Novavax Inc (NVAX) 2017 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Novavax Third Quarter Financial Results Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the conference over to Ms. Andrea Flynn, Director of Investor Relations. Ms. Flynn, you may begin.

Thank you. Good afternoon. This is Andrea Flynn, Director of Investor Relations at Novavax.

I would like to thank everyone for joining today's call to discuss our third quarter 2017 financial results. A press release of our earnings 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.

Joining me on today's call is Novavax President and CEO, Stan Erck; together with our President of Research and Development, Dr. Greg Glenn; and our Vice President of Finance, Chris Dunne.

Before we begin our 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 strategies and other financial- and business-related matters, including expectations regarding revenue, operating expenses, cash usage and clinical developments 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.

I'll now turn it over to Stan to begin today's call.

Thanks, Andrea. Welcome to our third quarter 2017 earnings call.

Before I jump into my overview of our very productive third quarter, I would like to note 2 items. We announced a few weeks ago that Buck Phillips, our CFO for the last 4 years, is leaving to pursue an expanded opportunity in the industry. I would like to take a moment to thank Buck for all of his efforts here at Novavax. Buck has had a key role and been a large part of our success here, and we all wish him well in his new endeavors. And as you've heard, Chris Dunne, our Vice President of Finance, is joining us this afternoon to review the financial aspects of our report. Chris has run our financial reporting and accounting functions here at Novavax for over 7 years and is a seasoned senior financial executive with over 20 years of public biotech experience. I am pleased to have him join us on the call today.

Finally, some of you have -- may have seen yesterday's announcement that our board member, Gail Boudreaux, was just named President and CEO of Anthem, Inc., of one of the nation's largest health insurers. Unfortunately, as a condition of her new employment, Gail is no longer able to be a member of our Board of Directors. I want to thank Gail for all of her guidance and wish her all the best at Anthem.

Now turning to our clinical programs. Novavax had a very productive quarter, with substantial progress in both of our key pipeline areas, RSV and flu.

I'll begin with an update on our RSV program. We continue to increase our momentum in the third season of enrollment in the Prepare trial, our Phase III trial of the RSV F vaccine for infants via maternal immunization. As a reminder, RSV is the leading cause of infant hospitalization in the U.S. and a leading cause of infant mortality globally. The Bill & Melinda Gates Foundation identified the reduction of RSV-related infant mortality as a key goal for the foundation, and they are supporting the Prepare trial through an $89 million grant.

We continue to pursue our goal of having sufficient enrollment by mid-2018 to initiate an interim analysis. We expect that this interim analysis will determine if we have successfully met our primary endpoint, thus allowing us to halt the trial and file a BLA. Accounting for births, follow-up and data analysis, we expect this interim analysis could read out by the end of 2018 or early 2019.

Turning to our flu program. We successfully recruited and immunized 330 older adults in our Phase I/II trial and are on track to provide the safety and immunogenicity data before the end of the year. We expect these data will lead to several meaningful milestones, including a request for an accelerated approval pathway that could push the program into pre-BLA status by the end of 2018.

I'll reiterate my comments from last quarter: our goal is to bring a vaccine to market that is clearly differentiated from the market leader. We look forward to the upcoming data from our Phase I/II trial before the end of the year, that should provide strong directional guidance for the success of the program.

I'll now turn the call over to Greg for additional details on our clinical programs.

Thanks, Stan, and good afternoon, everyone. Given that we provided an overview of the NanoFlu program on our last quarterly call and discussed the RSV Phase II older adult data in detail during the quarter, I'll just provide a quick overview of our clinical programs here today.

Starting with NanoFlu. We previously detailed the preclinical results showing that our nanoparticle flu vaccine demonstrated superior immunogenicity and protection compared to a market leader in preclinical challenge studies. In head-to-head comparison studies against Fluzone High-Dose, our nanoparticle influenza vaccine with our proprietary Matrix-M adjuvant, which together we call NanoFlu, demonstrated significantly higher and broader immune responses against both matched and unmatched influenza strains, including a series of "drifted" strains that have evolved over more than a decade of influenza seasons.

Specifically, the study, which was conducted in ferrets, found that NanoFlu induced hemagglutinin-inhibition (sic) [hemagglutination-inhibition] or HAI, had neutralized the antibodies against a broad range of influenza subtypes. In a head-to-head comparison against the standard-dose and high-dose inactivated flu -- influenza vaccine in ferrets, NanoFlu elicited higher HAI and neutralizing antibody responses, exceeding those induced by the high-dose vaccine against recent homologous strains. Additionally, NanoFlu induced superior protection in a ferret challenge model against homologous and a 10-year-old "drifted" influenza strain.

These data together suggest that NanoFlu has potential to elicit broader, more robust immune responses, resulting in greater protection than the market-leading licensed influenza vaccine in older adults, that is Sanofi's Fluzone High-Dose. Also, these data suggest that NanoFlu has the potential to address the problem annual strain mismatch due to its ability to induce highly neutralizing antibodies against a broad range of influenza strains.

Since our last earnings call, we have achieved 2 important milestones for the NanoFlu program. First, the preclinical results I just discussed were published in the peer-reviewed journal, Vaccine. Second, as Stan indicated, we initiated a Phase I/II clinical trial of NanoFlu in older adults. The trial is a randomized, observer-blinded, active comparator-controlled trial in approximately 330 healthy older adults. The primary objective of the trial is to assess the safety and immunogenicity of 2 antigen concentrations compared to Fluzone High-Dose. Immunogenicity will be evaluated using HAI titers, the industry standard and an established correlate of protection. We expect to announce top line data from this trial before the end of the year. Importantly, immunogenicity data from this trial may provide the basis to request accelerated approval for initial licensure of our NanoFlu vaccine.

Now moving on to our RSV franchise. The Prepare -- or our Prepare trial, our Phase III trial of the RSV F vaccine for infants via maternal immunization, which is being conducted in collaboration with the Gates Foundation, continues to increase its momentum in the third global season of enrollment. Prepare's global footprint is expected to grow from 16 sites in 5 countries in its first season of enrollment to over 90 sites in 12 countries in the third season in 2018. Our latest sites in Bangladesh and India join Argentina, Australia, Mexico, New Zealand, the Philippines, South Africa, Spain, the U.K. and the U.S.

As a reminder, the Prepare trial is a randomized, observer-blinded, placebo-controlled trial that utilizes a group sequential design, offering flexibility in trial size that is responsive to the rate of endpoint events and evolving evidence of efficacy while maintaining the integrity of the blinded trial.

The trial includes a single injection given to a mother between 28 and 36 weeks of estimated gestational age. The primary objective of the Prepare trial is to determine the efficacy of maternal immunization with the RSV F vaccine against symptomatic RSV lower respiratory tract infection, with objective measures of medical significance through a minimum of the first 90 days of life. Participants are being recruited and vaccinated at global clinical sites based on the timing of each region's RSV season. The trial will include a minimum of approximately 4,600 participants.

In regard to RSV program for older adults. As we indicated in our call in July, top line data from the Phase II older adult safety and immunogenicity trial demonstrated the benefits of both adjuvant formulations and 2-dose regimens. Based on the data and the continued analysis of other studies, we are planning to -- we are evaluating plans to conduct a clinical trial for older adults in 2018.

I'll now turn the call over to Chris to review the financial results for the quarter.

Thank you, Greg. Today, we announced financial results for the third quarter and 9 months ended September 30, 2017. A summary of our financial statements can be found in today's press release.

We recorded a net loss of $44.6 million or $0.15 per share for the third quarter of 2017. This compares to a net loss of $66.3 million or $0.24 per share in the prior year period.

Revenue for the third quarter of 2017 was $8.4 million compared to $3.2 million in the 2016 period. This increase of 158% was driven by higher revenue recorded under the Gates Foundation grant of $89 million. As you know, the Gates Foundation revenue is directly related to the operating activity in the Prepare trial, our Phase III trial of the RSV F vaccine to protect infants via maternal immunization. We continue to expect an increase in the Gates Foundation revenue in 2017 relative to 2016, which relates to the continued ramp in enrollment and increased level of activities as the trial continues in its third global season.

R&D expenses increased -- decreased 21% to $41.9 million in the quarter compared to $53 million in the same period in 2016. The decrease was primarily due to reduced activities related to the development of the RSV F vaccine for older adults, other general R&D project-related expenses and lower employee-related costs.

G&A expenses decreased 40% to $8.1 million in the quarter compared to $13.6 million in the same period in 2016. This decrease is due to lower professional fees for pre-commercialization activities and lower employee-related costs.

As of September 30, 2017, the company had $172.6 million in cash, cash equivalents and marketable securities on the balance sheet. This includes approximately $23 million in net proceeds raised through the ATM during the quarter. This compares to $235.5 million on the balance sheet at December 31, 2016.

This concludes my financial review. I'll now turn the call back over to Stan.

Thanks, Chris. We remain excited about our pipeline and our prospects for the remainder of 2017 and beyond. We look forward to updating you on our progress as we continue to execute against our key milestones.

And at the risk of repeating some messages that you heard earlier, just to summarize, near-term milestones for our 3 lead programs are as follows. For our RSV infant via maternal immunization program, we will complete what we refer to as our informational analysis this quarter. We expect that our current and projected rate of enrollment will allow us to trigger an interim analysis by mid-2018. This analysis will inform us as to whether we've met our primary endpoint. We expect that this will lead to a BLA in 2019.

For our NanoFlu program, we will unblind data from our ongoing Phase I/II trial also in this quarter. Assuming that a variety of stars line up, this could lead to a Phase III pivotal trial this time next year, again leading to a BLA in 2019.

Finally, for our RSV elderly program, we continue to evaluate a path forward in either the high-risk COPD population or in the general elderly population, and we will report on our decisions during the first half of 2018.

We'll wrap up here and open up to Q&A. Operator?

(Operator Instructions) Our first question comes from George Zavoico with B. Riley FBR.

Congratulations on the progress in enrollment, especially in the -- in Prepare and starting the elderly NanoFlu. First question about the NanoFlu, you mentioned that you'd go for accelerated approval. Based essentially on what? I mean, there's already a product on the market for the elderly, the high-dose Fluzone, as you said. How are you going to argue for accelerated approval with the FDA with a product already on the market?

Yes. So it doesn't take just one product, George. This is something that was established over a decade ago. And in fact, the last 3 flu vaccines that have been approved have been approved using the accelerated approval. And so all you have to do is show that there's some additional benefit of what your product delivers or that there's a shortage of product in the marketplace. And so we certainly expect to be able to show some benefit, but you can also argue that there are 330 million or however many million Americans there are, and there are only 160 million vaccines being produced. So we think we win on both counts.

Okay. And then with the RSV with older adults, it's -- when you first mentioned that you were planning or evaluating the trial, the one thing that -- well, the main thing that needs to be determined is whether it's high-risk COPD or general elderly. Is that correct? It's pretty clear that one of those is definitely going to happen, right?

I think so. Yes, that's our plan.

(Operator Instructions) And I'm showing no further questions at this time. I would now like to turn the call back to the President and Chief Executive Officer, Mr. Stan Erck, for any closing remarks.

Great. And thank you, everybody, for being on the line and listening. We're -- obviously got a big few weeks ahead of us with a couple of important pieces of data being absorbed by the company, and we'll report out on that in due time. So thanks a lot.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program, and you may disconnect. Everyone, have a great day.