Novavax Inc (NVAX) Q4 2020 Earnings Call Transcript

Novavax Inc (NASDAQ: NVAX) Q4 2020 earnings call dated March. 01, 2021.

Corporate Participants:

Silvia Taylor — Senior Vice President, Investor Relations and Corporate Affairs

Stanley C. Erck — President and Chief Executive Officer

Gregory M. Glenn — President, Research and Development

John J. Trizzino — Executive Vice President, Chief Commercial Officer and Chief Business Officer

Gregory Covino — Executive Vice President, Chief Financial Officer

Filip Dubovsky — Executive Vice President, Chief Medical Officer

Analysts:

Kelechi Chikere — Jefferies — Analyst

Eric Joseph — JPMorgan — Analyst

Charles Duncan — Cantor Fitzgerald — Analyst

Mayank Mamtani — B. Riley Securities — Analyst

Vernon Bernardino — H. C. Wainwright — Analyst

Presentation:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Novavax Fourth Quarter 2020 Financial Results Conference Call. [Operator Instructions]

I would now like to hand the conference over to your speaker today, Ms. Silvia Taylor. You may begin.

Silvia Taylor — Senior Vice President, Investor Relations and Corporate Affairs

Thank you. Good afternoon everybody and thank you to all of you who have joined today’s call to discuss our fourth quarter and full year 2020 operational highlights and financial results. A press release announcing our results is currently available on our website at novavax.com and an audio archive of this conference call will be available on our website later today. We are also filing our 10-K this afternoon.

Joining me today are Stan Erck, President and CEO, who will provide an overview of our progress to date; Dr. Gregory Glenn, President of Research and Development who will provide an update on our global clinical trial activity and regulatory pathway; John Trizzino, Chief Commercial Officer and Chief Business Officer, who will update us on our manufacturing scale-up, partnerships and advanced purchase agreements; and Gregory Covino Chief Financial Officer who will briefly highlight our financial status; additionally, Dr. Filip Dubovsky, Chief Medical Officer, will be available for the Q&A section at the end of today’s call.

Before we begin with prepared remarks, I need to remind you that we will be making forward-looking statements during this teleconference that could include financial, clinical or commercial projections. Statements relating to future financial or business performance, conditions or strategy and other financial and business-related matters, including expectations regarding revenue, operating expenses, cash usage and clinical development and anticipated milestones, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Novavax cautions that these forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time.

With that, I’d now like to hand the call over to, Stan. For those of you following the accompanying slides, please turn to Slide 3.

Stanley C. Erck — President and Chief Executive Officer

Thank you, Silvia, and thank you to everyone for joining us this evening. I’d like to make some opening remarks regarding how we’ve progressed as a company and reflected where we are headed in this coming year. Following that we’ll take some time for questions. So the past year has been a whirlwind. We have completely changed the company in ways that would normally take several years to accomplish, while many businesses in the world have slowed down due to the pandemic, we’ve done the opposite. Everything about our company has changed.

Before we get into our presentation, I’d like to thank all of our staff for the non-stop effort that each of them has made for an entire year. I’m afraid to say that I don’t see a slowdown anytime soon. But having said that, everyone understands the importance of our mission and can take satisfaction from the accomplishments that have been made so far and know that they are part of a once in a lifetime mission.

I’d like to start our presentation by recounting for you a shortlist of what our staff has accomplished since our last annual earnings report. We’ve enrolled over 50,000 participants in COVID-19 clinical trials. In the spring of last year, we completed enrollment in a Phase 1/2 trial in the US and Australia, between September and February we initiated three efficacy trials in the US, the UK and South Africa, enrolling almost 50,000 participants. We’ve shown that our vaccine is 96% effective against the original COVID-19 when tested in the UK trial and achieved 86% of effectiveness against the UK variant strain in that same trial. In the South African trial, with the so-called triple-mutant variant was circulated. We showed that our vaccine was 60% effective at preventing COVID disease and the portion of the study population was HIV negative. What sometimes gets lost in the discussion of our COVID-19 program, is that we also completed a Phase 3 pivotal trial for our NanoFlu program and met or exceeded all eight of our primary endpoints. We started last year with about 150 employees worldwide. We now have approximately 800 employees globally and will likely exceed 1,000 employees sometime this summer. We started last year without any capacity to manufacture product. In the last year, we have built a global network of manufacturing sites and partners in 10 countries, total capacity for COVID-19 vaccines will exceed 2 billion doses on an annual basis by mid-year.

At the beginning of last year we had $80 million in cash and the financial operating horizon of only six months. In contrast, we ended the year with over $800 million and continue to build our financial strength. We have now secured over $2 billion of funding from our partners, including the US government and CEPI and the Bill & Gates — the Bill & Melinda Gates Foundation and a purchase commitments for our vaccine representing the potential for several billion dollars in revenue in the next 12 months. The combination of all of these accomplishments adds capacity and expertise that will be the foundation for Novavax over the long-term and most importantly, gives us the opportunity to provide the world, including countries of all income levels with the safe and effective vaccine that can be used to help in the worst pandemic in the last century. We are excited to share more details today on the progress we’ve made during the historic year.

I would now like to hand the call over to Greg Glenn to discuss highlights from our clinical development program for 2020 and the beginning of 2021.

Gregory M. Glenn — President, Research and Development

Thank you, Stan, and maybe we can turn to Slide 4. This really has been a remarkable year. Over the past 12 months, we’ve moved rapidly to respond to the COVID-19 pandemic. We first identify the stabilized recombinant full-length protein NVX-CoV2373 which I will call it 2373 for short, as our vaccine candidate. We identified this within one month of the SARS-CoV sequence being published. We also demonstrated the key role of our Matrix-M adjuvant for induction of potent immune responses, when formulated together, showed that these components elicited highly protective immunity in animal challenge models. As you will see below, we’ve moved rapidly through clinical development and now demonstrated the same high level of efficacy in humans. Our scientists are committed to transparency and publication in high quality peer-reviewed journals and we know satisfaction, we’ve met this goal through multiple manuscripts a few which you see here, published in prestigious scientific journals, including the New England Journal of Medicine Science in nature.

So moving to Slide 5. Our recombinant protein subunit based vaccine 2373 offers a range of practical benefits, which we expect will optimize and expedite its global distribution. First, our candidate recombinant spike protein was designed to ensure stability and as a result can be stored at typical refrigeration temperatures, enabling distribution through standard cold supply chains. Additionally it’s ready to use liquid formulation of both the protein and the adjuvant marketly facilitate the administration of the vaccine. The adjuvant Matrix-M is a critical feature of the 2373 vaccine, which has both an immune enhancing and dose-sparing effect, allowing us to produce more doses of 2373 with less antigen required per dose, while reducing immunity that exceeds vaccine from a COVID-19 infection. This greatly augments our global capacity for vaccine manufacture in distribution.

On Slide 6. We provide an overview of our COVID related clinical trials. The Phase 1/2 safety and immunogenicity trials demonstrated a key role to the adjuvant dose-sparing and the new responses they were all well in excess of convalescent sera. The data suggests the hallmark of our vaccine is the induction of high levels of functional immunity and has an excellent safety profile. In addition, this study confirms the 5-microgram dose for the antigen. I want to note that there are several other immunogenicity trials that have already or will be starting soon in India, the Czech Republic and Japan that will help to extend the global access to our vaccine. For day I’m — for today. I’m going to focus on the results of our efficacy studies. During their conduct, the dramatic evolution of the virus occurred and we were first to demonstrate FC against all three major circulating strains. This has led to vital insight for public health and a unique opportunity to demonstrate the utility of our technology in the face of an evolving COVID-19 virus.

Let’s begin by talking about our Phase 3 trial in the UK on Slide 7. After initiating our trials September 2020 with the support of UK Vaccines Taskforce and the NIHR registry, we were able to rapidly roll over 15,000 participants, 27% of whom were over the age of 65. Our top line interim analysis showed an overall efficacy of 89%. However, during the conducting of this trial the virus evolved and against the original COVID strain, similar to the virus has seen in the mRNA trials, we demonstrated best-in-class efficacy of 96% with the B117 variant, the strain that appeared during the trial, we observed an 86% vaccine FC. This latter strain is growing in prominent in the US and it’s worth noting that UK data suggests that 2373 will perform well in the US amid rapid viral evolution that’s trending heavily in this direction. Although the primary endpoint has been that additional cases have been collected and a final analysis will be available in the coming weeks, considering the pathway to authorization, we initiated a rolling submission with non-clinical data with MHRA in the UK. We plan to file for authorization by early second quarter after we have gathered sufficient data from our UK trial and completed CMC requirements.

Moving now to our Phase 2b trial in South Africa on Slide 8. We enrolled a diverse study population of about 4,400 participants, including 245 medically stable HIV-positive adults. We achieved our primary efficacy endpoint in the overall population demonstrated in a significant level of efficacy at 49%, including all participants. It’s important to note that 2373 also demonstrated 60% efficacy in the population that was HIV negative representing 94% of the volunteers. During the conduct of the trial as I mentioned earlier, the virus evolved and during surveillance, the South African B1351 variant was widely circulated during our trial, accounting for 93% of sequence cases. Although one-third of the study participants were seropositive baseline, these antibodies did not seem to prevent infection with 131 — 1351 again suggesting that prior COVID-19 infection did not protect against subsequent infection with the B1531variant. However 2373 did offer significant protection even though the vaccine was derived from the original COVID-19 strain. This is not unexpected as a qualitatively better and broader response here reflects the lessons learned from the Matrix-M adjuvant in NanoFlu vaccine that shows in the face of evolution we have appropriate responses.

I would like now to direct your attention to Slide 9. We are pleased with the progress we’ve observed to date with our PREVENT Phase 3 efficacy trial in the US and in Mexico, which we conducted in partnership with the NIH and the Coronavirus Prevention Network. Briefly the study design is a two-to-one randomized trial enrolling over 30,000 subjects. You can see, the primary endpoint is aligned with our previous trials and our interim analysis will be done with 72 cases and 144 final events. Finally, we are encouraged to discover highly motivated participant population during the enrollment process and we believe the two-to-one randomized study as well as the expectation of a crossover elder played a major role in expediting recruitment.

If you look at Slide 10, we can — completed enrollment within two months of initiating this event driven trial in December of 2020. And now we are happy to report we have a diverse study population of 30,000 participants, which is comprised of 20% Latin American, 12% African American, 6% Native American, 5% Asian American and approximately 13% of the individuals 65 and older. We expect to announce this interim data from the trial in the second quarter, depending of course on the overall attack rate. As of today, we are working to implement a blinded crossover for both our UK Phase 3 and PREVENT-19 trials and these blinded crossovers, participants will receive active or placebo opposite to what placebos the participants initially received while still remain in blinded. This design ensures the integrity of the blinded studies and enables us to continue following participants for the duration of efficacy and safety. For PREVENT-19 our blinded crossover protocols have been submitted to the FDA and the updated protocol including the details of the crossover have been posted on our website under Resources.

So moving ahead to Slide 11. Regarding our regulatory pathway in the US, we are in ongoing discussions with the FDA to align on the data required for initiation of EUA and continue to provide information to our open IND application. At this time, we expect to complete our EUA filings in the second quarter. Overall, we are very busy on the regulatory front and we’ve also began the rolling submission process with multiple other regulatory authorities, including the European Medicines Agency, Health Canada, The Australian Therapeutic Goods Administration and New Zealand’s Medsafe. We will continue to engage in dialog with respect to regulators as we complete our pivotal Phase 3 clinical trials in the UK and US ensuring that we fully address all safety, efficacy and quality elements required for authorization. As we look to the future for our 2373 clinical program, we would like to highlight two areas of focus in the coming months. Our six-month boosting protocol taking place in our Phase 1/2 trial in the US and Australia and the development of a variant strain in candidates.

On Slide 12, you see our Phase 1/2 trial in the US and Australia initiated in May 2020, provided positive data on 2373s immunogenicity and safety. The trials continue to offer valuable clinical insights with some participants now receiving a six-month dose to examine the production of functional immune response. Our technical — technology is suitable for boosting and agile enough to enable the rapid development of a bivalent vaccine approach that can address an evolving virus.

On Slide 13, as I mentioned, and we have also made significant strides in addressing the mutations of the COVID-19 arising around the globe, including exploring variant strain vaccines as standalone and bivalent candidates. We are evaluating these candidates in ongoing human primate studies and plan to initiate clinical evaluation in these candidates in mid 2021. We are leveraging the adaptability of both our vaccine technology and the manufacturing processes to evolve our strategy alongside the evolution of the virus.

So inclusion on Slide 14. We now have two independent trials demonstrating 2373’s high level of efficacies at levels similar to that seen in the best results against the original virus strain and the efficacy against two variant strains coming out of the viral evolution. We also see an encouraging safety profile. We are proud of the clinical team as Stan mentioned that’s achieved these milestones with 2373 to date and look forward to additional data in the coming months, including data from the PREVENT-19.

And with that, I’d like to turn it over to John Trizzino.

John J. Trizzino — Executive Vice President, Chief Commercial Officer and Chief Business Officer

Thanks, Greg. I would like to bring your attention to Slide 15, now. As you can see from this slide, in the past 12 months, we have built an impressive global supply chain infrastructure that includes both owned and partnered facilities. This network is centered around our own facilities in the Czech Republic and Sweden, partnerships with contract manufacturing organizations in the US, Canada, UK and Spain and license agreements in India, South Korea and Japan. The combined capacity for our COVID-19 vaccine globally will exceed 2 billion doses on an annual basis, when we reach full manufacturing capacity, which is expected by about mid-year. This global supply infrastructure securely positions Novavax as an integral part of the global solution to the COVID-19 pandemic.

Let me highlight some of the following important points. Novavax CZ in the Czech Republic is a large scale state-of-the-art manufacturing facility that is now producing our vaccine antigens. Matrix-M is now manufactured at multiple sites globally with sufficiently committed raw materials for our adjuvant component of the vaccine. The strategic partnership with Serum Institute provides significant and immediate manufacturing capacity that will provide access to low and middle-income countries. SK Bio and Takeda licensing partnerships offers additional capacity and access into South Korea and Japan respectively. In addition to the advance purchase agreement in Canada, we have just recently signed an MOU for expanded manufacturing capacity in Canada at their Biologics Manufacturing Center in Montreal.

Now on to the next slide, Slide 16. What we all have painfully come to know well this past year is that pandemics have no borders and therefore our response must be on a global scale. This mandated that Novavax respond in multiple ways to ensure a fair and equitable access globally. First, as a function of our funding partners around the globe that include the US Government, CEPI, UK and BMGF, the Bill & Melinda Gates Foundation. Then for the various countries around the globe that expressed an interest in our vaccine and finally country-specific manufacturing partners that allowed our technology to provide additional supply into India, South Korea and Japan.

So as you can see on this slide, we have various agreements that have been executed to date. Advance Purchase agreements totaling approximately 200 million doses. 110 million doses committed to the US Government with the potential for additional procurement. 1.1 billion doses jointly committed by Novavax and Serum Institute to the COVAX facility and license agreements with Serum Institute, SK Bio and Takeda.

With that, I’ll turn it back over to, Stan to provide an update regarding our NanoFlu program on Slide 17.

Stanley C. Erck — President and Chief Executive Officer

Thanks, John. While we spent the majority of our time and attention this year developing our COVID-19 vaccine candidate, we remain committed to advancing NanoFlu through regulatory licensure. We announced the successful completion of our pivotal Phase 3 clinical trial in the first quarter of last year achieving all primary objectives. Additionally, in November we published Phase 2 data in the Clinical Infectious Diseases. We are currently exploring a variety of options related to commercializing NanoFlu. These options include developing one or more combination vaccines, such as 2373 and NanoFlu, NanoFlu and RSV and potentially all three. Based on data to be generated earlier this year, the plan is to bring one or more of these candidates in the clinical trials later this year. As always we will publish results of these studies as they become available. We believe that in the post-pandemic era, seasonal vaccination with combination vaccines will be a large commercial opportunity for our platform.

And with that I will now hand it over to Greg Covino to provide our financial results.

Gregory Covino — Executive Vice President, Chief Financial Officer

Thanks, Stan. Hi, everybody. If you could please turn to Slide 18. So I think our press release does a pretty good job of running through the highlights of P&L activity quarter-over-quarter, in addition to laying out fourth quarter and full-year financing activities. So I’m not going to repeat that here. We also just filed our 2020 10-K prior to or during the course of this call. So the 10-K also includes a summary of important business and financing events including those which occurred subsequent to year-end. In particular, we’ve included an update on new supply agreements and John just touched on that in his comments and we make note of the substantial completion of a new January 2021, $500 million ATM. So I would encourage everyone to please take a look at the 10-K. Overall considering our year-end cash position over $800 million as you saw in the release and the financing activities subsequent to year-end, we believe we are well capitalized and in solid financial position as we approach the commercial launch of our COVID-19 vaccine.

Back to you, Stan.

Stanley C. Erck — President and Chief Executive Officer

Okay. Turning to Slide 19 as we reflect on the extraordinary progress Novavax made in 2020, we remain focused on delivering key clinical and regulatory milestones as well as executing our global manufacturing and commercial plans in collaboration with our partners. In parallel, we will continue to advance dialog with global regulatory agencies that we will seek authorization in licensure for 2373.

Before I open the call for questions, I want to thank our entire Novavax team for their incredible contributions this year. I would also like to thank our various partners, a few of which include the US Government, CEPI, the Bill & Melinda Gates Foundation, and the COVID-19 Prevention Network, whose immediate response to the pandemic and continued support help make possible our accomplishments during the year. Only through these combined efforts, we’ve been able to achieve these outstanding developments and become a part of the global solution to the COVID-19 pandemic.

With that I will now turn it over to the operator for Q&A.

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from the line of Kelechi Chikere with Jefferies.

Kelechi Chikere — Jefferies — Analyst

Thank you. Good afternoon and thank you for taking my questions. Congratulations on all the progress and suspects [Phonetic] over the last year. I guess my first question is just related to your manufacturing. I’m hoping you can provide additional color around your manufacturing and where you are there? Are you able to provide any color on your monthly production capacity or your ability to stockpile vaccine right now? And I guess related to that, how quickly would you be able to go from e-way authorization or approval to actually shipping vaccine? If you could provide any color there, that would be great? And I have one follow-up question.