Novavax, Inc. (NASDAQ:NVAX) H.C. Wainwright 24th Annual Global Investment Conference September 12, 2022 4:00 PM ET
Company Participants
Gregory Glenn – Chief Scientific Officer
John Trizzino – Chief Business Officer and Chief Commercial Officer
Conference Call Participants
Vernon Bernardino – H.C. Wainwright
Vernon Bernardino
Hi, everyone. Thanks for coming to the H.C. Wainwright Global Healthcare Conference. My name is Vernon Bernardino. I’m a senior analyst at H.C. Wainwright., covering Novavax. From Novavax today, we have the privilege of having a discussion with Chief Scientific Officer, Gregory Glenn; and Chief Business Officer and Chief Commercial Officer, John Trizzino. I think with them today, you’ll get a flavor for why this is a company that’s on the cusp of emerging as a true vaccine business and one that’s perhaps going to be an important player that’s going to grow very quickly, very soon.
So before we get — gets into an overview of the company. Just wondering if you could go over what makes your technology — your vaccine technology, unique and how it’s different from the others out there.
Gregory Glenn
Good. Well, thanks for having us. It’s great to be here. So as you know, we have a recombinant full-length protein nanoparticle technology, and we — the importance that looks to the immune system, it looks like a virus. It looks like exactly the same configuration, you’d say, for example, find a spike protein in and that creates an immune response is very effective. We add to that Matrix-M, which is an adjuvant that enhances the immune response, both in terms of its quality and quantity. And that together is, I think, explains some very, very good data we’ve got, for example, now with COVID-19.
Question-and-Answer Session
Q – Vernon Bernardino
And 1 thing I’d like to get into later, but I’ll throw it out there now. is some of you have probably heard that Moderna is talking about $100 for its booster shot, right? $100 for something that perhaps was free before is a good business model for them. But in your case, I don’t think that even a bivalent vaccine is going to necessarily cost that much. In fact, in our modeling, it’s not for our financial modeling.
Just wondering if you could talk a little bit — maybe this is your area, John, as far as the commercial aspects and how perhaps not cheap, but the margins are not necessarily specific, but how it is a viable business because this is something that you can be competitive on a price point?
John Trizzino
Yes, I think that’s a great question. I think everyone has been speculating as to when does it go commercial, right? When do we get out of the government purchasing COVID vaccines? And I think what we know in the U.S. is that they may have taken a position that this fall campaign is probably going to be the last of government procurement. We’re going to move into novel kind of commercial operations, probably starting in ’23. There’s also been a pronouncement made recently about going through an annual seasonal vaccination 1 time per year for 12 and above, that’s in the U.S. We’re beginning to hear that in Europe and in UK as well. So I think we’ll begin to see the globe start shifting in that direction from an annual vaccination, which is really why I think we’re anxious and where I think the biggest value creation is for us.
From a pricing perspective, right, we all know that pricing in this industry is not a cost-plus proposition, right? It’s market-driven. And the market drivers here are what’s the cost benefit? Well, there’s a significant fear factor that remains relative to, we don’t want to go back into the pandemic. This virus is global. It’s not going away anytime soon. As often as said, and Greg can talk more about this from an epidemiological standpoint, it’s so pervasive around the globe right now and continues to circulate, continues to be mutations and new strains emerging. And so I think we got to be careful about not allowing us to be rolled back to sleep and not get vaccinated, right? But the vaccine has been significant economic cost. So I don’t see, frankly, $100 a dose in the U.S. being that much of an issue.
And we’ve already done kind of some public and private payer testing. It seems like that’s a tolerable number from a cost benefit standpoint I’ve been saying this for a year now, Medicare already posted a reimbursement prices early on at $60 a dose. I don’t see them being too concerned about something that’s a little bit higher than that.
I think the root of your question is, so what does that mean relative to — is that economically viable for us? And the answer is absolutely. It gives us a lot of room from a gross margin standpoint but it also gives us a little bit of room to manage whatever other pricing or discounting strategies might be applicable for us as we head into this market.
Vernon Bernardino
Now it’d be great to get into a little bit more of the commercial prospects and how things are emerging and/or evolving in the coming year, let’s say, 2023 and — versus perhaps with your view of what the virus is going to do in the coming years because it is perhaps — and I don’t know who is going to conclude that this is going to be endemic at the time that it’s going to be endemic, right? And we have heard immunity. But one thing that’s also unique about your vaccine is Matrix-M. So wondering if you could talk a little bit about that and how it translates as a truly unique part of your vaccine technology across the vaccine pipeline portfolio?
Gregory Glenn
Yes. So just Matrix-M is an adjuvant and it’s actually a little particle about the size of a virus. It’s got a content called saponin and this activates the immune cell when they take it in. And the downstream effect is to increase the level of immune response and the quality of the immune response. So really older — many years ago, decades ago, vaccines were actually didn’t have a lot of impurities in it, and that actually helped immune response, but it caused a lot of reactions.
So now we have these highly purified proteins, they need a little help to show that its dangerous immune system. So that’s what Matrix does. And the great thing where we stand today as far as the technology platform, is the formula is an insect cell-derived full-length glycoprotein made in the nanoparticle and Matrix-M. And those are applicable to many disease states. Influenza, as you know, we’re working on that clinically. RSV, we have a number of areas where we think that this success with COVID can be replicated based on the platform technology.
And we scale it up. And I think we’ve done something rather remarkable that we have scaled it up in multiple places in the world, including India, which is inspected and licensed in the U.S. now. So it’s really an incredible accomplishment to have gotten to that point. We have a huge capacity, both for making Matrix-M and for making these nanoparticles.
Vernon Bernardino
And if we could drill down a little bit as far as the importance of — or the contribution that Matrix-M has? When you’ve done your studies and you have a Phase 3 study complete of your flu vaccine as well as RSV, and here you are with SARS-CoV-2 vaccine, what kind of increases, let’s say, in results, whatever parameter you think is most important for investors to really focus on, that comes with Matrix-M that also results in what I’ve seen perhaps a durable response and not only an increase in full response?
Gregory Glenn
So at the beginning of the program, when we started with COVID-19 vaccine, we had to prove the value of the adjuvants using FDA requirements. So we immunized the nanoparticle by itself and nanoparticle plus Matrix-M. And you could see a massive difference in the immune response and also a plateauing such that we were dose sparing, which means we use — we use 5 micrograms of antigen. And so that’s out of our normal pail of understanding, but it’s very small amounts. It actually is that we’re limited by the amount we can actually reliably detect. So it’s a very powerful adjuvant making the vaccine very immunogenic.
So as I said, in place of role, also it’s improving the quality. In the case of COVID, what it’s done is help us show that our vaccine, which is a spike protein, and the spike protein of the prototype Wuhan and today’s BA.5, they’re very similar actually. They’re 98% the same. We call homology. So Matrix-M allows the immune system to see that the parts that are unchanging. So when we make an immune response against our Wuhan vaccine, we get very good responses against BA.5. And that’s important as we look forward to the virus continuing to evolve.
Vernon Bernardino
And I think that would be a good segue actually into how with influenza, especially seasonal influenza, you see that year-over-year, you have now a quadrivalent, meaning four different strains are put into the composition of the vaccine. A lot of that is driven by, let’s say, antigenic drift, not only just mutation. How does that translate to perhaps the future prospects and composition of what you think as far as a COVID vaccine would be, and therefore, let’s say, yearly vaccination? And John, from your perspective, how that translates into the global market opportunity?
Gregory Glenn
Yes. Just briefly, the vaccine we have, we see it as applicable to the coming viruses. So we tested, we did our clinical trials. We did two Phase 3 trials. We’ve got extremely good evidence of the vaccine works in the gold standard of 90% plus efficacy. And in the context of doing those trials, the virus is already evolving. So Moderna and Pfizer when they did their trials, it was pretty stably very close to the prototype. But starting December and thereafter, it was wildly changing and yet our vaccine performed very consistently across populations, the UK, U.S., Mexico. So that is a feature of the vaccine is we do get immune responses to the protein.
So why does that happen? So these proteins that have a function in nature. They’re like a syringe. So — and it’s common to flu and RSV and COVID. The surface protein acts like a syringe and when virus lands on the cell and injects the genetic material of the virus into the cell. And so that structure function has to be preserved. And so you find that even though there’s some variation that create these variants, that structure that is concerned, our vaccine makes immune responses to it. So it’s very — it has very much implications for flu, where flu is really a similar problem. You’re chasing the changes.
We have data from our earlier program, Matrix-M nanoparticle vaccine, showing that really you could take last year’s strain change, immunize and then a whole set of — a whole new set of viruses evolved and the immune response that we got from the kind of prototype, we’re still really undiminished in its ability to immunize. So that makes for a better flu vaccine, which is obviously a very important goal.
Vernon Bernardino
And John, how do you think it translates as far as the — perhaps a global opportunity when we may or may not conclude that we need a yearly COVID vaccine shot, I’m not going to call it a booster?
Gregory Glenn
Let me just say one last thing on the durability. I think that there’s a couple of things at play here. So the human immune response hits a peak and over some time, it decays. And so that’s pretty normal. And so I’m a pediatrician. If you have a child, you go take a child and you get a shot at two months, four months and six months and come back in 18 months and come back in six years of age. So I think that we’re going to want to be manually boosted against COVID. Our vaccine does give very durable protection. It looks like very durable protection over 12 months and really good immune responses. But it’s likely that the crossing of some dementia immunity and change a virus, I think it’s going to be advisable to expect an annual immunization.
And the virus is showing no kind of signs of lightening up. It continues to burn through. I’ve just read today in the Journal this really nice article showing that there’s about 15,000 deaths every month and — on a monthly basis. With flu, is in an annual basis, it’s something like 15,000 to 75,000. So it’s way worse than the worst flu vaccine year. And so I think that we’re going to want to continue to come to this situation with a strong vaccine is broadly protective.
John Trizzino
Yes. I don’t see any point in which we’re not going to be vaccinating for COVID. That’s not our opinion. I think that’s pretty much a consensus amongst public health experts at this point. As Greg said, the virus is going to continue to circulate just like flu. There are strain changes that might be required. I think there’s older adults or immunosuppressed, people that will absolutely need to be vaccinated but then you got kids or adolescents, spreading virus being shedding virus that is going to create some issues. So I think I don’t envision a point in time in which COVID vaccination is not happening on an annual basis.
With that in mind, right off the same technology platform, that’s where flu comes into play, right? So also a recombinant protein nanoparticle, also Matrix adjuvanted, also vaccinated in the fall of every respiratory season, it makes perfect sense to bring those two together. Now that we’re in the process of in making sure that they work well together, right? Because what you don’t want to do is the weak link being one or the other, right? They both have to be an effective vaccine. We’re going through those clinical trials now to confirm all that.
But what we know from the Phase 3 flu trial is that we know we’ve got a really good flu vaccine. We know from our very large COVID trials that we’ve got a very safe, very effective COVID vaccine, so it makes perfect sense to put those together. If we can’t, we still know that we’re going to have a vaccine for COVID.
I won’t go into all of the other pipeline activities. But just to say that Matrix applies to a number of other things that we’re doing, too, which is malaria. I think there’s some news that came out recently about an improved malaria vaccine from Oxford University, partnering with Serum Institute. Most people don’t know that that’s our Matrix in adjuvant that’s in that technology. And then the same with RSV, respiratory syncytial virus, we’re going to be going back to that with Matrix as well.
Vernon Bernardino
Now we’re getting close to a warning time. But I wanted to ask, one of the things that perhaps is the future is the bivalent vaccine and not just a bivalent two strains of SARS-CoV2, but that is also one in combination with flu. That’s an opportunity that perhaps even more experimental with the mRNA technologies. I was wondering if you could talk about how that looks to you, Greg, and then John, on the market opportunity there?
Gregory Glenn
Well, we’re not absolutely convinced that we need to go to the bivalent. We are doing that. We think some customers may want that. But we’re — again, the data we’re seeing, we’re boosting, we get these very broad responses. So that being said, the prototype vaccine mix for flu is a very important part of our portfolio. And you may have seen we did a trial — a formulation trial, we showed the results where we combined the SARS-CoV-2 vaccine with the flu vaccine. We have very nice results.
John Trizzino
I think what we’ve seen in the last couple of months is mostly the U.S. government appropriately show reacting to what mRNA can and can’t do. And I think the decision to go to a bivalent and Omicron-containing bivalent was mostly an mRNA decision. Now we don’t have the booster label yet. We’re probably within weeks away from getting that booster label. And so I think there’s a different view in the world toward a recombinant protein nanoparticle adjuvanted than there might be for what’s going to work or not work for mRNA. And I think we got — the policymakers and the regulators have to wrap their heads around the difference between a protein-based vaccine and mRNA-based vaccine.
The other thing I’ll point out from a commercial and customer standpoint is that the U.S. has been very definitive, although, right now, we have our prototype monovalent vaccine being reviewed by FDA right now. So — and there’s very substantive data to say that, that works in preventing serious disease. But the rest of the world is in a different place, right? We’re a global company. We are approved for use — authorized for use in 43 countries around the globe.
I’ve been in Europe. Two weeks ago, I was in London last week talking to folks at the vaccine test force there and getting ready for a JCVI recommendation coming up. There has not been a specific ask made of us to change the product that we’re supplying to them right now. So there’s an inconsistency right now between countries on exactly what the vaccine profile is. I think that’s going to settle out over the next several months. And as Greg said, ultimately, we’ll give the customer what they want because we can produce a bivalent. But right now, we think Wuhan prototype vaccine is the way to go.
Vernon Bernardino
Now we won’t have time to talk enough about the strength of your partners and just call on partners globally, but it is something that’s very underappreciated, something you established, I think, a lot earlier in a high degree before even Pfizer, for example, which has a lot of reach. But as far as the approvals are concerned, just wondering if you could go over the time we have left, what to expect, so you said though perhaps a booster recommendation if not, let’s say, authorization before year-end. What other milestones should we look for that are very specific and if not specific to Novavax but something that is the industry is driving.
John Trizzino
Yes. I’ll try to keep it real brief since we’re running out of time. But I’ll go at it strategically instead of tactically because there’s a lot of tactical things we’re doing from a regulatory standpoint, from a policy perspective, from a government affairs perspective that are important to the work we’re doing. Strategically, the value creation for this company is going to be made over the next five to 10 years, not over the next three to four months.
I think we are strategically positioned extraordinarily well, right, with the 43 countries with our large Phase 3 trials, over 50,000 subjects in clinical trials around the globe over the last two years, demonstrating safety and efficacy. How we have our regulatory approvals in place, our policy bodies are in place. The work that we’re doing with a variety of these made tags around the globe, I think we are — while we are late in some instances, I think there’s no arguing the fact that we are later than the mRNA manufacturers but we are where we are at the moment. I can’t change the past. All that I could do is maximize the value going forward. And I think we’re very strategically positioned for success going forward, ’23, ’24 and beyond.
Vernon Bernardino
Okay? If we have time, can we take one question? Does anybody have a question before we go. Okay. I think that’s it. I think — oh.
Unidentified Analyst
Do the softening of restrictions have an impact on your business results?
John Trizzino
Thank you for that question. So the answer is, yes. I mean, if you really think about when we got our EUA back in May, all of this within a period of time, it stopped being front page news. Masks were being taken off, less restrictions. I think you saw a very precipitous decline in overall vaccination rates starting in that period of time. And then you went through the lull of the summer months, there’s no question that the uptake, which is probably what you’re getting at, was significantly affected by that. That, plus the need — the market shifted on us while we were waiting for a few things to happen. Earlier in the year, it was about those people that had not been vaccinated, the primary series vaccination, and there was an opportunity for us there that we capitalized on a little bit, but not as much as we would have liked to. Then there’s the booster market, right? We were hoping that we were going to be — have a booster label earlier than we did. That took a little bit longer. And so we missed out on some of those booster opportunities during that same period of time.
Where we are right now from an adolescence standpoint? So 12 to 17 is approved. I think that’s an opportunistic market for us plus next year will be a booster market there. So all of these factors taken into consideration certainly has affected some of the pull-through this past year.
Unidentified Analyst
And are you leveraging any negative effects from the inhibitors in order to — how your own differentiation?
John Trizzino
We’re in the vaccine business, right? We want to build vaccine confidence. It’s a good vaccine. It’s a safe vaccine. We think we have a great vaccine. We think we have a better vaccine. But I’m not going to tell you that there’s something wrong with theirs. It’s been in tens of millions of people around the globe, hundreds of millions of people, billions of people, right? And so I want people to walk away being confident in vaccines in general. We’ll differentiate ourselves on our own merit going forward.
Vernon Bernardino
Thank you for that question. And so I’d like to conclude by thanking our representatives from Novavax, Greg Glenn, John Trizzino. I also want to thank everyone for your attendance, whether here in person or online to the H.C. Wainwright Global Healthcare Conference. See you next time. Thank you.
Gregory Glenn
Thank you, Vernon.
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