Welcome to Vaxart Business Update and Full Year 2022 Financial Results Conference Call. A question and answer session will follow management's opening remarks. Individual investors may submit written questions to ir@vaxart.com. As a reminder, this conference is being recorded. I would now like to turn the webcast over to your host, Ed Berg, Senior Vice President, Business Operations. Thank you. You may begin.
Good afternoon, welcome to today's call. Joining us from Vaxart are Andrei Floroiu, our Chief Executive Officer, Dr. Sean Tucker, our Founder and Chief Science Officer, Dr. James Cummings, our Chief Medical Officer, and Phillip Lee, our Chief Financial Officer. Before we get started, I'd like to remind everyone that during this conference call, 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 differ materially from those discussed in these forward-looking statements due to a number of important factors, including uncertainty inherent in the clinical development and regulatory process and other risks described in the Risk Factors section of Vaxart's most recently filed annual report on Form 10-K and other periodic reports filed with the SEC.
Vaxart undertakes no obligation to update any forward-looking statements after the date of this call. I'll now turn the call over to Andrei Floroiu. Andrei.
Thank you, Berg, and thanks to all of you joining us today. We are pleased to share with you our corporate strategy update and talk about how we'll be progressing our transformational oral vaccine platform. As we said in the press release we issued this afternoon, we are prioritizing the development of our oral pill bivalent norovirus vaccine candidate, as we believe this to be the best strategy to position Vaxart for long-term success and maximize shareholder value. Our goal with this strategy is to focus most of our investments on the programs that have the greatest near-term potential to validate and progress our oral pill technology platform. Norovirus represents a very attractive target for Vaxart because of the very compelling risk-reward profile of our program. I will highlight five dimensions here.
The disease characteristics, the large commercial opportunity, the attractive competitive context, the compelling data we have generated so far, and our near-term data readouts. First, the key characteristic of norovirus as an infectious disease have not changed since we started working on our program, and we do not expect them to change. This is unlike COVID, which has been a constant moving target with emerging variants. Norovirus is less challenging for a company like Vaxart to develop a solution again. The norovirus commercial opportunity is huge for a company of any size. An annual $10 billion disease burden in the U.S. alone, with an estimated $60 billion burden globally. Competition for a norovirus vaccine is very limited. There is no approved vaccine anywhere in the world, and ours is the only oral program development that we are aware of.
To our knowledge, there is only one other advanced program in development. Importantly, our oral enterically delivered mucosal vaccine could have significant advantages for an enteric mucosal infection when compared to potential injectable alternatives. Additionally, an oral pill vaccine has inherent convenience advantages in both kids, key populations, kids and the elderly. The fourth point is that the data we have generated so far with our norovirus program is substantial and quite compelling. We have completed 6 clinical trials enrolling 360 subjects in our norovirus program, and this does not include the 2 ongoing phase II trials with top-line data expected to read out this year. The immunogenicity data we have seen to date from the completed trials look consistently strong, and the safety and tolerability data so far is benign.
Additionally, as my colleagues will cover in more detail, our data in one key segment, the elderly, looks much better than what we would expect in this population, which is different than the data that has been seen with injectables. We have a lot of concrete data points here to make us very excited about the potential for the clinical success of our norovirus program. We'll highlight many of these aspects over the next few months in both scientific and investor events. Fifth, we have two important top-line data readouts over the next six months. The first one is our phase II dose ranging study in mid-2023, and the second is our phase II challenge study in the third quarter.
Besides that, importantly, we believe that if the data generated from our norovirus program continues to be strong, we will have a range of value-creating options for taking the program forward. Mid to late-stage vaccine assets addressing large markets are very attractive to many industry players, and these vaccine assets are quite rare. At JP Morgan this year, we've seen that there is a lot of interest in these type of assets. We believe this industry dynamic will translate into valuable optionality for us later on. Let me talk a little bit about our COVID-19 program. We continue to believe that the current injectable COVID-19 vaccines leaves a lot to be desired, and that the encouraging data from our program suggests that our platform could fundamentally change how we fight COVID-19 and pandemics in general.
That being said, we have had to adjust our strategy to the continuous evolution of the COVID-19 pandemic and the changing perspectives of important stakeholders such as governments and regulators. We decided to play to the strengths suggested by our clinical data and focus on addressing pandemic preparedness by developing a pan-Betacoronavirus vaccine. One of the notable weaknesses of injectable COVID-19 vaccines has been their relatively narrow, strain-specific activity. Cross-reactivity has been a feature of our mucosal oral pill vaccine. Such cross-reactivity will be essential for providing better protection against a virus that continue to evolve at a rapid rate and may escape the protection afforded by currently approved vaccines. Our broader focus on this Betacoronavirus approach means we will not proceed with the previously planned clinical COVID-19 trials.
As we advance new vaccine candidates, we will determine the best development plan going forward. Furthermore, we remain engaged in discussions with regulatory agencies, governments, non-governmental organizations, and other strategic partners to maximize the value of all our vaccine programs, and we will provide updates as warranted. While we very much value every member of the Vaxart team, we have taken the difficult but necessary step to adjust our staffing levels with a 27% reduction in workforce to reflect these new priorities and activities. With a change in program prioritization, our cash runway now extends into the second quarter of 2024. As James will discuss in a moment, we expect to achieve several important milestones within the norovirus program between now and then.
These milestones have the potential to support the continued advancement of the norovirus program towards a phase III trial, while also providing further validation of the promise of our oral pill vaccine platform. To showcase our differentiated norovirus program and bivalent candidate, I am pleased to announce that we'll be hosting a virtual key opinion leader call on March 28th at 1:00 P.M. Eastern Time with several leaders in the norovirus vaccine development. Sarah Bartsch, PHICOR Project Director at the Research Foundation of the City University of New York, and Jan Vinjé, Head of the National Calicivirus Laboratory at the Centers for Disease Control and Prevention in Atlanta, will share their insights and perspectives on the global need for a safe, effective, and readily deployable norovirus vaccine. With that, I'll turn the call over to James for a review of our norovirus program.
Thanks, Andrei . I'm really excited about the potential of our oral norovirus vaccine program, which could transform the vaccination paradigm globally, providing significant advantages compared to needle-based vaccines. We've already demonstrated robust immunogenicity data from our Phase I norovirus clinical trials in both young adult and elderly populations. These data show that our bivalent vaccine candidate induced a robust immune response to include IgA antibody-secreting cells, had an ASC response rate of 78% for the GI.1 strain and 93% for the GII.4 strain, with no interference observed. This means that the presence of GI.1 antigens did not interfere with the stimulation of an immune response against the GII.4 strain and vice versa. Importantly, our norovirus candidate has an attractive safety profile in trials to date that's well-tolerated with no serious adverse events, and that's consistent with our platform.
We believe it has the potential to reduce transmission as well. As stated in this afternoon's press release, a key component of our prioritization of the norovirus vaccine program is the expansion of the ongoing phase II GI.1 norovirus challenge study to include additional challenge cohorts. We believe that the increased data set generated with these additional cohorts will improve the likelihood of identifying a correlative protection between immune responses to the vaccine and a reduction in risk of norovirus infection or acute gastroenteritis. Identifying a correlative protection may reduce the size and the duration of a phase III trial.
With the inclusion of the additional cohorts, we expect to report top-line data from the phase II challenge study in the third quarter of 2023. As announced last month, we initiated and dosed the 1st subject in the phase II dose-ranging study of our bivalent norovirus vaccine candidate, a critical next step in advancing this promising candidate to a phase III clinical study. Our bivalent vaccine is designed to target the prevalent strains of 2 norovirus genotypes, GI.1 and GII.4. They're the ones that cause the majority of norovirus disease in humans. Our oral pill bivalent norovirus candidate is differentiated from other norovirus vaccines in development for the reasons Andrei already noted. It creates both mucosal and systemic immune responses. We're customizing the presentation for different age cohorts.
There's no need for refrigeration because it's stable at room temperature. It's much easier to distribute while eliminating the biomedical waste associated with administering injected needle-based vaccines. The phase II dose-ranging trial is expected to enroll approximately 135 healthy adults at three sites in the United States. The first 10 subjects received open label high dose vaccine, and the remaining subjects will be randomized to high and low dose vaccine or placebo. Each of the vaccine arms will have 50 subjects, and the placebo arm will have 25 subjects. The primary endpoints are safety and immunogenicity in order to determine a dose level for phase III development. We expect to report top line data from the phase II dose-ranging study in mid-2023.
If successful, the next step would be a phase II b study, leading to an End of Phase II meeting with the FDA next year. In addition to the ongoing studies of our norovirus vaccine candidates in healthy adults, we expect to initiate a Bill & Melinda Gates Foundation funded clinical trial to evaluate the ability of our norovirus vaccine candidate to induce breast milk antibodies and transfer of antibodies to breastfeeding infants. If such transfer does occur, it could provide an important route for protecting infants from norovirus infection. This is especially important given the high incidence of norovirus infection in young children. We expect to initiate this study in 2023. Based on our growing body of data and the trials we have currently underway, we believe our bivalent norovirus candidate has a potentially expeditious path towards submission and a potential FDA approval.
We look forward to advancing our promising norovirus vaccine candidate that may benefit individuals, communities, and health systems globally. I'll now turn the call over to Sean for an update on our novel COVID-19 constructs. Sean?
Thanks, James. The SARS-CoV-2 pandemic seems to be in a transition, perhaps turning into an endemic virus, and yet the virus really is continuing to cause significant mortality or morbidity and as well as to mutate. For these reasons, there is an ongoing risk that new variants will emerge and that the current vaccines will provide limited protection against these viral threats. We know regulatory guidance and the commercial opportunity continue to evolve. We believe that chasing the latest variant is not the best strategy for any company or for our society, given how long it takes to develop, manufacture, and of course administer that vaccine. Therefore, we are now developing novel constructs that could provide protection not only against the strains of SARS-CoV-2 or that are most prevalent today, but also against future strains.
We believe that this more proactive approach will be essential for getting off the hamster wheel of COVID-19 vaccine development, bringing the pandemic under control, and reducing the individual and societal impact of an endemic infectious disease. Based on the substantial mucosal cross-reactivity data reported to date from the phase I and phase II a studies of our COVID-19 vaccine candidate, we believe that we may be able to potentially create an oral pan-betacoronavirus vaccine. SARS-CoV-2, the virus that causes COVID-19, is a subspecies of virus within the Betacoronavirus genus, as are other coronaviruses. A pan-betacoronavirus vaccine would make it easier to future-proof the vaccine, whether the emerging coronavirus threat was a new SARS-CoV-2 variant, SARS-CoV-1, MERS-CoV, or some other Betacoronavirus.
Keep in mind our clinical data for COVID-19 demonstrated it is possible to induce antibodies at the entry points for SARS-CoV-2 infection, the nasal and oral mucosa. These mucosal antibodies were cross-reactive to multiple SARS-CoV-2 strains, as well as more distantly related Betacoronaviruses such as SARS-CoV-1 and MERS-CoV. It's important to note that SARS-CoV-1 and MERS-CoV were more deadly than SARS-CoV-2, and future Betacoronavirus infections q also be more dangerous.
Therefore, we believe that a mucosal antibody-inducing bi- pan-betacoronavirus vaccine may be a valuable tool for pandemic preparedness. I'll now turn the call over to Andrei. Andrei?
Thanks, Sean. I want to take a moment now to welcome Phillip Lee, Vaxart's new Chief Financial Officer. Phil joined our team in December and brings nearly 15 years of experience in strategy, M&A, and partnering on more than $20 billion in transactions. Speaking on behalf of the entire leadership team, we're excited to have him on board. Phil?
Thanks, Andrei. The details of our financial results for the full year 2022 are summarized in today's press release. Vaxart ended the year with cash equivalents, restricted cash and marketable securities of $95.7 million, compared to $114.8 million as of September 30th, 2022. The decrease was primarily due to cash used in operations as we advanced our norovirus program. As Andrei noted earlier, these funds provide cash runway into the second quarter of 2024. I'll now turn the call back to Andrei for his closing remarks.
Thanks, Phil. We are starting 2023 with significant momentum. With the expansion of the phase II GI.1 norovirus trial and the initiation of our phase II bivalent norovirus trial, we are very well positioned to generate the data we believe we will need to inform the design of a phase III clinical trial that can support approval of our bivalent norovirus vaccine candidate. Moreover, with the updates to our portfolio prioritization that we announced today, we believe we have the optimal strategy and resources to set ourselves on a course for success and future sustainability. The prioritization of our norovirus program will also provide us with several important milestones against which our investors can measure our progress. These milestones include reporting top-line data from the ongoing phase II dose-ranging study of our bivalent norovirus vaccine candidate in mid-2023.
Reporting top data from our ongoing phase II challenge study for our GI.1 monovalent norovirus vaccine candidate in Q3, 2023. Initiating in 2023, the Bill & Melinda Gates Foundation funded clinical trial to evaluate the ability of our norovirus vaccine candidate to induce antibodies in breast milk and transfer of antibodies to young infants. Finally, as I mentioned earlier, we will host a virtual key opinion leader call on March 28th at 1:00 P.M. Eastern Time that will illustrate the differentiated nature of our norovirus program and our bivalent vaccine candidate. We hope you'll join us for this exciting and informative virtual event. On behalf of Vaxart's leadership team, I'd like to thank you for your time today, and we are now happy to take your questions.
Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Charles Duncan with Cantor Fitzgerald. Please proceed.
Hey, hi. Good afternoon, Andrei and team. Thanks for taking our question. Liking the focus on norovirus. Had a couple of questions there. With regard to the top-line data, mid-2023, I'm wondering if you could lay out maybe what you would like to see, you know, maybe not so quantitatively, but what would you be encouraged by in terms of taking that data set to the agency? Would you anticipate that End of Phase II meeting by the end of 2023 or in 2024? I think you said early 2024, but could you be in a position to operationalize, depending on funding, for a phase III by roughly this time next year?
James, do you want to take this?
Sure. Thanks, Charles. Thanks for the question. In terms of the top-line data from our phase II , dose confirmation, dose ranging study, you know, the top-line data we'll have in mid-2023 is based on 135 people, right? Either receiving placebo or a high or low dose of our bivalent construct. I would say that what we're looking for with those reports are the immunogenicity as well as the safety profiles of the product. Again, you know, in our s- you know, platform, we've seen a very consistent, clean safety profile. We'll see what that data looks like, come mid-year.
In terms of our approach with the agency and when an End of Phase II study would occur, you know, after we have the results of that top-line data, we'll be building the follow-on study, part B of that study, which will give us the numbers needed to go before the FDA. That would be, I won't go into the details of how big, but it would be a larger size study, based on the dose selected. I would see that potentially taking place in 2024. Does that answer your question, Charles?
Yeah, I think it does. We'll look forward to that data. The second question that I had was either for Andrei or Phil. Knowing that Phil recently joined the firm. I guess I'm wondering if you could provide more color on the R&D spend. I think it was about $81 million in the year. How much of that was COVID versus noro? In terms of R&D spend that you anticipate for this year, what percentage of it is-
I think the best way to get you the numbers is actually in the Form 10-K that we filed. What we disclosed there is the external spend for norovirus and COVID. In terms of what's going forward, obviously I think there has been significant focus on norovirus and the clinical trials that we're running there. You could largely think that the majority of our spend will be on norovirus, although we are continuing with other assets in our platform as well.
Okay, that's helpful. Last question on partnering. I guess my question is strategy and so it's probably gonna be an imperfect, question or certainly answer, takes two to tango. With regard to moving into a longer larger study of phase III in noro, would you anticipate the data yet this year, to be able to enable you to progress with partnering discussions? Or would you rather take the candidate into phase III yourselves? Thanks.
Hi, Charles. I'll try to answer this question, even though as you can appreciate it's a bit premature. I think the data that is gonna come out in the third quarter, particularly the challenge data, the norovirus challenge data, is seen as very important by investors and potential strategic partners too. I think after that data will be a key decision point for us in terms of how we proceed forward.
Got it. That's helpful. Thanks for taking my questions.
Thank you so much, Charles.
Our next question is from Mayank Mamtani with B. Riley Securities. Please proceed.
Good afternoon, team. Thanks for taking our questions, and I also appreciate the timely pivot, focus on norovirus. Maybe just piggybacking on the prior comment, Andrei , could you talk a little more on for the challenge study, the rationale for expanded cohorts and I think it would be helpful for investors to understand what levels of protection, you know, be it the asymptomatic efficacy or even transmission you're looking to target in this data set. If you are able to go a bit deeper on the types of immune correlates you're looking at, that also would be very helpful.
James, do you want to take this question?
Sure. Mayank , thanks for the question. In terms of the type of data to drill down into what we're looking at for the challenge study, essentially we're looking at protective efficacy. Looking at a reduction in symptomatic acute gastroenteritis secondary to a norovirus. We're also looking at the potential for decrease in shedding, viral shedding of norovirus. We all know it doesn't take a lot of norovirus to cause an infection, but if you can decrease shedding, you should decrease potential transmission. Those are two of the things we're looking at. Another facet of that study in particular is looking at a correlate of protection.
We feel that a correlate of protection is it could be key in sizing up our Phase III endeavors and looking at the potential to decrease numbers and/or timelines for a Phase III study, looking at a correlate protection. This challenge is a GI.1 challenge. You know, our bivalent vaccine that we're calling the dose ranging study has GI.1 and GII.4. So we're keenly interested in what that correlative protection may look like, and then sharing that with the FDA in discussions to get a read on how that might impact our Phase III study. Does that answer your question?
Yes, it does. Maybe if I can ask you to be a little more specific on the dose ranging study for the bivalent. The dose levels that you're looking at, How do they compare against the monovalent work that you've done before? You know, what sort of answers that you're looking from there that you think would be very helpful with the regulators? If there is a need for you to do a bivalent specific challenge study also, you know, before you start a phase III , if you could clarify that. Thanks again for taking my question.
Sure. Sure. Thanks. In terms of the dosage levels of that study, and it's available on ClinicalTrials.gov, we're looking at a bivalent of GI.1 and GII.4. It's 5 E to the 10, which the total dose is 1 E to the 11 dose, right? In terms of the high dose, that's GII.4 and GI.1. That's a 1 E to the 11 per strain for a total dose of 2 E to the 11. In our previous studies, we've had doses as high as 1 E to the 11. This is a higher dose and, as I said, we'll be looking to maintain what we've already seen across our doses in this and other vaccines, which would be a clean safety profile.
In terms of other diarrheal diseases, or diarrheal disease presentation while performing studies until we go into our phase III , certainly we would collect any data in a phase II if someone were to have, you know, a acute gastroenteritis, but that would be exploratory only. These studies aren't really geared for that. That's where a phase III study would come in. I think the best way to look at this is leveraging what could be the benefit of our challenge study. As you know, in the adult populations, you know, there's not a consistent transmission annually. It's more selected by population. We would look forward to garnering a lot of knowledge from that challenge study in terms of potentially protective efficacy. Does that answer that question, Mayank?
That does. Maybe just one more question that just came in. Could you also touch on the requirement for you to initiate the breastfeeding mothers of in an infant study? If you can comment quantitatively on how much funding you have or will receive from the Gates Foundation.
Well, I'll leave the funding questions to those people who dabble in those arts. From my standpoint, you know, that look at a study in lactating postpartum women, where we would give our oral tableted vaccine to women who've already delivered a baby, so they have a breastfeeding infant, to measure a couple things. One, looking of course to ensure that we're safe, but looking at the amount of antibody that we find in the breast milk. I think that's very important, and that's part of this study. Then the second piece is looking at the amount of antibodies against norovirus we find in the infant's feces or stool. Looking at passage or transfer of those antibodies in breast milk, I think is very important.
From our standpoint, this may be a way to protect, you know, some of the most vulnerable populations, by implementing a vaccination strategy on the lactating mom. I'll leave the question of dollar amounts, et cetera, to others on the call. Andrei , Sean, Phil, would you like to comment?
Yeah.
All right.
Mayank, we're not gonna provide details on the dollar amounts here. We just said that this trial was co-founded by the Gates Foundation and us. We're just gonna leave it there.
We have reached the end of the phone questions and answers. We now turn the conference back over to Ed Berg for any online questions.
Fabulous. Yes, we've got a number of online questions. I'm gonna start off. Andrei , this one's gonna be for you. The question is why prioritize norovirus? Why make that decision now, and why didn't we make the decision earlier, Andrei ?
Thank you, Ed Berg. We really believe that we have one of the leading norovirus vaccine candidates, and it's important to emphasize that. Our decision to focus on the norovirus program followed an extensive strategic review of our business and a review of our entire pipeline candidates, including looking at what would be the fastest path to commercial product for us, as well as the most efficient way for us to maximize our current resources. The reason we prioritized norovirus is because overall it presents the best risk-reward profile for us in the near term. As we mentioned, we have two very important data readouts this year. One mid-year and one in the third quarter.
We do see progressing or advancing the norovirus program as being the best way for us to validate our program, our platform, and to position us for long-term success. Importantly, the updated cash runway extends well beyond those two data readouts. I think that's important for investors to know.
Excellent. Thanks, Andrei . Focusing on the cash runway, there's a number of questions on norovirus. Phil, this is gonna be for you, and they all relate to norovirus. I'm gonna try and summarize the scope of all the questions that we're getting. Can you complete a phase III study in norovirus without additional funding? What's the projected cost and duration of a phase III study? Does your cash runway include a phase III study? Phil, passing that over to you.
Sure. Thanks, Brent. The guidance of our cash runway is into Q2 2024, and that does include a cost associated with all our existing norovirus phase II studies, as well as the Gates Foundation funded study planned for later this year. What it doesn't include is the projected cost to conduct a phase III trial, and we aren't really providing guidance on the cost of a potential phase III trial at this time.
Excellent. Thanks, Phil.
Back to you, Berg.
James, this one's on norovirus for you on the clinical study. The question is norovirus again. Presuming you obtain positive data from phase-.
Presuming we have positive data from the phase II studies, we expect an End of Phase II meeting would be next year, 2024. The phase III trial could begin as early as next year as well. That'll be in concert with guidance from the agency. Over.
Sent. Excellent. Thank you, James. Andrei , this one's gonna be for you and really is talking about funding. What's the prospect for U.S. or international government funding, whether it's from the U.K., BARDA, et cetera? Andrei , over to you.
Well, this is, it's a difficult question to answer, particularly now as we perceive the interest and attention of various governments and governmental agencies have shifted. It's hard to predict what governments are gonna do. We remain in contact with important agencies both here in the U.S. and abroad. We continue to believe that our oral pill vaccine platform could play a transformational role in fighting the pandemics in general. Again, we continue to have those communications, but it's hard to predict the outcome.
Thank you, Andrei . Phil, this is another question on share price for you. There's a number of them. I'll just answer 1, but there's a lot of questions about the same thing. Will there be a reverse split to get the shares over $1? If so, what's the ratio? Phil, I'll hand that over to you.
Sure, Brad. We believe we have key catalysts that would really drive the potential interest in our stock price in the next two quarters. You know, as we mentioned earlier on this call, those catalysts do include a top line data readout for our phase II dose ranging study, as well as the top line data for our phase II challenge study for norovirus. In terms of a reverse split, you know, we don't believe we need one at this time.
Excellent. Thank you, Phil. Well, that wraps up our questions for today. Sherry, I hand it back to you.
Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.