All right. Welcome, everyone, to 2025 Jefferies Global Healthcare Conference. My name is Roger Song, one of the senior analysts covering MediCal Biotech in the U.S. It's my pleasure to introduce the next presenting company, Vaxcyte. So we have a whole crew here. We're going to have a fireside chat with the CEO, Grant, President, CFO Andrew, and then COO, Jim. Good morning, gentlemen.
Good morning, Roger.
Good morning.
Awesome. All right. Okay, so maybe before we dive into your exciting, this new pneumococcal pipeline and then the platform, maybe just give us some high-level overview of your recent updates because you have some data and then also the macro, the environment that's happening. Give us some elevator pitch and then we can dive right in.
Yeah, great. I'll maybe, Roger, cover the recent update. Just at the end of March, we disclosed our first clinical data set in the infant population for our 24-valent vaccine. The results of the data were positive. We've seen that view now confirmed by a number of outside experts with whom we've been in dialogue. We saw all the hallmarks that we think that can make this a successful vaccine. Happy to get into that over the course of this session. At the macro level, certainly there's a lot of noise and news flow out there at the macro level, the biotech level, and certainly at the vaccines level. I would say that now that we're seeing leadership kind of be in roles and more recently at FDA with Dr. Makary and Dr. Prasad, despite a lot of the headlines about the potential implications to vaccines writ large, we've been comforted of late by kind of the statements made with respect to vaccines and continued support for science-driven, evidence-based, transparent approach, support for some of the bedrock immunization programs like PCVs.
We've also, and I just returned from a couple of days in Washington, continue to get consistent messages as well from folks with whom we're engaging in meetings. We think there is recognition of the important role that vaccines play in population public health, important role that these bedrock immunization programs play. I know we may get into the detail, but evidence that the regulatory framework that has long been in place for PCVs will remain in terms of the approach, the pathway, both from a regulatory and commercial opportunity standpoint.
Excellent. Okay, yes, that resonated very well with we had the interview with Dr. McCarry at our conference yesterday. In one of the sessions, obviously, with the vaccine, the very clear message is Vaccine Saves Lives. It will be evidence-based, scientific-based approach to recommend and then regulate the future vaccine space. That is pretty clear. All right, maybe we could do this way in terms of the upcoming events. What is your comment and what is the potential, the expectation for the upcoming events? The first one, I believe, is you are on track to start your phase III adult VAX-31 best in class pneumococcal vaccine by mid-year.
My question really is, I think you guided on track, but my question is, how's the interaction with the FDA in terms of recent changes and how confident you are to start phase III as planned using the non-inferiority immunogenicity as the primary pivotal study?
Yeah, so we did just in early May, in connection with our Q1 results announcement, we did again reaffirm our guidance with respect to the start of that non-inferiority study. There are several studies that comprise the phase III program, the most important of which is a non-inferiority study. We reaffirmed our expectation to start that study by mid-year, have data from that study next year. We also reaffirmed the timing of the other studies that comprise the program as well. We have breakthrough therapy designations, so we're afforded a level of interaction with FDA that we're taking advantage of in terms of both frequency as well as the levels within FDA. Those discussions existed prior to the change of the administration, and we have been ongoing up through the changes, the recent changes in FDA leadership.
We continue to see, as I said earlier, kind of support for PCVs, kind of taking a science-evidence-based approach. In our discussions with FDA, we have not commented specifically on the play-by-play of those discussions, but we can say both in our discussions and, as I said earlier, what we are seeing publicly is nothing to suggest that the approach to use surrogate immune endpoints as a primary basis for approval will change.
Yeah. Yeah, okay, thank you. I totally understand you're not going to give us the update play-by-play, but just can you just say you have interacted with the new administration in terms of the CBER and then your review team and then how much changed over there? Anything, updated thoughts from their FDA perspective, giving you the confidence you still be able to do that?
We have been interacting with FDA, including through the changes in the FDA leadership. Given how well-established and tried and true this regulatory pathway is, we would not have expected then, we would not in normal course expect now to interact with the heads of FDA or the head of CBER. The folks with whom we have been engaging have remained the same. The team has remained unchanged. The tone and tenor of those discussions have been consistent with both pre and post-FDA leadership.
Excellent. That's great. Before we move on to the next catalyst, let's just talk about this is an adult program. Right now we know it's a minority of the PCV market, but a sizable market. Just remind us how big the adult PCV market is and then what's the VAX-31 position in the future adult PCV market because we probably invest in the reminder to see how good the data you have provided for the phase II.
Yeah, so indeed, this is an $8 billion category. The majority of the sales in this category are in the pediatric segment, but the adult market does comprise at the moment about 15%-20% of those sales globally. That adult market is poised to grow quite substantially for a few discrete reasons. First off, the U.S. has primarily been the only major country that has universally mandated pneumococcal conjugate vaccines for older adults. That was for adults over the age of 65, but just last fall, that age cutoff was lowered to adults age 50 and above. That singular decision at the ACIP increases the size of the addressable population by an incremental 65 million Americans. Once you vaccinate someone when they turn 50, there's also the potential for at least one more vaccination as they get older.
The U.S. market, which has been almost entirely that segment that has gone to adults, is poised to grow dramatically. Then outside of the United States, as we have seen broader spectrum PCVs developed, other developed countries are beginning to mandate universal vaccination at various ages, but we've seen Germany, Australia, other major countries in Europe are following along. We are really expecting to see quite a substantial uptick in adult sales that could ultimately rival the sort of pediatric sales that we've seen historically.
Excellent. Yeah, we should keep in mind that the adult market is substantial right now and then it's growing, it potentially can grow substantially, as you mentioned, with those drivers. Okay, we should move on to the infant because that's probably another near-term event for you. Maybe just give us some reminder for the recent PD3 adult, the infant VAX-24 data. What are the key data points you would say that's supportive of the further development in the infant using the technology? You say it's a positive data. How should we think about the nuance of the data to support?
Yeah, before I answer that explicit question, I mean, what has been the hallmark of Vaxcyte's technology is the fact that we can develop carrier-sparing conjugates. And we've been able to demonstrate very clearly in adults where we've seen not only VAX-24, but also VAX-31 readout, we avoid the phenomena of carrier suppression quite dramatically relative to our competitors. And so we've shown that very clearly as we increased the number of conjugates from 24- to- 31. And furthermore, we showed it as we tested even higher doses than our convention. And so we certainly have something that is unique relative to our peers for whom when they add additional conjugates or at higher doses, they see lower relative immune responses.
We think we do have a highly differentiated technology that is going to allow us to develop this key VAX-31 program in adults where that program confers 95% plus coverage relative to the competition who's in the more like 50-60%. With that, we have our first readout in the pediatric segment with VAX-24. We have our VAX-31 program already in the clinic in infants for which we'll see that readout next year. What we saw in March, as Andrew mentioned, was decidedly reassuring and de-risking from our perspective. We not only saw that we had a safety profile that looked quite consistent with today's market leader, the 20-valent PCV, but we also saw the incremental conjugates that we added over and above the current 20 were highly immunogenic, which will confer improved coverage on a relative basis.
Critically, for those overlapping 20 serotypes, those that are circulating in any relevance, we actually saw substantially improved immune responses. Yet the data was not perfect. We did see for a handful of the serotypes, fortunately, those that are not circulating in any relevance from our perspective, we did see some inferior immune responses. That said, this was a dose-finding study where we did see really nice dose responsiveness and not only going forward for what could be a VAX-24 program advancing, but more likely and preferably the VAX-31 program, which will read out next year, we had already incorporated higher doses in that particular study.
We are already underway with a study for which we think those higher doses will confer even better relative immune responses, but critically in the context of a much more broadly protective vaccine, which increases coverage from the 60s in % coverage for today's standard of care into the 90s in terms of coverage for VAX-31.
Excellent. Yeah, we're definitely going to talk about the 31 in a minute because that probably is the way to go eventually for you already choose that for the adult and then probably will be for the infant as well. By the end of the year, you will give us the second readout from the 24 phase III, which is the PD4 post booster dose. What should we expect from there? Because you give us some teaser when you report the PD3 data and then how should we think, interpret that data? What should we expect from the full data for the PD4?
All right, thanks, Roger. I think we presented about two-thirds of the booster data in this initial readout. We do have, I think, a fairly good idea of where we're going to land when we get the additional third. The point estimates, I would estimate, should stay fairly similar. What we noticed is there were six of the serotypes where we missed the non-inferiority, but we just barely missed it. Part of that reason for missing that is because obviously the numbers were not sufficient and the way that it's assessed is the lower bound of the 95% confidence interval is what makes you hit or miss the non-inferiority. If we increase the number of subjects, maintain the same point estimate, narrow the confidence intervals, I think you'll see some of these go from missing the non-inferiority to hitting.
As Grant had already alluded to the fact that we have seen the ability to improve responsiveness with increasing dose, we will obviously keep a very close eye on the 4.4 micrograms to see if we can maintain that dose-dependent immune response, which would bode well for our 31- study, which has a higher dose in it with 3.3 and 4.4 for all the serotypes.
Got it. Yeah. So one is potentially you can bring those inferior to non-inferior among those six serotypes. And also you want to continue to see the dose dependence.
Exactly.
For the PD4 full data. Yes. Another thing before we talk about the 31, just give people a reminder in terms of what's the formulation in terms of dosing strengths for the 31 versus 24, why you design 31 like this way based on the learning from the adult trial.
Yeah, so we had our first clinical readout for VAX-24 in late 2022. We saw that matching the dose with the 20-valent marketed product, we could show as good or better immune responses, in many cases the latter. Yet when we increased the dose to as high as 4.4 micrograms, which is not unprecedented but is higher than the convention, we saw even further improved immune responses. We took those learnings and applied that to the formulation for VAX-31, where we not only tested the conventional dose at 2.2 micrograms, but we also added a higher dose cohort at 3.3 micrograms, with a few pushed all the way to 4.4. What we saw in that adult readout for VAX-31 was that once again, the 2.2 microgram dose was adequate.
In many cases, we showed better immune responses relative to Prevnar 20. When the dose was pushed even higher to that 3.3 dose cohort, for the most part, those immune responses only further improved on a relative basis. Obviously, the higher the immune responses, the better to confer longer-term protection, but also will set a higher bar for those who are chasing us to be able to match up. That was a very clear finding for VAX-31. In the meantime, we had already started the VAX-24 pediatric study where we had yet to see the learnings that came out from the benefit of pushing to that 3.3 microgram cohort. Now we have VAX-31 with those same formulations already underway in an 800-subject infant study that will read out next year.
We're very much looking forward to hopefully seeing a repeat of that sort of phenomena.
Yeah, excellent. I think investors like this pattern recognition. So basically from the 24- to- 31, you can have a very substantial improvement. We hope we can see that repeat in the infant. And then I think most of the investors I've interacted and then they agree next year, this mid-year for the PD3 for 31 is very critical for the next step. What's the expectation there? We did all the preview and then everything set the bar for the 24, it continued to be the bar for 31. What's the expectation for there?
Yeah, I think looking forward to the VAX-31 data next year, what really drives adoption in this class is coverage. The broader the vaccine, the better protection it will confer to the population. When we saw the VAX-24 data and the four incremental conjugates perform so strongly, it gives us great confidence that with the incremental seven that will be in VAX-31, that those 11 are all likely to look good. That is what drives the improved coverage relative to Prevnar 20. We have high confidence heading into that data that the incremental 11, for which is the key hook that pulls these vaccines through, will be in our favor. Based on the higher doses that we're testing in that particular study, it further gives us confidence based on the VAX-24 data that we'll see an improved relative set of immune responses.
Critically, you do not need to be perfect in this class. It is adequate to have some potentially inferior strains, but that's counterbalanced by the regulators based on the additional coverage that your vaccine is providing. When you're going from 69% coverage with Prevnar 20 today to 92% coverage for VAX-31 in a potential future, that's a massive uptick in coverage, which would offset any potential misses. Hopefully, we'll have the fewer the better, but we're feeling good about the data based on what we've seen with VAX-24.
Yeah. I think additional, I totally agree that the coverage will be balancing this potential, the immunogenicity in terms of the non-inferiority bar. On the other side, this primary endpoint is one endpoint for the immunogenicity based on what we read from the previous regulatory review. They also look at the totality of the profile in terms of immunogenicity, GMR, GMT, and OPA, IgA, IgG. Just tell us a little bit about the precedents. Suggesting the FDA, when they see imperfect data, they are willing to accept more totality of the study.
No, I think you've got it exactly right, Roger. The FDA is going to look at when you bring a new vaccine to market, if your risk-benefit ratio is at least as good as the approved vaccine, preferably they want it better. You improve it by improving coverage. That obviously incremental disease coverage leads to a better vaccine. That gives you the favor. Grant already alluded to the fact that our 31 substantially broadens the coverage. The other thing that they're going to look at is if you miss on a pivotal non-inferiority assessment is how much of that disease for that serotype is circulating. For our 24-valent, if you look for serotypes 3 and 19F, we almost doubled or in some cases more than doubled the GMRs for those two serotypes. That represents 30% of circulating disease in the U.S.
They'll look at that as well and say, are you improving on those that are circulating? Whereas for the ones that we had a little bit of a lower performance were for those serotypes that there hasn't been circulating disease for some time. Rate of circulating disease is a contributor to their assessment. Finally, I mean, there are a lot of other factors, but I think the other major factor is what's the magnitude of your immune response? There's a certain understanding that if you get above a certain antibody level, that they're protected.
If you've got a GMT that is much or a GMC, in this case with infants, that's much higher than what is the protective threshold, even though you missed on the endpoint, if you're still well above that threshold that's considered protective, they're going to say that that's okay that you missed and they would be willing to move forward. They're going to look at all of these. Fortunately for us, we did very well in the 24 for the circulating disease. For the other ones, they either weren't circulating or the magnitude of the immune response was extremely robust. We're feeling very comfortable that based on totality of data that we're able to move forward with this vaccine.
Excellent. Thank you. Obviously we hope the 31 is as good as adult and then you can just move that 31 formulation into the phase III. That probably is the plan. If you start to, you'll still see some room to improve for the 31 data. Just tell us what's the lever you can pull before you can move the infant program into the phase III in terms of the formulation.
Yeah. So one of the things that we had observed in adults in the VAX-24 program was in the context of certain serotypes dosed at the highest level, certain other serotypes suffered a bit in terms of their relative immunogenicity responses. In that adult VAX-31 formulation, we had increased three of the serotypes up to the 4.4 dose, whereas the balance of the other 28 were at 3.3. That's the formulation that's already in the clinic. It just so happens that those three were also amongst those that lagged a bit in the VAX-24 infant studies. We've already addressed the dose of those few serotypes prospectively heading into this data readout next year. Yet there were a few more for which if we could go back and change things, we might have pushed all the way to the 4.4 microgram dose as well.
They have been pushed upward to 3.3 micrograms, which is higher than 2.2 where they were tested in VAX-24. To your point, Roger, going from phase II to phase III , if we found ourselves in a situation where those few for which we're watching closely needed to be improved further, going from phase two to phase three, it would be within our, we would have the latitude to increase them up to 4.4 going from phase II to phase III . We would feel very enabled to do that. That is another lever at our disposal and we'll see the data next year.
Excellent. In the beginning, you say the platform is really the carrier protein sparing. If we push the envelope, say what's the ceiling effect you will see in order to increase the dose to 4.2? Why not just the entire 31 serotype? Obviously, you don't need that, but if that's a possibility, you can do. The other part of the question is, can you go beyond 4.4 if you need?
Yeah. That's actually a really key- point is that our chemistry, and its proprietary, is more facile than convention. Historically, with the market-leading pneumococcal conjugate vaccine, the ratio of the polysaccharide sugar to protein is such that they have more protein than sugar. That's not something that they're able to adjust. We have been able to create these carrier-sparing conjugates where we can have substantially less protein on a relative basis to the sugar. When we're increasing the dose to as high as 4.4, we might have more sugar, but we're really just only matching up on the carrier protein. That lever is uniquely enabling for us, we believe, relative to the competition.
We think it's the key explanation for why in certain cases, some of our serotypes didn't perform as well in children in this pediatric population for whom they're completely naive to these immunogens. That lever of dose is particularly useful for us in order to get to even a conventional protein carrier dose. For certain serotypes in this population, it appears that that will be important.
That's actually a very fundamental reason, the difference between the infant and the adult. Maybe you need a little bit more carrier protein in the beginning and then you still give them the sugar and then they will start to immune. That may be the reason. Yeah. Okay. Very good. I think that's very good for your program, but we know this is also a large cap kind of a market. We have a couple large cap, but they are having either commercial product or they are developing the late stage or early stage pipeline. Any updates from the field? We keep a close eye on Pfizer, GSK, and Pharmaca. Anything you want to highlight to us, say, okay, oh, this is what we need to pay more attention or the others.
Yeah. We are the first company that has taken a 30-plus valent vaccine into the clinic. We were able to generate unprecedented results in adults with our VAX-31 program. We fondly refer to that program as the category killer. In fact, we have seen competitive reactions with companies dropping lesser valent programs and stretching to try to match up with 30-plus valent programs of their own. That comes with increased risk. We know that our competitors are trying to keep up, but what we have shown is that we can increase coverage in ways that belie the impact of carrier suppression. We have shown that empirically. It remains to be seen whether or not these alternative programs can match up.
They're trying and we'll see once, if and when they get into the clinic, if they're able to generate data that can keep up with the magnitude of immune responses that we've been able to generate already with our 31-valent program.
Excellent. Last minute. This is a vaccine business and also capital heavy, but you do have a ton of the cash in the bank. How do you think about the capital allocation? What's the preparation for the adult and the infant already in place?
Yeah, we disclosed in early May, we have just under $3 billion on the balance sheet. We are fortunate to be very well capitalized. Our previous guidance with respect to that balance sheet had been the ability to fund through all of the milestones over the next few years, the commencement and completion of all the phase three studies that comprise the VAX-31 adult program and through all the important phase II readouts for the infant program, certainly now with VAX-24 and upcoming for VAX-31. Importantly, manufacturing is critical in the sector to complete the buildout required to support the kind of commercial potential and the doses required in this market. That said, in the context of the current environment, we want to be responsible stewards of the capital of our investors.
We did announce in May that we are looking at our investment priorities and capital allocation to ensure our balance sheet, which we think remains a competitive advantage, becomes even more so. We are in the midst of that exercise and stay tuned, expect to provide more information in the coming months here as to the results of that exercise, which is intended to further stretch our cash runway.
Excellent. Thank you, gentlemen, for being with us this morning. Thank you, everyone, for listening.
Thanks for.