Hi. Welcome, everyone, to Day two, Jefferies' 2024 London Healthcare Conference. My name is Roger Song, one of the senior analysts covering biotech in the US. It's my pleasure to introduce our next company, Vaxcyte. We have Grant and Andrew. Welcome, gentlemen.
Thank you, Roger. Delighted to be here at Jefferies London 2024.
Excellent. Thank you. You've been here every year. The conference is getting bigger every year. Yes, in the next 25 minutes, we're going to have this fireside chat and then talk about your latest development for your very exciting, game-changing, or, you know, field-changing pneumococcal vaccine. Then we may focus a little bit on the latest stage development, including the manufacturing and commercialization. Before we start with the question, maybe, Grant, you want to give us a more brief company overview with some updated, you know, elevated pitch with the recent updates?
Yeah. So for those of you who are less familiar with Vaxcyte, we are developing pneumococcal conjugate vaccines, which have historically been one of the fundamental vaccine classes to prevent pneumonia in infants and seniors predominantly, but are recommended in use throughout the age spectrum. We are developing a 24-valent vaccine as well as a 31-valent vaccine. We got our initial proof of concept with the 24-valent vaccine in adults in 2022. We position that data as unprecedented in respect to having produced a more broadly protective vaccine or broad-spectrum vaccine that showed not only an opportunity to expand coverage, but actually showed higher immune responses relative to the standard of care vaccines today, which is quite different than what is ordinarily seen, where when you add additional coverage, usually that's at the sacrifice of the magnitude of the immune responses.
And then more recently, in September, we released the results of our 31-valent pneumococcal conjugate vaccine in adults, which pushed coverage even further and still maintained those higher immune responses, which was a really terrific outcome for the company. And we will be working as hard as we can to bring these vaccines to market as quickly as possible and make them available as broadly as possible. So beyond the pneumococcal conjugate vaccines, we might touch on this later. We have other vaccines in our pipeline that we think could be important advances as well. But for the time being, the primary focus is on our pneumococcal conjugate vaccine franchise.
Excellent. Yes. The key topic today will probably be the pneumococcal conjugate vaccine, but you do have a platform, site-specific conjugation, and then can do many other vaccines as well. So stick with the pneumococcal vaccine. So it's two major age groups. One is infant and one is adult. You have more data in the adult, and then you are about to read out some infant data next year and then with two of your vaccines. So maybe talk about the adult population. You just recently got a BTD for your second-generation vaccine, VAX-31. So tell us about this BTD, what data coming to support a BTD designation, and then also you're about to have the conversation with the FDA regarding the end of phase II meeting. So what will be the key topics to allow you to start a phase III?
Yeah. So the adult market for pneumococcal conjugate vaccines has been the smaller portion relative to the infant market. The market today is about an $8 billion annual market. About 20% of that is in the adult segment, but that is expected to grow substantially. Just recently, the ACIP expanded the recommended age from those who are 65 and up to those who are 50 and up. So that accounts for an incremental 65 million Americans who will now be universally recommended to receive these vaccines. So that's going to substantially grow the size of the adult market in the U.S. And we're also starting to see recommendations in other developed nations. Most recently this year, Germany made a recommendation for universal vaccination and Australia as well. So as the coverage expands, it's easier for developed countries to justify vaccinating adults.
So this is a really important category that's going to grow dramatically over time. And Roger, as you've mentioned, we have our 31-valent vaccine. We just announced breakthrough designation with that program. We will be moving that program into phase III clinical development next year. And we're relying on very consistent precedent with regard to full approvals being granted based on validated surrogate immune endpoints. So for this class, we've already proven to ourselves that they're terrifically effective, these pneumococcal conjugate vaccines. And fortunately, you can correlate the magnitude of the initial immune responses with that long-term protection. So just as the 13-valent, the 15-valent, and the 20-valent have enjoyed approvals based on non-inferior immunogenicity comparisons, that's exactly what we expect with regard to our VAX-31 program.
As we move toward an end of phase II meeting with the FDA, we've already guided to the expectation we'll initiate the phase III studies for that program next year. We've already gone through that same end of phase II process with our 24-valent vaccine. We decided to upgrade to the 31-valent for the initiation of our phase III studies, but it's based on very long-standing precedent.
You know, to your point, you already gone through the whole process with your VAX-24. So how much difference do you expect you will have for the VAX-31? Maybe CMC part is one of them. Any other things you will particularly?
Yeah, I'd say the most unique aspect of what we've been working with as we've been designing our phase III studies is rather than powering our studies based on what has been more typical, well, in fact, entirely the norm, which is to show the non-inferior immune responses relative to the standard of care vaccine, our immune responses were substantially higher than the norm. So when we went into that end of phase II conversation with our 24-valent vaccine, the only real question with regard to phase III conduct was around defining what statistically significantly better immune responses would look like in terms of the hurdle. We did that at that point. And I've said this before, we were pleasantly surprised to see those statistically significantly higher immune responses come through with the 31-valent vaccine as well.
So that would have been the most unique aspect, but we've already done that once, so we don't expect any surprises there. So heading into the end of phase II design conversations with the FDA, it'll be much more the same than anything different.
All right. Good. So you're assuming everything goes well, and then you will start a phase III mid-year next year. And then when we're going to start to see the initial pivotal data, and then what's the expectation related to the approval and then the final data package?
Yeah. So there are a few different aspects of the phase III programs, but foremost, it's showing that pivotal non-inferiority comparison. So that will be the first study that we'll initiate next year. And these studies are conducted quite rapidly because for adults, you give them a single vaccination. 30 days later, you obtain the material to do the immunogenicity comparisons. And it's precisely the same design as the phase II study we've already conducted. They're usually slightly larger. So we will start it next year, and we've already guided to having the results from that phase III pivotal non-inferiority study in 2026.
And then how about the rest of the pivotal package? And then when should I know? You haven't really officially guided it, but what's the rough estimate for the potential approval time?
Yeah, we haven't marched things out that far, but what we have said is that there are a few different elements to the phase III programs. There's the pivotal study I've already discussed for the non-inferiority immunogenicity comparisons. Then there's a lot-to-lot consistency study where you ensure that as you make different batches of the vaccine, you see consistent immune responses. And then there are certain elements of at-risk populations that you want to confirm the comparative immunogenicity. So those are really the three different independent components of the phase III program. And what we've said publicly is we'll be initiating the complement of phase III studies over the course of 2025 and 2026 with the breakthrough designation.
You could imagine as we think about conducting those studies, we'd be looking to wrap up the programs in the 2027 timeframe, and then that would probably push us into the sort of 2028 zone as we think about typical conduct through the regulatory pathways.
Excellent. Time flies. Very quickly, we can get there in a couple of years. Okay, so that's for the adult population. As you mentioned, actually, infant is an even bigger segment. So tell us a little bit about the infant market. And then more importantly, recently you just got IND cleared for your VAX-31. But you also have an ongoing trial for your VAX-24 in the phase I too. We'll have data next year. Tell us a little bit more about the development in the infant, and then I can have a few follow-up questions related to those two assets.
Yeah. So we've already fully enrolled in an 802-subject infant study with our 24-valent vaccine. We've said publicly that we'll be getting the first data out in the first quarter of next year. For infants, it's a little bit more complicated of a regimen relative to what I just described in the adult segment where they get one vaccine. Infants in the United States get actually four vaccinations. There are three vaccinations, which is called the primary series. And after that third dose, you measure the first immunogenicity results, and then they get boosted when they're between 12 and 15 months. And that immune check is the second of the two co-primary endpoints. So we'll have the first data out for our 24-valent vaccine first quarter of 2025, and then we'll have the boost data by the end of 2025. So that will be a very important readout for us.
There's been really clear continuity between this class of vaccines using the exact same formulations, having shown very strong immune responses in both infants and adults. And it's been consistent with other sponsors. So we have, I think, a very good read on what to expect, having had the data readout already with VAX-24 in adults. So that will be important next year. And as you mentioned, Roger, we just recently announced last week that we have had the IND cleared for a 31-valent vaccine in adult, sorry, in infants. And we will be starting that phase II or that clinical program in short order. So yeah.
Yeah. Good. You made the decision to advance 31 into the adult versus 24. That's a strategic decision. Makes perfect sense given the strong result and then the broader coverage. Then how about the infant market? So it may be a good problem to have because you may, given you already have, you will have the 24-valent data for infant next year, and then you're about to start the infant 31-valent next year. So you will have some discrepancy between the gaps in terms of the phase II data between those two assets. How are you going to make the decision which one you're going to move into the phase III and then what's the consideration there?
Yeah, at this juncture, Roger, fair question. The plan is to continue to pursue both the VAX-24 and the VAX-31 in infants in parallel. As Grant said, we're expecting the first of the two co-primary endpoints for the VAX-24 program by the end of the first quarter of next year with the booster data to follow by the end of next year. And then for the about to start VAX-31 infant program, expect to get that into the clinic by the end of January of next year on the heels of the recent IND clearance and have the first of the two endpoints for that in mid-2026 with the booster data to follow about nine months later. So the gap between the programs is currently over a year apart. Given the size of this market, as Grant said, represents about three quarters of the overall $8 billion market.
And given the best-in-class profile for VAX-24, the current plan is to pursue both in parallel. We'll continue to monitor both the competitive landscape and our own timelines to determine whether that will continue to be the path all the way through phase III and the launch or whether we might ultimately make a decision analogous to what we did in the adult market.
Okay. That makes sense. And then continue to forward in terms of the infant once you get the VAX-24 data next year. And then after the booster data, you probably will start to talk with the FDA regarding the end of phase II meeting. So how different and then similar between the infant and then adult end of phase II meeting, the package, and how long you expect that will take because it will kind of tie into your 31-valent infant data for phase II?
Yeah, I would say it's more the same than different in the sense that the same validated surrogate immune endpoints prevail, so the original efficacy studies for pneumococcal conjugate vaccines were conducted with the seven-valent vaccine, which heralded this class of vaccines when they were approved 25 years ago, and subsequent to that, the 13-valent, the 15-valent, the 20-valent have all been granted full approvals based on the immunogenicity thresholds that were established, so that same precedent-based approach will be the same approach that we will take for the infant program. Likewise, that's what we did in adults and got the exact same confirmation that that would be adequate, so we're not expecting any surprises. There are some differences just in terms of the schedule, but the same non-inferiority comparisons have prevailed across not only multiple vaccines, but multiple sponsors.
Got it. And then how about the CMC and the safety, given there's a different population, a little bit different maybe, I don't know. I think the dosing is a pretty similar formula. It's pretty similar. So tell us a little bit about the safety requirement and the CMC before you can start a phase III for infant?
Ultimately, for both the adult and infant populations, the expectation is we'll need to have 3,000 subjects exposed for both populations. That's currently the plan. That's based not only on our prior discussions with FDA, but of course, the precedent established multiple times by the various sponsors that are in this market, and we expect from a CMC standpoint, essentially, it's the same manufacturing process that supports the vaccine for both the adult and infant population, so all the work we're doing today in our long-standing partnership with Lonza to prepare ourselves for the adult launch, it's ultimately the same process and the same product that will hopefully be in a position to deliver for the infant market as well.
Got it, so how about.
And.
Sorry, probably worth noting, yes, for the other sponsors who've come before us, they've used the exact same formulations in both adults and infants, and we would expect to do likewise.
Yeah, sure. And how about the before start of phase III? So any additional safety, either preclinical or clinical, you need to complete for your infant population, or you already have everything ready outside of the phase II data, you can have the end of phase II meeting and then start the phase III?
Yeah, I mean, we'll see when we get our phase II data next year, but the expectation is that that would be adequate to allow us to initiate the phase III, but we have to see the data.
Yeah, sure. Okay. Good. All right, continue to move forward. Assuming all the phase II positive, and then you can start the phase III for both adult and the infant. Given your biotech company, although you have a big balance sheet, so how should we think about the cost structure when you start the phase III, maybe separate by adult versus the infant?
Yeah, certainly. This is an area that requires significant investment, but it's really commensurate with the size of the market and the opportunity here. And our spend, as you might expect, will be ramping up over the next few years as we get into more in later stage clinical trials and continue to scale up our manufacturing to support what will hopefully be an initial launch in the adult market and then a subsequent launch in the infant market. And part of that investment over the next few years will include the stockpiling of inventory to prepare for the launches. So we expect that the manufacturing component will be more substantial than the clinical component. The clinical trial costs are relatively manageable, again, in the context of the size of this market. The more significant investment is in manufacturing, really in three areas.
One, to manufacture the product to conduct all these clinical trials. Second, to prepare for the expected initial launch for the adult population, which is more limited in size compared to the infant market, and then we are now underway, again, in our partnership with Lonza to construct a dedicated facility that would enable us to support the expected demand upon the launch in the infant population, which again is the more substantial part of the market, so each of those three pieces collectively larger in size than expected clinical spend.
Got it. Any specific number you want to give us, some high-level guidance in terms of the phase III cost for infant versus the adult and then the manufacturing part of the, maybe more talk about the launch versus the, because we know phase III cost, you can combine the clinical and the manufacturing?
Right. And the guidance we have given, the adult clinical costs tend to be lower because you're only administering one dose, whereas Grant noted, in the infant market in the U.S., it's four. European and other markets, it's three. In the adult population, it tends to be about $15,000 per patient. So the total costs are going to be a function of the aggregate trial size. And it's about three times that amount in the infant population. So $45,000 plus or minus to conduct the infant studies. From a CMC standpoint, what we have guided to is the construction of this dedicated facility that is underway now with Lonza will be to the total of about $300 million-$350 million and expect to have that completed by either early 2026 or as soon as late 2025.
Very good. Okay. And then how about the commercial kind of commercialization costs? You will start adult first. That's a smaller market, but how should we think about the size of the commercial for the initial launch and then how we'll scale to the infant population?
Certainly, much of that work is underway and ultimately we'll make these determinations in a few years in advance of launch, but the current expectation is for the U.S. market to support both the adult and infant indications. We would expect a commercial footprint plus medical affairs of 300-400 individuals across sales, marketing, as I said, medical affairs, distribution, and the like. So pretty manageable effort in the context of the size of the market opportunity here in the U.S., and that, in our view, is consistent with what you see from some of the other major sponsors as well in this space. In the markets outside of the U.S., again, ultimately we'll be determining which of the markets do we commercialize on our own in and in which markets might we seek a partner.
Those evaluations are still underway, but you're probably looking at an ex-U.S. organization that's comparable in size in aggregate to what I outlined here for the U.S. market.
All right. Good. Since you mentioned partnership, this is always an interesting topic for biotech for the commercial stage. So what's the current strategy thinking around the partnership? How committed are you to launch the drug, the vaccine in the U.S. or Europe and the rest of the world?
Yeah, we're 100% committed in the U.S. market to launch independently. We believe we've got the product and we'll certainly build the expertise to do that. And again, in the context of the size of the market, we think it's a very manageable lift. In other major markets outside the U.S., we would expect to do the same, but there are likely going to be territories in which we make a decision to partner. And we have talked about this before, but China being maybe the most obvious example, you've got a large market, third highest price point in the world, but an effort where you require significant feet on the street. So that's a market that we think is perhaps the most obvious of potentially others as well where we would seek to have a partner. We have some time to ultimately execute on those.
So our goal is to do those as late as possible so we can generate the most value out of those partnerships, but at a time frame that doesn't compromise our ability to access those markets and deliver the kind of peak sales we think can be achieved.
Excellent. Okay. So quickly on the competitor side, we understand pneumococcal vaccine historically is a large cap play. So you are the only small cap really dedicated to pneumococcal vaccine. Very successful so far. And then I think recently we saw a couple of kind of large cap benchmark you and then also kind of come up with some plan to maybe raise the competition there. What's your comment about that? And then given your technology platform, how likely you can even kind of go beyond the 30-valent compared to the product you have right now?
Yeah, I mean, we have generated really compelling data with our 31-valent vaccine. We've said we had high expectations. It even exceeded those. And the conventional technology that has been the best option historically has gotten into the low 20s. There's a 20-valent vaccine. There's a 21-valent vaccine. And they've gone on record themselves and said that's really as far as they can push that technology. So now they're in the zone of trying to push with alternative approaches that are basically being combined with the old approach. And we already have really compelling 31-valent data. We feel like we're ahead. We feel like we have an opportunity to produce a really compelling vaccine that will be a substantial improvement on what we've seen out of the alternative approaches.
And when you push to 31-valent, you're already at, in Europe, 98% of the circulating disease is accounted for by those 31 strains of pneumococci. So to think about going past that, there's really almost no marginal benefit of doing that. So when we saw our 31-valent data, we were delighted to see that in our parlance, we do have headroom to theoretically go beyond 31. But in this moment and for the foreseeable future, there really isn't an argument for that. We'll have readiness to go past that as appropriate, but we think we've pushed as far as we need to in this moment. And we got there, frankly, comfortably. And I think what we've seen out of the most recent competitive responses is they're definitely pushing into the less comfortable zone.
Yeah. Excellent. Okay. Last 30 seconds, cash position, and then what's the cash runway guidance so far?
Yeah. So just as of our announcement last week with respect to our Q3 results, $3.3 billion on the balance sheet as of September 30, which is in a great position, can fund through multiple milestones over the next few years, including all of the phase III readouts from the to be started VAX- 31 adult program that Grant referenced that we'll be reading out in 2026 and 2027. And then for the infant population, in a position to read out both of the endpoints for each of the VAX- 24 and VAX- 31 programs as well. So we're in a good position to get through, as I said, several readouts over the next few years here and hopefully put us on the cusp of BLA submission and ultimate approval.
Excellent. Thank you, Grant. Thank you, Andrew. Thank you, everyone.
Thank you.
Yeah.