Q1 2021 Novavax Inc Earnings Call
And distribute novavax licensed product for the remaining balance of the $1 1 billion doses for low and middle income countries participating in the Kodak facility.
Together with serum we expect to begin delivery of doses in the third quarter of 2021 dependent on the appropriate regulatory authorizations.
In the first quarter, we also finalized an advance purchase agreement with the government of Canada to supply 52 million doses with the option to purchase an additional 24 million doses.
We also announced our intention to transfer our technology and partner with the government of Canada to explore opportunities to manufacturer our vaccine at the National Research Council Biologics manufacturing Center.
As of today. In addition to our advanced purchase agreements with Gobby are bilateral advanced purchase agreements total approximately 200 million doses committed to countries around the globe.
In addition, we continue negotiations with the European Commission on behalf of the 27 member States from a potential supply agreement. We are pleased with our progress to date and we will share additional details as these discussions reach finalization.
Based on the many inquiries over the past year and those ongoing discussions we understand that the COVID-19 pandemic and demand for vaccine is here to stay.
We will continue to support this demand in the years to come as such we are currently negotiating a number of other supply agreements with countries globally, but are looking to secure a vaccine for 2022 and beyond.
Given the need to complete the primary vaccination in most countries the demand for $23 73 remains extremely high.
With that I would now like to turn to slide 16 to review our financial results.
Today.
We issued our first quarter earnings release, which walks through the details of our financial results for the quarter. We also filed our 10-Q for the first quarter of 2021. Today. This includes details on important business and financing events during and subsequent to the first quarter.
Notably Novavax revenue in the first quarter of 2021 was $447 million.
<unk> to $3 million in the same period in 2020.
This significant increase was due to the increase in research and development expenses to $593 million relating to the $23 73 activities performed under the U S government and separate funding agreements.
We raised net proceeds of approximately $565 million during the first quarter through utilization of our ATM offerings.
Quarter end it ended with a very strong cash position of over $2 billion compared to over $800 million at year end 2020. This increase in cash was primarily due to $772 million of payments received under advanced purchase agreements.
And the $565 million of ATM funding just referenced.
With that I'd like to hand, it over to Stan to discuss some of our updated timing and guidance as it relates to our upcoming milestones.
Okay, So, let's turn to slide 17.
And on this call we will review the long list of recent successes.
The safety and efficacy data now I'd like to take talk about near and mid term focus of the company I'd like to start by addressing your questions that we get asked every single day.
We'll update guidance on short term gross.
Good question Josh.
We actually expect to see the results from the U S phase III trial.
What is the timetable to regulatory filings in various parts of the world and the third is what does the trajectory for scaling up our manufacturing on a global basis, let me take them one on attack.
On blinding U S phase III trial, let's start with the timing of the U S phase III trial.
So please turn to slide 18.
We have previously.
Did that.
That we expect to unblinded trial on the second quarter of this year.
And based on the timing of the unwinding of our South Africa and in UK trials I think there's a lot of people have an expectation that we might be able to on blend to trial in April.
Instead, we initiated a blinded crossover in this trial in April for which we show the study design on the slide we believe implementing the crossover and thus bypassing an interim unblinded will actually give us a comprehensive data set.
This gives us the ability to collect locations increasing the robustness robustness of our dataset when measuring efficacy against factors such a severe disease and against periods. We continue to guide.
That we will announce our phase III clinical data in the second quarter.
Look forward to sharing our results with you in a few weeks.
So with respect to regulatory authorizations, moving now to slide 19.
Our timetable for regulatory filings, we know that were delayed from where we thought we'd be at this point.
But now we're giving guidance that nearly all of the major challenges have been overcome and we can clearly see the light at the end of the tunnel on.
All facilities in our network have already demonstrated the ability to manufacture commercial scale GMP material.
The filing timetable depends on completing the final phases of qualification and validation of the assays.
That are needed to complete the demonstration of process consistency and to subsequently finalized reported for regulatory filings.
It has been a massive effort.
And that's dependent on our global manufacturing partners to help us accumulate a suitable database.
Not surprisingly it.
It is currently the top priority of the company.
It is not likely.
We will finish this work and time to submit by the end of June so on changing our guidance to reflect that we expect to complete our regulatory filings in the third quarter.
We are planning multiple filings that will be made with the U S. FDA, the UK NHRA and with the EU MAA as soon as our data packages are complete.
In other markets, we will continue on a rolling review process processes initiated earlier this year, including with Health, Canada, Australia and therapeutic goods administration in New Zealand. That's safe. Additionally, we anticipate starting rolling submissions to <unk> for emergency use listing.
Rolling submission process is also underway with the Republic of Korea Ministry of food and drug safety, which SK Bioscience initiated collaboration with Novavax in April of this year.
Regulatory authorities, who will all complete their reviews of our submissions on their own timetables and we hope to have market authorizations in multiple countries during the third quarter.
As of today, we are not able to predict a date with precision so we won't.
It is in everybody's interest to push to make this happen as early in the quarter as possible.
Let me next discuss the current state of our manufacturing and our anticipated capacity as we look to the remainder of the year.
Please turn to slide 20.
On our last earnings call, we discussed the significant strides taken in 2020 to build out our global supply chain as seen on our global supply chain map.
Some of the key manufacturing developments included.
Reaching an agreement in principle with GSK to support fill and finish manufacturing of up to 60 million doses for use in the UK.
Establishing manufacturing capabilities in Canada through our memorandum of understanding with the Canadian government to produce $23 73 at the National Research Council Biologics manufacturing Center.
Finalizing the exclusive license agreements with both Takeda and SK Bioscience in Japan, South Korea, respectively.
Today, our global supply chain now spans over 10 countries.
With all of our manufacturing sites, producing GMP material at scale.
I think we've done a remarkable job on standing up manufacturing in these multiple plants across the globe I'm happy to report that we have gotten to the point, where we've successfully manufactured a drug sessions, a recombinant protein nanoparticle at commercial scale in each of these plants with drug substance production is the most complicated step in.
Overall manufacturing processes.
Our guidance has been that we would be at full operating cadence by the end of the third quarter.
As has been fairly widely reported we are having difficulty getting to that point due to a global shortage of a few raw materials, including the shortage of 2000 liter bags.
<unk> filters, which are used in the purification process and the growth of the year as closely as we try to manage these materials, we have been running into shortages that has caused us to delay production runs.
Our expectation is on our suppliers are adding sufficient capacity such that we will be operating at full capacity.
But likely not until the fourth quarter.
We expect we will be at full capacity throughout 2022 and beyond.
The impact on us will be a somewhat slower rollout on product approval, but not dramatically.
We are building inventory of our drug substance and adjuvant as we speak we have tens of millions of doses made already and will continue to produce approximately 100 million doses per month by the end of the third quarter.
These will be ready to go and when we get a regulatory authorizations.
So now let's turn to slide 21, unless you look at the next six to 12 months with licensure expected in the third quarter at least in some parts of the world We will begin shipping product.
With our new agreement with <unk> and the Kovacs facility our doses over the next six to 12 months may be prioritized to lower price countries. We have taken this position because we think it's the right thing to do and is in line with our original funding from Saturday.
I think that is particularly timely given the discussion around the waivers of IP rates during the pandemic.
I believe that we have taken the lead to show the world the right way to get product distributed on an accrual basis globally, we expect that even with early products sold at low prices, we will be able to match that with revenue from higher income countries to be able to generate sufficient cash flow to expand our business rapidly.
Beginning in early 2022.
We will have a rapid increase in our ability to service our high income country Apa's because of the following reasons.
Ricci manufacturing capacity of over 150 million doses per month, starting in the fourth quarter of this year, including from serum Institute.
Increased capacity coming from online from new manufacturing partners.
And resolution of any outstanding raw material constraints.
With respect to the U S market, we are well positioned with our technology and timing to supply product for boosting and seasonal re vaccinations.
And the ex U S market.
There continues to be variability with many countries continuing to have very low vaccination rates. Therefore significant unmet demand remains globally that we will be able to support 2022 and beyond. This will continue to include the supply to high income markets from our facilities and we expect low and middle income countries.
Supported by share.
Over the next four to six quarters, we expect all of these factors to contribute to know novavax generating billions of dollars of revenue.
We plan to be in the clinic with our variant strain antigen in the fall and data will come soon after that we can then determined our best path forward for our booster our re vaccination strategy that strategy will be dependent on durability of protection and ongoing very interest range surveillance.
Sort that out and make the right call at that time.
Longer term.
We expect to upgrade our vaccine to be combined with flu, which will require further expansion of our production capability.
This is something we think our platform is unique in being able to do we initiated this program late last year and published data last week showing that in an animal model of combination nano flow COVID-19 vaccine was able to elicit strong antibody levels to both low end of coronavirus and when the animals were challenged with Corona virus. They are complete.
<unk> protected.
This has the potential to be the standard for seasonal respiratory vaccine with a single vaccination using our same platform. We could have a vaccine that elicits broadly neutralizing antibodies is efficacious against both Corona virus and flow stable can be made and formulated at large scale.
Would require running trials with the combination cohort flu vaccine, but it's been hard for us to start up because we haven't had the benefit from our own production capabilities and our contractors are all focused on COVID-19.
But we will be able to get a combo vaccine into patient's arms by the end of this year just to confirm the formulation is as effective as the parks I would guide people to think about the launch of such a combo vaccine out in 2025, so even if you see other well tolerated protein agile teams compete with us for the call.
<unk> only market in the next several years, we think that our unique COVID-19 flu combo will come out on top in the long run.
In the future as.
As we generate significant revenue in our production facilities come online.
<unk> used our capital our people in the labs to produce more vaccine programs that are termed that our team has long been hoping to work on.
This is just the beginning from Novavax.
In all cases, we will continue to build these vaccines on the platform that has consistently shown competitive advantages, including the development of broadly neutralizing antibodies with the potential to protect against a wider range of variance both on COVID-19 and flu.
Stability profile that allows for the refrigerated shipments on storage of vaccine a safety profile that leads to fewer side effects.
And with our combination vaccine the potential to protect against multiple infectious diseases with a single vaccination.
Turning finally to slide 22.
It was another successful quarter strengthening every aspect of our business. We are rapidly advancing toward our mission of delivering $23 73 globally would that be.
Being said, we recognize the need to seamlessly deliver on our more near term milestones ahead, including executing on our clinical trials finalizing preparations to radio global supply for commercialization.
Obtaining regulatory authorizations for $23 73, and advancing our variant strain in combination vaccines into clinical development.
To most effectively address the evolving pandemic.
Before opening up the call to Q&A I want to thank our entire novavax team for their continued dedication.
Tireless efforts over what was once again, a very busy and productive quarter user.
These efforts combined with the support of our partners globally are brought novavax significantly closer to delivering on our COVID-19 vaccine.
I will now turn it over to the operator for <unk>.
Okay.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
At any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question comes from.
Chase Carey with Jefferies. Please go ahead.
Hello. Thank you for taking my questions. Just a couple on my end I guess first can you give us an idea or additional color on how much vaccine that youll have actually stockpiled and I guess also related to that how much are you actually producing per month currently.
Yes, it's a good question this is Dan.
It varies quite dramatically by site by month.
As we either have have raw material supplies are not linked.
As I mentioned to you that in the third quarter, we had expected to be able to produce roughly 70 or 80 million doses per month.
At the Novavax sites, excluding Sarah and I would guess that were probably half that right now.
We've made.
30, or 40 million doses on the shelf.
It's.
It's getting larger every week.
Thank you very much that's very helpful. I'll hop back in the queue.
The next question comes from Charles Duncan with Cantor Fitzgerald. Please go ahead.
Okay.
Hi, Stan and team congrats on a good quarter progress. Thanks for taking my questions I have a couple of them.
The first day. So im wondering if you can provide any additional color on the UK emergency use authorization.
And then secondarily.
Maybe a perspective on emergency use authorizations versus say full authorization I guess I'm wondering.
Do you prefer to stick with the Eune approach for <unk>.
Countries outside of the U K and others that you filed or would you pursue a full authorization.
Okay.
Okay.
Yes, So U K U K has been that we've worked closely with a lot of these groups U K, we've had the most dialogue with.
And I think the expectation we had always had was that we would try to get a filing into the UK was the full CMC and clinical package by the end of June that's now moved into July I think.
On the NHRA is paying close attention and is likely to be the first approval.
And authorization I guess is the right word.
And.
So it could be others like Korea, just at the same time I think.
Yes.
Just as far as the EUA versus five on approval.
We think that emergency use for conditional authorization is on the route to getting full approval and that just because of the safety data needs to mature.
To have a complete package to allow for final approval.
So everything we're putting in for the EUA is relevant to the BLA.
Okay, and then moving on to prevent 19 in terms of the crossover could you just help me think through kind of the strategy there.
It seems like the crossover eliminates the control arm and I'm just really wondering.
What you are hoping to learn from the crossover.
Is it just a way to increase the number of patients have been exposed to full.
Fully vaccinated.
Yes.
Yes, so the situation in that prevent 19 study was complicated by the fact that a lot of emergency use vaccine was made available on the U S and U S public health system.
Advocating its use.
So for us to maintain the integrity of the study we have to take on a strategy, where we will provide vaccine to all the participants and the most rational way to do that would be through a crossover. This allows us to also look at.
Waning protection by comparing the people who are initially vaccinated with those are vaccinated in the crossover design.
We're going to get a lot of information from the study, including a larger safety database, but importantly.
We are.
We're going to have enough cases.
Stan reported prior to crossover for us to be able to have a final analysis.
The second quarter.
Okay final question regarding.
Perhaps the feature.
Our strategy of combining COVID-19 vaccine with an influenza vaccine or nano flow I think Sam you mentioned, perhaps being able to market that in 2025, I'm wondering on rate the rate limiting steps to getting there and we've got several seasons.
Farhan it seems like that would be a pretty interesting combination.
Vaccines, so what needs to be done to get there.
Well, it's generally clinical development.
I'll take a crack on and there are a couple of issues. One of them is if you've been watching the influence of epidemiology, you will have seen that Lewis.
The season.
Yes.
Need to understand how it is going to turn it back to us from a cadence before we plan to do any kind of efficacy evaluation.
Naturally we only want to run studies, where we think we can get a result and for that we need to understand.
Flu comes back and how it will come back so that's an important bit of information, we need because we need to compare the combination vaccine to two individual components, we will get the efficacy results for COVID-19, while we already have them from the U K and South Africa and will get confirmation from the final phase III study in the U S. But we also on the efficacy results.
From the nano fluids. So we can use it to leverage the combination product.
Thank you and it's David I think you mentioned on a trial, perhaps even starting this this next flu season.
Misfire.
Or the follow on.
So its immunogenicity trial, starting in the fall.
Yes.
Okay. Thanks for taking my questions.
Yeah.
The next question comes from Eric Joseph with Jpmorgan. Please go ahead.
Hi, guys. Good evening, thanks for taking the questions.
First on manufacturing and if I heard correctly you have three.
30 to 40 million doses on the shelf currently seeing.
Well below the target of 110 million doses by the end of the quarter to satisfy OWS. So I'm, just wondering sort of what.
The impact sort of it might be too.
On.
Remittance or follow through on that award.
Whether any of that payment is at risk.
Secondly on prevent night scene.
Yes.
It sounded like you had some visibility on net accrual rate.
<unk>.
And initiating the crossover trial Fortunately can you.
Just a clearly whether or not you've already conducted.
An interim efficacy analysis.
Sort of.
Pretty much what prompted that.
On the move to initiate the crossover portion of the study at that time.
And then finally.
Given some of the challenges in sourcing of raw materials to complete manufacturing how should we be thinking about the impact to product margins.
So where things stood at the beginning of the year. Thanks for taking the questions.
Yes, let me take the manufacturing related ones I think.
Yes.
I think our expectation is we will have the 110 million doses made.
Right around the end of the year, the first and second month from next year, so that will.
I will take that.
The impact of cost of goods sold.
Is it is not a long term impact at all I think it's.
If you're not running the plant.
First products, you make cost a lot, but if youre, if youre, making at regular cadence the cost of goods sold should be.
There always is and so.
So I'm not worried about our cost of goods sold.
Margin.
And as far as far as the crossover like I mentioned before the real reason we did it.
Well, it's because UA vaccine came available and our other studies for instance, our phase II studies are about 60% of the people on dropdown currency EUA vaccine. So that wasn't the real driver for us to maintain the integrity of the study.
Okay.
Just to follow up on Charles' question, it would seem like that rate sort of validate the.
The placebo arm.
<unk>.
I guess, what proportion of patients on study.
Have.
Do you expect to cross over how do you maintain confidence that there'll be able to accrue.
Thats primarily.
On the placebo arm.
The primary efficacy is obviously conducted prior to crossover where theres, a placebo comparator and asking me. The final analysis, we didn't connect day interim can be a single analysis.
Conducted on datasets all of that.
Alpha is going to be used against that endpoint. So we're going to have a more precise estimate of efficacy.
Data will be available.
By the end of this quarter.
Okay.
That's for taking the questions.
Okay.
The next question comes from.
Mike.
Tony with B Riley FBR.
Please go ahead.
Good afternoon. Thanks for taking my question on appreciate the comprehensive update.
My question's on most of the specific follow ups to previous day ask question. So maybe just stay on starting.
Starting from the non clinical and CMC or manufacturing component of the submission.
Are you able to comment on what might be these.
A lot of things that are causing the hold up is it just process coordinating between the different sites or are there any specific issue that on any particular assay.
So if you're able to comment on that that would be great.
And part of it has to do with manufacturing in different sites and showing comparability between the processes. The actual end product between the different sites.
And you have to develop assays that Ken for all of those and so.
I think it probably took a little longer than we expected to get a.
Potency assay that worked across total the same story across all of the sites, but I'm happy to say, we did we crush that rich.
A big breakthrough there.
We're now.
Racing toward validating everything and put it into a package.
Okay. Thank you and then on the protocol Amendment.
Sorry, if I shouldn't be calling it an amendment from prevent 19 study could you just verify the final event rate is still I think one four cases.
<unk> will be well.
What we had in their mission protocol and then my more important question is on as.
As you know the the label for some of these EUA approved vaccines.
Got to look more specific to a booster.
Going into the fall.
Are you able to comment what could be gleaned out of <unk>.
19, if anything at all in GAAP booster strategy if at all.
Okay, Let me take that on <unk> first as far as the number of cases.
The previous version of the protocol calls are event driven analysis.
We're not there anymore and we weren't there because like I explained we had two adjusted study to maintain its integrity. So now is the time based analysis, it's going to be.
Got it done on events that were collected prior to crossover and Thats going to the total number of events, we have in our analysis and I'll address that.
Casino label as.
As far.
As the other question by loosening boosted.
Nothing from prevent 19 will speak directly to boosting the data. We have are boosting is coming from our phase II study, where we've just completed a six month booster of people who are initially vaccinated both on one or two doses. Additionally, it will come from the South Africa study, where people who received two doses or getting a single boost dose in that.
Context. So those are that's the main data we're going to have to talk about boosting in addition to all the.
Really compelling preclinical data that Greg shared with you previously.
I guess match on follow up to that is can that be part of the regulatory submission.
U K com Gov data that South Africa data.
Those elements do that.
Do they make sense to be bought on their data package.
I think in the initial.
Filing our main intent is to get primary licensure with a vaccine we have on hand, and booster trials is going to be considered as the data matures and is available.
It's Mike.
Thinking we're going to be filing in advance of having that data mature.
So.
It will come on and say is there a variation RSA amendment to that Bob.
Okay, Great and then final question on the.
So sandy will give color on the day.
Monthly run rate getting to 115 Malone on fourth quarter.
Any any commentary you can I know you used to talk about the annual run rate also and if you are still guiding to that getting to that $2 billion as Marc and I understand that includes contribution from cm put about 1 billion rich.
You seem to be picking up some slack NAV bar serum.
So.
Any color on when you can get to that do go on but over the year run rate.
Packaging and all of that.
And your partners capacity.
Yes, I think we will be there by the end of this year and expect to be there throughout the entire 2022.
Okay.
Fair enough thanks for taking my questions.
The next question comes from Vernon Bernardino with H C. Wainwright. Please go ahead.
Okay.
Hi, everyone and congrats on the tremendous process.
Yes.
Thanks for taking my question.
One question I had is given the U S. Currently appears to be a flush on vaccine doses. Once you have authorization to provide 110 million doses promised to the U S. Government do you anticipate the government.
Just curious those doses in the U S or outside the U S or is there some by agreeing with one that allows you to perhaps change your tier one with potential stockpiling.
Margaret for future COVID-19 vaccine.
Again from emerging variant.
I think all of the above but I don't think we know I don't think anybody is determined.
What the fate of those 110 million doses are.
That's a discussion that we will.
We will have.
Okay, and then given the preliminary results with your RSV vaccine rest backs, although the data from a small sample give them on look quite promising data on women, who got vaccinating pregnant spec conducting on maternal immunization study with two or $3 73.
Right now on our main focus.
On the pregnant population is too really to what some of the other sponsors have done we're planning a registry of the foreign to capture those cases and assure safety, we actually have a relatively sizable population of pregnant women in our studies right now and we're following that very carefully to build on safety database out as well.
Okay, and then last question I'll get back thank you.
As you probably know this vaccine has the same question on vaccine efficacy of 43%.
Moving to conduct the prevent study have you observe subjects not coming back for a second dose of two threads share.
I assume you have Africa data from the phase one showed that while antibody levels favorable maybe nine had fallen below the range as observed in convalescent Sera from recovered COVID-19 patients.
G level from a standard like two or 373 dose of 25, microgram <unk> plus matrix M.
Might have been enough to confer protection. Therefore, you see advanced a combination on the fruit plus tier 373 single shot.
And I saw on the paper that was.
So that's our primary strategy you could have a very differentiated vaccine available when it's ready for commercialization, especially if you met the threshold of 50%.
Vaccine efficacy against severe diseases or the single shot.
Yes, I think those are all.
Good observations on it we will see we're going to do a trial on false combination vaccine.
That's one reason we will learn learn about what I think you summarized.
Some of the findings quite well.
And if I may just I think last.
On.
The number you said that the U K.
So drop of 60%.
That was data from the <unk> phase III study, although there was a similar proportion than in the U K are those.
People are going to drop out of the study would be just saw from Mercedes So theres still being followed.
Okay. Thank you for taking my question and congrats on the progress from here forward to the reveal of the phase III.
Thank you Rob.
This concludes our question and answer session I would like to turn the conference back over to Stanley Eric for any closing remarks.
Okay.
Okay.
Thanks to everybody as we every quarter it gets.
More.
Data pointing to a successful vaccine, we're getting close to the end and which is really the beginning for us and that's what we're all we're all.
<unk> to do I think I think we've eliminated all of the serious hurdles.
Getting <unk>.
Risk.
Hurdles to getting to where we need to be to get a vaccine and so we're excited about that.
Forward to shipping our first product.
<unk>.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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