Vaxcyte, Inc. ($PCVX)

At BofA, and I am pleased to be introducing our next company presenter, Vaxcyte, joined by Grant Pickering, Co-Founder, Director CEO; and Jim Wassil, Executive VP and Chief Operating Officer; and Grant's got a few opening remarks on state of pneumococcal vaccination space, and then we'll go into my questions after that.

Excellent. Thank you, Jason. Appreciate you guys having us here to Las Vegas for the Bank of America Conference. As most people know, we have fully enrolled our Phase III program, all 3 of the Phase III studies for VAX-31. We are in the business of setting expectations around the pivotal study that will read out in the fourth quarter of this year that we call OPUS One. And we want to make sure people have clarity of thought as it relates to expectations around that study. the pneumococcal conjugate vaccine space has had a long history of successful reviews of broader and broader forms of these vaccines to rise to the occasion of the incremental strains that are causing disease over and above those strains in the standard of care at the time. And what we've seen from past vaccines is a recognition that in some cases, there are missed non-inferiority comparisons -- but the scheme of the totality of the evidence, it warrants the approval and inclusion of all of the serotypes in order to produce the broadest protection possible and as we think about expectations for OPUS-1, we're comparing VAX-31 to not only even 20, but also CapEx of the 21 valent product that's out as well with equal standard of care recommendations. And so with VAX-31, we have the benefit of having 31 serotypes, which are 11 more than Prevnar 20. And in the context of having already done a direct head-to-head comparison against Prevnar 20, we saw really resounding positive immune responses from VAX-31 and very robust responses across the full spectrum of those 31 conjugates. So as we think about an expected outcome heading into this Phase III study, we recognize that while 18 of the 20 serotypes that are in common were better than those responses in Prevnar 20. There were 2 that were lower and 1 was appreciably lower. And in that context, we see that as an expected serotype for which we will miss the noninferiority comparison. It's serotype 22F it slightly exceeds the minimum threshold in Phase II. But in light of certain uncertainties heading into Phase III. Our thesis is that we should just expect to miss on that one. But in the context of a 31 valent vaccine relative to a 20, that would be a decidedly better profile than the continued recommendation for Prevnar 20. And in the case of serotype 22F, the magnitude of the immune responses against that particular serotype are extremely high in ways that we think there would be continued confidence that we'd see effectiveness going forward. As it relates to the comparison to the other vaccine Capvaxive, we have, again, 31 relative to 21. So 10 incremental serotypes, which would confer an incremental 15% to 20% of coverage on top of what's offered from the 21 valent vaccine. And the situation is that while both CapEx and VAX-31 have been compared to Prevnar 20 in well-controlled studies we don't have a direct comparison of VAX-31 to Capvaxive yet. We will get that data in the fourth quarter. But looking across those studies, what we see is, in a number of cases, higher immune responses coming from A31, that in other instances, a handful of serotypes for which we think there's a reasonable expectation that we'll miss on the non-inferiority comparisons of that handful. But in the context of a 31 valid vaccine compared to a 21 valent vaccine, we do believe it will be a decidedly best-in-class offering in light of our expected outcomes from the study. But when we look at the specific serotypes, we do see that serotype 3 and 8 are ones that we think we can reasonably expect to miss as well as serotypes 23B, 31 and 35B. But I would say that the magnitude of the immune responses that we have seen with VAX-31 would suggest to us that they would meet the same relative criteria that the FDA has applied to past instances where they formally missed noninferiority, but the magnitude of the immune responses would suggest that they would continue to offer protection in -- particularly in the context of a broader spectrum vaccine, 1 that would put VAX-31 in a position to have a best-in-class profile heading into the BLA filing. So that's how we're thinking about it. We're calling this a handful of misses. But I should caveat, I'm sure Jason will ask this the very first question, but I'm going to preempt him. We do have the study set up such that the 11 serotypes that are in all 3 vaccines are set up such that it's an either/or we need to just hit on 1 or the other. So in the instances of 22 F3 and 8, we think we'll hit on at least 1 of the 2 vaccines in ways that we wouldn't expect those to come out of the study as an official miss. So that's the way we're setting expectations heading into the fourth quarter readout for OPUS-1 for VAX-31 and why don't I stop there and move on to the balance of the Q&A, Jason.

Okay. And then as a follow-up to the CapEx of analysis that you guys have done -- is the right way to think about this, hey, this is a worst-case analysis when you say a reasonable expectation that those 5 could be a miss. Not that there's still a possibility that you could but you want to set the expectation and that's maybe a worst-case planning analysis?

Yes. I mean I think what we are trying to do is to remove the ambiguity out of the question that we tend to get from investors, which is how many can you miss on -- and we try to be as precise as we can with that. But I think our view has been that there's been too much residual ambiguity around precisely what that means. So in our view, this is our best expectation. And particularly for the CapEx situation where you don't have a head-to-head, you have 2 different similar but slightly different OPA assays. We need to wait until the data emerges out of the study. But what gives us the most reassurance is the magnitude of the immune responses we're seeing are decidedly encouraging around the way that these are tended to be handled with regard to the actual review by the FDA.

Would these have met at 0.5 as lower bound, but not at 0.65. Is that fair to say that the heightened hurdle is impacting this?

I do think that at 0.5, we were fairly confident that we should be able to do much better, obviously, than that. I think Serotype 3 may or may not miss, but that's the only 1 that I think at 0.5 would be possibly a miss.

Okay. All right. And maybe before we jump into OPuS-1 and specific trial related questions, a couple of the high-level change again a foot at the FDA. And I would imagine that perhaps leadership-related headlines and overhangs on your business over the past year, 1.5 years. Have been more about HHS CDC than it has been about FDA, but your latest news and how you think about that impacting pre-agreements, discussions with FDA and any approach that you're taking?

Yes. I think we've had an extremely constructive dialogue on a continuous basis with the FDA. We have the benefit of a breakthrough designation, fast track designation and a real recognition that expanding coverage for pneumococcal conjugate vaccines is a critical priority. So I mean, for us, we just went through the whole process of locking down the Phase III clinical program for VAX-31, and we thought that was a very constructive dialogue. So we don't expect any changes there in light of how similar that outcome was relative to what has been the historical set of precedents. So yes, I think we're comfortable.

The other news is Pfizer's 35 vaccine that they disclosed -- it's not in the clinic yet, obviously. But if you think about the time line for VAX-31 on-market 2028 I would presume they would -- if you are successful, they may have to run a head-to-head trial against VAX-31. So maybe if you can just talk about time lines, how entrenched you need to be as a standard of care to prompt a future competitor from having a higher developmental bar?

Yes, that was big news. So as you pointed out, last week, Pfizer announced that they are no longer advancing the 25 valet vaccine in their fourth generation vaccine that was expected to be going into Phase III clinical development and instead pivoting backward to a preclinical 35 valent vaccine for which they're not providing any detail -- so for us, we're already in Phase III clinical development with a 31-valent vaccine. I think if you could imagine, the optimal 35-valent composition, it wouldn't move the coverage from where we are with our 31-valent, which is covering 95% of the circulating disease to more than 96% or 97%. So even if you could get on track with a 35-valent vaccine, as you say, it would come well after us. Would likely require a direct comparison to VAX-31 for which, on a relative basis, we're showing 25% higher on average immune responses relative to Prevnar 20 and the trick has always been how do you get more of them into a single formulation without the immune responses dropping further, further and further. So I think for us, that was just means we have less competition behind us, we'll find out soon enough as they tell us more about that particular program.

And if things play out as you've outlined here, right? So I guess relative to PCV20, you have a net gain of 9, 0 types versus CapEx, if you'd have a net gain of 5, 0 types. In the past few years, you've always talked about how health authorities would view that added coverage. There's obviously discussions about preferential recommendation, things like that. So maybe if you can contextualize what that clinical benefit means and how that could move markets?

Yes. I mean I I would say that it's definitely not as simple as subtracting a number of technically inferior outcomes from your coverage. And I say that because for the same reason that Prevnar 13 and Prevnar 20 are what they are, despite having and misses on noninferior comparisons. The magnitude of the responses were sufficiently reassuring to the authorities that they preserve that coverage even with the misses. And that's the expectation that we're setting with our data -- so I'll give you a good example. So we talked about the expectation of missing on 35V the magnitude of those titers are extraordinarily high. There were 11,000 -- so that is an extremely high titer and would be extremely reassuring to anyone who's knowledgeable in the space. So it certainly wouldn't be the case in our mind that it would be a matter of reducing the coverage in light of those potential misses. So -- for us, we're talking about a 95% coverage with VAX-31, which compares to around 80% for Capvaxive and more like 62% for Prevnar 20. Those are massive upticks in coverage, which I think we'll be rewarded for when the time comes.

I'll just add that at the same conference that Pfizer is presenting their infant data next week, the CDC actually has an abstract talking about the growing trend of serotype 4 in the Western states in the U.S. the Capvaxive of is missing that. So there's also that consideration that in certain regions, especially where we're in right now, it's very critical to have that type of serotype coverage as well. And so that factors into it.

One thing you didn't mention, but you're optimizing certain dose levels to get greater immune responses. And you have statistical superiority testing also factored into the program. And so how some of those puts and takes may ultimately net out, right, in terms of the -- so it's a complicated algorithm, right, to dice this down too. But curious, do you think that comes into play at all?

I think so. I mean the anxiety and the part of the regulators was with each successively broader spectrum version of the pneumococcal conjugates that have come before us have arrived with significantly lower immune responses across the board. And so they've been forced to make that trade-off between broader coverage and lower immune responses, and this is well chronicled in the space. And in the head-to-head studies that we've done with VAX-31, we've reversed that trend. And so when we're talking about having, on average, 25% higher on -- relative to Prevnar-20 immune responses, you're precisely right. Many of those are because we're showing substantially higher responses, 7 of whom in Phase II showed statistically significantly higher and we're expecting a repeat of that. So while we're saying we might miss on a few, we expect to be much better on many others. So that is part of the trade-off here.

And thinking about product labeling, right, because the test is you can select NI on the weaker of the 2 on the shared strains. And so is it that there's really only a risk of lacking an ability to beat either or on just 1 stream or...

Well, I think to your point, yes, what we're saying is that in the either or the way the study is set up, since we have 2 standard-of-care vaccines that are not given referential, there are 3 serotypes for which we might miss independently, but across the 2 comparisons we wouldn't expect misses on those. So would really be those few that are in Capvaxive of over and above the 11 that are income

Is an individual comparison, but on either or you're expecting it at all.

Correct.

Right. And so then presumably in showing a robust immune response even against the stronger of the 2, the expectation presumably you'd get recognition of all 31 strains in the label?

That is the expectation. Yes.

Yes. I mean, the precedent as others have missed in the past, but they still were able to claim that serotype in the label. So we would expect based on that precedent to be a similar position I mean it's a huge miss and I don't know what a huge miss would be, but I think then there would be a debate, but I don't think we're expecting any huge misses here. They're going to be near misses.

I guess it seems like this is more of an investor thing to prepare people for in terms of analyzing data -- as you think ahead to the infant program and when you move to Pivotal, do you think that the higher non-inferiority thresholds are going to be applicable in those Phase III studies as well because it seems like that's kind of the main drag here?

Yes. So the rationale behind the increase, the higher bar for adults was really driven out of the regulator's concern that in the adult space, you don't have a clear bright line on what is a seroprotective threshold -- if you're above a particular level, they're reassured. But as you get closer and closer to lower levels, that's anxiety-inducing. That's why they wanted to see the bar raised. In infants, it's a different set of circumstances, the 3 field efficacy studies that were ran back in the day when Prevnar was first approved, showed that there was a very clear bright line for which over a certain magnitude of IgG antibody titers showed protection in the field efficacy studies. And so there isn't the same question of titers that aren't correlated, how far can they go? These are correlated to protection and infants. So that's 1 of the reasons why they regulate the infant vaccines differently than the adults, they actually require separate IND filings. And so that for certain means that, that endpoint won't change. There is a comparison of the antibody titers as part of the pivotal study design for infants. So there is some possibility they could raise that bar for the second of the 2 co-primary endpoints, but it's not a given.

Okay. So then assuming clinical success in the fourth quarter with OPUS one, just remind us the sequencing of the other 2 registration-enabling trials when the earliest possible filing could be and -- just remind us of your FDA discussions, I think you're both shooting for greater than 3,000 patients with the safety database to satisfy what the regulators need, but just confirm that.

So I mean that's a pretty standard number of subjects. You need 3,000 subjects exposed with your final manufacturing formulation for safety. You've seen our OPuS-1 or OPUS-2, we go well beyond that minimum requirement. -- we've had these discussions with the FDA already. In terms of timing, we said OPUS-1 comes towards the end of this year in the fourth quarter, OPUS-2 and 3 in the first half of next year. And then we will have 1 more additional clinical study that we will do which is manufacturing consistency. The other requirement the FDA has is that you demonstrate with your commercial process that you can manufacture multiple batches and do it and get consistent clinical results. And so that will be our final clinical study and that will get us to our ultimate BLA submission.

How long would that take the manufacturing study?

Relatively speaking, it shouldn't take very long. I think you're talking maybe 1500 subjects, give or take, got 500 per arm, and it wouldn't necessarily have a comparator this time. So same thing. You do the the study you do 1 month later, you're still going to have to do the 6 months for safety. I would expect us to be able to have this urology and the safety all done within that 6-month period after the last subject.

Is that something that you can expedite or move faster? Or do you need to wait for some of the OPUS studies before you can start that manufacturing study?

No, we don't need to wait for those other studies to start that. I mean the expectation is that we'll be able to get that study started in due course and have it dovetail into the anticipated BLA filing late next year.

Okay. All right. That's what I was trying to get at. All right. Let's see. So post-marketing commitments to FDA. I know that, that was sort of part of the rumblings about how things are changing. How are the post-marketing commitments different at all from like what you've seen Pfizer and Merck have to do in the past?

So I'll caveat this by saying traditionally, a lot of your post-marketing commitments are 1 of the last things you negotiate. And the reason is the FDA wants to see the totality of your clinical package before they impose any of those additional requirements. That said, we've had some discussions already. We're comfortable that we're going to do a post-licensure test negative design study to demonstrate efficacy against pneumonia or effective since its post licensure, similar to what Merck had done as well. And of course, as with every vaccine, an extensive safety follow-up will be also required to ensure that when you go into a larger population that's not controlled in a clinical study that you still have the same safety that you reported in your clinical trials.

Maybe just a commercial question. How big do you think the adult market is today? I mean we could take the Capvaxive of revenue. What we don't know is how much that's taking from the Prevnar franchise. And then we have the over other issue of a catch-up market too in there. So how do you just untangle that? And do you have a sense of like what the size of the adult market will be steady state when you're ready to go to market?

I think in this moment, our belief is it's about 1/3, 1/3 and 1/3 between the infant market, the adult market and then the international opportunity. So yes. I mean, Capvaxive has had a really good start. It doesn't appear to have eaten into Prevnar's revenues materially. So it seems like it's incremental growth of the adult segment, which is what we have been expecting for quite some time. So that is going to be -- so the adult market is going to be the fastest-growing part of this market. It's an $8 billion segment today. It's anticipated to grow to $12 billion. And so -- the question is what portion ultimately will the adult market take? It's -- I think it's good to approach 50-50, probably won't get all the way there, but could get somewhere close to that eventually.

Okay. And then as we sit here a year from now, you guys are going to be close to hopefully a BLA submission and coming a commercial entity. And so talk about the infrastructure build between now and launch? What are going to be some of the capital commitments and big hurdles and milestones to having your manufacturing between Lonza and your U.S. facility, all teed up and buttoned up and ready to go.

Yes. So we've been spending a lot of time benchmarking, building out the initial leadership team for our commercialization effort. Jim is spending considerable amount of time. The beginnings are usually with regard to thought leader development. And so the medical science liaisons group is growing, and that will be the initial outreach and then over time, we'll begin to scale the balance of the organization. But -- our view is that we can handle the launch of this complexity. I think with the Well, we've been able to look at the uptake for Capvaxive, which has been quite impressive, and that's a product that has limitations. And with a product like VAX-31, we see a great opportunity to bring a better product to market. and we'll do everything required to deliver on that.

Okay. Maybe pivoting to the infant program and talk a little bit about the Phase II trial, which we'll read out next year. These trials are obviously under powered can produce results if you look across the history of Phase II infant studies that may be difficult for some investors to interpret because there's a lot of different comparisons as opposed to those 3, a post those 4 assessment here. And so just maybe level set in terms of to what extent you expect carrier suppression maybe plays an issue in a Phase II study and just the noisiness and how to -- how would you kind of coach investors through that one?

Well, there's no question it's a lot more complicated to describe than the adult setting. In the adults, you give 1 vaccination, 1 month later, you get the antibody responses. And there you have it. As you say, with infants, it's considerably more complicated. They get 4 vaccinations. We only take 2 immunological readings after the third and the fourth dose. So yes, it is more complicated, but we've got a fair amount of time. We're not going to read out the study until first half of next year. And we haven't decided definitively if we'll take advantage of the fact that there is a chance to look at the first endpoint prior to the BOOST data you don't have the whole story until you see the BOOST data. So we've guided that we will get specific about our unblinding plan. But in any case, we'll have the full measure of that study by midyear next year. So we have quite a bit of runway to set expectations. But in this moment, we just say our VAX-24 data that read out last year was really encouraging. We think we have a path to the market with our 24-valent vaccine. As it relates to carrier suppression, we've seen even less manifestation of carrier suppression, with our vaccines in infants than we had seen in adults and that being in the context of having shown substantially less carrier suppression than others. So we're seeing the benefits of the design of our pneumococcal conjugate as we build them to avoid carrier suppression. But VAX-24 data looks really encouraging. In the context of that carrier suppression, we're confident that we can add these additional 7 conjugates on top to get to VAX-31 and get them to be immunogenic across that spectrum. We did have a handful of misses in the VAX-24 data. Fortunately, they were not on key serotypes that are circulating in any relevance. So we have a really good base to work from. We are testing higher doses with VAX-31. We've seen really nice dose response to improve immunogenicity with higher doses. And in this study, we're testing multiple higher doses, so the hope is that increase in antibody responses could rescue some of those serotypes for which we've missed -- but if we deliver on the incremental serotypes on top of Prevnar 20, which is today's standard of care, would create a major opportunity to expand coverage, again from around 60% to 90%, which would be a massive increase, and that will be driven by the incremental serotypes and then across the common 20, we had already shown improved immune responses on the most important circulating serotypes. It was really on those ones that were not as strategically important where we missed. And if we can improve any of those, it just strengthens the set of arguments as we try to deliver VAX-31 not only to adults, but to infants. So that's the best I've got today.

But on those 5 with FAC24whr where there were the misses, just for our understanding, talk about which of those you're pushing dose to potentially mitigate that?

Yes. So in the context of the doses, so just in order of how we progressed we took VAX-24 into adults first. We got our first clinical data. We showed with higher doses, we saw improved immune responses. So when we moved VAX31 into adults, we kept pushing the dose upward and kept seeing more and more data associated with higher dose equals higher immune responses. So when we got the first infant data with VAX-24, we did see room for improvement. And so we already had VAX-31 at higher doses than we added an increment over and above that. And so I think our view is that we already had in the -- in 1 of the formulations higher doses for a few of those serotypes that did end up showing room for improvement. And then when we added the optimized dose Jason on top of that, all those that showed room for improvement, we moved up to the high end of the range. So we'll have multiple shots at higher doses to produce the best profile possible coming out of Phase II.

Yes. Okay. And then lastly, I mean, we have 30 seconds here, but just beyond Pfizer and the stated ambition to have a 35 valent, you're just general understanding of who you view as competitive possible competitors, at least with the 30 handle or on their serotype coverage?

Yes. So I mean -- so we've got GSK with their affinity bound constructs. They are in a Phase I study with a 30-plus valent vaccine. So they're in early stage clinical development, then you've got Pfizer and preclinical. But I'd say the issue that people have found in adults is they're mixing multiple protein carriers, and that's turned out to be really problematic. And I know we're running out of time. But there have been multiple attempts at that. No one has succeeded. We have the benefit of not needing to try to mix in something new and exotic to expand coverage to the 30s. So yes, there are people trying, but we'll see.

All right. We're out of time. So gentlemen, thanks so much for joining us.

Thanks for having us.