue to invest in this program, even though we thought the next step was very interesting. And we had to make a very unpleasant decision to strap plans for that challenge study and wait to see what other opportunities we have to address this program. And luckily just recently, I think, we started to see -- to be very excited about pan-corona virus, particularly due to the U.S. government, new $5 billion effort in this area.

So let's talk about that effort and whereabouts of this, prior to that. So did you submit to BARDA for funding by the deadline? Was it accepted? Where is the company if prior...

We will get the money and then we can for sure [indiscernible]...

of course, of course.

No. These are all good questions, but we -- as I'll talk a bit later, we are building it in how much information we can provide at this point. What I would say is, it's mostly based on publicly available information. So first of all, we have low beams for over 2 years, the U.S. government on the need to fund next-generation vaccines to improve our ability to fight pandemic. Because we believe that the current generation vaccines, the amount of new vaccine that many of us to -- has significant shortcomings. And even the next pandemic comes, we're not going to be well prepared. And that message [indiscernible] get traction and not get an we got caught up into the political gains that all of us can see. I was very excited when we realize that finally, the U.S. government sees the need to actually -- with serious money need behind [indiscernible]. And then we are not sure whether this is going to pass the debt ceiling negotiations and we're very relieved when we saw this. So this program, NextGen is a $5 billion effort. And the reason we're very excited about it is because 1 of the goals there is to support the advancement of mucosal vaccines and the vaccine that can show cross reactivity, right? So this information is available publicly. You can all go and read it. What I can tell you is that many people from outside of the company, some of them, our competitors, told us that they said that, that proposal was written somewhat to [indiscernible] in mind. Now I'm not sure that's the case, but I think we believe that we are uniquely positioned for this proposal. One of the things that makes us uniquely positioned is the requirement by BARDA that the vaccine candidates that they want to fund should be ready to enter a Phase IIb trial within 6 months from submission. So we're actually not aware of any other mucosal vaccine that can fit that criteria. So that's one reason for which we're very excited. The other 1 is that BARDA's stated intention is to fund a very large Phase II trials of 10,000 people. So if you add the numbers, and this is at this point highly speculative, this results into a $100 million to $160 million study. And I think such a large study in a larger world generate very, very interesting clinical data. And I think it's about time that U.S. government supports our program.

So you're excited about the support. But Vaxart right now, you're saying isn't ready to make a statement?

No. I mean we are a known entity to BARDA. We have been known by the scientists there. We have been in interactions with the U.S. government in the last 3 years, we're in [indiscernible] now, but it's just not proper that we are more specific. And when we have something clear and definitive, we will of course, update investors.

Okay. But words start to flow. How much of a priority is the influenza program going forward?

Well, right now, it's not a priority because we have to focus our resources, right? But I would -- answer to the question will be differently. The data we generated is clearly very exciting. And everybody in the industry shares that thought. Now also what we believe is that flu is not properly addressed need, if you want, right? So the current [indiscernible] flu vaccines, they have okay efficacy, they need to match the strains, they're injectables, they need to go to a pharmacy to get injected, some people don't like injections, et cetera, et cetera. So we think that there is significant room for innovation here. And we believe that oral pill vaccine would allow a lot more people to get vaccinated and potentially provide them with better protection. We talked about influenza that our vaccine has the potential to [indiscernible] transmission. So we still remain very excited about the prospects of this program.

Let's turn our attention to potential value creation through strategic partnerships. What are your plans for future business partnerships?

So our plan is maybe somewhat different than some other small companies, at least the -- the many that I have met as an investor. I think you see many CEOs want to turn their company into the next Pfizer. And that usually more of them will not -- doesn't end well because I believe, and I think our Board shares my belief that each asset has a natural owner. And in the case of vaccines, particularly in vaccine, we've addressed very large markets such as flu, such as norovirus, such as COVID. There is a strong argument that big pharma is better able to create more value, particularly in the late stage development say Phase III [indiscernible]. So that being said, also big pharma has a lot of cash, but as many small companies during COVID, they focused on COVID. So now fast forward 3 years later, some of them don't have much in their pipeline. So there is a lot of interest in late-stage vaccine assets, there aren't that many of them out there. So of course, we are having conversations and as do other companies in our space, that's something that's usual. And we are open to finding those opportunities that the meaningful create or maximize shareholder value. Again, when we have something to say, we'll say it.

Okay. Thanks. Let's talk about -- so we talked a little bit about the headwind of having limited resources and many potential creators of values. Let's talk about other headwind supply chain issues. Last year, you mentioned that there were supply chain issues. Are those issues still a concern for the company? And if so, what are we doing to overcome those?

Yes. So I would say that largely most of those issues went away. Some still remain, but most of them went away. And also over the past 3 years, as I said, we have been able to build internalize lots of capabilities that made us a bit less dependent on outside factors, outside providers and so on so forth. So you put these 2 together, and I think today, we are much more able to be in charge of our destiny, which also allowed us, for example, for this 2 ongoing norovirus trials to stay on track with the timing.

That's great. We are not finished this fireside chat, but there was a question about increased communication with our shareholders. And someone asked, can you commit to do more of these fireside chats to keep the investors in the loop?

Well, so I think that also depends on the reaction of this fireside chat. If it's good and if there is demand for it, we're open to do it more of them. I think the right way to continue is to perhaps this with some of our other colleagues, Sean or James, talk about other topics and help investors understand and the companies better get to know us, better understand how we're thinking that kind of stuff. So yes, we are open to it. But I want to just draw to your attention that to make the point that fireside chats are not meant to be sending a timely material potentially stockholding information, right? So this is an area where I feel there has been -- there have been a few misconceptions particularly from institutional investors. So I'd like to take the opportunity to address some of them here, right? So the way publicly traded companies update investors and disseminate information is, as you know, as a [ lawyer ] right, quite heavily regulated, right? So information flows [indiscernible] as fluid as we would like it to be. Even us answering these questions, right, we have to be careful what we can say, how we can say there are disclaimers et cetera, et cetera. So I'd like to give you a bit of a sense of some of the restrictions here and the things that we can do and the things that we cannot do. As I mentioned before I was an investor before, and I totally understand that as an investor we want more and more information all the time, it's never too much, right? But I also got to understand the limitations the companies have in providing information, what kind of the information that they can and cannot provide. So more specifically, let's talk about clinical stage pipeline. So I saw here, value is driven by data, right. So most of the communication that you see from biotech companies like Vaxart is around clinical data and around clinical trials. When you start one, what's the status and when you have clinical data, right? So we have made those announcements. And then while we don't say anything, it's often because there's nothing that we have to say, right? That's we're saying. So I think we get a lot of questions all the time weekly, people would like to get weekly updates, but there aren't weekly updates to make. And the other thing I want to make sure everybody understands we have obligations as a publically traded company. We can't just sit on information, right? We can't just sit on clinical trial data or partnership and not update investors, right? We have an obligation to disclose. So again, when we don't say something we don't have an update this is because we don't have anything to update you on. The other important concept is that you have disseminate -- the information are disseminated at the same time to everybody, right, you cannot do selective disclosure. So even if I'm talking to a large investment fund or hedge fund, it's not like we can be on the phone with them and tell them something that we cannot tell individual investors. So I want all of you that listen to this now that you are getting the same information that everybody else is getting. And now let me talk to you a little bit about some of the information we either cannot communicate or that is not wise to do, right? So one of them is interaction with governments, right? So -- and I'll give you an interesting example here. But sometimes you are bound by confidentiality, right? So you are limited in what you can say. And sometimes, it's just not wise to say certain things because we are creating expectations that we need to manage and then it gets very complicated. So for example, about 15 months ago, we invited to 10 Downing Street U.K. Prime Minister's residence to talk to his special adviser for health, and we're also invited to the U.K. parliament to talk to [indiscernible] and so on. And as you can imagine, this was a big honor. And we all saw that it was a validation of the potential of our platform. But I would have loved to be able to tell people about it, but it was something that we decided it's not wise to do. Why? Because politicians don't like to have attention drawn on to them, right? So we kind of could have upset the people that we're looking for support from. And the other 1 is that you never know these discussions end up with anything concrete, right? So we run the risk of creating some expectations that then not materialize. In this case, Boris Johnson with us, the U.K. Prime Minister, the people that we talk to were not interested anymore, and that was the end of that, right. So this is just 1 example of conversations that we just do not comment on, and we've had many, many of these across 5 continents over the last few years in COVID. The other 1 is discussions with strategic partners, right? These discussions in our industry happen all the time, and most of them probably [indiscernible]. So they take a lot of our time, we prepare for them and so on. Sometimes they take [indiscernible] you just don't update on progress or status and very often because you are limited by NDA's and as such. So unfortunately, we are bound by lots of rules and regulation as far as what we can disclose and not. We are trying our best to keep investors informed. But I'd like everybody to understand that they're getting the same access to information as everybody else and we are doing our best to try to update you as much as we can.

Thank you. And well stated and I hope...

Was it a long answer? it was clear enough.

[indiscernible] important for our shareholders.

If not keep that just coming, and we're going to try to answer them, but I think we're not doing anything different than most other biotech companies. In fact, I think this fireside chat and other efforts we've had, I think, there are things that most other companies don't do so [indiscernible].

Well, let's turn to one of the most recent events. Earlier this month, we -- there was a press release issued by the company indicating the sale of more stock. Can you give us reasoning behind that raise of funds?

Yes. So this is -- it wasn't an easy decision because the financial markets are very tough. Our stock price is not where we would like it to be. So because of that, it wasn't an easy decision to make. However, as you know from our latest quarterly filings and if you've followed us, you can tell that we are getting close to having 12 months of cash only and going below that, it's really not a great place to be. And our Board felt very strongly that we should raise money. There's a saying in biotech, you raise money when you can, not when you need it, so that we should raise money when we can, not when we need it. Financial markets this year have been very unpredictive, hard to predict, sorry for that. Our stock price was as low as $0.59. It has been recovered to $1.40. And we have been presented with an opportunity to raise some money, and we don't have a crystal ball. So our stock would be $2 in a month or it could be back to $0.60, right, we don't know. And so we decided to take that opportunity and we feel that, that's in the best interest of the company, and we hope that we can -- not we hope, we clearly -- puts us in a better place to progress the platform and our products.

Thank you. Well, we'll end on one last question. And this one probably couldn't be much more broad. Can Vaxart provide a business plan of the schedule, essentially someone's asking you for the company's strategic plan?

Well, okay. So let's see how we answer that. We have a vision. And that's the reason most of us are here and are excited about the work we do. So that vision is to really transform the vaccine segment by progressing our revolutionary platform and changing how people are vaccinated globally, right? So we hope that through all oral tablet vaccine would enable a lot more people to get vaccinated a lot faster, potentially being better protected [indiscernible]. So that's the big fish. Now we are a small biotech the company, right? So there are a couple of things that contribute to translating this vision into strategy. One of them is we are science-based, we are data-driven, right? So that dictates your next step in all these programs. The other 1 are the external opportunities, both for funding and for value creation, right? So you take these 2 factors along with the vision, and that's what determines the strategy. Right now, our strategy is to focus on the norovirus program, which is, we believe, the [indiscernible] that we have to significant value creation, while at the same time, looking for opportunities to advance our other programs. And as I said, the recent government effort, for example, is one such opportunity for continuing to advance our pan-corona virus program.

Well, Andrei, I want to thank you for your time today. and to our shareholders. I want to thank all of you for all the questions that you've submitted. We look forward to communicating with you as events progress and as the company progresses.

Yes. And thank you so much for your time. This is our first time doing this. Hopefully, we're going to get better at this time, and hopefully, more relaxed doing it, right. But thank you for your attention and keep the questions coming, and we're going to try to answer as many of them as we can.