Q1 2025 Dynavax Technologies Corp Earnings Call
Good day, ladies and gentlemen, and welcome to the Dynavax Technologies First Quarter 2025 Financial Reserve Conference Call.
Speaker Change: As a reminder, this call is being recorded. At the end of the company's repair remarks, we will open the call for questions and provide specific participation instructions at that time. I would now like to hand the call over to Paul Cox, vice president, investor relations, and corporate communications. You may now begin.
Speaker Change: Thank you for participating in today's call. Joining me from Dynavax or Ryan Spencer, Chief Executive Officer, Don Casale, Chief Commercial Officer, Rob Janssen, Chief Medical Officer, and Kelly MacDonald or Chief Financial Officer.
Speaker Change: Before we begin, I advise you that we will be making four looking statements today based on our current expectations and beliefs
Speaker Change: including but not limited to potential market sizes, market segmentation, effective marketing efforts, future expected market share and related growth rates and related ACIP recommendation impact on each. [inaudible]
Speaker Change: Financial guidance and trends, including revenue, profitability, cash flow, and sufficiency of current capitalization, timing and results of FDA submissions, clinical trial starts and data readouts, and potential future uses of or demand for CPG-1018 adjuvant.
Speaker Change: These statements involve risks and uncertainties and our actual results may differ materially. These risks are summarized in today's press release and detailed in the risk factor section of our SEC filings, including today's quarterly report on Form 10Q.
Speaker Change: Our four looking statements speak as of today, and we undertake no obligation to update such statements.
Speaker Change: Our earnings press release and this call will include discussion of certain non-GAAP information. You can find our earnings press release including relevant non-GAAP reconciliations on the investor section of our corporate website at Dynavax.com.
Ryan Spencer: And with that, I will now turn the call over to Ryan
Ryan Spencer: Thanks, Paul. Thank you all for joining us this afternoon. 2025 is off to a strong start, including delivering our highest ever first quarter net revenue for Epless SB of $65 million, which was an increase of 36% compared to last year.
Ryan Spencer: We believe this performance early in the year puts on track to achieve the top half of our 4-year couple of sub-b guidance range of net product sales between $305 to $325 million.
Ryan Spencer: We're also excited to advance our development pipeline which leverages our vaccine at Agenda Technology, CPG-1018.
Ryan Spencer: We have key clinical trial milestones this year for our shingles and play vaccine programs, while further broadening our pipeline with new programs announced today in the pandemic influenza and line the truth.
Ryan Spencer: All of our pipeline programs intentionally follow a similar philosophy of utilizing proven antigens and our CPG taking adjuvant, creating lower risk development pathways to advance products with significant commercial potential.
Ryan Spencer: So let's start with our singles program, which is our most advanced clinical program.
Ryan Spencer: We see significant opportunity for a differentiated single vaccine, which is currently a multi-billion dollar global annual market dominated by a single product.
Ryan Spencer: As a reminder, we've already completed a dose range in phase one study where we saw comparable immunogenicity and meaningfully lower rates of post-injection reactions compared to shingreds.
Ryan Spencer: For our ongoing phase 1-2 study, we expect to report our top line readout for part 1 of the study in the third quarter, which we based on one month data following the last vaccine dose in the study for the 50 to 69 year old patient cohort. [inaudible]
Turned to our new pandemic influenza adjective program.
Ryan Spencer: Pandemic influenza remains one of the most persistent and unpredictable global health threats. Yet, while vaccine adjectives play in a central role in the pandemic response, the global supply of proven adjectives remains limited compared to the global antigen production capacity.
Ryan Spencer: Our goal is to generate clinical proof-and-concept data for pandemic influenza vaccines using CPG-1018. We believe this is an attractive opportunity for us to leverage our expertise and capabilities as a supplier of CPG-1018 and five COVID-19 vaccines used around the world.
Ryan Spencer: We're on track to initiate a Phase 1-2 trial, combining third-party source blue antigen with CPG-1018 in the coming weeks.
Ryan Spencer: This data will allow us to begin business development efforts with global flow manufacturers, governments and non-government organizations focused on supplying our azimuth support, global pandemic preparedness and response.
Ryan Spencer: The second new program in our today is an investigational protein subunit vaccine for the prevention of Lyme disease, which is a bacterial infection that is the most common vector board illness in the northern hemisphere.
Ryan Spencer: We see a unique opportunity for Dynavax to develop a best-in-class Lyme disease vaccine. The mechanism of action for Lyme disease vaccines is well understood in which high levels of antibodies are required for protection.
Ryan Spencer: curve acting candidates in late stage clinical development, requiring challenging three to boarded oath series followed by annual boosters.
Ryan Spencer: A Lyme disease vaccine agitated the CPG-10-18 offers potential for a differentiated product requiring fewer doses for less frequent boosters.
Ryan Spencer: We're excited to progress this program into I&D-enabling studies to generate pre-clinical proof-of-concept data in non-human primates with plans to enter the clinic in 2027.
Ryan Spencer: Rob will speak in more detail about our clinical pipeline in a few minutes
Ryan Spencer: including executing on over 85% of our $200 million share repurchase program as it made fit, while evaluating external opportunities that leverage our unique business platform, including our fully integrated commercial stage infrastructure and capabilities to generate additional long term growth for our shareholders.
Ryan Spencer: We're proud of the company we're building around our core assets, the Peppleston B&CPG-1018, which have together helped protect millions of people around the world. Our performance thus far sets us up for even greater success in 2025.
Ryan Spencer: which we expect to be a banner year for Dynavax. I look forward to providing you with updates on our progress along the way. Next, I'd like to turn the call over to Donk.
Donn Casale: Thanks, Ryan. At Dynavax, we are proud to be the leader in the U.S. Hepatitis Dull-Faxing Market.
Donn Casale: In 2022, the ACIP Universal Recommendation transformed the U.S. adult hepatitis B vaccine market.
Donn Casale: Expanding it into one of the largest addressable patient populations for vaccines in the U.S.
Donn Casale: The market continues to adopt these expanded guidelines with Q1 total market dose volume increasing
Donn Casale: Heppletha B's strong performance in this expanding market has resulted in record first quarter performance, with net revenue of $65 million, a 36% year-over-year increase.
Donn Casale: This strong start to the year positions us well to achieve the top half of our annual revenue guidance range for 2025.
Donn Casale: The retail segment delivered strong year-over-year growth in the first quarter, with market volume increasing approximately 70 percent compared to Q1 2024. This strong momentum has carried into the second quarter, with purchasing and utilization rates surpassing our expectations.
Donn Casale: Our commercial strategies are resonating with customers and adoption is steadily expanding across the market.
Donn Casale: Pepples and bees estimated U.S. market share rose to 43% in Q1, up from 41% in the same period last year.
Donn Casale: This growth was driven by broad-based gains, including consistent annual market share increases across all major retail customers.
Donn Casale: We expect to see similar year-to-year market share gains throughout the remainder of 2025 in line with our long-term expectations.
Donn Casale: Our positive outlook is supported by strong market growth and retail and other key customer segments where Heffler-Savvy holds a leading position.
Donn Casale: We are encouraged by the ongoing adoption of Heppless FB. Our partners continue to track their long-term outlook for Heppless FB, market opportunity in the U.S., which we expect to pay to over $900 million by 2030, with Heppless FB capturing at least 60% market share.
Donn Casale: This long-term guidance reflects our expectation of double-digit annual growth in product net sales through 2030.
Donn Casale: We expect the Hefflis Abbey Market Opportunity to remain durable beyond 2030, driven by ongoing vaccination of the eligible adult population, observed re-vaccination practices by healthcare providers, and continued market share gains.
Speaker Change: We are excited about the future for help with them. The strength we see across our business reinforces our belief in a long term growth opportunity.
Speaker Change: The execution bar and commercial team has been outstanding and the moment we have built in the first quarter set a strong foundation for continued success this year and beyond.
Speaker Change: I will now turn the call over to Rob to take you through our clinical pipeline of our clinical pipeline.
Speaker Change: Thank you, Donn. As Ryan mentioned earlier, we're very pleased with how our clinical development pipeline continues to advance and expand as we focus on leveraging our core adjuvant technology to develop differentiated vaccines.
Speaker Change: Our internal R&D programs focus on well-established antigens in biology with clear regulatory pathways, where CPG-1018 ashrin can provide a meaningful improvement.
Speaker Change: Additionally, we provide CPG-1018 to support external collaborations in a variety of programs. We believe this maximizes the opportunity for CPG-1018 to be utilized in novel vaccine development initiatives.
Speaker Change: For a Schengel-Saxi program, we previously reported results from our phase one clinical trial, evaluating our investigational Schengel-Saxi ZK-18 compared to Schengel-Saxi in 150 participants.
Speaker Change: Importantly, this was an adjuvant dose-ranging study that allowed us to select the dose of CPG M&T to advance in the Phase 1-2. Now, we're currently conducting Part 1 of that Phase 1-2 study in adults aged 50 to 69 years.
Speaker Change: We completed enrollment of 441 subjects in the trial at the end of last year and we expect to report our top line readout in the third quarter. It will be based on one month data following the last vaccine dose in the study.
Speaker Change: Now this is an antigen dose-ranging study to select the dose level to further optimize the formulation and schedule for our vaccine.
Speaker Change: Our goals for part one are first, select the Anagendosan Schedule to advance into part two of the phase one to study by demonstrating similar immunogenicity in the shingras based primarily on vaccine response rate measured by both antibody and CD4 positive P cells.
Speaker Change: 2. Demonstrate improved tolerability with lower rates of moderate and severe post-injection reactions compared to shingwits and 3. Demonstrate the durability of CD4 positive T-cells at 6 and 12 months, follow-up with data readouts expected next year in 2026
Speaker Change: In the Schinger's pivotal study, participants over seven years of age had a lower vaccine efficacy than in a study in a younger age.
Speaker Change: Thus, our study in adults over age 70 will provide a more stringent assessment of C-1018 immunogenicity than in the younger age group.
Speaker Change: We believe the Part 2 data, along with the longer-term follow-up from Part 1 and the younger age group, that both of which are expected next year, will provide a comprehensive data package to provide confidence in advancing into a pivotal efficacy trial.
Speaker Change: Now regarding our plague vaccine program, it's in collaboration with and fully funded by the U.S. Department of Defense. We continue to plan to initiate a phase two clinical trial in the third quarter of this year.
Ryan Spencer: Now, for the pandemic influenza management program, as Ryan mentioned, we expect to initiate the first and human clinical trial in the second quarter of this year.
Ryan Spencer: This will be a randomized active control phase one, two study to evaluate the safety and immunogenicity of an investigational H5N1 avian endemic influenza vaccine, adjuvanted with CPG-1018 and L.
Ryan Spencer: We believe this could enable us to generate clinical proof of concept in an efficient and low cost manner.
Ryan Spencer: Part of one of the phase, one through trial, will involve approximately 90 participants aged 18 to 49 years.
Ryan Spencer: to receive either a single dose or two doses of the investigational vaccine with the intent to select the optimal formulations of CPT-18 for part two of the Phase-1-2 trial.
Kelly Macdonald: I'll now turn the call over to Kelly to review our financial results
Kelly Macdonald: Thank you, Rob. Before I get started, a reminder to please refer to our press release and form 10 to use while earlier today for more detailed financial information.
Kelly Macdonald: Financial highlights for the first quarter include helpless heavy net sales of $65 million for the first quarter, up 36% Eurorear, and $68 million in total revenues, up 34% Eurorear.
Kelly Macdonald: Additionally, HealthlessFB gross margin was 79% for the first quarter of 2025, an increase compared to 77% in the first quarter of 2024. We continue to expect HealthlessFB gross margin of approximately 80% per full year 2025.
Turning to expenses.
R&D Expresses for $19 million for the first quarter .
Kelly Macdonald: Up, compared to $14 million in the first quarter last year.
Kelly Macdonald: Notably our single data readout in Q3. Our pandemic influenza clinical initiation in Q2 and our plague program, Phase 2 initiation in Q3. We expect R&D expenses to increase by at least high teens per as a percentage compared to 2024.
Kelly Macdonald: If our singles program read out supports moving into part two of the phase one through trial, we would expect a further step up in R&D expenses in the second half of the year to reflect investments in launching that study.
Kelly Macdonald: SG&A expenses were $48 million in the first quarter, up from $44 million in the first quarter of last year, with the increase primarily due to incremental proxy related expenses.
Kelly Macdonald: Excluding any potential further proxy contests related costs, we expect FG&A expenses to be roughly flat in 2025, reflecting our ongoing commitment to discipline excess management.
Kelly Macdonald: Starting the first quarter, we also recorded an allowance for doubtful accounts of $11 million relating to our legacy COVID-19 adjuvant commercial supply agreement with Clover Biopharmaceuticals.
Kelly Macdonald: This bad debt expense reflects our assessment of heightened credit risk from flover due to their recently reported liquidity decision as of December 31, 2024.
Kelly Macdonald: Moving to the bottom line, we had gaps in net loss of $96 million for the first quarter of 2025 compared to gap net loss of $9 million for the first quarter of 2024 2004
Kelly Macdonald: and that loss in the first quarter of 2025 was primarily due to the gap accounting treatment of our debt-resonancing, which required us to recognize the one-time adjustment reflecting the difference between fair value and far value and connection with the extinguishment of our 2026 convertible notes.
Kelly Macdonald: Lastly, on the P&L, non-GAAP adjusted EBITDA, improved to negative $4 million for the first quarter compared to negative $7 million in the first quarter of last year. Please see our press release issued earlier today for a reconciliation of non-GAAP results and accompanying disclosure. Thank you for your time.
Transitioning to the Bell of Sheep [inaudible]
Kelly Macdonald: We ended the first quarter with cash equivalents and marketable securities with $661 million, compared to $714 million at the end of 2024.
Kelly Macdonald: The decrease in our cash position reflects the continued execution of our stock repurchase program which included aggressive execution in the open market during periods of significant market volatility during the quarter
Kelly Macdonald: Today, the company has repurchased over $172 million worth of common stuff under the authorized $200 million share repurchased program, or over 85% of the program executed.
Kelly Macdonald: and we anticipate completing the remaining purchases by the end of the year.
Kelly Macdonald: Also lowered our overall cost of capital with meaning fully improved terms, reduced basic and eluded shares outstanding and accelerated the execution of our share buy back program.
Kelly Macdonald: Following this successful debt-rich financing, we believe we have the right size capital structure to support our strategy to protect and deliver long-term value for shareholders.
Kelly Macdonald: We now expect to achieve the top half of that range due to our strong start to the year.
Kelly Macdonald: We also reiterate our expectation for adjusted EBITDA to be at least $75 million demonstrating our ability to grow adjusted EBITDA at more than two times the rate of product revenue and further strengthening our ability to deliver on our strategic priorities in 2025.
Kelly Macdonald: In closing we are very excited about our strong start to the year consisting of a record first quarter for <unk> that would be our advancing pipeline with key milestone and new programs. This year and our strong financial profile with a balanced capital allocation strategy.
Kelly Macdonald: Very proud of this progress. We're also excited about our growth prospects as outlined on the call today.
Kelly Macdonald: Thank you everyone for your time.
Kelly Macdonald: Operator, we would now like to open the Q&A portion of today's call.
Kelly Macdonald: Okay.
Speaker Change: Thank you at this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from Matthew Phipps from William Blair. Your line is open.
Matthew Phipps: Hi, good afternoon, Thanks for taking my questions and Im starting to see the new programs announced I.
Matthew Phipps: I guess first just a quick question talking about hitting the upper half of guidance why not officially raised the lower end of guidance, then if confidence in hitting that upper half.
Matt: Hey, Matt Thanks for the question.
Matthew Phipps: At this point, we're only one quarter through the year. So we think it's a <unk>.
Matthew Phipps: Prudent to maintain our overall guidance range as artificial official guidance I'm just trying to cover that we have seen good progress to start with Europe.
Matthew Phipps: Is the intention with the commentary around the upper half of the range.
Speaker Change: Got it Okay, and then maybe a higher bigger picture question, Ryan, There's obviously been some investor debates on the best path to long term value creation for <unk> and I'm wondering just particularly if you could share your view around kind of capital allocation and business development now that you're almost through the first singles.
Matthew Phipps: Read out you.
Matthew Phipps: You, obviously had previously discontinued the T that program, but now announcing two new preclinical programs.
Matthew Phipps: How do these all fit into the longer term play of and particularly around does this signal maybe less appetite for less interest in a near term external business development, bringing forward kind of two new preclinical programs.
Matthew Phipps: Yes, I mean look I mean, starting with the capital allocation philosophy, we've been pretty clear about our view that we have a balanced strategy and what underpins that is our desire to create value by leveraging our core assets as you've kind of high.
Matthew Phipps: Up on here, Matt with the preclinical programs focused on <unk> and also fully leveraging our infrastructure and capabilities, which plays into our commentary around value creation through corporate development focus on late stage commercial asset so.
Matthew Phipps: And then sort of the <unk>.
Matthew Phipps: Third leg of that.
Picture around our capital allocation strategy is to.
Matthew Phipps: I'll focus on our existing asset levels upbeat. In addition, we also do look for opportunities as you noted as we noted with our share buyback program to return capital to shareholders. So when we balance all of these things out. We believe there is room in the book actually quite proud of this fact that we've been able to return capital to shareholders. While also creating enough room for us to <unk>.
Matthew Phipps: Yes.
Matthew Phipps: Our internal development programs and we still believe there's an opportunity for us to identify high value assets to leverage our full commercial capability.
Matthew Phipps: So we're going to continue to run that strategy.
Matthew Phipps: And as we advance forward.
Matthew Phipps: Okay.
Matthew Phipps: Thanks, Rocco I'll hop back in queue.
Matthew Phipps: Thank you.
Matthew Phipps: Thank you for your question.
Matthew Phipps: One moment please.
Speaker Change: Our next question comes from Philip <unk> from TD Cowen the floor is yours.
Speaker Change: Good afternoon, Thanks for taking our questions a couple from us to first on the quarterly performance.
Speaker Change: Definitely seem to be less seasonality.
Speaker Change: In the winter of 'twenty, four 'twenty five and in the past.
Speaker Change: What are you seeing along those lines do you expect what we saw this year to be the new normal or was there anything special about.
Speaker Change: This past winter.
Speaker Change: Hey, Phil it's Don Thanks for the question.
Speaker Change: So what we saw particularly in retail.
Speaker Change: Fast start with focus on non flu vaccines, including hepatitis B vaccine this year versus in years past.
Speaker Change: So it was very purposeful by our leading retailers to really prioritize kind of expanded vaccine.
Speaker Change: For the first quarter, so that really contributed to the growth. We saw in Q1 as I mentioned, we saw 17% growth year over year.
Speaker Change: In the retail segment alone so that helped kind of flattened out that seasonality that we typically saw in years past.
Speaker Change: Perfect.
Speaker Change: So the pipeline first on the.
Speaker Change: Coming shingles data released it sounds like if I.
Speaker Change: Interpreted your prepared remarks correctly.
Speaker Change: That.
Speaker Change: The data we get in Q3 will be informative, but not necessarily sufficient to make a go no go decision.
Speaker Change: Youre looking more for the more fulsome data releases go longer term data releases in 2026.
Speaker Change: To fully inform that decision.
Speaker Change: Is that correct. That's the first question and then second question just more broadly.
Speaker Change: A lot of debate on what's happening in Washington, with vaccines and the regulatory environment for those given that you're starting or talking about starting the development of two new programs.
Speaker Change: Where youre, having interactions with the FDA can you characterize those meetings and whether theres been any.
Speaker Change: Any issues due to the changes at the FDA and HHS.
Phil: Alright, why don't I take the first one first Phil so no.
Phil: This readout is important but I think youre highlighting the difference between sort of a stage development decision, making and then the ultimate decision, making to move into a pivotal program and so what what you you can pick up on our remarks today I was trying to price right clarity for what this initial readout.
Phil: And then what are the longer term projection is to have a fulsome package to make a decision to go into pivotal program. So the first readout. This year is important we need to remember we are using our developed antigen here and we're using it to determine the optimized schedule and formulation, we still are going to be looking at that.
Phil: Data to ensure that we're delivering a comparable vaccine response rate and with that positive data that would unlock additional investment to advance CMC activities and clinical development into the next part of that step. So so I want to be very carefully. If there is a decision to be made here based on the information likely like we said in the past.
Phil: What we've added to the discussion today is.
Phil: To help and help you understand the bigger picture and longer term decision that in the data required to support what I think is the ultimate decision around moving forward into a pivotal study and that information, we're going to require more information, including long term durability of the T cell response, which we've consistently highlighted the <unk>.
Phil: <unk> as well as <unk>.
Phil: Comparable vaccine response rate in the hardest to vaccinate population within some silver 70 years old. We think this provides the most stringent analysis to provide the confidence in getting to the pivotal trial. So theres multiple stage gate and the program ahead of us.
Speaker Change: Got it that is very helpful.
Speaker Change: And then any issues with your discussions.
Speaker Change: With the FDA.
Speaker Change: Yes, so I'll comment generally and then Rob if you have any specifics to add but but we actually find ourselves somewhat insulated for some of the immediate changes right. Now if you think about the order of magnitude of our engagement.
Speaker Change: Net.
Speaker Change: Big engagement with the FDA will be end of phase two on the shingles programs and that'll be in the back half of 2006.
Speaker Change: Do you think kind of access for whatever we have falling into a good spot there in that the.
The near term immediate kind of activities, we'll have time to settle out by the time, we're engaging with the agency and we're going to have the benefit of engaging in this agency before we embark on critical pivotal programs.
Speaker Change: As it relates to other I'll call more operational activities, Rob do you have any comments, yes, just we haven't had a lot of interactions.
Speaker Change: Recently, but those interactions we've had with the review team really havent been affected at this point.
Speaker Change: That's helpful. Thanks for taking my questions.
Bill: Thanks Bill.
Speaker Change: Thank you for your question one moment please.
Operator: Our next question comes from Jon Miller from Evercore. Your line is open.
Jon Miller: Hi, guys. Congrats on the progress thanks for taking my question.
Jon Miller: I'd like to follow up first on that FDA question.
Jon Miller: Recently heard that the agency is considering requiring placebo controlled trials for all new vaccines.
Jon Miller: Do you think thats going to be relevant to your programs, which obviously are.
Jon Miller: Mostly designed head to head versus existing vaccines and what do you think those comments are specifically referring to.
Jon Miller: And then secondly.
Jon Miller: On the Lyme vaccine, which I am.
Jon Miller: Personally very interested in.
Jon Miller: How do you.
Jon Miller: How do you conceive of.
Jon Miller: Relevance of the commercial benefits youre going to provide relative to the competitive vaccines given pivotal trials from the competitors are coming end of this year and obviously, they're well ahead, what do you think that market looks like by the time you are approaching commercialization.
John: Great. Thanks, John.
Speaker Change: Ill, let me present for any comments on the FCA in placebo controlled trials and Robin Please feel free to jump in if there is more to add but.
Speaker Change: I think you have to go back to again, our latest stage program is shingles, and if you recall some of our prior dialogue on shingles was the fact that we are proposing a placebo controlled study which was viewed to be.
Speaker Change: A question Mark with agency accepted which we did get positive feedback prior to the change in administration around the opportunity to have a placebo controlled efficacy study for <unk> for singles.
Speaker Change: So I think ultimately.
Speaker Change: For that program, there's really no change it's supportive.
Speaker Change: We will also conduct a head to head study, but thats focus on Tolerability and Thats a.
Speaker Change: And then point that we're interested from a commercial labeling perspective, and we expect that would be supported as well as it relates to additional programs in the future. It's too soon to tell I think while while there was remarks shared on the intention of placebo controlled trials I do think there is there is other elements of.
Speaker Change: Development that we have to consider.
Speaker Change: Especially ethical concerns.
Speaker Change: And so.
Speaker Change: At this point, we don't see it being a major challenge any of our ongoing programs our future development, we might find ourselves in a situation, where we're doing placebo controlled arm as well as head to head arms to support labeling and competition.
Speaker Change: Just picking up the right balancing act between us.
Speaker Change: Anything to add to that.
Speaker Change: Okay and then the.
The lines of these products I'm glad you mentioned this honestly because.
Speaker Change: While this is a very interesting evolution, where the programs in late stage development are going to be demonstrating the ability for circulating antibodies have provided protective response.
Speaker Change: You have to go through quite a challenging dosing regimen, which can significantly limit uptake in the marketplace.
Speaker Change: So we believe there is a couple of elements of our program.
It's why we're so interested in advancing it not only do we believe we can establish the profile very early on in nonhuman primates to again provide a very valuable very early stage step to demonstrate some level of proof of concept.
Speaker Change: But additionally, we believe the product profile of support taking our leading market share position, but also actually grow the market because it creates an opportunity for a regimen that is much more approachable for the population.
Speaker Change: So I think ultimately this is a perfect example of where having an adjuvant.
Speaker Change: That is safe and well tolerated can be incredibly beneficial to augment a proven mechanism of action.
Speaker Change: Do you guys expect there to be the current phase III to establish reliable correlate of protection and would you expect then to be able to move forward with that sort of an endpoint and your own program.
Speaker Change: No.
Speaker Change: I would not expect.
Acting that we'll have to see how data plays out over time, but I do think.
Speaker Change: Even without correlated protection I do think it will.
Speaker Change: Ongoing data as well as our challenge work will provide an awareness of the level of antibodies needed to be effective or at least at a threshold at which you would measure your early stage studies with even though might fall short of our regulatory approval correlate I do think it will quite incredible information on.
Speaker Change: Well that being able to measure whether or not we're having a meaningful impact with fewer doses.
Speaker Change: Yeah.
Speaker Change: Makes sense.
Speaker Change: Thank you for your question.
Speaker Change: One moment please.
Speaker Change: Our last question comes from Roy Buchanan from citizens.
Speaker Change: Floor is yours.
Speaker Change: Hey, thanks for taking the questions.
Speaker Change: Just to make sure I'm clear on the shingles readout next quarter you guys had previously said.
Speaker Change: 75% threshold median CD four T cell level versus <unk>, if you do not see that in the one month data next quarter, you're going to stop the program or what's the.
Matt: Hey, Matt.
Speaker Change: Thanks for the question and Rob again, please comment, but ROI as we've continued to evaluate the right way to think about the immunogenicity data to support.
The goal really here, which is identifying.
Speaker Change: How we compare to shingles from an efficacy perspective, we've continued to work with leaders in the space and review the scientific.
Speaker Change: Information available and now you've heard Biopharma stake T cell frequency it is very important.
Speaker Change: However, we believe the best measure of that is not at one month, but at six and 12 months, whereas you have the opportunity to see the contraction of T cells back to a baseline level thats going to be maintained over time as opposed to the level of rapid expansion.
Speaker Change: And so our current plan.
Speaker Change: For this study is to focus on the vaccine response rate, including the CD four vaccine response rate and frankly importantly, the CD four vaccine response rate with ultimate T cell frequencies at one month fee.
Speaker Change: Informative, but not as critical as six months or 12 months.
Speaker Change: If you have any other comments around that because of the expansion and contraction of why this is a.
Speaker Change: So Roy <unk> force expand very quickly after vaccination, but they also dropped very quickly.
Speaker Change: Especially over the first 12 months and then and then the curve begins to flatten out over that period of time and an example is the <unk> studies, where CD four accounts dropped more than 50% over the first year and at that time that the efficacy was 97% over a three year period. They dropped two thirds efficacy only dropped five.
Speaker Change: <unk>.
Speaker Change: So yes, we are using CD four frequency, but it's not a clear direct measure of what's happening with incentives and it does drop fast, but as I said at 12 months. It begins to stabilize and doesn't drop as fast. So we think 12 month measurement of seats for frequency is probably more informative than the <unk>.
Speaker Change: One month.
Speaker Change: Okay, Great. That's very helpful. Thanks, and then a couple on Hecla SaaS.
Speaker Change: Okay.
Speaker Change: Investors have said that the total market shares.
Speaker Change: Maybe it's maybe it's growing less quickly.
Speaker Change: Either way is there any explanation for that potentially slower growth, it's definitely slower than the growth <unk> seen in previous quarters.
Speaker Change: Keep pushing back anything there and then how much of <unk> revenue is due to Medicare. Thanks.
Donn Casale: Hey, Brian this is Don regarding market share.
Donn Casale: When we think about market share year over year comparisons are most appropriate given the seasonality of Hep b market versus say a quarter over quarter assessment of market share.
Donn Casale: We continue to expect year over year growth every quarter in 2025, we are on track exactly how we had planned for market share growth that supports not only 2025. There are long term view of achieving at least 60% market share and part of that is due on the back of retail pharmacy that could be the fastest growing segment, where we have very high mark.
Donn Casale: Sure. It continue to increase that market share. So we feel very comfortable and very proud we're at market share and continue to expect that market share gain year over year.
Donn Casale: Okay.
Donn Casale: Added to this.
Donn Casale: Thats exactly right answer the year over year comparison, but really just to give you. Some context why the quarterly we don't do the quarterly comparison.
Donn Casale: When we have different channels and different customers, where we have different levels of share and when we see the channel mix change quarter over quarter for.
Donn Casale: For example, retail drop in Q1 compared to Q4, where we have very high share it impacts the overall share for that quarter when lower share parts of the market are more static and so.
Donn Casale: We've said this for the last I don't know how many years the quarterly fluctuation due to channel mix changes or.
Donn Casale: One off procurement dynamics in the beginning or end of a quarter are not appropriate comparisons and we're going to continue to stand by that but we are excited when we look at the annual growth each quarter. So happy to continue to show those kinds of details as we progress further.
Donn Casale: Are these things that arent necessarily intuitive, but we do want to continue to draw the comparison to the prior quarter for the same period in the prior year.
Donn Casale: And then regarding Medicare It is an important part of the market retailers are very excited about having access now to help us tab as well as all hepatitis B vaccine.
Donn Casale: It will take some time as it relates to Medicare access through Medicare advantage plans, we anticipate probably a second half of the year there'll.
Donn Casale: There'll be open access for all Hep, B vaccines, including capital savvy and they will continue to work with our retailers are on prioritizing patients appropriate patients within the Medicare segment, but it will be an important part of our growth strategy and the good news is obviously retail is a big part of that where we have a very strong footprint.
Donn Casale: And engagement strategy.
Got it thank you.
Donn Casale: Thank you for your question.
Donn Casale: We have no further questions at this time I would now like to turn the call over to Ryan Spencer CEO for closing remarks, you may begin.
Donn Casale: Thank you operator, and thank you all for joining US today. We appreciate your interest in <unk>. We are excited about our recent accomplishments and the strength of our position. We look forward to updating you on the progress and focused on protecting the world against infectious diseases. Operator, you may end the call.
Donn Casale: Ladies and gentlemen, thank you for joining US today. This does conclude today's conference you may now disconnect.
Donn Casale: Goodbye.
Okay.
Donn Casale: [music].
Donn Casale: Okay.
Donn Casale: Okay.
Donn Casale: [music].