GLAXF - Vaxcyte: End Of Phase 2 Meeting FDA Q4 Of 2023 To Get Ball Rolling

2023-10-16 18:25:10 ET

Summary

• Vaxcyte, Inc. is making substantial progress with its vaccine candidate VAX-24 for the prevention of invasive pneumococcal disease as evidenced by trial data.
• Obtained positive immunogenicity data from its phase 2 study in adults for prevention of IPD and expects to meet with the FDA in Q4 2023 for phase 3.
• Vaxcyte faces competition from other pneumococcal vaccine companies, but its 24-valent PCV could provide superior protection compared to existing options; Plus it has potential to advance a 31-valent PCV.
• Vaxcyte, Inc. had $1.440.8 million in cash as of June 30th 2023; Enough to fund its operations through at least 12 months from August 2023.

Vaxcyte, Inc. ( PCVX ) has made great progress in being able to advance its vaccine candidate known as VAX-24, which is a pneumococcal conjugate vaccine [PCV] being studied for the prevention of invasive pneumococcal disease [IPD]. It was already able to obtain positive immunogenicity data from its phase 2 study in adults ages 65 and older, and full 6-month study data from other ongoing studies as well. Why I believe that it is nearing a huge inflection point is because it is gearing up to meet with the FDA soon. That is, it expects to have an end-of-phase 2 meeting with the agency in Q4 of 2023. The goal of this meeting is to establish an adult phase 3 study to be advanced as part of this program.

The biotech is on track to report safety, tolerability and immunogenicity data from its phase 2 pivotal non-inferiority study in adults in 2025. Not only that, but Vaxcyte is also advancing this PCV candidate for infants as well. Top line safety, tolerability and immunogenicity data from the phase 2 infant study is expected by 2025. The importance of looking at this biotech now is that not only does it have the potential to go after a big market opportunity, but that it could possibly end up being superior compared to the current standard of care [SOC] of PREVNAR 20. Besides PREVNAR 20, there are other PCVs being advanced in other pipelines, which could end up directly competing against VAX-24 even if it is ultimately approved.

VAX-24 For The Prevention Of Invasive Pneumococcal Disease

As I noted above, Vaxcyte announced positive immunogenicity data from its VAX-24 adult phase 2 program in patients 65 and older, along with other immunogenicity data pooled from other studies. This vaccine is being advanced for the prevention of pneumococcal disease , which is an illness as a result of the streptococcus pneumoniae bacteria. A major problem is that those who are susceptible to invasive pneumococcal disease [IPD] need to get a preventative vaccine to prevent such disease. Susceptible patients are those who are young/old, have comorbidities, and have chronic heart or lung disease. It was shown that the 2.2 mcg dose of VAX-24 met opsonophagocytic activity [OPA] response non-inferiority criteria for about 18 of 20 serotypes common with PREVNAR 20. On top of also showing the superiority of 4 additional VAX-24 serotypes. In addition, positive immunogenicity data was noted from other studies which deployed VAX-24.

What is opsonophagocytic activity? It is an assay used to measure immunogenicity of pneumococcal vaccines. The main premise for a vaccine is to be able to clear the Streptococcus pneumoniae bacteria through opsonophagocytosis , which is the engulfment [devouring] by macrophages and neutrophils of said bacteria. Thus, with VAX-24 being able to produce substantial opsonophagocytic activity in terms of non-inferiority to PREVNAR 20, it showed that it was able to have an effect in clearing bacteria in the patients.

The advancement of this program brings forth several catalysts to look forward to. The first is that Vaxcyte intends to have an end of phase 2 meeting with the FDA in Q4 of 2023. Should this meeting go well, then it will be able to initiate a phase 3 adult study using VAX-24 for the prevention of IPD. A second catalyst would then be the release of data from the phase 3 adult non-inferiority study, which is expected to be released in 2025. Lastly, there will be a release of safety/tolerability/immunogenicity data from the phase 2 infant study by 2025 as well.

Potential Competitors For The Prevention Of Invasive Pneumococcal Disease

The thing is that despite the massive potential that exists for Vaxcyte being able to advance its own pneumococcal vaccine [PCV], there are many competitors that it may or may not have to deal with. Pfizer ( PFE ) with PREVNAR 20 is one of them , but where Vaxcyte might end up holding a competitive edge with VAX-24 is that it is a 24-valent PCV. Results released above highlight the potential that VAX-24 has the potential to provide an additional 10% to 28% protection of IPD, compared to standard of care [SOC] PCVs already approved. Another competitor which Vaxcyte might have to deal with might be GSK plc ( GSK ) and the reason why is because of an acquisition it made. It spent $3.3 billion to acquire Affinivax in order to get its hands on a 24-valent PCV, along with the MAPS technology as well.

The 24-valent PCV in Affinivax's pipeline is AFX3772, which is being explored in a phase 3 study at the moment. Should GlaxoSmithKline succeed in clinical testing, along with eventually receiving regulatory approvals, then it will easily compete against 20-valent PCVs like PREVNAR 20. With the acquisition, it was also able to obtain a 30 valent PCV in preclinical testing. While this program is early, the ability to target 30 serotypes for prevention of IPD will easily stifle competition.

Where Vaxcyte may ultimately succeed is not just its ability to move forward with VAX-24 only. It may be able to eventually fend off competition with its own preclinical PCV candidate known as VAX31. Why is this significant? That's because VAX-31 is a next generation 31-valent PCV. That is, if successful, it would broaden coverage against 31 serotypes. Vaxcyte believes that it might be able to receive clearance of its IND of VAX-31 by the FDA in Q4 of 2023. From there, if all goes well, it should be able to report on top line safety, tolerability and immunogenicity data from this phase 1/2 adult study in 2024.

Financials

According to the 10-Q SEC Filing , Vaxcyte had cash, cash equivalents and investments of $1.440.8 million as of June 30, 2023. The reason for the cash on hand is because of an offering that was completed in April 2023. It sold a total of 13,030,000 shares of its common stock, which included the full exercise of the underwriters' option to purchase an additional 1,830,000 shares at a price of $41 per share, along with pre-funded warrants sold at $40.999 per underlying share.

With this financing transaction, it generated net proceeds of $545.3 million. While this was a significant cash raise, I believe that Vaxcyte, Inc. will be looking to raise cash again, my estimate would be at least in the 1st half of 2024. Why is that? That's because it stated that it has enough cash to fund its operations through at least 12 months from the filing date of its 10-Q SEC Filing, which was filed on August 8, 2023. Biotechs that only have this estimate of cash runway tend not to wait until the very end to raise cash, that is why I believe Vaxcyte will need to start looking for ways to raise cash again at least in the first part of 2024.

Risks To Business

There are several risks that investors should be aware of before investing in Vaxcyte. The first risk to consider would be with respect to the end-of-phase 2 meeting with the FDA for the advancement of VAX-24 for prevention of IPD, which is anticipated in Q4 of 2023. There is no assurance that the FDA will give the green light for the company to initiate a phase 3 study. At which point, this program could end up taking longer than anticipated.

A second risk to consider would then be the phase 3 study of VAX-24 itself. Even if a phase 3 study is initiated, there is no assurance that the primary endpoint will be met upon the release of results.

A third risk to consider would be with respect to competition in this pneumococcal vaccine space. While Vaxcyte may ultimately yield an advantage in terms of targeting 24 serotypes with VAX-24, compared to 20 serotypes by currently approved SOC vaccines, there is no guarantee that it will do well on the market should it eventually be approved.

The fourth and final risk to consider would be with respect to the financial position that it is in. Despite a huge cash raise of about $545.3 million in April 2023, its cash runway is not that much. This is laid out above from its 10-SEC Filing, in that it believes it only has enough to fund itself through at least 12 months.

Conclusion

Vaxcyte has done well to advance its VAX-24 pneumococcal conjugate vaccine [PCV] for the prevention of invasive pneumococcal disease [IPD]. I believe that further value can be unlocked if it can successfully get the FDA to greenlight the phase 3 study that it wants to initiate to push this program forward. It hopes to achieve such an advancement with an end-of-phase 2 meeting with the FDA in Q4 of 2023. There are going to be a few results to be released from the VAX-24 program in 2025 as well, which provides additional catalysts to look forward to.

I believe that this biotech is in good shape, especially when you consider that its technology continues to be expanded upon. For example, even though it is only currently advancing a 24-valent PCV at the moment, it could possibly eventually be ahead of the game with a 31-valent PCV which it is also moving forward in the pipeline. As I laid out directly above, it expects to possibly have received clearance from the FDA for its IND of VAX-31 in Q4 of 2023. From there, data from a phase 1 study for VAX-31 could be released in 2024.

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