Vaxcyte, Inc.

Good afternoon, everyone. My name is Beau, and I will be your conference operator today. At this time, I would like to welcome everyone to the Backsite Fourth Quarter and Full Year 2023 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star two. And just a reminder, today's call is being recorded. Now at this time, I'll turn things over to Mr. Andrew Guggenheim, President and Chief Financial Officer of Backsite. Please go ahead, sir. Thank you, Operator, and good afternoon, everyone. I'd like to welcome you to Backsite's earnings conference call to discuss our 2023 results and to provide a business update. I'm joined today by our Chief Executive Officer, Grant Pickering, and our Executive Vice President and Chief Operating Officer, Jim Wassel. Earlier this afternoon, we issued a news release announcing our results. Copies of this and our other news releases, with its corporate presentation and SEC filings, can be found in the Investors and Media section of our website. Before we begin, I'd like to remind you that during this call, will be making certain forward-looking statements about VAC sites which are subject to various risks, uncertainties, and other factors that could cause actual results to differ materially from those referred to in any forward-looking statements.

For discussion of the risks and uncertainties associated with these statements, please see our press release issued today, as well as our most recent filings with the SEC. including the risk factors set forth in our Form 10-K for the year ended December 31st, 2023, and any subsequent reports filed with the SEC.

With that, I'll turn the call over to Grant Pickering. Grant? Grant Pickering Thanks, Andrew. And all of you on the call and webcast, thank you for joining us today. 2023 was another remarkable year for Backsite. officially marking our 10th year of thoughtful and methodical research and development by the entire Backsite team and our partners. We're driven by our mission to prevent or treat infections caused by bacterial diseases, including invasive pneumococcal disease, or IPV. This past year, we continue to make significant strides in advancing our potentially best-in-class pneumococcal conjugate vaccines, or PCVs, Vax24, our lead 24-valent candidate, and Vax31, our next-generation 31-valent candidate. And we remain focused on providing the broadest spectrum of coverage against IPV for both adults and children. Last year was highlighted by the successful completion of our VAX24 Adult Phase II program. Following our stellar initial proof-of-concept data in late 2022 in adults aged 50 to 64, we reported data in April 2023 from a separate Phase II study in adults 65 and older that not only confirmed the prior proof-of-concept study results, but showed even greater immune responses compared to PREVNR20 on a relative basis. These data further validate the potential of our cell-free platform and carrier-sparing approach to deliver broader-spectrum PCBs. The findings from our Adult Phase II program support a potential investment class profile for VEX24 and demonstrate how our novel cell-free technology platform has the capability to overcome the limitations of other conventional approaches. These results and the foundation we have carefully created have us well positioned to advance our PCD franchise to potentially disrupt what has consistently been a crucial vaccine class societally and financially. Following the Vax24 Adult Phase II program completion, we made important progress with regulators. This included a successful end of Phase II meeting with the FDA regarding the clinical design of the Vax24 Phase III program, as well as encouraging feedback on CMC-related matters as we plan for future potential VLA submissions. In addition to the positive developments for Vax24, we were pleased to initiate the adult clinical program for Vax31. With this important step, Vax31 is now the broadest spectrum PCD in the clinic. Following the FDA's acceptance of the adult IND, we initiated the Phase I portion of a Phase I-II study in adults 50 and older in November. The strong momentum of this study continued into 2024 as we announced the start of the Phase II portion in early January and completion of enrollment less than a month later. I am incredibly proud of our many achievements, particularly across clinical, regulatory, and manufacturing for our PCV programs, and we now look ahead to several important milestones. For the adult indication, our VAX24 program is phase three ready, and we are in the final stages of manufacturing the product needed for several of the potential phase three studies, including the pivotal non-inferiority study. In advance of the potential initiation of this VAX24 study in the second half of this year, we expect to announce the top line safety, tolerability, and immunogenicity data from our VAX31 adult phase one, two study in the third quarter. this timing and the overlapping timeline for the completion of the VAX 24 and VAX 31 adult phase three studies provide us the opportunity to make a strategic decision regarding which adult program we will move into phase three following the VAX 31 data readout. If we advance VAX 24, we intend to initiate the pivotal non-inferiority study in the second half of this year. and the balance of the Phase III studies, which are shorter in duration than the non-inferiority study, in 2025 and 2026. If we advance to Act 31, we expect to initiate the full complement of the Phase III studies in 2025 and 2026. Regardless of which program we move forward, we expect to initiate the final Phase III studies in 2026. and subject to the results of these studies, submit a BLA shortly following the completion of the last study. Vax24 remains a potential best-in-class candidate, covering more serotypes than any pneumococcal vaccine on market or in U.S. clinics today. And Vax31 has the potential to further increase coverage to approximately 95% of IPV circulating in the U.S. adult population. Beyond expanded disease protection, Vax31 is designed to also maintain coverage of previously circulating strains that are currently contained via ongoing vaccination. This is critical since previously controlled strains have rebounded in prior instances where vaccine coverage was withdrawn. This puts us in a unique position relative to other sponsors who are applying the conventional PCV approach and are forced to make sacrifices in an attempt to cover newly circulating strains. We estimate that the adult pneumococcal vaccine market today is approximately $2 billion of the total $8 billion annual global market and is positioned to be the fastest growing segment. Growth in the U.S. market is expected to accelerate due to the potential shift in universal adult vaccination from age 65 down to 50, which would both expand the market and open up the adult regimen to a prime blue schedule, nearing the infant market. Outside the U.S., we expect to see other countries begin to routinely recommend adult vaccination, as evidenced by the recent recommendation in Germany to vaccinate adults 60 and older. While the adult market is expected to grow significantly, the infant segment continues to represent the largest portion of the global pneumococcal vaccine market at an estimated $6 billion in sales annually. We believe Vax24 has a potential best-in-class profile for this vital population, and we are thrilled to be nearing the completion of enrollment of the second and final stage of our Vax24 Infant Phase 2 study. Based on our progress, we expect the top line data from the primary immunization series by the end of the first quarter of 2025, with the top line booster data to follow by the end of that year. In contrast to the adult program, the Vax24 Infant Clinical Program is substantially ahead of the Vax31 Infant Program, and we intend to advance both of our PCV candidates in this population. We expect to provide guidance on the potential timing for a VAX31 infant IMD following the readout of the VAX31 Phase I-II Adult Study later this year. Bringing the broadest PCBs to both infants and adults represents an opportunity to significantly reduce invasive disease across the entire population is what drives our efforts every day. Given the magnitude of the opportunity of our PCB franchise, we continue to invest in further solidifying our manufacturing foundation to enable robust, large-scale manufacturing. These investments are intended to support the potential global commercialization of our PCBs for both the adult and infant populations. Our expanded relationship with Lonza and our decision to exercise our option with Futuro Biopharma both of which we announced late last year, are reflective of these efforts. In addition to our PCV franchise, we continue to advance our earlier stage vaccine candidates, including VaxA1 to prevent group A strep, VaxPG to treat periodontitis, and VaxGI to prevent dysentery and shigellosis. VaxA1 and VaxGI, as well as our PCV programs, target diseases that are significant contributors to antimicrobial resistance, or AMR. AMR poses a serious global health threat, and if no action is taken, drug-resistant diseases are expected by the WHO to be a leading cause of death by 2050. While AMR is a complex crisis that no single solution will fully address, vaccines represent an important part of the solution. We are proud to develop vaccines to help fight diseases that have become increasingly resistant to treatment with antibiotics, and we look forward to sharing more updates on our earlier stage pipeline over the course of the year. From a financial perspective, we substantially strengthened our balance sheet, raising approximately $545 million in net proceeds in a follow-on financing last April, and then added another $816 million earlier this month. Pro forma, after this most recent financing, we had over $2 billion in cash and investments as of year-end. This financial strength provides us the capital to fund the company through several important milestones over the next few years, which Andrew will highlight later. I'll now turn it over to Jim, who will provide more details on our PCV programs and strategy. Jim?

Thanks, Clint. I'd like to start by reiterating why developing broader coverage vaccines to treat mucosal disease matters. Despite widespread administration of effective vaccines, the global impact of disease remains significant and is associated with high case fatality rates, antibiotic resistance, and meningitis. In the U.S. alone, the standard of care pediatric and developed immune-causing vaccines cover only approximately 30% to 50% of circulating disease. As a result, the public health community continues to affirm the need for a broader spectrum of vaccines to prevent IPV. We designed our PCVs to expand coverage and still include all of the serotypes covered by the current and marketed vaccines that were most prevalent when these vaccines were originally developed. The ability to both add newly circulating strains and maintain pressure on previously circulating strains is critical from a global health perspective. Based on the totality of results from the VAX24 Adult Phase II program that Grant referred to earlier, We believe we have the opportunity to set a new bar for pneumococcal vaccines by delivering broader coverage and higher immune responses relative to conventional PCVs. Following the completion of the Phase II adult program, we had a successful end of Phase II meeting with the FDA focused on the Vax24 adult Phase III clinical program. We believe there is agreement with the FDA on the clinical design of this program, including the approximate overall number of subjects, the primary and secondary endpoints for the Pivotal Non-Inferiority Study, as well as confirmation that the planned immunogenicity analyses are sufficient to support licensure and an efficacy study is therefore not required. Regardless of whether we advance VAX24 or VAX31, we expect either Phase III program to include up to five studies to support licensure and the broad label. Additionally, as part of the ongoing C&C-focused discussions, we received encouraging input from the FDA regarding the Vax24 adult licensure requirements. We are afforded this dialogue under the Vax24 adult breakthrough therapy designation and expect to seek additional CMC-focused input from the FDA as we continue to prepare for an adult phase three program for either Vax24 or Vax31 and future BLA submissions. For Vax31, We are thrilled to see that our Phase I-II adult study progressed from IMD acceptance to enrollment completion in approximately three months. In total, the study enrolled 1,015 adults age 15 and older and is evaluating safety, tolerability, and immunogenicity at three doses, low, middle, and high, compared to Prevnar 20, which I will refer to as PCV20. Similar to the criteria for the Vax34 Adult Phase II program, the Vax31 study will compare the opsonophagocytic activity, or OPA, and IgG responses compared to PCV20 for the 20 serotypes in common. And for the 11 serotypes unique to Vax31, the study is evaluating the percent subject to achieve a fourfold rise in OPA titers, which is the established precedent and a basis for approval. Based on our preclinical data for Vax31 and the clinical data for Vax24, particularly the mixed-dose arm for both adult phase II studies, we are optimistic about the prospects for the VAX31 data. We called it in the mixed-dose arm from the VAX24 study. We simulated the amount of karyoprotein that is in the VAX31 middle dose. We've relieved those image, and if the results give us a preview of what we might expect for VAX31. If we see results for VAX31 that are comparable to those from the mixed-dose arms of the VAX24 study, in which all the three serotypes hit the non-inferiority endpoint, we believe that would be a very positive outcome. Similar to our expectations for VAX24 Phase II adult program, for the VAX31 study upcoming readout, our focus is on the ocular geometric mean ratios for each serotype rather than the confidence intervals. Because this Phase I-II study will be smaller in size than the Phase III study, you can expect the confidence intervals to be wider. it's very possible that several may cross the 0.5 non-inferiority threshold. If the GMRs are 0.6 or higher for each year taking the study, prior PhD studies have shown that these ratios are adequate to achieve the non-inferiority threshold. When considering the historical precedence for broader spectrum PCV candidates, a focus has been on the importance of societal benefits of expanding disease protection. With this public health goal in mind, for all prior PCV programs that have been approved, Regulatory authorities have accepted generally lower overall immune responses and some missed non-inferiority endpoints versus the standard of care. We believe, however, based on our Vax24 data, that our carrier-sparing platform has the potential to change this historical pattern by both extending coverage and maintaining immune response. With FACS 31, we expect to increase disease coverage by 45% importance over the standard of care in adults today, which is significantly greater than the increase in coverage presented by prior programs. We believe this level of improvement will be strongly considered by regulators in their assessment of the potential public health benefits FACS 31 may provide. As our adult programs continue to advance, we are also pleased with the progress we have made with our FACS 24 program in instance. VACS24 has a potential best-in-class profile in this population, and we are excited to be nearing enrollment completion for our infant phase 2 study. Given the size and global nature of the infant market, we are particularly excited about the primary and booster data re-ups expected in 2025. We believe these milestones, along with the VACS31 adult data re-up expected in the third quarter of this year, will further define the full potential and magnitude of the PCV opportunity for VAC sites. We look forward to sharing important updates on the progress of our PCD franchise this year. And I would now like to turn the call over to Andrew.

Great. Thanks, Jim.

On the financials with respect to the income statements, the details of our fourth quarter and full year 2023 results and the reasons for the variances to the comparable 2022 periods are reflected in our 10-day filing and summarized in our press release.

The year-over-year increase in R&D expenses is driven primarily by higher manufacturing expenses related to the planned adult Phase III clinical trials and potential future commercial launches of our PCV programs. Both R&D and G&A expenses also grew as we invested in our team to support our recent and anticipated growth. The acquired manufacturing rights expense of $75 million for the fourth quarter and full year 2023 was related to the exercise of the option with Sutro Biopharma, of which $50 million was paid in cash in the fourth quarter.

The 2022 expense for the same item was related to the upfront consideration incurred in connection with the original option agreement entered into with Sutro. I would also note the contribution of the interest income line as a function of our higher cash and investment balances and the higher interest rate environment. As we look forward, we expect an increase in 2024 R&D and GMA operating expenses over both full-year and Q4 2023 annualized levels, particularly within R&D. This expected increase is primarily a function of our investment to make the required clinical trial materials for a potential Vax24 or Vax31 Phase III belt program, which will consist of multiple trials, and to continue manufacturing activities to support the potential future commercial launches of our PCB programs.

While we expect substantial annual growth of our R&D expenses, we do expect the amount to vary by quarter depending on timing of manufacturing activities. For G&A, we expect the expense growth to be generally steady by quarter.

At this time, we do not anticipate any future acquired manufacturing rates expenses. Separate from the income statements, in the fourth quarter of last year, we commenced construction and build-out of the dedicated manufacturing suite at Lonza to support the potential global commercialization of our PTV program in connection with the agreement we entered into with them in October. We expect this build-out to take approximately two to two and a half years at a capital cost over this period of approximately $300 to $350 million. As of year-end 2023, we have incurred $86.5 million of capital and facility build-out expenditures that were reflected on our balance sheet in two separate line items, property and equipment, and other assets. The detailed breakdown can be found in our 10-K file today. For the remaining construction and build-out costs of this dedicated manufacturing suite, We expect the majority will be incurred in 2024 and the balance in 2025 and perhaps into early 2026.

Most of the associated costs will be reflected on our balance sheet in the same two items I mentioned earlier and will not run through the income statements until build-out of the suite is complete and manufacturing activities commence. There will be a separate and smaller operating expense component over the build-out period that will be reflected for the R&D expenses.

Turning to the balance sheet and cash runway, as Grant noted, we continue to maintain a strong financial position ending 2023 with $1.24 billion in cash, cash equivalents, and investments.

This excludes the $816.5 million in net proceeds from the fall amount operating completed earlier this month.

Going forward, we expect that our balance sheet will be sufficient to fund our operating expenses and capital expenditure requirements through a number of important milestones over the next few years, including the Vax 31 Adult Phase 1-2 study top-line data expected in the third quarter of this year.

The Vax 24 Infant Phase 2 study primary series and booster dose readouts expected by the end of the first quarter and year in 2025, respectively. The initiation of anticipated Phase III studies for the adult PPD program we elect to advance, which, if Act 24, would include the non-inferiority study in the second half of this year and the remaining studies in 2025 and 2026, or, if Act 31, the full complement of studies in 2025 and in 2026.

The expected top-line data from the Phase III pivotal non-inferiority study, whether we advance Act 24 or Act 31, and the expected completion of the build-out of the dedicated menu assurances to support the long-term commercialization of our PCB programs. I will now turn it over to Grant for closing remarks. Thanks, Andrew. Before moving to Q&A, I would like to acknowledge the entire team at VaxSight and our partners. 2023 was an extraordinary year of validation for Vax24 and our pipeline. Over the next year, we look forward to several upcoming catalysts that will further define the profiles of our PCV franchise, and I am confident in our ability to execute and further scale our business in 2024 and beyond. We look forward to sharing further updates as the year progresses and appreciate your interest by joining us today. With that, let's take some questions. Operator? Thank you very much, Mr. Pickering. Ladies and gentlemen, at this time, if you do wish to ask a question for today's question and answer period, you need to press star 1 on your telephone keypad. If you find your question has been answered and you wish to remove yourself from the queue, please press star 2. If you are using a speakerphone, please pick up your handset to allow for optimal sound quality. Also, we ask that you please limit yourself to one question and one follow-up question. We'll go first this afternoon to Jason Gerberry of Bank of America.

Well, hey, guys. Thanks for taking my questions. You know, I guess firstly, just, you know, as we think about this decision between 31, back to 31 and 24, you're ultimately measuring yourself against back to 24. So wondering if you can kind of frame what success looks like and you know, in the end would showing kind of like a net incremental coverage of three or four strains as measured by statistical NI or good enough point estimates or a fourfold rise collectively across the spectrum. Does that sound like to you kind of what a bar for success looks like? And then secondly, have you guys explored ways to reduce protein carrier in the 31 valent approach? And the reason I ask is, You know, for some reason, if this iteration of Act 31 doesn't make the cutoff, just wondering, you know, if there are ways to potentially go back to the drawing board and to optimize. Thanks.

Yeah, Jason, thank you for the question. So, yeah, as we look forward to that data that we expect to see in the third quarter, I mean, we're quite optimistic. The way we're looking at this program is, combination of the empiric evidence generated today combined with the circumstances so from an empirical data perspective uh certainly we have not only of course compelling pre-clinical data with fax 31 but also the fax 24 data that's been generated across the phase 2 program that's read out already with a particular emphasis on that mixed dose cohort where we were able to already test the cumulative cumulative amount of protein carrier that we would expect to have put into the clinic with Vax 31. So for us, you know, we're really looking, as you point out, at a couple different endpoints. So there's the non-inferiority comparisons to Prevnar 20 across those 20 consciences. And then there are the incremental 11, where it's a slightly different endpoint, where you're looking at fourfold rise over baseline. So for us, you know, the data that we generated with that Vax24 cohort demonstrated, even at that mixed dose level, really good comparative results. results across the 20 that are in PREVNR20. And then the incremental 11, you know, four have already read out. The next seven will come with this study. And so, yeah, for us, I think, you know, we're feeling good. The data is going to be here in the not-too-distant future. And, you know, as you mentioned, the idea of adjusting the ratio That is certainly something that has been at our disposal historically. We do have a level of precision with our chemistry that permits us to adjust the ratio of sugar to protein in ways that we don't believe anyone else can. We've used that to great effect to date with greater sugar than protein than convention, a la the character sparing conjugate. But for the foreseeable future, we don't think we need to go back to the drawing board on that, but that would be something we could always look at down the road. For us, we've been able to show that adjustments in dose yield improved immune responses. So the first order, if necessary, would be more likely to come in the form of adjusted dose But again, as you know, Jason, this is not perfection that's required. The whole focus of this class has been to preserve coverage over historically circulating strains while looking to expand coverage to newly circulating strains. And in that trade, It's been recognized that even with lower immune responses, that's an okay tradeoff. Fortunately for us, at least for VAX24, we didn't look like that was going to be required to push coverage. We'll see what the VAX31 data looks like, but I guess the point is perfection is not the requirement. We've seen a few missed strains being considered a good tradeoff, at least in the eyes of the regulators, and I think ultimately that's been a good decision, and we'll see what data comes out of this study in the third quarter. Great. Thanks so much. Thank you. We go next now to Roger Song at Jefferies.

Great. Congrats for the progress. A few questions from us limited to two. So the first one is, with the 31 data in 3Q, you probably need another end-of-age meeting with the FDA. The question is, how much you can leverage from your and the Phase 2 meeting package for that meeting because your timeline is basically you're going to start Phase 3 in 2025 and 2026 if you move forward with 31, particularly around the CMC because that's something that seems to be holding you back for the 24 at this moment. Thank you.

Thanks, Roger. This is Jim Wassel. And I'll try and answer that question for you. I think you're very perceptive in your question. We're hoping to leverage a lot of the study designs that we proposed to put forward with our end of phase two design for VAX 24 and use the very similar design for VAX 31. Obviously, we'll look at the data from the Phase 1-2 of BACS-31. We'll do a reanalysis from a statistical perspective. We'll power the studies appropriately to ensure that we maximize the probability of success in our non-inferiority study and our other Phase 3 studies. But essentially, the proposal that we put forward in BACS-24 will be very similar in terms of the overall study design that we'll see for 31s.

Got it. And how about the CMC portion of the 31?

Yes. Same thing as well. We're using very similar manufacturing processes. It's not exact manufacturing processes in some cases between the 24 polysaccharides and 31 as well as the drug substance. And of course, the carrier protein is still the same carrier protein. So a lot of similarities between 24 and 31. So whatever we learned from feedback from the FDA from a CMC perspective from 24, we believe is applicable to 31 as well.

Excellent. Maybe just a follow-up question. For the 31 higher dose, you mentioned on the call the mixed dose from the SIRT24 is mimicking the middle dose for 31. maybe just any color you can provide related to the high dose 431, particularly in terms of the carrier protein, how much higher and what are the key stereotypes potentially can be those higher, if you can give us some color around that. Thank you.

Yeah. Hey, Roger. Grant again. Yeah, we've been a little bit more coy with regard to the doses. We did provide a bit more detail here just for competitive purposes. But, you know, we want to make sure that we come out of this phase two experiment with a clear dose to advance to phase three. So, ergo the bracketing with lower and higher doses. We haven't gotten into explicit detail. But there's a pretty tight window of dosing that's been historically applied in the pneumococcal conjugate vaccine space. So we wouldn't do anything that would be radical there. But we're not going to go into the explicit details of what those are, at least for the time being. And that will be decided at the time we review the data.

Understood. Thank you. Thank you for taking the question.

Of course. Thank you. We go next now to Saleem Syed at Mizuho.

Hey, guys. This is Eric Lavington on for Saleem. Thanks for taking our question. I'm curious what your take on possible outcomes for discussions for V116 at the upcoming ACE meeting might read through to, you know, either your decision between VAX 24 and VAX 31, and what it might mean for the comparison in Phase 3. Thank you.

Thanks, Eric. Jim Walsall again. So, I'll answer this by saying, you know, I think many of us know already it's February 29th ACIP. Merck's V116 will be on the agenda. I think at that meeting we'll get a better idea of the current thinking of the ACIP pneumococcal working group. The pneumococcal working group will most likely present epidemiological data, have economic data, V116 clinical data, and then they'll make a proposal to the ACIP regarding how to recommend V116, assuming they get FDA approval. So I don't think I'd want to speculate on this, especially since we're going to have a much better idea by the end of this week what the ACIP's position will be. I will say that, you know, I want to highlight V116 is only applicable in the adult population, and it takes a different approach than our PCV program. In order for them to reach 21 strains, due to the limitations of their technology, they had to remove nine strains that have been traditionally included in approved PCVs. So with Vax31, we do have a potential to further increase coverage to approximately 95% of invasive disease. And we're doing this by adding additional strains and maintaining coverage of previously circulating strains. So we'll wait and see. We'll see what the outcomes are. I think 24 will have a strong position regardless. Obviously, 31, which contains, for the most part, all the strains in both vaccines, will be in a strong position to increase coverage and really take a strong position if it gets approved. Got it. Thank you.

Thank you. We go next now to Dave Reisinger at Learing Partners.

Yes, thanks very much. So, first, I wanted to say congrats on the corporate progress and appreciate the updates. I guess I have two questions for Grant and Jim. First, ACIP preferred recommendations are rare, but vac site could be particularly well positioned for a potential preferential recommendation for Vax 31. Could you just comment on that notion and provide your perspectives? And then second, could you elaborate more, Jim, on your comment about potential prime boost opportunity in adults? Thanks very much.

Yeah, thanks for that, Dave. Appreciate the acknowledgments. And Jim is kind of our ACIP guru. So, why don't I hand it to Jim and see if he can respond to that question. Yeah. So, well, let me jump in. So, yes. Certainly, the ACIP has within its purview the right to extend a preferred recommendation. They have been limited in those decisions in the past. The most recent, of course, was with Shingrix over Zostavax for the shingles vaccines. It's been more limited in the pneumococcal conjugate vaccine space. But it does occur, and we even see that with Prevnar 20 in certain circumstances. So, there are a lot of pundits out there, Dave, speculating on how the ACIP is going to react. And the margin of improvement does need to be quite material from an efficacy perspective or coverage perspective. But when you have an opportunity to potentially extend the coverage with a singular vaccine to as high as 95% while continuing to maintain pressure on previously circulating strains. To us, objectively, we think that is the kind of profile that would warrant a preferred recommendation. So we'll have our day. If things stay on track, we'll see how they react to the B116 profile. But certainly from our perspective, we believe there is that possibility for us. But B116 will be another data point. I think, you know, what we had heard was there was hope at Merck that there was going to be an opportunity for a preferred recommendation. We'll find out. I think that's being walked back a bit from what we're reading. But as Jim pointed out, before the week is out, we'll have a leading indicator.

In terms of your question on the prime boost, in previous discussions at the ACIP when both the 15-day limit and 20-day limit got approved, there was a debate over whether we should start immunizing starting at 50 years of age instead of the current recommendation of 65. I think there's a lot of support for that, and the reason is the data says that almost the third, probably around 28 to 30 percent of adults right now are in an at-risk category or high-risk category for getting pneumococcal disease, particularly pneumococcal pneumonia. And these are groups that, you know, it's not just You know, asplenic and malignancies and HIV and severe immunosuppression, these are a lot more common groups. You have severe asthma, COPD, you have diabetes, chronic lung, chronic liver disease. And the belief is that that population in terms of percentage in that age group is only going to grow. And historically, at-risk recommendations haven't really gotten penetration. So, there's been some debate about moving the recommendation down to 50. And then, that would mean, most likely, that you would need to get a booster at 65. So, there could be a prime at 50 and a boost at 65. And we'll also see some of that debate, I think, coming up in the upcoming EHRP.

That's great. And just to follow up, if I may. Could you talk about your phase three plans in adults and your age strategy?

Well, from an FDA licensure perspective, the adult label is usually extended at age 18 and up. So we'll be looking for the same sort of broad label that's been obtained with other pneumococcal conjugate vaccines. So the next phase uh look then is that the acip as to how they grant the universal recommendation but from a licensure perspective we'll be looking to have an across the spectrum sort of indication but then it's a question of usage and as jim said when it's universally recommended the uptake is much greater than when it's restricted to at-risk population

given the interest in these at-risk groups in 50- to 65-year-olds, we'll make sure to have adequate enrolled at-risk groups in our clinical studies so that we can support if the ACIP does want to move down to 50 years of age on clinical data to help with their decision. That's super helpful. Thanks so much.

Thank you. Thank you. We go next now to Irma Raffet at Evercore.

Hi, guys. Thanks for taking my question. Among the new serotypes you're adding to VAX31, there's one in particular which has a bunch of literature on it suggesting it's very unique and perhaps difficult to manufacture. I'm referring to 35B. Can you speak to your confidence in the manufacturing as well as early immunogenicity that you saw in preclinical models on 35B in particular? Secondly, is it your expectation that Pfizer's broader spectrum program, 24, 25-valent, is using a second carrier protein beyond CREM-197? Thank you.

Yeah, maybe I'll answer the second one first, and then Jim will address the 35B question, Omer. Thank you for both of those.

the Pfizer.

Oh, yeah. As it relates to the fourth generation program. Yeah. It's hard to know exactly what they're doing. So, you know, from what they've been willing to disclose, they've been considering all number of potential changes to try to extend beyond a 20 valent vaccine. But at the most recent earnings results, they seem to indicate that whatever incremental strains would be layered on top of what would presumably be the 20 strains that are in Prevnar 20. And there, it then comes down to, is it a unique protein carrier? Is it different chemistry? Is it different linkers or some sort of other formulation? But it's hard to know beyond that. I don't think they've gotten detailed with regard to that. That said, you know, this idea of the notion of using an additional protein carrier, you know, that's something other sponsors have tried going back to GSK's first foray in pneumococcal conjugate vaccines. And then more recently with Sanofi's approach intermingling diphtheria toxin and tetanus toxoid. And those have, you know, turned out to be a bit problematic, as, you know, Sanofi's not decided to proceed in the adult indication. So, it's unclear at the moment, but other attempts in a similar vein haven't worked out particularly well, but we couldn't say for sure if that's the approach they're trying as of yet. And as to 35B, Jim, do you want to comment?

Well, traditionally, we limit our comments on some of this due to proprietary issues, Now, I'll say 35B is an important serotype. It's one of the more common circulating strains in adults, and it's probably the most significant contributor to otitis media in the U.S. today. So we are very keen on making sure that it is manufactured appropriately and that it works well in FACS 31.

Thank you. Thanks, Ewer. Thank you. We go next now to Seamus Fernandez at Guggenheim.

Great, thanks for the question. So I wanted to just talk a little bit about pediatric and what expectations how you'd like to kind of set expectations for the three-dose data. I know that that is something that Merck has, you know, sort of pitched as part of the vaccine advance story. Just interested to know, I know that breadth is likely to dominate, but three-dose regimen has been quite successful overseas. So interested to just know how you guys are thinking about the opportunity for actually perhaps a superior profile at Merck. your third dose versus the Prevnar 20 third dose just because a number of those serotypes appeared to miss at three doses and then really required the fourth dose to catch up. So just interested to know how you're thinking about that and its importance from a market perspective longer term. And then just a second question is on whether you choose 2431 in the adult vaccination program. Are you confident that you won't be required to study versus V116? Or is that something that could be decided after the ACIP recommendation in June? Thanks.

Yeah, thanks for the question, Seamus. So, yeah, as it relates to the infinite indication, obviously a critical part of the market, you know, three-quarters of the sales consistently in that space. And as you referred to a three-dose series, I wasn't sure exactly which direction you were until you expounded a bit. But, yeah, to be clear, in the U.S., we have a three plus one approach so three vaccinations within the first six months of life that's called the primary series and then the fourth dose comes in the form of a boost the next year in europe they restrict that primary series to only two vaccinations and then the third dose the next year so it's really a three in europe versus four dose approach and as you say less doses create more pressure on lower immune responses. And so when Pfizer studied Prevnar 20 in infants in U.S. and Europe, the impact of the one less dose was quite profound. So in the U.S., there were six of the serotypes that missed the non-inferiority comparison to Prevnar 13 after the primary series. And one can imagine that when you only give two vaccinations with a vaccine that's providing lower immune responses, the impact of that would be felt in a fewer vaccination approach. And sure enough, the results of their phase three study in Europe had 11 of the common serotypes missed the non-inferiority comparison at the primary series. So that has been a big question mark. Nonetheless, the CHMP in Europe did recently recommend that PREVNR20 ought to be approved. So that will be interesting to see how that plays out with that many missed non-inferiority comparisons. But to your point, But what we've seen, at least in adults with VAX24 data, is that we are, for the most part, getting higher immune responses relative to Prevnar20. And if that's the case, it could widen the advantage, certainly in a three-dose regimen versus a four-dose regimen. So, yeah, we'll have to see how some of this plays out with regard to how the European authorities handle. That, you know, the study that we're running that we'll read out in 2025 with BACS24 in infants is the conventional 3 plus 1 approach. So, that's the data we'll start with. But to the extent we see higher immune responses potentially once again after that primary series, that could set us up for a potentially better outcome to create even further competitive advantage relative to TREVNAR20 in Europe. But we'll see what that data looks like next year. And then, Seamus, you were also asking about the potential B116 comparisons. I thought you were first talking about VAX24 versus VAX31 in PEDS, but obviously you must be talking about adults only, given that B116 will be restricted to the adult population to the extent it gets approved. Yeah, I think, you know, we're going to see, we're going to get the benefit of having seen not only how the conversation is progressing with the ACIP later this week, but by the time we will expect to get our VAX 31 data, we'll know for sure. if the vaccine is approved, and if so, how it's sequenced or recommended relative to Prevnar 20. So yeah, I think on with that information, we'll have a much better sense of what the appropriate comparison would be for either Vax24 or Vax31, Vax31 in particular. So I think that's a bit of a wait and see.

Jim, anything to add? No, I think that's fair. I think that if there's A non-preferential recommendation, then I think it will be up to us to choose which of the comparator we can choose to use in Phase 3.

Great. Thank you, guys. Appreciate it. Yep. Thanks, Seamus. Thank you. We go next now to Louise Chin at Cantor Fitzgerald.

hi thanks for taking my question i wanted to ask you on your global manufacturing capacity and how this gives you a competitive advantage and then what kind of capacity will you have once you complete this build out and second question i wanted to ask you was just on the infant are you going to also choose either fax 24 or fax 31 for instance You know, what are you thinking here, and what is your VAC31 adult data going to give you as you think about the infant opportunity?

Yeah, thanks for the questions, Louise. Yeah, so as it relates to the manufacturing build-out, from a competitive standpoint, perspective, it's really table stakes, if you will. If you can't supply these vaccines at the appropriate capacity, then how can you expect the ACIP, among others, to make a broad recommendation for your vaccine? So, for us, it's been fundamental to unlocking the full value of these vaccines. to stay ahead of that sort of capacity so as to have not only the ability to deliver but the sort of profile that would warrant preferred recommendation ideally. And so that's been absolutely crucial to this whole story, and I think we've been able to stay ahead of that. You know, we're in a position to launch out of existing Lonza infrastructure where we've been making these materials to study clinically. And then late last year, as you all know, we made the strategic decision to invest in a dedicated facility at lonza and as you uh requested you know the way we're thinking about that dedicated facility is one that would be able to satisfy the global demand from the developed world for either vax 24 or vax 31 in both of the adult and infant indications so we do really expect that one to really deliver for us to maximize uh the sort of opportunity that we think is at hand. And then to your question about Vax 24 versus Vax 31 going forward, I think, you know, it's really an indication-dependent conversation. So for us, We find ourselves in a position where both Vax24 and Vax31 have an opportunity to reach the market on the same timeline. So with the right Vax31 data later this year, naturally, it would make sense for us to move to deliver the most broadly protective vaccine that we can. And ideally, that would be Vax31. If not, we know Vax24 looks really good as well. And so we'll wait to see that data before anointing which one to advance. That said, in the infant market, we're already well ahead with Vax24. And so for us, we're contemplating either or both of Vax24 or Vax31 in the infant indication, just because we know we can bring Vax24 to market faster based on the path we're on today. So it's a little more nuanced in the infant indication because of that sequencing.

Thank you.

Thank you. We go next now to Joseph Stringer at Needham.

Hi. Thanks for taking our question. Just a couple of quick ones on the preclinical programs. You briefly mentioned those, but could you just give us a quick sense for which one you think could enter the clinic first, and in particular on strep A? Curious if you could give us a quick outline of the competitive landscape there and what you think the commercial opportunity in that indication is.

Sure. Thanks, Joe. So, you know, as we stated, you know, we've got three other pipeline projects. We've got a group A strep, periodontitis, and shigella. All three are moving forward in early stage preclinical development. We haven't guided to when they would go in the clinic, but I think the one that I believe is most advanced at this point is the one that you mentioned, which is group A strep. The group A strep vaccine, I think, has a very important role. I think it's one of the most underappreciated diseases. There are over 500,000 deaths due to group A strep that occur every year due to rheumatic heart disease. But it's a ubiquitous disease causing pharyngitis, you know, mainly in school entry kids as well as young toddlers. It's not treated, you know, aggressively with antibiotics, which means that there's a significant amount of antibiotic prescriptions associated with this disease. And also, subsequently, you would expect, you know, growing levels of antimicrobial resistance. have led to increasing importance of finding a vaccine to prevent against this. And there's recent economic studies that say that medical and indirect costs are around $5 billion a year. So a vaccine that can have some degree of efficacy, a reasonable amount of efficacy could significantly have direct medical costs offset. So I think you'll see a commercial opportunity here in school entry kids, potentially toddlers. And then the one area I haven't mentioned is there's high rates of invasive disease in older adults as well. So we could see a very similar type of uh recommendation in fact a little bit more because you're immunizing school entry kids as well uh that you see with the pcb so so we're really excited about this program

And I think from a competitive standpoint, Joey, it's, you know, it's not as active as certainly in the PCV space, if Jimmy can comment on that.

Yeah, there's minimal activity. There's only – there's a few academic centers and one pharma company that are currently looking at a group-based stress vaccine, so minimal competitive environment as well.

Great. Thank you for taking our questions.

Thank you. And ladies and gentlemen, it appears we have no further questions today. So that will conclude today's VAC site fourth quarter and full year 2023 earnings conference call. Please disconnect your line at this time and have a wonderful day.