Okay, well, thanks everybody, and good afternoon and welcome to Guggenheim's inaugural innovation conference. I'm really pleased to be joined by Vaxcyte. On my far right is Andrew Guggenhime, President and CFO, and to my immediate right is Jim Wassil, EVP and Chief Operating Officer of Vaxcyte. So really pleased to have this team here today. Maybe just to start off, hoping to just chat about the pneumococcal market, as it stands today, and you know, specifically just in terms of the players in the space, as well as you know, potential market expansion opportunities that you see in the pneumococcal market, as just a starting point.
Great. I'm happy to start with that and turn it over to Jim. First of all, thank you, Seamus, and to Guggenheim, for the invitation. Pleasure to be here today. Yeah, so it's the pneumococcal vaccine market is $8 billion globally. It's comprised approximately three quarters by the infant market and a quarter by the adult market, although as we may discuss today, the growth rate in the adult market expected to increase substantially. There are four major players in this market. Historically, the space has been largely dominated by Pfizer and its Prevnar franchise. Merck has been making more significant inroads of late. And then both Sanofi and GSK also have programs in it, of course, as do we.
But as I said, and Jim can talk about this, there is a reason to believe that the market will continue to grow significantly, particularly in the adult space, based on a recent decision, most notably at the ACIP just a couple of months ago.
Jim, just maybe you can jump in and the influences that you see from the recent ACIP decision specifically.
Sure. So, for me, I think, you know, we have to applaud the ACIP for moving the recommendation down to 50 years of age. They did it based on public health need. If you look, people in the U.S. between 50 and 64, about one third of them, or even higher, according to the ACIP, have an at-risk or high-risk condition for pneumococcal pneumonia. However, there's been an at-risk recommendation, but penetration was in the low 20%. So they decided since one out of every three adults needs the vaccine anyway, let's move it down to a universal recommendation down to 50 years of age. So, what you're going to see over the next few years is, you know, obviously a new cohort of 50-year-olds getting vaccinated, but you have over 60 million adults between 50 and 65 that now need to get caught up.
So there's going to be a catch-up for the next probably five, six years ongoing. So you're going to see a blip or an increase in the overall market size. Ultimately, we believe ACIP will make a recommendation for a booster at 65. So at steady state, my belief is that the U.S. market will more than double in terms of its overall size for the adult pneumococcal market. Ex-U.S., we're seeing other countries now starting to take interest in an adult program. Germany was one of the more recent ones. They recommended 60 years of age and above get a pneumococcal conjugate vaccine. It may be U.K. is considering it, you know, Australia, Canada, a number of others. If you get some of these seminal countries to recommend, then typically other ones follow.
We think that there's going to be a significant expansion in the adult market over the next three to five years.
Great. And, you know, obviously there's a little bit of a, you know, considerations that we have to make or think about as investors relative to the change in the administration. Just hoping you guys could address your thoughts on, what the impact, the change in the administration could mean, whether it be for vaccines or, or more broadly.
Yeah, I'm certainly happy to take that look. I mean, I think vaccines are, you know, arguably one of the most significant, important advancements, achievements in public health in history and continue to prevent millions of deaths worldwide in both adults and children. So we're certainly monitoring developments, but we expect to work with industry and frankly the administration and multiple components within the administration. And we're of course encouraged by the more recent comments indicating support for vaccines that have had a positive impact on public health. So it's a situation we'll continue to monitor, but we do believe that we all have a vested interest in keeping our population healthy and safe. So we expect to monitor developments and work collaboratively with the administration to ensure that all these vital immunization programs that have protected our people remain in place.
Great. So let's continue on and really kind of drill into your own technology here. So, you know, great results with VAX-31. Actually, thank you for the, I'm not thanking you, but like, it was great to see the press release this morning. Maybe you could talk a little bit about the game plan going forward and the news that came out this morning with regard to the move forward quite aggressively with VAX-31.
Yeah, I mean, I'll just remind everybody in case those of you haven't seen it, talk about the announcements we did make this morning. Jim can talk about its implications. So we announced two developments this morning, both on the regulatory front. First, for the infant indication, we announced that the FDA has cleared the IND application for our VAX-31 program and have accelerated our guidance with respect to the initiation of that important phase II study. Our prior guidance had been to initiate that study in the first quarter of next year, but based on the recent clearance, we have updated that to now expect that study to start by the end of January of next year. So pleased to be able to move that forward. And Jim and his team are working to get that study initiated.
And then secondly, in the adult indication, on the heels of the recent VAX-31 data, we had just in early September, we announced the FDA has granted that program breakthrough therapy designation in adults. So expect to leverage the benefits of that, in connection with our interactions with the agency over the coming years as we get ready to stand up that phase III program.
Great. Jim, can you just remind us, you know, the importance of the data that were presented, in early September, and really what we learned about VAX- 31 and what's unique about the technology, to actually allow for the such robust results?
And so historically, as manufacturers expanded coverage by adding additional serotypes, you saw a decrease or diminution in the overall immunogenicity. From 7- 13, it went down 20%-30% roughly. From the 13 to the 20-valent PCV, it went down another 20%-30%. There's at least my belief is that that's not sustainable. I think regulators don't think it's sustainable as well. They do want to have the additional coverage. And so historically they were like, okay, the breadth of coverage trumps the reduction in immunogenicity and they got approval. Our technology is unique. It's a cell-free-based platform. We can do site-specific conjugation. And because of that, we can dictate where the conjugation occurs and we make sure it's distal to the T cell epitope. So we have a more potent carrier protein.
And because we can control these reactions, we can actually load more polysaccharide on the carrier protein. So we use less carrier protein. That's important because the belief is that it's actually this carrier protein or what they call carrier-induced suppression that has led to this lower immunogenicity. We feel that this technology gives us a bigger runway. We'll still see some suppression at some point, but what the 31 data told us was, you know, we were able to increase coverage from PCV20 of roughly half the circulating strains in the U.S. up to 96%. And yet we were able to see an increase in immunogenicity at the same time. And so, we're trying to reset the immunogenicity back to the point where we are sure that the clinical outcomes will be maintained while giving that breadth of coverage.
It, you know, there's also the breadth of coverage. There's the decision from the ACIP recently. How do you feel VAX-31 is actually positioned from a longer-term perspective, whether it be, I would say preliminarily, let's just focus on adults, as part of that conversation?
I think we're positioned extremely well in adults. Going up, like I said, almost doubling the coverage from roughly 50%- 96% is a massive improvement in the overall disease that can be addressed. I think that's sufficient to get us a preferential recommendation. I think that having that breadth of coverage and demonstrating that we can supply the market would be sufficient to get that preferential recommendation. Regardless, I do think that having that breadth of coverage, regardless of a preferential recommendation or not, is going to lead to substantially greater market share. And we saw that with PCV20 came out versus PCV15, there wasn't a clear preferential recommendation. And PCV20 has 97% market share.
We think providers will recognize the value that the breadth of coverage will bring and that ultimately we can lead to a dominant market position if we're first to market with a 30+ valent.
Is there differentiation in the international market that's worth kind of thinking about on the adult side, versus the pediatric side in the existing market from your perspective?
Yeah. Well, historically in the international markets, they did not. They haven't been recommending an adult program. And the reason was that the pediatric vaccine came out first. It, you know, kids are the carrier of this disease. They spread it to grandpa. So by immunizing kids, you saw a 50% reduction in adults in terms of disease. And so a lot of the countries said, well, we've already seen a 50% reduction. We don't need to do an adult program. Now you have the adult vaccine coming out about two years before the infant. And the majority of disease out there is in the new serotypes. So I think, you know, not necessarily from a competitive perspective, but from a recommendation perspective, we saw Germany already make this recommendation. I told you others are considering it.
I think that having that breadth of coverage of 96% and making sure that you can deliver a substantial reduction of disease before that herd immunity takes place in the pediatric market means that we'll see more and more recommendations and funding outside the U.S.
Great. And the effort, you know, maybe talk a little bit more about the phase III program that you're building. So, you know, you're seeing superior efficacy on a number of serotypes versus Prevnar 20. You've basically gotten the go-ahead and breakthrough designation now. What are we talking about as kind of the next steps here? How many trials, how many patients, what's the phase III program look like? And, you know, how quickly can you get this to market?
Yeah, I'll just cover the timing and Jim can talk about the specifics of the program. But, you know, we have guided and reaffirmed this, just earlier this morning to initiate the pivotal non-inferiority study by the middle of next year, for which the data would read out in 2026, and we expect to complete the complement of studies that would collectively comprise the phase III program, initiate those either in 2025, 2026, thus reading out in 2026 and 2027, being in a position to submit the BLA shortly thereafter. A pretty standard phase III package, but Jim can talk about some of the specifics.
Yeah, I when you look at what our predecessors have done and what was necessary for licensure, I don't think we're going to get very creative. I think what they've done are really good programs. First, you need minimum of 3,000 subjects for safety. That's a requirement by the FDA. So we have to reach that. And to do that, first and foremost, you got to do a pivotal non-inferiority study. We'll do that. And you have to do what's called a lot-to-lot consistency study, which shows that you can manufacture multiple batches and be equally immunogenic across each of those batches. So we'll do those two studies. But then after that, we still haven't reached our 3,000 exposed. Let's round out the label a little bit. Let's get concomitant use with flu.
Let's look at subjects who have been vaccinated with another pneumococcal vaccine and showing them that they would benefit from expansion of coverage with VAX-31, so we'll do that, and then the other thing we'll do is the recommendation I mentioned got moved down to 50 years of age because of a lot of at-risk adults. We want to show the ACIP and the providers that we can work well in at-risk groups. So we're going to have a study specifically designed to those individuals that are at higher risk of pneumococcal disease. The one additional thing that we are considering as well is Merck was able to get a claim for cross-reactivity by demonstrating between 15B and 15C, and there was a precedent in there as to how they did it.
We're looking at potentially exploring cross-reactivity with other serotypes as well.
We expect this all, Seamus, to get confirmed in another phase II meeting we'll be holding with the FDA regarding the program. Of course, we've already done this once for the VAX-24 program, but we'll need to do it again here before we initiate the phase III trials.
Great. Let's talk about the infants, and the infant program that's underway. We've got data coming up, by the end of the first quarter. So, you know, what's the sort of right way to kind of think about this data? You know, you guys did an absolutely spot-on job of, you know, kind of guiding the market in terms of how to think about these data sets. How should we think about the upcoming data set, you know, where do you think investors' expectations should be? And maybe, you know, I know there's this desire to sandbag a little bit, just to keep expectations low. But, you know, I think it's realistically, you keep beating expectations, but I don't want to set them too high either. So.
Sure. Well, I mean, it's first, I'll begin by saying infants, we have to start educating on the differences here. In adults, you're looking at a non-inferior immune response after you get one dose. Here, there are two co-primary endpoints. One is in infants, you give four doses, three in the first year of life, and then a booster in the second year of life. So there's a co-primary after the first three doses in the first year of life, and then there's a look after the booster. Our data in the first quarter is only going to be looking at that first co-primary endpoint, not the booster. That'll come later, I think nine months later.
Yeah.
So the focus here though is this is where Pfizer missed on their six endpoints. It's out of 20. They met them all post-boost. So it's the more important of the two endpoints to look at from looking at probability of success. And essentially what we're looking at is there's a level of antibodies which is defined as being a threshold of protection. And if you achieve above that, you're considered protected. If you are below it, you're not. So they're looking at how many infants achieve that protective threshold, and they're measuring non-inferiority in terms of that type of response. And the measurement is it can be no more than the lower bound of 10% absolute percentage points lower than the comparator.
And so we're going to look at that and see where we stand and go forward with the program from there.
Yeah. I would just add to what Jim said, agree with everything there. You know, on the back of the three positive data readouts in the adult population, on the back of the very consistent translation for other programs from adults to infants, we feel confident in the upcoming results here. Just to remind and caution everybody, as we did before the adult readouts, because this phase II study is smaller in nature, the inherent error bars that serve as the guidepost will inherently be wider. So our focus then and our focus now will be on the point estimates here that are really the ultimate predictor of our ability to succeed in a much larger phase III trial.
Great. VAX- 31, you guys are hitting the accelerator on this. It's also starting to get a little bit close to VAX- 24. So I have to ask the question, first off, you know, maybe talk a little bit about the VAX- 31 infant program that you're accelerating. And then separately, you had, you didn't have to, but you had the, I think the fortunate opportunity to accelerate VAX- 31 in adults without really losing much time. Is it possible that we could end up with a similar result in the pediatric setting, or does it make sense to sequence the two still?
Yeah, I think, you know, we currently are planning to pursue both of the infant programs, 24 and 31 in parallel. We have been able, that said, to leverage a lot of the learnings from the VAX-24 infant study in our VAX-31 infant study such that, you know, over the last 12 months, the timelines have compressed somewhat. At this point, there is still a gap such that we would intend to pursue both. And given the size of the infant market, getting to that market sooner not only can deliver more public health benefit, but can, you know, represent significant shareholder value. But I think, Seamus, we will continue to monitor that over time. Is it possible? I'm not going to sit here and say it isn't possible.
And to the extent, if the timelines for whatever reason to further compress, that would be a decision we'd have to make. But at this juncture, planning to do both in parallel, read out the phase II VAX-24 infant data points next year. And then, of course, now starting the VAX-31 study.
I don't know if it's fair to ask, but is it, what is the correct comparator? I assume that depending on your timeline, correct comparator is still the approved vaccine product, so you could be running 31 and 24 in parallel, head to head against 20-valent Prevnar.
Yeah. It would still, the standard of care in the market would still be the comparator.
The comparator. Okay. Makes sense. In terms of, you know, the manufacturing, I think there's historically been situations where manufacturers have gotten caught, maybe flat-footed or the view was the manufacturing was so complicated that you couldn't scale up appropriately. What's your view on that dynamic? Is it more a reflection of risk-taking heading into investment or and you don't really see that as a problem, or is it more a question of, yeah, actually scale up is challenging and something that we still have to work on?
Yeah. So I'll tell you what's different about our situation than my previous life in vaccine development at other companies. Typically in a vaccine program, you got to do a 30,000 or even more. Rotavirus was a 70,000 patient study. And then you find out when you unblind whether you have a vaccine or not. You then, you know, manufacturing investment, inventory buildup are all very expensive. So trying to get that capital allocated, even though you have complete access to capital in these large companies before you know what you have on hand is very risky. So you unblind, you say, wow, this is great. And then you turn and you start manufacturing or building a new manufacturing facility with larger scale.
Here, because of the situation where you can demonstrate non-inferiority in terms of immunogenicity, our phase II gave us a bit of a de-risking event. So we were able to start investing in that larger scale manufacturing facility at Lonza, which we're doing now. And so we'll launch from existing multi-use facility in Lonza, be able to supply the adult market because it's one dose and primarily a U.S. By the time we start to go out, to ex-U.S. and have our infant approved, we'll have the new facility and we'll be much faster to be able to scale up. So it's, I don't think it's really manufacturing complexity in the vaccine space. It's when you start to build that facility and scale up.
Yeah. Yeah. We feel very fortunate to have garnered the support from our investors to be able to make that investment. So in fact, we are not caught flat-footed, but instead are ahead of the game. So we are, as Jim said, preparing to launch out of existing Lonza facilities to support the adult indication. We're well on our way through the buildout of this dedicated suite that will support the infant indication coming online and be able to support the supply requirements for both the infant and adult populations globally.
And let's talk about the competitive landscape then. You know, obviously a lot of potential players kind of coming to the market. We even had Sanofi here yesterday talking about a potential 21-valent in the pediatric setting. You know, from your, you know, sort of surveillance of the competitive landscape, what are the potential risks? And then, you know, on a relative basis, talk about the opportunities that you really see to upstage the competitors.
Yeah. Certainly a lot of activity in the space. Announcements made by a couple of our competitors in the space over the last couple of weeks. So I think it's just the activity in the space I think is an indication of the need and the opportunity in this market. Without going into specifics for each of the other competing programs, I would say we like the position we're in, for a combination of factors. First, I think the data we've presented, first for the 24-valent program, and then of course, more recently for the adult 31-valent program, and we're not too far away from sharing the data for our infant program. The data certainly in our view support a best-in-class profile, and to the extent for global health or competitive reasons, reason to believe we could go beyond 31 if needed.
I also think we feel comforted by where we are from a timeline standpoint relative to the competition. I think being on the cusp of initiating our phase III program in adults is ahead of where the competition is. I think I would say the same for the infant program. Combination of the platform, the results, and the timeline give us good confidence about our ability to be first to market with a best-in-class profile. We still keep a very healthy and appropriate eye on the competitive landscape and are paranoid at some level in that regard. We're confident where we are at this juncture.
And then Jim, maybe just before we end on the pipeline and opportunities in the pipeline, what do you feel is one unique thing that could really differentiate 31 in the pediatric setting? It feels like there's a unique opportunity to approach otitis media.
Exactly. I think the vaccines that have been out there have done an excellent job in reducing invasive disease, and you're talking about a 90%-95% reduction. There's still a significant amount of invasive disease out there and it warrants a vaccine. But what we're looking at right now, PCV20 in the U.S. has roughly about a 35%-36% coverage of otitis media events, or ear infections. Our 31 would increase that to about 86%. The reason I'm excited about this, almost every kid gets an ear infection, a lot of them multiple times before their two years of age. The first one is very typically Strep pneumoniae, and there's a belief that if you can stop that first one, you don't get a second or third.
It's the second and thirds that are really nasty because it's more accelerated, not typical Hib biofilms, very difficult to get the antibiotics in there. But they need an inflamed ear to be able to really establish themselves. I think if we can increase our coverage, and if you're going from 35% up to 86%, we can actually do an efficacy study to demonstrate that differential improvement. Yeah, we're looking forward to seeing if we can both decrease the amount of ear infections, multiple ear infections, and also antibiotic use because that's a huge cause or leading to the antibiotic consumption.
Great. And maybe just to wrap up, final question, pipeline opportunities, obviously, what's next from your perspective and what are you excited about?
Going along the lines of antibiotic reduction and antimicrobial resistance, we're looking at Group A Strep. Group A Strep is a serious disease. It causes over 500,000 deaths, mainly due to rheumatic heart disease. It is a major leading cause of antibiotic consumption as well. We've seen a lot of antibiotic resistance increased recently. In fact, there have been a few strains that are now resistant to penicillin, which if you lose that, can have significant health impacts. That's our next one in line and we're looking forward to moving that along. We're also working on other vaccines that can address antimicrobial resistance like Shigella.
I would just say for Group A Strep, we expect in the coming months to give guidance when we anticipate that program moving into the clinic.
Great. Well, Andrew, Jim, thank you so much.
All right. Thanks for having me.
Great to see you here.