On May 15, 2023 VBI Vaccines Inc. (Nasdaq: VBIV) (VBI), a biopharmaceutical company driven by immunology in the pursuit of powerful prevention and treatment of disease, reported a business update and announced financial results for the quarter ended March 31, 2023 (Press release, VBI Vaccines, MAY 15, 2023, View Source [SID1234631751]).
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Jeff Baxter, VBI’s President and CEO, commented: "As highlighted earlier this year, we continue to focus on three core priorities: (1) making a difference in the fight against hepatitis B including prevention and treatment, (2) advancing key development programs that target significant unmet needs with meaningful near-term milestones, and (3) managing our operational expenses and capital to fuel sustainable growth and value for key stakeholders – patients, healthcare providers, and shareholders. We continue to make good progress across all three endeavors, and I am especially excited to note the increase in use of PreHevbrio in the U.S. With an ever-expanding access and distribution network in place, and our focus on commercial execution, we hope and expect to see this momentum continue throughout 2023 and beyond. Complementing our work in prevention, the encouraging clinical data announced earlier this year from our partnership with Brii Biosciences underscores the belief that a functional cure with broader efficacy for more hepatitis B patients is within reach, and that our immunotherapeutic candidate, VBI-2601, has the potential to be a meaningful part of that combination regimen."
Recent Key Program Achievements and Projected Upcoming Milestones
Hepatitis B (HBV)
PreHevbrio [Hepatitis B Vaccine (Recombinant)]
Net product sales increased 90% from Q4 2022, with $0.5 million earned in Q1 2023
Product sales are net of the provision for discounts, chargebacks, rebates, and fees – in the aggregate, these discounts reduced sales by $0.3 million in Q1 2023, from $0.8 million gross sales to $0.5 million net sales.
PreHevbrio is now available for purchase at six retail pharmacy chains in the U.S., including Costco, RiteAid, Walmart, and three of the top 10 regional retail pharmacy networks, as well as through the U.S. Department of Veterans Affairs (VA), Federal Bureau of Prisons, and at certain military treatment facilities
Work is underway to continue to expand the number of U.S. integrated delivery networks (IDNs) and hospital systems that offer PreHevbrio
Access continues to broaden for PreHevbrio in the U.S., with a 170% increase in the total number of customer orders in Q1 2023 compared to Q4 2022
S. coverage rates remain strong for the PreHevbrio-specific Current Procedural Terminology (CPT) code across Medicare, commercial, and state Medicaid plans
Q1 2023: Initial stocking order supplied to VBI’s marketing and distribution partner, Valneva, for the U.K. market at the end of Q1 2023 – brand name in U.K. and Europe is PreHevbri [Hepatitis B Vaccine (Recombinant, Adsorbed)]
Q2 2023: PreHevbri is expected to be available in certain European countries beginning in the second quarter of 2023
By Year-End 2023: Availability expected in Canada under brand name PreHevbrio [3-Antigen Hepatitis B Vaccine (Recombinant)]
VBI-2601 (BRII-179): HBV Immunotherapeutic Candidate
Q1 2023: Initial Phase 2 combination study data, announced in February 2023, suggest VBI-2601 has potential to be a valuable immunomodulatory component of a functional cure regimen
H2 2023: Interim topline clinical data expected from part one of the two-part Phase 2a/2b combination study evaluating VBI-2601 (BRII-179) as an add-on to existing pegylated interferon (PEG-IFN-α) and nucleos(t)ide reverse transcriptase inhibitor (Nrtl) therapy in non-cirrhotic chronic HBV patients
Around Year-End 2023: Additional data from Phase 2 combination study expected
Glioblastoma (GBM)
VBI-1901: Cancer Vaccine Immunotherapeutic Candidate
Mid-year 2023: Expected initiation of next phase of development in recurrent GBM setting
Q3 2023: Expected initiation of VBI-1901 study arm, as part of the Individualized Screening Trial of Innovative Glioblastoma Therapy (INSIGhT), a Phase 2 adaptive platform trial, in combination with Agenus’ anti-PD-1, balstilimab, in the primary GBM setting
COVID-19 & Coronaviruses
VBI-2901: Multivalent Coronavirus Vaccine Candidate
Mid-year 2023: Interim data expected from Phase 1 study of VBI-2901, VBI’s multivalent eVLP vaccine candidate that expresses the SARS-CoV-2 (COVID-19), SARS-CoV-1 (SARS), and MERS-CoV (MERS) spike proteins
Additional Corporate Updates
Leadership Appointments
April 2023: Nell Beattie appointed as Chief Financial Officer and Head of Corporate Development, and member of VBI’s Board of Directors
April 2023: Vaughn Himes, Ph.D., Chief Technical Officer at Seagen Inc., appointed to VBI’s Board of Directors – Link Here
Recent Peer-Reviewed Publications
May 2023: Talbird, Anderson, et al., "Cost-effectiveness of a 3-Antigen Versus Single-Antigen Vaccine for the Prevention of Hepatitis B in Adults in the United States" published in Vaccine – Link Here
May 2023: Diaz-Mitoma, Vesikari, et al., "The Persistence of Seroprotective Levels of Antibodies After Vaccination With PreHevbrio, a 3-Antigen Hepatitis B Vaccine" published in Vaccine – Link Here
Organizational Changes and Cost Savings
April 4, 2023: Announcement of plans to reduce internal workforce and operational expenses by 30-35% – a reduction which began in April and is expected to largely complete by the end of June 2023. As a result of this and other reductions in spend, operating expenses from normal business are expected to be 30-35% lower in the second half of 2023 compared to the second half of 2022.
First Quarter 2023 Financial Results
Cash Position: VBI ended the first quarter of 2023 with $40.4 million in cash as compared with $62.6 million in cash as of December 31, 2022.
Revenues, net: Revenues, net for the first quarter of 2023 was $0.5 million as compared to $0.1 million for the same time period in 2022. The revenue increase of 285% was a result of an increase in product sales of PreHevbrio in the U.S., in addition to initial product sales of PreHevbri to our partner, Valneva, in the U.K., offset by lower sales in the Israeli market.
Cost of Revenues: Cost of revenues was $3.6 million in the first quarter of 2023 as compared to $2.8 million in the first quarter of 2022. The increase in the cost of revenues was due to increased product sales, direct labor costs, and inventory related costs for our 3-antigen HBV vaccine.
Research and Development (R&D): R&D expenses for the first quarter of 2023 were $3.2 million as compared to $2.4 million for the first quarter of 2022. R&D expenses were offset by $2.4 million in the first quarter of 2023 and $2.8 million in the first quarter of 2022 due to government grants and funding arrangements. The increase in R&D expenses was mainly related to the continued development of our vaccine candidates, specifically VBI-2901, as the Phase 1 study began in Q3 2022 and completed subject enrollment during Q1
Sales, General and Administrative (SG&A): SG&A expenses for the first quarter of 2023 were $13.3 million as compared to $10.9 million for the same period in 2022. The increase in SG&A, partially offset by government grants and funding arrangements, was a result of the increase in commercial activities related to PreHevbrio, most notably the deployment of our commercial field teams which occurred in the middle of Q1 2022, and the continued development of our distribution infrastructure. Additional increased costs include increased insurance costs, professional costs, and labor costs.
Net Cash Used in Operating Activities: Net cash used in operating activities for the three months ended March 31, 2023 was $21.7 million compared to $19.9 million for the same period in 2022. The increase in cash outflows was largely a result of an increase in net loss, offset by the change in operating working capital, most notably in other current assets and accounts payable. As announced on April 4, 2023, VBI is implementing cost saving measures that are expected to reduce operating expenses from normal business in the second half of 2023 by 30-35% compared to the second half of 2022.
Net Loss and Net Loss Per Share: Net loss and net loss per share for the first quarter of 2023 were $27.8 million and $3.22, respectively, compared to a net loss and net loss per share of $21.3 million and $2.47 for the first quarter of 2022, respectively.
Net Loss and Net Loss Per Share, Excluding Foreign Exchange Loss: Net loss and net loss per share, excluding foreign exchange loss, for the first quarter of 2023 were $20.9 million and $2.43, respectively, compared to a net loss and a net loss per share, excluding foreign exchange loss, of $16.9 million and $1.96 for the first quarter of 2022, respectively. Foreign exchange loss for the first quarter 2023 was $6.8 million as compared to a loss of $4.4 million for the first quarter of 2022. Certain intercompany loans between VBI Vaccines Inc. and our subsidiaries are denominated in a currency other than the functional currency of each entity. The primary driver of the increase in foreign exchange loss was the impact of the relative strengthening of the U.S. and Canadian Dollars against the New Israeli Shekel upon translation of these intercompany loans.
Use of Non-GAAP Financial Measures
Net Loss Excluding Foreign Exchange Loss and Net Loss per Share Excluding Foreign Exchange Loss are non-GAAP financial measures. VBI’s management believes that the presentation of Net Loss Excluding Foreign Exchange Loss and Net Loss per Share Excluding Foreign Exchange Loss is useful to investors because management does not consider foreign exchange loss, which is primarily driven by changes in exchange rates related to certain intercompany loans, when evaluating VBI’s operating performance. Non-GAAP financial measures are meant to supplement, and to be viewed in conjunction with, GAAP financial results. The presentation of these non-GAAP financial measures should not be considered in isolation or as a substitute for comparable GAAP financial measures and should be read only in conjunction with the Company’s financial statements prepared in accordance with GAAP. Reconciliations of the Company’s non-GAAP measures are included below.
The following represents a reconciliation of Net Loss to Net Loss Excluding Foreign Exchange Loss and Net Loss per Share Excluding Foreign Exchange Loss.