Novavax, Inc. (NVAX) Management Presents at Cantor Global Healthcare Conference (Transcript)

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About: Novavax, Inc. (NVAX)
by: SA Transcripts

Novavax, Inc. (NASDAQ:NVAX) Cantor Global Healthcare Conference October 3, 2018 10:55 AM ET

Executives

John Trizzino - Chief Business Officer and CFO

Analysts

Ellie Merle - Cantor Fitzgerald

Ellie Merle

Hi, everyone. I am Ellie Merle from the research team here at Cantor. We're very happy to have Novavax. With us from the company is the CEO, John Trizzino. Thank you very much for making it to the conference. And I’ll pass it over to you.

John Trizzino

Great, thank you very much.

First of all my name is John Trizzino, and I am not the CEO but thank you very much for the promotion. I am the Chief Business Officer and Chief Financial Officer and we're going to take you through today a corporate update. There are several exciting things happening at Novavax and I want to brief you all on all of those activities.

So yes, our typical safe harbor statement which we will spend one second on. So for today we're going to do a quick company overview and we’re going to focus on two areas, our ResVax development program so it’s now in Phase 3. We’re going to talk about our NanoFlu program and all in a fair amount of detail this is where we’re going to focus our time and attention today.

So what is Novavax? So for those of you who are not familiar with who Novavax is, we are late stage biotech company focused on discovery and development of innovative vaccines for the prevention of serious infectious diseases. So, that kind of encapsulates where we're focused and it manifests itself in these two programs we’re going to talk about today.

So, the ResVax program, if you are not familiar with RSV its respiratory syncytial virus and this is a very serious disease that affects the very young, infants that are less than one year of age or concentration of the disease in less than six months old and this a quote from Cody Meisner, COID member of AAP just commenting upon why people should be paying attention to RSV.

So what we’re going to talk about today, these are the things that we've been focusing on for the last 12 months. They are critical and important milestones for the program. We have enrolled 4,636 pregnant women into this trial which is no small feat. This past year we have successfully completed an informational analysis and I will tell you what that means a little bit later, but it’s critical and important to de-risking the Phase 3 trial. We’ll talk about market sizing and all of our pre-commercialization activities and why these are important particularly as it relates to vaccine.

Vaccine is unique in this regard relative to policy, patient education, physician education and ACIP support. Also we spend a significant amount of time working with FDA, working with CBER specifically. We have a fast track designation for this program and it's also importantly supported by an $89 million grant from the Bill and Melinda Gates Foundation which will explain why this is a global trial.

So a quick run through the prepared trial design to simply point out that this is medically significant and symptomatic RSV disease. It is 4,600 subjects as we’ve talked, it’s in 11 countries. It's following both mom and baby, it’s a single IM injection that would be given to all pregnant women in the third trimester and of course as with all vaccines, the safety profile is critically important with vaccines it has to be safe and then effective and of course we will look at some very specific efficacy measurements.

So the primary endpoint is looking at three critically important pieces. So, we're looking at that there is a medically significant RSV disease. Well that's not a qualitative assessment, it’s objectively identified by confirmatory PCR.

In addition to that, there has to be one manifestation or symptom of RSV for it to qualify for the primary endpoint. And then one of the following two things either hypoxemia, so this is blood oxygen level below a certain point or tachypnea. So why is it one or the other is because babies will compensate for low blood oxygen level by breathing quickly, by rapid breathing. And so, you're looking at these two criteria to assess whether or not they're falling into this last piece.

In addition these secondary endpoints also play a significant role in the totality of the package that we would be presenting to CBER. And so this is RSV hospitalization. So, why do we not pick hospitalization as an endpoint, because it's a fair significant variability country-to-country, hospital-hospital at the criteria for hospitalization - and so we wanted a very specific primary objective as to what constituted severe significant disease and drop hospitalization to a secondary endpoint but hospitalization is the significant economic burden measure and so it's important part of the total package.

Equally, severe hypoxemia so now a more significant measure lower than 90% blood oxygen concentration would be a definition of severe hypoxemia and we want to look at that too. So, is there an additional benefit to even more severe disease? Well, we would certainly love to prevent all symptomatic disease and significant symptomatic disease. If we can demonstrate that we're preventing even more serious disease, I think - I think that tells a high quality story as well.

So, as I mentioned before we performed this informational analysis. So why did we do that? Well, we got to a point - this is a multi-year trial. We actually by the time we recruited our last subject, we were into our fourth global season of the trial. So remember we were during the trial in northern hemisphere and southern hemisphere, and so we were in our fourth season of the trial of when we completed it. When we get it out to the mid-point we're saying, "You know what? These are expensive trials. Novavax is a small biotech company before we invested another $100 million in the trial, is there a way for us to get at least a look at where we are today."

And that look was in the form of a blinded look. So we didn't lift the blind, we remained blinded. We prepared an approach about how we wanted to do that, we consulted with FDA and we concluded that this methodology that's up here that we needed to set a threshold. It was not looking at a particular or specific vaccine efficacy endpoint, we were saying "Are we above or below a certain threshold to give us confidence to continue or give us the answer to stop, okay."

And so this criteria in discussion with the FDA resulted in this probability - posterior probability of greater than 90% confidence. So, 90% confidence that the lower bound is greater than zero. This approximated some 40% or so vaccine efficacy, right. And so what happened was we commission based upon this criteria an independent un-blinded statistician. So the statistician had to be un-blinded, they reported to our data safety monitoring board and the data safety monitoring board reported back to us that in fact we had met this threshold.

All, right. So, this is critically important because it allowed us to conclude based upon our original design of this threshold and based upon the final number of subjects that were included. So, this ends up being approximately the first 30% of the total study of 1,307 subjects and also based upon the precise number of cases, we were then able to calculate what we believe that told us about this informational analysis and that the threshold not only put us above 40%, but achieving a threshold put us above 45% and somewhere between 45% and 100%.

So, we're getting a de-risking of the program assessment. We don't know what the vaccine efficacy is. We remain blinded but this is a significant point at which we felt confident to move the program forward. These 1,307 subjects become part of the 4,636 subjects, and become part of the answer to the trial. So, this was an important milestone for the Company.

So, we've just highlight that we released - we're keeping everybody informed, we released that we concluded the trial back in May. The last baby was born into the trial on July 12, which puts us on a trajectory to releasing data in Q1 of next year.

Also, so again it's been a very active year for us. Lots of things going on, right. The information analysis being communicated, the trial recruiting its last subject, FDA in their ongoing discussions but let’s keep in mind, this is the first Phase 3 trial of an RSV vaccine, the public health community is anxious for this vaccine, FDA has been very supportive, we’ve been consulting with them on a consistent basis, and again what we decided to do is because of the 4,636 subjects, because of the safety profile of 3,000 being vaccinated, FDA concluded along with us that we could make - what was a prescribed interim analysis to be the final efficacy analysis.

So we have enough kind of current aggregate number of blinded primary endpoints that this will be a statistically sound efficacy conclusion. Right, so this is really important. We will have an answer on this trial in Q1 of 2019.

So that leads us to a pathway to licensure. We talked about these - all of these first three steps already final efficacy analysis in Q1, and the only guidance that we're giving after this point is that the BLA for the U.S., MAA for Europe will be submitted by Q1 of 2020.

All right, so since we're so close to filing a BLA, it’s important to talk about the market and the market assessment and sizing the markets. So what are these market opportunities? Again assessing the significance of this disease, it's a globally, the second leading cause of death second only to malaria. Think about that. Think how much we talk about malaria and the death associated with that, RSV disease in low-income countries is the second leading cause of death.

In the U.S. it's the leading cause of hospitalization. The babies are getting [indiscernible] high-quality healthcare, that’s not the case in low-income countries that statistic is probably the single reason why Gates decided to support us and fund the trial and obviously they do their due-diligence before they drop $90 million in the lap of a company and this happened to be also the single largest investment that Gates has made in a product specific trial.

Maternal immunization - it’s concluded within the healthcare community that maternal immunization offers the best method of protection. Why is that the case because we want to protect the baby from birth. Right, we can't wait for a priming dose at two or three weeks, a boosting dose a couple of months later, the game over by then. Right, the baby has to be protected at birth. The strategy is elevate antibody levels in mom, mom very efficiently transplacentally transfers antibodies to baby, naïve infant, baby is protected at birth through the most significant exposure in those first few months of life. Again only Novavax has an RSV vaccine in a Phase 3 clinical trial and in our analysis estimate that this is in excess of a $1.5 billion global revenue opportunity.

So, let me backup for a second before I jump right into that. So, if we could get sound up a little bit. I got to click it.

[Video]?

So it's interesting right, if you have never seen a baby in distress from RSV, that's the baby in distress, right, there is some significant things you heard the doc saying no fever, right, so it's typically not a manifestation you see in RSV but you see this difficulty breathing. Being able to see a young infant in such respiratory distress, it's hard to watch but it's why we have a vaccine for RSV and during an RSV season, this is what the doctor's offices and the hospital's see all the time.

Over to the right here, Shanisty Ireland was interviewed by her experience and we've spoken to Shanisty a number of times. We actually had to come out to talk to the company, is very interesting. This was not a premature baby, this was not a baby that was high risk, this was a healthy mom with a healthy 9 pound baby boy, Adam, who was infected by his siblings and was admitted to the hospital at six weeks of life. So this is what RSV disease manifests itself in and this is what we are trying to prevent.

So as I said, this is not a disease of premature babies. This is a disease of full-term infants. So what you see here is the statistic coming from pediatrics publication. This is 85% or more, right, of hospitalizations could have been prevented. So, why we’re saying that? Well because that 78% represent full-term babies, the 7% relates to late preterm. So, almost a year full-term babies are being exposed to hospitalization and could benefit from maternal immunization. This is a disease of all babies and including full-term babies.

So what is the RSV season look like, so this is a recent publication that’s come from the CDC identifying what the season looks like in the U.S. There is a little bit of variability South to North, there is a little bit of variability country to country, but the point here being is that this is a recent publication in 2018 that says, there is long RSV season. So for those of you who might be familiar with Synagis and MedImmune in the early days of preemies, whenever they were focused on the higher scrip babies with a $10,000 therapy, they wanted to limit that to the most significant season and this ended up being about four or five months season.

The reality is it’s circulating RSV virus throughout the eight months, and any baby that is six-month plus of age is going to touch some part of that RSV season and therefore be exposed to what you saw in that video in a few previous slides.

So just another graphic looking at the disease in infants less than six months of age, 69% of all infants will contract to RSV in the first year of life. 77% of these infants will - infection in the first six months of life and over 400,000 medical interventions, a doctor's office visit, an emergency room visit, a hospitalization and intensive care unit stay, okay.

So what is the revenue modeling look like for this. Well if you - let’s look at the U.S., if you look at all births in the U.S. 3.9 million births in the U.S. So not all of them are full-term or near full time, but about 95% of them are. If we now take that and apply a vaccination rate, so if any of you are at all familiar with pediatric vaccination rates with an ACIP recommendation, those vaccines have about a 90 plus - 95% plus vaccine coverage. This is vaccinating mom for the benefit of baby with an ACIP recommendation I have no reason to believe that you’re not going to see a vaccination rate here similar to that what you see for pediatric recommendations.

This gets us too easily in excess of $0.75 billion of revenue peak revenue in the U.S. You look at other kind of major markets so EU five, Asia three, only get you to the 1.5 billion. This is not also assessing the launch out into middle market middle income countries which could be easily put this over $2 billion of peak revenue.

So in addition to the disease burden and addition to the market sizing, I talked before about and there's probably another dozen slides I could take you through relative to what you need to do to prepare for a vaccine launch.

But to summarize you have to have a great product which we do, you have to have supporting policy with an ACIP recommendation. You have to have physician education already collaborating with ACOG so this is the organization of OB/GYN. You have to have a payer strategy in place right and so therefore it is the price that we’re going to charge for this vaccine considered by the payers to be an acceptable pricing strategy. We’ve done that already, it’s well in line with existing pediatric vaccine like PREVNAR, its well in line with others like meningococcal vaccine. And so we've explored that as well we made sure that all of these pieces are fitting together.

We are also talking to the ACIP working group. So in order for it to go from a FDA recommendation to ACIP recommendation, you got to pass through the advisory committee on immunization practices. They have a working group that gets formed before it gets recommended there and so that’s what we’re doing we were working with that group as well. So take a pause for a second breathe, I’m going to talk about NanoFlu.

So NanoFlu is our influenza vaccine or nanoparticle influenza vaccine with our matrix adjuvant and our intent is to advance a highly differentiated influenza vaccine into the marketplace. And some of the activities that we've done in that regard is a Phase 1/2 trial that we conducted last fall that data readout and then subsequent publication in New England Journal of Medicine happened early this year.

We now have a Phase 2 clinical trial design that we had our first subject in on in last Monday on the 24th. And we're also in constant communication and discussion with FDA about the opportunity for accelerated approval, and I'll talk more about why that's important a little bit later as well.

So, why everybody thinks about flu, there's plenty of products in the flu market. The problem is even with all of these products in the flu market, you still have a situation where last year for older adults specifically age three and two was estimated to have a 17% vaccine efficacy. Well, okay that's better than nothing but it's not good enough. And so therefore we feel the need to bring something forward that will be better.

And if you think about what's considered to be the best product in the marketplace today, we had to compare ourselves to that best product. So, those of you that are familiar with the flu vaccines phase, you'll understand Sanofi's, Fluzone High-Dose is now the market leader and holds probably 70% of the older-adult market has demonstrated in a number of trials that it's more effective than its own standard dose. And so we compare ourselves to that.

Last statistic here I think is important as 61% of all flu related hospitalizations were associated with A(H3N2). So therefore we need to look at that particular strain and understand why that's the case. And there are two reasons, so this is a conclusion that's been reached by not only us but by the CDC. There are two driving reasons for why we're seeing low vaccine efficacy and both of which we're addressing in our vaccine.

So, you have this antigenic evolution. So this strange drift that you hear about every year, there's a number of strains in the vaccine but what's really circulating in the community at any given point in time and there can be a significant variability there. You also have the effect of egg adaptation which you heard a lot about last year as well. And why is that? Because now you're taking a virus and you're adopting it to grow in eggs, right. And therefore it's not necessarily a direct NASH.

So, if we look at each, so this diversity in evolution of H3N2 becomes pretty clear. So, this phylogenetic tree - and we look back over the years here are the different strains and how they have evolved. And the intensity of that evolution is demonstrated by the color coding on the Epitope changes there.

And what we're seeing is, if you remember last year Hong Kong was the strain that was in the vaccine. All during the course of last year, all sort of, wow, there is drifted strain in Singapore. Well, okay, it's not in the vaccine but it's kind of wreaking havoc in the community and so that became a point, it was most common in Australia, with Singapore, and it ended up becoming most common in the U.S.

And so - come back to that, egg adaptation first. So, almost 90% of all vaccines are egg based, right. And this is egg mismatch as a result of this growing in eggs and the passaging a number of times, and the virus changes when it's grown in eggs. And so we just need to understand that that's causing some of these vaccine efficacy issues.

So, what is NanoFlu going to do to help solve that problem? It's demonstrated improved immune response compared to egg based high-dose flu vaccine. NanoFlu is a recombinant nano particle vaccine, it's non-egg based, it's adjuvant of the Matrix-M. So, what that results in is an exact genetic match to the strain that's been identified that WHO and CDC recommends to be in the vaccine.

We're not taking a virus and adapting it to grow in eggs. We're taking that exact genetic sequence and that's how we're manufacturing our product from that genetic sequence into the product that we're administering. Broader-immune response against antigenic drift is a benefit of adding our matrix adjuvant into the equation as well, and especially in the older adult population, this is our first path forward but this could also apply broadly to other populations as well.

So, the results of the trial, remember phylogenetic tree that I talked about before, Hong Kong drifting to Singapore. Well, by the way we demonstrated a 64% better response, 64% better response to the drifted Singapore strain then Sanofi high-dose was able to demonstrate during the course of last year's season.

We also looked at Hong Kong, we also looked at historical drift. So this was drift backwards just because the strain was circulating before and is not included in the vaccine doesn't mean it's still not also circulating today. This is the benefit of this phylogenetic tree.

And also at the bottom here, so you got Sanofi high dose can be a standard dose. They demonstrated from an immune response as well as from an efficacy trial a Sanofi high dose was better than the standard dose. So, now we’re coming along and demonstrating that we are better on top of that improvement right and that’s a significant statement to make.

So we talked about the New England Journal of Publication so this is so peer-reviewed right and we can talk to you about all the statistics that we want to talk about in the trial results. But peer-reviewed letter to the editor, we’re able to get a Phase 1 basically study published that's generally unheard of in the New England Journal of Medicine but there was such solid data here and significance to flu vaccine marketplace that they felt it was important to do that.

With the statement that NanoFlu demonstrates significantly improved immune responses against the panel of homologous and drifted A(H3N2) influenza viruses compared to leading license egg-based high-dose flu vaccine in older adults, bold statement.

Okay, so our Phase 2 trial, so what is that look like. We want to go back and we want to confirm dose and formulation so this would be the trial before you go into a Phase 3. We’re going to look at adjuvant effect with and without adjuvant.

The other significant benefit of this trial is as a result of this trial because FDA has opened the opportunity for us to go to Phase 3 with accelerated approval, it's then at the conclusion of this trial but with an end of Phase 2 meeting sometime in Q2 present this data to the FDA. FDA if this data is consistent with what we saw in the Phase 1, we’ll say yes we’re going to grant you accelerated approval, accelerated approval means that we can then go forward and do an immunogenicity only immunogenicity only not efficacy trial against the license comparator in the Phase 3 allowing us to very quickly move along our food program into Phase 3 in the second half of 2019.

And that's what I just said, the NanoFlu accelerated approval pathway. So yes, so pathway going forward and some of these things we’ve already completed. We initiated the Phase 2 trial. As I said last Monday, we’re projecting data from that trial in Q1 of 2019 and we’re expecting to based upon good data projecting that we would start that Phase 3 trial in the second half of 2019.

Thank you very much. Appreciate your time and attention.

Question-and-Answer Session