Q4 2023 Vaxcyte Inc Earnings Call

Participants

Andrew Guggenhime; Chief Financial Officer, Senior Vice President; Vaxcyte Inc

Grant Pickering; President, Chief Executive Officer, Director; Vaxcyte Inc

James Wassil; Executive Vice President and Chief Operating Officer; Vaxcyte Inc

Jason Gerberry; Analyst; Bank of America

Roger Song; Analyst; Jefferies

David Risinger; Analyst; Leerink

Seamus Fernandez; Analyst; Guggenheim

Louise Chen; Analyst; Cantor Fitzgerald

Joseph Stringer; Senior Analyst; Needham & Company LLC

Presentation

Operator

Good afternoon, everyone. My name is Bo, and I will be your conference operator today. At this time, I would like to welcome everyone to the Vaxcyte fourth-quarter and full-year 2023 financial results conference call. (Operator Instructions) 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 Vaxcyte. Please go ahead, sir.

Andrew Guggenhime

Thank you, operator, and good afternoon, everyone. I'd like to welcome you to Vaxcyte'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 Wassil.
Earlier this afternoon, we issued a news release announcing our results. Copies of this and our other news releases for the 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, we'll be making certain forward-looking statements about that site, 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 a 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 31, 2023, and any subsequent reports filed with the SEC.
With that, I'll turn the call over to Grant. Grant?

Grant Pickering

Thank you, welcome, all of you on the call and webcast. Thank you for joining us today.
2023 was another remarkable year for backside, officially marking our 10th year of thoughtful and methodical research and development by the entire vaccine team and our partners. We are driven by our mission to prevent or treat infections caused by bacterial diseases, including invasive pneumococcal disease or IPD. This past year, we continued to make significant strides in advancing our potentially best-in-class pneumococcal conjugate vaccines or PCBs. Vax 24, our leading 24 billion of candidates and Block 31 our next generation 31 being a 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 VAX 24 adult Phase two 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 two study in adults 65 and older that not only confirm the prior proof-of-concept study results but showed even greater immune responses compared to Prevnar 20 on a relative basis. These data further validate the potential of our cell-free platform and carrier sparing inference to deliver broader spectrum PCBs. The findings from our adult Phase two program support a potential best-in-class profile for VAX 24 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've carefully created have us well positioned to advance our PCV franchise to potentially disrupt what has consistently been a crucial vaccine class societally and financially following the VAX 24 adult Phase two program completion, we made important progress with regulators. This included a successful end-of-Phase two meeting with the FDA regarding the clinical design of the VAX 24 Phase three program as well as encouraging feedback on CMC-related matters as we plan on for future potential BLA submissions.
In addition to the positive developments for VAX 24, we were pleased to initiate the adult clinical program for VAX 31st. With this important step back, 31 is now the broadest spectrum PCV in the clinic following the FDA's acceptance of the adult Ionsys, we initiated the Phase one portion of a Phase one two 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 two portion in early January and completion of enrollment less than a month later. I'm 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 VAX 24 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 VAX 24 study. In the second half of this year, we expect to announce top line safety, tolerability and immunogenicity data from our back 31 adult Phase one two study in the third quarter. This timing and the overlapping time line 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 will move into Phase three following the VAX 31 data readout. If we advance VAX 24, we intend to initiate the pivotal noninferiority study in the second half of this year and the balance of the Phase three studies, which are shorter in duration than the noninferiority study in 2025 and 2026. If we advance back 31, we expect to initiate the full complement of the Phase three studies in 2025 in 2026, regardless of which program we move forward. We expect to initiate the final Phase three studies in 2026 and subject to the results of these studies submit a BLA shortly following the completion of the last study, VAX 24 remains a potential best-in-class candidate covering more serotypes than any pneumococcal vaccine on market or in U.S. clinics today. And the X. 31 has the potential to further increase coverage to approximately 95% RIPB. circulating in the U.S. adult population beyond expanded disease protection box 31 is designed to also maintain coverage of previously circulating strains that are currently contain via ongoing vaccination. This is critical since previously controlled strains and rebounded in prior instances where vaccine coverage was withdrawn. This puts us in a unique position relative to other sponsors for applying the conventional PCB approach and are forced to make sacrifices in an attempt to cover newly circulating strain. 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 US market is expected to accelerate due to the potential shift in Universal adult vaccinations from age 65 down to 50, which will both expand the market and open up the adult regimen to a time schedule nearing the entire market outside the US, 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 okay, 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 VAX 24 has a potential best-in-class profile for this vital population, and we are thrilled to be nearing the completion of enrollment and the second and final stage of our VAX 24 into Phase two 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 followed by the ended back here.
In contrast to the adult program, the VAX 24 infants clinical program is substantially ahead of the Vax 31 infant program, and we intend to advance both of our PTV. candidates in this population. We expect to provide guidance on the potential timing for Addax 31 instance, I have the following the readout of the VAX 31 Phase one two 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. It's what drives our efforts every day, given the magnitude of the opportunity of our PCV franchise. We continue to invest in further solidifying our manufacturing foundation to enable robust large-scale manufacturing, and 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 to secure 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 vaccine one to prevent group A. strep PG. to treat periodontitis and back to GI. to prevent this in Paris and shed a lot of sense. That's a one index GI. as well as our PCD. programs targeting diseases that are significant contributors to anti-microbial resistance for 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 chip.

James Wassil

Since then, I'd like to start by reiterating my developing broader coverage vaccines to treat pneumococcal disease.
Now despite widespread administration of effective vaccine. The global impact of disease remains significant and is associated with high K totality rates, antibiotic resistance and meningitis. In the U.S. alone, the standard of care, pediatric and adult pneumococcal vaccine cover only approximately 30% to 50% of circulating Bizzy. As a result, the public health community continues to affirm the need for a broader spectrum vaccines to prevent diabetes. We designed our PCV to expand coach and still include all of the serotypes covered by the current marketed vaccines that were most prevalent when the vaccines were originally developed, ability to both add new circulating strains and maintain pressure on previously circulating strength is critical from a global health process perspective, based on the totality of results from that point for adult Phase two 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 news on this relative to conventional PCV following the completion of the Phase two adult program, we had a successful end-of-Phase two meeting with the FDA focused on the vaccine front for adult Phase three clinical programs. 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 licensor and an efficacy study is therefore not required regardless of whether we advance back 24 or back 31st, we expect either Phase three program to include up to five studies to support licensure and the broad label. Additionally, as part of the ongoing CMC focused discussions, we received encouraging input from the FDA regarding the VAX 24 adult licensure requirements, we are afforded this dialogue under the VAX 24 adult breakthrough therapy designation. We expect to seek additional CMC focused input from the FDA as we continue to prepare for an adult Phase three program for either VAX 24 for VAX 31 and future BLA submission for that 31. We are thrilled to see that our Phase one two adult study progressed from IND acceptance to enrollment completion in approximately three months. In total, the study enrolled 1,015 adults aged 50 and older and is evaluating safety, tolerability and immunogenicity at pretax flow, middle and high compared to present our 20, which I will refer to as PCV20 similar to the criteria. Further VAX 24 adult Phase two program for that 31 study will compare the upside of episodic activity for Alpha and IgG responses compared to PCP 20 for the 20 serotypes and costs. And thirdly, when do you think you need to that 31 study is evaluating the percent subjects who achieved a fourfold rise in open titers, which is the established precedent and a basis for approval based on our preclinical data for that 31 and the clinical data for that fund for particularly with mixed dose arm for both adult Phase two study, we are optimistic about the prospects for the VAX 31 data. Recall that in the midst of ARM from VAX 24 study, we simulated the amount of carrier protein that is in the Vax 31 little bit. We believe the immunogenicity results give us a preview of what we might expect for that 31 have received results for that 31 that are comparable to those from leaf dose arms of the VAX 24 studies, which all the three serotypes hit the non-inferiority endpoint, we believe that would be very kind enough similar to our expectations for VAX 24 Phase two, though, program for the Vax 31 study upcoming readout of focusing on the open geometric mean ratios for each serotype rather than the confidence intervals because this Phase one two study will be smaller in size in a Phase three study. You can expect these confidence intervals to be wider. It's very possible that several may cross the 0.5 noninferiority threshold to GMR or 0.6 or higher, which you're taking these studies five Phase three studies have shown that these ratios are adequate to achieve the non-inferiority threshold when considering the historical precedence for a broader spectrum fee from the candidates, the focus has been on the important societal benefits of expanding disease protection, which is probably helpful in mind for all prior PCV programs that have been approved by 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 vaccine for data that our carrier sparing platform has the potential to change this historical pattern by both extending coverage and maintain. It's actually one we expect to increase disease coverage by 45 percentage points over the standard of care in adults today, which is significantly greater than the increase in coverage presented by prior products. We believe this level of improvement will be strongly considered by regulators in their assessment of the potential public health benefit.
Page 31 we provide as our build programs continue to advance. We are also pleased with the progress we've made with our vaccine for programming investments. That 24 has a potential best-in-class profile in this population, and we are excited to be nearing enrollment completion for our interim Phase two study. Given the size and global nature of the NPU market, we are particularly excited about the primary and booster data readouts expected in 2025. We believe these milestones, along with the vector, even though data readout expected in the third quarter of this year will further define the full potential and magnitude of the PTV. opportunity for vaccines. We look forward to sharing important updates on the progress of our PCV franchise.
This year.
And I would now like to turn the call over to Andrew Guggenhime on the financials.

Andrew Guggenhime

With respect to the income statements, the details of our fourth quarter and full year 2023 results and the reasons for the variances for the comparable 2022 periods are reflected in our 10 K filing and summarized in our press release year over year. Increase in R&D expenses was driven primarily by higher manufacturing expenses related to the planned adult Phase three clinical trials and potential future commercial launches of our PCV program, 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 of future biopharma, of which 50 million was paid in cash in the fourth quarter for 2022 expense for the same line item was related to the upfront consideration incurred in connection with the original option agreement entered into in the future. 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 2020 for R&D and G&A operating expenses over both full year and Q4 2023 annualized levels, particularly within R&D. This expected increase is primarily a function of our investments to make the required clinical trial materials for potential VAX 24 for Baxter, the one Phase three adult program, which will consist of multiple trials and to continue manufacturing activities to support the potential future commercial launches of our PTV. program. While we expect substantial annual growth of our R&D expenses, we do expect the amounts 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 rights expenses separate from the income statement. In the fourth quarter of last year, we commenced construction and build-out of a dedicated manufacturing suite at Lonza to support the potential global commercialization of our PTV. programs in connection with the agreement we entered into with them in October. We expect this buildout to take approximately 2 to 2.5 years at a capital cost over this period of approximately 300 to $350 million. As of year end 2023, we had 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 for detailed breakdown can be found in our 10 K filed today.
For the remaining construction and build-out costs of the 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 and the same July that I mentioned earlier and will not run through the income statements and to build out the suite that complete and manufacturing activities commence. That will be a separate and smaller operating expense component over the build-out period that will be reflected in R&D expenses.
Turning to the balance sheet and cash runway. As Brent noted, we continue to maintain a strong financial position ending in 2023 with $1.24 billion in cash, cash equivalents and investments. This excludes the $816.5 million in net proceeds from the follow-on offering we 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 back to the one adult Phase one two study top line data expected in the third quarter of this year, but actually, for instance, Phase two study, primarily soon and booster dose readout expected by the end of the first quarter and year-end 2025, and subsequently the initiation of anticipated Phase three studies for the adult PTD. program, we elect to advance which ship at 24% from the non-inferiority study in the second half of this year and the remainder in 2025 and 2026 or in fact, 31 full complement of studies in 2025 and in 2026, the expected top line data from the Phase three pivotal non-inferiority study, whether we advanced spectrum for all vaccine first, and we expected completion of the build-out of the dedicated manufacturing suite to support the long-term commercialization of our PCB programs.
I will now turn it over to Grant for closing remarks 300.
Before moving to Q&A, I would like to acknowledge the entire team at that site and our partners. 2023 was an extraordinary year of validation for VAX 24 and our pipeline over the next year. We look forward to several upcoming catalysts that will further define the profiles of our PCD. franchise, and I'm 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. And with that, let's take some questions. Operator?

Question and Answer Session

Operator

(Operator Instructions) Jason Gerberry, Bank of America.

Jason Gerberry

Hey, guys, thanks for taking my questions. And I guess, firstly, just as we think about this decision between 31 back to 31 and 24. You're ultimately measuring yourself against VAX 24.

James Wassil

So wondering if you can kind of frame what success looks like and in the end, we're showing kind of like a net incremental coverage of three or four strains as measured by statistical and I or good enough point estimates are a fourfold rise collectively across spectrum. Does that sound like to you kind of what a automotive bar for success looks like?
And then secondly, have you guys explored ways to reduce protein carrier in the 31 on a balanced approach. And the reason I ask is if for some reason, if this iteration of x 31 doesn't make the cutoff. Just wondering, Tom, if there are ways to potentially go back to the drawing board and to optimize? Thanks.
Yes, Jason, thanks for the question. So yes, as we look forward to that data that we expect to see in the third quarter. I mean, we're quite optimistic and the way we're looking at this program is the combination of the empiric evidence generated to date combined with the circumstances. So from an empirical data perspective, and certainly, we have not only, of course, compelling preclinical data with VAX 31, but also the VAX 24 data that's been generated across the Phase two program. This read-out already with a particular emphasis on that next dose cohort, where we were able to already test the cumulative net cumulative amount of protein carrier and that we would expect to have put into the clinic with VAX 31. So for us, we're really looking, as you point out a couple of different endpoints. So there's the noninferiority comparisons to Prevnar 20 across those 20 conjugates. 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, the data that we generated with that VAX 24 cohort, it demonstrated even at that mixed dose level, really good comparative it results across the 20 better are Prevnar 20 and then an incremental 11. And you know, set before I've already read out the next seven will come with this study. And so yes, for us, I think we're feeling good. The data is going to be here in the not-too-distant future. And, you know, as you mentioned, and the idea of adjusting the ratio, that is certainly something that has been at our disposal historically on. 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 use that to great effect to date with greater sugars and protein, then convention along a carrier sparing conjugates. 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 does not yield improved immune responses. So the first order, if necessary, would be more likely to come in the form of adjusted doses. But again, as you know, Jason this is not perfection, and that's required the whole focus of this class. It's meant to preserve coverage of our historically circulating strains while looking to expand coverage to newly circulating strains and in that trade spend recognize that even with lower immune responses, that's an okay trade-off. And fortunately, for us, at least for VAX 24, we didn't look like that was going to be required to push coverage. We'll see what the Vax 31 data looks like. But I guess the point is professions that that requirement we've seen a few in this strange being considered a good trade-off, 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.
Thanks much.
Thank you.

Operator

Roger Song, Jefferies.

Roger Song

Great. Congrats for that progressed on a few questions from us. I guess maybe to two for the first one is always the 31st data in the Q, you probably need another end-of-Phase two meeting with the FDA. The question is how much you can leverage from your 24 end of Phase two meeting package and to for that meeting, because you've highlighted basically even the start of Phase three in 2025 for nearly for alternate research. If you move forward with that 31, particularly around STMC. because that's something seems are holding you back for the 24 at this moment. Thank you.
Thanks, Roger. This is a Jim was far and I'm trying to answer that question for. I think you're very perceptive in your question. We're hoping to leverage a lot of that study design that we propose to put forward with the our end of Phase two design for VAX 24 and use a very similar design, provides 31st obviously, we'll look at the data from the Phase one two effects, 31. We'll do a reanalysis from a statistical perspective, will power the studies appropriately to ensure that we maximize the probability of success in our noninferiority study and our other Phase three studies. But essentially and the proposal that we put forward in backplane for will be very similar in terms of the overall study design that we'll see for 30 months.
Got it. And how about the CMC portion of the material?
Yes.
Same thing, same thing as well that we're using very similar manufacturing processes is not exact manufacturing processes in some cases between 24 polysaccharides and 31 as well as the drug substance. And of course, yes, the carrier protein is still the same carrier protein. So a lot of similarities between 24 and 31. So whatever we learn from feedback from the FDA from a CMC perspective from 24, we believe is applicable to 31 as well.
Excellent. And maybe just a follow-up question for this 31 higher dose, and you mentioned on the call, the mix goes from us to 24 is mimicking the middle dose for 31. And maybe just any color you can provide related to the high dose for 31, particularly in terms of the carrier protein, how much higher and there what are the key serotypes potentially they can be on those higher odds? If you can give us some money color around that Thank you.
Yes, hey, Roger grant again. Yes, 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 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 reviewed data.
Understood.
Thank you.
Thank you for taking the question, Boris.
Thank you.

Operator

We'll go next now to so the inside at Missoula.
Hey, guys, this is Eric long-term on the Celine, thanks for taking my question on. I'm curious what your take on possible outcomes for discussions for V. one one six at the upcoming ACC meeting. My read through to your either your decision on between VAX 24 and VEX. 31 and what it might mean for the comparison on the Phase three? Thank you.
I think Jim was holding up. So I'll answer that by saying.

James Wassil

Yes, I think many of us know array at February 29th ACIPC. one wanted to be on the agenda I think at that meeting, we'll give you a better idea of the current thinking of the ACIP pneumococcal working group on the pneumococcal working group, what most likely present epidemiological data health economic data is the first clinical data and then they'll make a proposal to the ACRP regarding how to recommend anyone, let's say, assuming they get FDA approval. So I don't think I'd want to speculate on this, especially since we've got it going to have much better idea by the end of this week was the HIPs position will be. I will say that, yes, I want to highlight the win-win is only applicable in the total 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 had to remove nine strains that have been traditionally included an approved PC needs. So winbacks 31, we do have a potential to further increase coverage to approximately 95% of the disease. And we are doing this by adding additional strength 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 strength in both vaccine, and we'll be in a strong position to increase coverage and really take a strong position if it gets approved.
Got it.
Thank you.
Thank you.

Operator

Dave Risinger, Leerink.

David Risinger

Yes. Thanks very much, Tom. So first, I wanted to say congrats on a corporate progress, and I appreciate the updates. I guess I have two questions for Grant and Jim first ACIP. preferred recommendations are rare, but fact 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 a potential prime boost opportunity in adults? Thanks very much.
Yes, thanks, for that, Dave, appreciate the acknowledgment, and Jim is kind of our ACIP. guru. So why don't I hand it to German chicken response to that question?
Yes.
So well, I let me jump it.
So yes, it certainly the ACIP. has within its purview, right to extend that preferred recommendation. They have been limited in those decisions in the past, the most recent, of course, which was with Shingrix overseas off the backs of the shingles vaccine, and 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 and we'll see how they react to the V1 16 profile. But certainly from our perspective, and we believe there is that possibility for us, the DeWind one 16 will be another data point. I think 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 been walk 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 here question on prime boost in previous discussions at the ACIP. one, but the 15 day when it finally got approved. There was a debate over whether we should start immunizing starting at 50 years of age and then the current recommendations, 65, I think there's a lot of support for that. And the reason is the data says it almost the third party ran 48% to 30% of adults right now or in an at-risk category or a high-risk category, forgetting pneumococcal disease, in particular, pneumococcal pneumonia, permanent. And these are groups that it's not just it's plenty and malignancies and HIV and the severe immunosuppression, neither either a lot more common groups. You have severe asthma and COPD have diabetes, clinical and chronic liver disease. And the belief is that that population in terms of percentage in that age group and only going to grow and historically, at least recommendations haven't really gotten penetration. So there's been some debate about moving recognition and 50 and then that would mean less likely that you would need to get a booster and 65. So there could be a prime and 50 and a boost in 65, and we'll also see some of that debate. I think coming up in the upcoming year?
Yes, that's great.
And just a follow-up, if I may.
Can you talk about your Phase three plans in adults and your age strategy?
Well, from a from an FDA license your 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 and look, that is at ACIP. as to how they grant the universal recommendation. But from a licensing perspective, we'll be looking to have it across the spectrum sort of indication. But then it's a question of usage. And as Jim said, universally recommended the uptake is much greater than that. When it's restricted to at-risk population.
And I'd only add that given the interest in these at risk groups in 50 to 65 year olds will make sure that adequate enrolled it with groups in our clinical study so that we can support the FDA thinks that he does want to move down to 50 years of age on clinical data that help with their disease.
That's super helpful.
Thanks so much.
Thank you.

Operator

We thank you.
We'll go next now to armor Raffat at Evercore.
I got it. Thanks for taking my question. What among the new serotypes, you're adding to that 31. 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 35 b., can you speak to your confidence in the manufacturing as well as early immunogenicity that you saw in preclinical models of 35 b. in particular? Secondly, is it your expectation that Pfizer's broader spectrum program 24, 25 and is using a second carrier protein beyond Kremlin 97? Thank you.
Yes, maybe I'll answer the second first, and then then Jim will address the 35 b. question.
Omar, thanks. Thank you for both of those on.
So and the Pfizer, I hope.
Yes, as it relates to the fourth generation program?
Yes, summer, it's hard to know exactly what they're doing. So you know, from what they've been willing to disclose that they've had they've been considering all number of potential changes and to trying to extend beyond a 20 valent vaccine. But at the most recent earnings results, they seem to indicate, but 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 it unique protein carriers at different chemistries at 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, this idea of the notion of using an additional protein carrier that something other sponsors have tried going back to GSK's first foray in pneumococcal conjugate vaccines and then more recently with Synovus approach, InterMune going in theory, tox and tetanus toxin. And those have turned out to be a bit problematic as Sinovac is not decided to proceed in the adult indication. So it's unclear at the moment but and 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.

James Wassil

And as to 35 being, Jim, you want to kind of niche within what we traditionally we limit our comments on in this period of proprietary issues. But now I say 35 b. is an important here in place. It's one of the more common circulating strains in adults and probably the most significant contributor to otitis media in the US today. So we are very keen on making sure that it is manufactured appropriately and that it works well in.
Thanks very much.
Thank you.
Thank you.
Thank you.

Operator

Seamus Fernandez, Guggenheim.

Seamus Fernandez

Thanks for the question. So I wanted to just talk a little bit about pediatric arm and what expectations, how you'd like to kind of set expectations for the three-dose data on. I know that that is something that Merck has sort of pitched as part of the Baxter event story. So just interested to know, I know that breadth is likely to dominate, but a 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 it at your third dose versus the present our 23rd dose, just because a number of those serotypes appeared to miss on at 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 24 31 in the adult vaccination program. Are you confident that you won't be required, but to study versus on the one one six? Or is that something that could be decided after the ACIP recommendation in June?
Thanks.
Yes, thanks. Thanks for the question, Shannon. So yes, as it relates to the infant 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 the warranty you expanded a bit, but the accident. 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 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 advisers studied Prevnar 20 in infants, in US 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 get two vaccinations with a vaccine that's providing lower immune responses, the impact of that would be felt in a fewer vaccination approach, ensuring out the results of their Phase three study in Europe had 11 of the common serotypes missed the nonintensive are already comparison as the primary series, so that has been a big question, Mark. And nonetheless, the CHMP in Europe did recently recommend that Prevnar 20 ought to be approved. So that will be interesting to see how that plays out with that niche that many missed non-inferiority comparisons. But to your point, what we've seen at least in adults with VAX 24 data is that we are for the most part getting higher immune responses relative to Prevnar 20. And if that's the case, it could widen the Advantage certainly in a three dose regimen versus a four dose regimen. So yes, we'll have to see how some of this plays out and with regard to how the European authorities handle that study that we're running that will read out in 2025 with VAX 24 and events is the conventional three plus one 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 setting our 20 in Europe. But we'll see what that data looks like next year.
And then Seamus, you're also asking about the potential the first 16 comparisons. I thought you were first talking about VAX 24 versus back 31 and page, but obviously you must be talking about adults only given that V. one 16 will be restricted to the adult population to the extent it gets approved. So yes, I think we're going to see we're going to get the benefit of having seen not only how the conversation is progressing with the ACOG later this week. But by the time we would expect to get our back 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 yes, I think armed with that information, we'll have a much better sense of what the appropriate comparison would be for either VAX 24 back 31, Phase three one in particular, so I think that's a bit of a wait and see, Jim, anything to add?
No, I think I think that's there. 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 region we can achieve. It isn't a story.
Great.
Thank you, guys. Appreciate it.
Yes, Seamus.
Thank you.

Operator

Louise Chen, Cantor Fitzgerald.

Louise Chen

High-level cyclical.
My question I wanted to ask you on your global manufacturing capacity and how that gives you a competitive advantage and then what kind of capacity will you have once you complete the build-out?
And second question I wanted to ask you was just on the events and are you going to also choose either back 24 back 31 for instance. And what are you thinking here and what is your back 31 adult data going to give you as you think about it is an opportunity.
Yes. Thanks for the questions, Louise on. Yes. So as it relates to the manufacturing build-out from a competitive our perspective, it's really table stakes. If you will, if you can supply these vaccines at the appropriate capacity, then European or 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 is 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. And we're in a position to launch out of existing Lonza infrastructure where we've been making these materials just steady 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 know, as requested, 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 max 31 in both of the adult and infant indications. So we didn't really expect that one to really deliver for us to maximize the sort of opportunity that we think is at hand.
And then to your question about them back 24 versus back 31 going forward, I think it's really an indication dependent conversation. So for us, we find ourselves in a position where both VAX 24 and VAX 31 have an opportunity to reach the market on the same time line. So with the write-backs 31 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 that 31, if not, we know, VAX 24 looks really good as well. And so we see that data before 19, which one to advance. That said, in the infant market, we're already well ahead with VAX 24. And so for us, we're contemplating on either or both of VAX 24, VAX 31 in the infant indication just because we know we can bring VAX 24 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.
Yes.
Thank you.
Joseph Stringer, Needham.

Joseph Stringer

Hi.
Thanks for taking our question. Just a couple of quick ones on the preclinical programs briefly mentioned those, but can you just give us a quick sense for which ones you think could enter the clinic first and in particular on strep A., I'm curious, could give us a quick outline of the competitive landscape there and what you think the commercial opportunity in indication is.
So thanks, Joe. So feel as we've stated, we've got three other pipeline projects. We've got a group A. strep periodontitis. And as you know, all three are moving forward in early stage. Preclinical development opportunities and 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 pretty big strength. It grew based strep vaccine. Preprint, I think has a very important role, I think is one of the most underappreciated diseases that are over 500,000 deaths due to group A. strep that occur every year do rheumatic heart disease, but it's the ubiquitous disease causing pharyngitis mainly in school entry kit as well as young toddlers that is not treated aggressively with antibiotics, which means that there's a significant amount of antibiotic prescriptions associated with this as it is. And also subsequently, you would expect growing levels of antimicrobial resistance. It led to increasing importance of finding a vaccine to prevent against this. And there's recent economic data to say 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 and direct medical cost offsets. So I think you'll see a commercial opportunity here and school entry can potentially cause it. And then the one area I haven't mentioned is the high rates of invasive disease in older adults as well. So we could see a very similar type of our recommendation. Is that a little bit more because you're immunizing school entry typically well, but as you see with the PCD., so we're really excited about this program.

Andrew Guggenhime

And I think from a competitive standpoint, Joe, you have some you know, it's not as active certainly in the PCB space to cover.

James Wassil

Again, there's minimal activity. There's only a few academic centers and one pharma company that are that are currently looking at a Group B Strep vaccine, so minimum competitive environment as well.
Great.
Thank you for taking our questions.

Operator

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