Business Overview and Company History
Vaxxinity, Inc. (VAXX) is a U.S. biotechnology company that has been pioneering the development of a new class of medicines known as active immunotherapy medicines (AIMs). The company's innovative approach aims to address a wide range of chronic diseases and infectious diseases that have traditionally been difficult to treat effectively and safely with vaccines.
Vaxxinity was formed in 2021 through the combination of two separate businesses that originated from United Biomedical, Inc. (UBI) - United Neuroscience (UNS), which focused on developing chronic disease product candidates, and C19 Corp. (COVAXX), which focused on the development of a COVID-19 vaccine. The company's origins can be traced back to UBI, which had been refining a synthetic peptide vaccine technology over the past two decades.
The formation of Vaxxinity was the result of a complex series of transactions. In 2014, a spin-out from UBI resulted in the creation of United Neuroscience (UNS), which focused on developing chronic disease product candidates. Later, in 2020, a second spin-out from UBI led to the formation of C19 Corp (COVAXX), which concentrated on the development of a COVID-19 vaccine. On February 2, 2021, Vaxxinity was incorporated specifically for the purpose of reorganizing and combining UNS and COVAXX, a process that was completed on March 2, 2021.
Since its inception, Vaxxinity has focused on developing prophylactic and therapeutic vaccines to combat common chronic diseases with large global unmet medical needs, as well as infectious diseases like COVID-19. In April 2022, the company took a significant step forward by entering into an agreement with the Coalition for Epidemic Preparedness Innovations (CEPI) to co-fund a Phase 3 clinical trial of its UB-612 COVID-19 vaccine candidate as a heterologous or mix-and-match booster dose. This trial, which began in early 2022, is evaluating UB-612's ability to boost COVID-19 immunity against the original strain and multiple variants of concern.
Vaxxinity's pipeline primarily consists of five programs focused on chronic diseases, spanning neurodegenerative disorders, neurology, and cardiovascular indications. Given the ongoing need for booster vaccines to address COVID-19 and the applicability of Vaxxinity's Vaxxine Platform to infectious disease, the company is also advancing a product candidate that addresses SARS-CoV-2.
The company's current pipeline includes six programs from early to late-stage development, which fall into three major areas: Neurodegeneration, Next Wave Chronic, and Infectious Disease. The Neurodegeneration pipeline consists of UB-311, the company's leading neurology product candidate targeting the primary pathological process of Alzheimer's disease (AD), UB-312 targeting the pathological process of Parkinson's disease (PD) and other synucleinopathies, and VXX-301, an anti-tau protein product candidate with the potential to address multiple neurodegenerative conditions, including AD.
Vaxxinity's Next Wave Chronic pipeline consists of UB-313, which targets Calcitonin Gene-Related Peptide (CGRP) to prevent migraines, and VXX-401, which targets proprotein convertase subtilisin/kexin type 9 (PCSK9) to reduce low-density lipoprotein (LDL) cholesterol, a risk factor for atherosclerotic heart disease. Additionally, the company's Infectious Disease product candidate, UB-612, is being advanced as a heterologous booster against COVID-19.
Financial Performance and Liquidity
Vaxxinity has not yet obtained regulatory approval for or commercialized any of its product candidates, which are in various phases of pre-clinical and clinical development. The company has financed its operations primarily through the issuance of common stock, convertible preferred stock, borrowings under promissory notes, and the execution of Simple Agreements for Future Equity (SAFEs).
As of September 30, 2023, Vaxxinity had $17.39 million in cash and cash equivalents and $25.12 million in short-term investments, totaling $42.50 million in available liquidity. The company has incurred substantial operating losses and negative cash flows from operations since inception and expects to continue to do so for the foreseeable future.
For the most recent quarter, Vaxxinity reported no revenue, as its product candidates are still in clinical development. The company incurred a net loss of $11,392,000, with negative operating cash flow of $11,845,000 and negative free cash flow of $12,259,000. These figures reflect the company's ongoing investment in research and development as it advances its pipeline.
Vaxxinity's debt-to-equity ratio stands at 1.1311805503766128, indicating a significant level of debt relative to equity. The company's current ratio and quick ratio are both 1.8875319511502413, suggesting a relatively healthy short-term liquidity position.
Vaxxinity has taken steps to reduce its rate of cash burn for research and development and general and administrative activities, including reducing headcount through attrition and organizational restructuring, limiting the use of external consultants and other professional services, and prioritizing research and development activities for certain programs while deferring others. As a result, the company expects its existing cash and cash equivalents and short-term investments will be sufficient to fund its operating expenses and capital expenditure requirements through early Q4 2024.
Thereafter, Vaxxinity's viability will depend on its ability to raise additional capital to finance operations, successfully commercialize its product candidates, if approved, or enter into collaborations with third parties for the development and/or commercialization of its product candidates. If the company is unable to do any of these, it may be required to delay, limit, reduce, or terminate its product candidate development or future commercialization efforts.
Operational Highlights and Challenges
In August 2023, Vaxxinity published results from the Phase 2a trial of UB-311 in patients with mild Alzheimer's disease in The Lancet's eBioMedicine. The data demonstrated target engagement and immunogenicity of the active immunotherapy UB-311 targeting pathological amyloid-beta.
Additionally, through the second half of 2023, exploratory target engagement and biomarker assays from the Phase 1 clinical trial of UB-312 in Parkinson's disease have continued to yield encouraging results. UB-312-induced antibodies were shown to slow alpha-synuclein aggregation in Parkinson's patient cerebrospinal fluid, demonstrating blood-brain barrier crossing and clear target engagement in vivo. UB-312 also reduced aggregated alpha-synuclein over time in the cerebrospinal fluid of Parkinson's patients, as compared to placebo.
In October 2023, Vaxxinity expanded the Phase 1 trial of VXX-401 to test higher dose levels, due to the product candidate's favorable safety and tolerability profile to date. VXX-401 targets proprotein convertase subtilisin/kexin type 9 (PCSK9) to reduce low-density lipoprotein (LDL) cholesterol, a risk factor for atherosclerotic heart disease.
Despite these operational successes, Vaxxinity has faced its share of challenges. In August 2021, the company's Emergency Use Authorization application for its UB-612 COVID-19 vaccine candidate was rejected in Taiwan, leading to the cancellation of certain raw material orders and resulting in a potential loss contingency that the company is still evaluating.
Additionally, Vaxxinity has had to navigate the complexities of related party transactions with United Biomedical, Inc. (UBI) and its affiliated companies, which have historically performed and administered a significant amount of research and development work on the company's behalf. This has added to the complexity of determining appropriate accruals, and Vaxxinity has largely moved away from this model in recent years.
Risks and Uncertainties
Vaxxinity's ability to generate revenue sufficient to achieve profitability will depend on the eventual regulatory approval and commercialization of one or more of its product candidates. The company has not yet obtained any regulatory approvals for its product candidates or conducted sales and marketing activities for them.
The company's product candidates are in clinical stage or pre-clinical stage development, and Vaxxinity has incurred significant operating losses since its inception. As of September 30, 2023, the company had an accumulated deficit of $350.20 million.
Vaxxinity's future capital requirements will depend on many factors, including the scope, number, progress, initiation, duration, cost, results, and timing of clinical trials, pre-clinical programs, and nonclinical studies of its current or future product candidates; the outcomes and timing of regulatory reviews, approvals, or other actions; the terms on which the company can manufacture its pre-clinical and clinical drug material; the extent to which it undertakes commercialization of any drug products, if approved; the extent to which it establishes sales, marketing, medical affairs, and distribution infrastructure; and the timing and extent to which it expands its operational, financial, and management systems and infrastructure.
The company's ability to raise additional capital on acceptable terms in a rising interest rate and tighter credit environment will be crucial to its continued operations and the development of its product pipeline.
Outlook and Conclusion
Vaxxinity is at a critical juncture as it refocuses its efforts on its neurodegeneration programs and moves closer to obtaining its first regulatory approval. The company's recent clinical data and operational progress, particularly in the areas of Parkinson's disease and Alzheimer's disease, have been encouraging.
The company's product segments demonstrate a diverse pipeline targeting significant unmet medical needs. The Neurodegeneration pipeline, including UB-311, UB-312, and VXX-301, addresses conditions such as Alzheimer's disease, Parkinson's disease, and other neurodegenerative disorders. The Next Wave Chronic pipeline, with UB-313 and VXX-401, targets migraines and cardiovascular disease respectively. The Infectious Disease pipeline focuses on UB-612 for COVID-19, with recent progress in regulatory submissions for conditional/provisional authorization in the United Kingdom and Australia.
Vaxxinity's financial performance reflects its status as a clinical-stage biotechnology company. The decrease in research and development expenses from $12.47 million in Q3 2022 to $7.91 million in Q3 2023, primarily due to the completion phase of the UB-612 COVID-19 vaccine program, demonstrates the company's ability to manage costs as its programs progress. Similarly, the reduction in general and administrative expenses from $7.30 million to $5.54 million over the same period shows efforts to streamline operations.
However, Vaxxinity faces significant challenges in terms of its financial position and the need to raise additional capital to fund its operations and product development. The company's ability to successfully navigate these challenges and execute on its strategic priorities will be key to its long-term success.
Investors should closely monitor Vaxxinity's progress in advancing its pipeline, securing necessary financing, and addressing the operational complexities it has faced, particularly with regard to related party transactions. The company's ability to achieve regulatory approvals and commercialize its product candidates will be pivotal in determining its future trajectory and whether it can pioneer a new class of immunotherapeutic vaccines to address unmet medical needs.