Vaxcyte, Inc. (PCVX) Earnings Call Transcript & Summary

Okay. Good afternoon, everybody. Thanks again for joining us at Guggenheim's Second Annual Healthcare Innovations Conference here in Boston. Really pleased to be joined by Vaxcyte. I'm Seamus Fernandez, one of Guggenheim's senior biopharma analysts. And to my far right is Andrew Guggenhime, President and CFO; and to my immediate right, Jim Wassil, EVP and COO of Vaxcyte. Always great to see you guys. Maybe, Andrew, if you want to just kick us off, love to just kind of hear your thoughts around the progress that Vaxcyte has made in the last 6 to 7 months. And also just state of the state on the environment and the opportunity ahead for Vaxcyte.

Great. Yes. Thanks, Seamus, and thank you and the team at Guggenheim for the opportunity to present here today. Appreciate it. Yes. No, look, it's an exciting time for Vaxcyte. The last year, just about a year ago, delivered by all accounts, pretty spectacular results for our 31-valent adult program. And then this year, in 2 installments, the last of which was last week, delivered robust results for our infant 24-valent program. So it's going to be an exciting time for us over the course of the next 12 to 18 months, just ticking off kind of the key events for us in the adult market, which represents about $2 billion of the total $8 billion pneumococcal vaccine market. We're on the cusp of initiating our 31-valent program, adult Phase III study, expect to start the pivotal non-inferiority study in December of this year. And reading out the top line results from that study next year and then expect to move into the balance of the Phase III studies that comprise that program next year with those studies reading out in 2027, which allows us to maintain our BLA and potential approval time line. So really excited about that. I know we'll get into the discussion on that. Moving into the infant market, as I mentioned last week, we unveiled the final data set for our 24-valent infant program that showed results consistent with what we observed early this year, robust immune responses, dose -- strong dose response profile and continuing to see an absence of meaningful carrier suppression in that population, which bodes well for the ongoing 31-valent infant program that continues to enroll subjects -- we're exploring 3 arms in that study, 2 of those arms are doses higher than any explored in the 24-valent study. So that program, as I mentioned, continues to enroll, and we're expecting to see data from that study either in 1 or 2 installments. If it's 1 installment, both of those will be by the end of the first half of 2027. If it's in 2 installments, we'll have the first data set likely either end of next year or early 2027. And so we can get into the reasons why we have optimist -- we are optimistic about the results from that 31-valent interim program. And then as we advance those studies from a clinical perspective, we continue to ready ourselves for potential commercial launches first in the adult population and then in the infant population. We announced last week the hiring of our first Chief Commercial Officer, Mike Mullette, who joins us today in the audience, but Mike brings a long and distinguished career in vaccines, spent almost 2 decades at Sanofi. And roles of increasing responsibility around the globe, then moved on to Moderna, where he stood up and led their North American vaccine franchise during the pandemic and comes to us most recently from Lykos. So thrilled to have him on board. And as we prepare for that aspect of commercial readiness from a manufacturing perspective, we are on the cusp of completing the build-out of our dedicated facility in our partnership with Lonza. That remains on track and on budget to complete early part of next year. And then more recently, we announced just in the last couple of months, the solution for a long-term drug product fill/finish capacity, an agreement with Thermo to establish capacity here in the States in North Carolina. And I'll just close by saying all these efforts are supported by a very strong balance sheet, $2.7 billion in cash and equivalents as of the end of September. So capital that enables us to fuel the advancement of these clinical programs as well as our readiness toward potential launches for first adult and then the infant markets.

Okay. Maybe we can just jump into just the evolution of the commercial market for pneumococcal disease. I know there's other areas that are viewed to be under threat or whatever. But as you guys look at the pneumococcal vaccine opportunity and the evolution today, how is the market evolving? And is it consistent with the more is better mantra when you look at it so far?

Yes. So I'd say that the market is fairly robust as it is today. It's a significant disease. And so from that perspective, the majority of countries throughout the world have already made recommendations and are funding it for the infant program. The estimate is that it's roughly an $8 billion market and some say it's projected to go to $12 billion, even $14 billion over the next decade or so. The main driver for that is the adult market. In the infant market, I just mentioned, most countries have already adopted. There will be some price increases. So you'll see some growth there. But in many ways, it's the adult market fueling this growth. So we see a change from more of an infant-based market to both infant and adult equally split. In the U.S., the reason for that is that the recommendations got moved recently down from 65 to 50 years of age. And with that movement down to 50, you get 63 million Americans between 50 and 65 that are now eligible. So there's this nice big catch-up that Merck and Pfizer are fighting over right now. But we believe when we launch, there'll still be a decent portion of that catch-up to us. The other thing, though, is the ACIP, which is the recommending body for vaccines in the U.S. have said, hey, when broader valent vaccines come out, we're going to consider giving a boost at 65 years of age. So that would double the market in the U.S. as well as this additional catch-up. Now ex U.S., because of the broader valent vaccines, adult recommendations have started to appear, Germany, U.K., Japan. And just last week, I think Quebec said that Capvaxive is on their schedule as well. So we're seeing that significant growth.

No, I think that's right. I'd just add to Jim's comments just in terms of the dynamics of the market. So $8 billion today, as he said, growing to $12 billion, $14 billion. So it's very large, very well established. And importantly, the adoption criteria in this market over the past 2 decades have been clear. So broader has been better. We've seen that in both the adult and infant markets that the broadest spectrum vaccine garners the significant share of the market. That's certainly true in the context, for example, in the U.S. of a preferential recommendation being granted to the broadest spectrum vaccine. We have seen that historically. That isn't the case today. But even in the absence of a preferential recommendation, we have seen the broader spectrum vaccine garner the significant market share, which I think gives us the optimism we have about the profile for starting with VAX-31 in the adult population, where a vaccine that covers more serotypes than any other vaccine, covers substantially more disease than the 2 existing players in the adult market. And if we can continue to replicate the data in our Phase III study that we saw in Phase II, not only more serotypes, more disease, but better immune response as well. So we're excited about the profile of this vaccine and the opportunity to hopefully commercialize it soon.

Right. And one dynamic that I think is worth talking about is just your adult Phase II data, what we learned from those Phase II data with VAX-31 and incremental to that, the ability to translate those data into Phase III results just because I think it is the opportunity here to talk about that. Maybe you can also remind us the starting point for your Phase III trial, I believe, is now December of this year, just the dynamics around that.

Yes. Maybe I'll first cover the -- just kind of the time lines and where we are and turn it over to Jim to talk about what we expect in terms of the translatability of Phase II data to Phase III in the context of what you typically see in this space. So just to level set, as I mentioned, we've got a Phase III program upcoming that will be led in headline by the pivotal noninferiority study. This is historically 1 of the 2 studies required for ultimate licensure. We reaffirmed just last week in our Q3 update that we expect to start that pivotal non-inferiority study in December with the data from that study reading out in 2026 with the balance of the studies to follow initiating in 2026. We'll be providing specifics on that design either once we've dosed the first subjects in that study or shortly before then. That's customary with our historical practice. One thing we have said in our interactions with the FDA, we are not expecting and have not heard to date any request for placebo-controlled study, a field efficacy study or an outsized safety database. So we continue to expect it will be driven by non-inferiority study with the details, as I said, ultimately to follow here, not only in the non-inferiority study, but the other studies that we expect will comprise the program for eventual licensure. But we -- as we have said, we are ready to go in that study, operationally ready. Supply is ready. We have submitted the final protocol to the FDA that is reflective of the conversations we've had with the FDA to date, which gives us the confidence that we'll be in a position to enroll the first subjects in December.

Great. And just remind us the percent coverage relative to whether it be Prevnar 20 or also CAPVAXIVE, where VAX-31 would end up in the adult population?

So in the adult population, we expect to cover about 95% of strains, and that's an incremental 14% to about 35%, 35% being above PCV20, 14% being above CAPVAXIVE. That's for invasive pneumococcal disease. For pneumonia, it's even larger difference. We actually see a better difference relative to both CAPVAXIVE and to PCV20. And just to answer that last question, you said, are we going to expect any differences between Phase III and Phase II? We're basically the same assays. We're the same patient population, a lot of the same sites, and we had 18 out of 20 serotypes be greater than Prevnar 7 of which were statistically superior. So I think we're going into the Phase III with a lot of confidence that we can reproduce what we've seen in the Phase II.

Yes. And I think that we have that confidence in part, certainly founded by the data we've shared to date, the strength of our technology platform. That outlook is consistent with what you've seen historically in this space where other developers who generated positive Phase II data. I think we're still batting 1,000 in those companies generating similarly positive Phase III data and the opportunity to ultimately get to licensure into the market.

The one question on the adult side is Prevnar 20 has been available for some time for the over 65 population, just in terms of being able to execute the clinical study. Can you just remind us -- are there any restrictions on the age of the patients, the patient population, just your expectations for recruitment of the study to be able to deliver the results in 2026?

When we did the original study design, we assumed that the ACIP would recommend the vaccine at 50 years of age. So we picked a population that would balance both the 50- to 65-year population and the 65 and above. So we want to make sure that we have a balance between those 2. Yes, the enrollment will be a little bit slower in the 65 and above because about 63% of them have already received a pneumococcal vaccine. But overall, we don't foresee any issues with enrollment in either patient population.

Right. And the benefit of also not having a placebo control in that study should be incremental an incremental help, I would think.

Absolutely.

Okay. Great. Why don't we talk a little bit more about the pediatric data, how you're thinking about the modifications to the study, the ability to kind of push the dose higher? And what did we learn from the most recent fourth dose results?

Okay. All right. So in the infant population, we had the recent data readout. I think the bottom line is that it's very consistent with what we've seen in the top line data that we saw in March. There were a couple of nuances that I think were very encouraging. The one is that as we got more of the fourth dose data, what we saw was a greater difference between the 2.2 microgram arm and the 4 in terms of a dose-dependent immune response. So post-dose 4, we are seeing an improvement when we push dose. We had already seen that in the top line data, and that's why we stopped the VAX-31 infant study and added what we're calling an optimized dose arm that is mostly 4.4 micrograms and then restarted that study while dropping the low-dose arm and moving forward. So I think it just reconfirms that we made the right choice to add the additional arm and move forward because we think that we can get improvements. We didn't see the carrier suppression in those serotypes that stayed at 2.2 micrograms between the middle and the mixed dose. So we didn't see a diminution in those. So we didn't see the historical carrier suppression that you've seen with other vaccines. So we're optimistic we can push dose and see an improvement in that immune response. The other little nugget was -- when we looked at the data, we obviously report the IEP, the immunogenicity evaluable population. But when we looked at subjects that were excluded because they got flu vaccine, we saw better results with us compared to PCV20 versus the overall general population, meaning that we had less interference when given concomitantly with flu than PCV20 did. And the reason that's important is flu is a standard of care and given in this population on a routine basis. So perhaps in Phase III, we don't exclude those individuals, and we can maybe see an even further improvement when we move forward with this project. Anything else?

No, I think just -- I would say the learnings from that study give us the confidence we have this 31-valent infant study ongoing, the combination of the data we saw, the fact that we are moving to higher doses in the 31-valent and the dose response and the absence of meaningful suppression give us the confidence we have as we move into this -- further down the enrollment pathway for this study.

Great. Maybe talk -- let's maybe drill a little bit more into the individual serotypes. -- and the data that we've seen from the individual serotypes, which ones would you just sort of say characteristically are the most important? And how have you sort of optimized for showing a non-inferiority to Prevnar 20 or potentially another vaccine in that context?

In infants?

In Infants.

Yes. So the most important are the ones that are currently circulating at the largest amount. 3 and 19F are the 2 most common. They represent 30% of the strains. In our 24-valent results, both post-dose 3 and post-dose 4, you saw more than a 1.5-fold, in some cases, over a twofold increase in our response relative to PCV20. So we think that we're in a good position because when you look at the serotypes that are circulating the most, I picked the 2 most common, but -- all the others we did fairly good as well with. So we're feeling very comfortable moving forward that we're covering those strains that are the most prevalent in the environment. The ones that we did a little bit lower on and may have missed on the non-inferiority like 1, 6A and 5 have not been circulating in the U.S. for 3, 4, 5 years in some cases.

I think just to expand on Jim's comment, the other serotypes on which we did particularly well in the 24-valent study were the 4 serotypes unique to VAX-24. And as we think about the ongoing 31-valent study, we'll have 11 serotypes unique to VAX-31 that are not contained in PCV20. And those 11 serotypes that are unique to VAX-31 confer an additional 30% of circulating disease coverage. So the coverage encompassed by those unique serotypes in which we did particularly well, we believe we'll do particularly well in the ongoing study and the performance on the serotypes that are common with PCV20, which we did particularly well kind of collectively, those represent a substantial portion of the disease that is circulating today, which is kind of one of the many factors that ultimately the FDA will consider in evaluation of this vaccine as they have in others, which is kind of the totality of the data assessment.

Great. And can we talk a little bit more about just sort of the dynamics around when we'll see the data from your Phase II and how we're likely to see it. There's a choice between covering a primary series versus going all the way to the fourth dose before revealing the data.

Yes. So that's still under discussion internally. What we have said and we affirmed this last week is we anticipate and we will announce the data either concurrently or sequentially. In either case, we'd expect to have the booster data, which is the second co-primary endpoint after the booster dose administered between 12 and 15 months of age. We expect to deliver that data set by the end of the first half of 2027. So 1 of 2 approaches will be taken. Either we will unblind that data set concurrent with the primary immunization series data. That's the data following the first 3 doses that are administered at ages 2, 4 and 6 months. If we unblind those results concurrently, we'll deliver that full data set we expect by the end of the first half of 2027. The alternative approach would be to unblind and therefore, disclose that primary immunization series data set in advance. If we do that, we would expect to have those data 6 months plus or minus in advance of the booster data, which would put that data set either at the end of 2026 or early 2027. We expect in the early part of next year to communicate publicly kind of what our ultimate unblinding strategy will be and what the result and disclosure plan looks like, whether it's a 2-step or this one-step approach.

One question that I have is just in terms of setting expectations for VAX-31 in the pediatric patient population. I'm a little reluctant to do this right now because I know that there's lots of paths to success. But maybe you could just help us understand what has kind of managed to -- what have other vaccines achieved in this space even when non-inferiority has been demonstrated, what number of serotypes has that been demonstrated to? And how much flexibility do you guys think you have?

Yes. Maybe I'll ask Jim to talk about the most recent example of an approved vaccine in PCV20 mutant population, then I can translate to kind of how we plan to set expectations as it relates to our 31 valent program.

Yes. So for PCV20, they got approved recently in infants in the U.S. They missed -- there are 2 co-primary endpoints, one after the first 3 doses that are given at 2, 4 and 6 months of age and then the second co-primaries after the booster dose given in the second year of life. In the first of the 2 co-primaries, they missed on 6 out of the 20 in terms of non-inferiority. They did recover where they made it after the booster. And they said that from that perspective, they felt that it was an approvable product. And of course, the FDA decided to move forward even though they did miss on those 6 serotypes.

And then I would just before I get into our expectations, I would say you contrast that with the European study where they administered 2 doses in the first 6 months of life before the booster dose. And in that study, they missed on 11 of 20 in the first of the 2 co-primary endpoints. And in that context, that data set was not approved. So you can see 6 was approved, a missing of 6 was approved out of 20, 11 was not. As it relates to our data set, we continue to believe, and we hear this from experts with whom we have conferred that our VAX-24 data set on which we did miss a few serotypes, both post-dose 3 and post-dose 4 represents an approvable data set. As we head into VAX-31, a couple of factors, I think, work further to our advantage. As I mentioned, we've got 2 of the 3 dose arms in the study that are higher than any of the arms explored in the VAX-24 study. And we saw this nice dose-dependent response, no impact to the safety and tolerability profile and absence of meaningful carrier suppression, which give us kind of the optimism that these higher doses will deliver higher immune responses. So we do expect higher immune responses in this VAX-31 study. This is a program, which, as I mentioned, confers substantially more disease coverage than the comparator PCV20, which set us up well. So I think our expectations going in the study will be similar to those we set in advance of the VAX-24 study. We would expect and believe we can miss on a few serotypes. But in the context of the disease coverage, how much these incremental serotypes represent, and kind of the overall immune response profile the FDA has and no indication that they will not continue to evaluate the totality of the data as we go forward. We'll be working to refine those expectations, but I think it's fair to assume and expect and still represent an approvable profile to miss on a few serotypes, whether post-dose 3 and/or post-dose 4.

Another sort of dynamic that can come into play and can be quite helpful is just sort of the size of the study. So can you just help us sort of scale the size of your Phase II pediatric study relative to the size of what a Phase III would look like?

So Phase II, we were doing about 200 subjects per arm, give or take, in the enrollment. When we do a Phase III, the overall size of the study won't be much different. It's just all of them will be 1 dose versus 3. So my guess is roughly 1,000 subjects per arm, maybe a 2,000 subject total is traditionally what a Phase III pediatric study will look like.

That is an important point, though, Seamus, and thanks for reminding even if you have kind of consistent mean -- geometric mean ratios from Phase II to Phase III, just given the Phase III study will be larger in size, but the confidence intervals are expected to tighten, right? And the measurement here is non-inferiority. So even with consistent means, would expect the kind of lower bound of that confidence interval in the Phase III study to be higher than in the Phase II, just given statistics.

Great. And then maybe just to wrap up, it's a competitive landscape. You guys are definitely in the lead in a lot of ways. But can you just give us a sense of your perception and view of how far along you are relative to competitors?

Yes. I mean look, I'm not going to speculate in years, but I think we like the position we're in. I think most recently, some of our competitors have announced kind of delays to their programs. So I think our lead, in our view, has only widened over the course of the last year, and we're about to start our Phase III program for 31-valent. It's the highest valency program going into Phase III of any. It remains a competitive market for obvious reasons, it's an $8 billion market in size. But we continue to have healthy paranoia about our competition, but like the position we're in from a timing standpoint and just the profile of our vaccine given the technology platform we have.

Great. Well, unfortunately, we are up on time. 25 minutes never really enough, but it's a great opportunity to catch up with you guys again. Look forward to all of the announcements and future success of Vaxcyte coming in 2026 and beyond.

Great. Thanks, Sam.

Thanks. Thanks, everyone.