On August 14, 2023 VBI Vaccines Inc. (Nasdaq: VBIV) (VBI), a biopharmaceutical company driven by immunology in the pursuit of powerful prevention and treatment of disease, today provided a business update and announced financial results for the quarter ended June 30, 2023.
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"Q2 was a period of transition for VBI as we worked to more efficiently align resource deployment and headcount with the opportunities for value creation," said Jeff Baxter, VBI’s President and CEO. "With, (i) the expansion of our hepatitis B partnership with Brii Biosciences, (ii) our internal workforce reduction largely complete, (iii) the redefined, highly targeted U.S. commercial field force now trained and deployed, and (iv) the additional cash we brought in from our expanded partnership with Brii and our concurrent public offering, we believe we are well-positioned going into the second half of 2023 to execute on our corporate strategy and drive growth and value for key stakeholders – patients, healthcare providers, and shareholders."
Recent Key Program Achievements and Projected Upcoming Milestones
Hepatitis B (HBV)
PreHevbrio [Hepatitis B Vaccine (Recombinant)]
● Global access continues to expand with:
○ June & July 2023: Launches in the U.K., Netherlands, and Belgium through our marketing and distribution partnership with Valneva – brand name PreHevbri [Hepatitis B Vaccine (Recombinant, Adsorbed)]
○ July 2023: Exclusive licensing deal with Brii Biosciences (Brii Bio) announced for the development and commercialization of PreHevbri in the Asia Pacific region (APAC), excluding Japan
● Global net product sales increased 48% from Q1 2023 with $0.7 million earned in Q2 2023
○ Net product sales are net of the provision for discounts, chargebacks, rebates, and fees – in the aggregate, these discounts reduced sales by $0.5 million in Q2 2023, from $1.2 million gross sales to $0.7 million net sales
● June 2023: PreHevbrio was awarded part of the CDC 2023 Adult Vaccine contract for up to $25.4 million
○ The CDC vaccine contract is established for the purchase of vaccines by immunization programs at the local, state, and national levels
● Through our U.S. partnership with Syneos, work has been underway to redefine the U.S. commercial account targeting strategy to better capitalize on the opportunities for, and access to, PreHevbrio, today – the transition to this new model started in February and was completed in June, with the new highly trained and experienced team now fully deployed
● Continued increase in use reflected among accounts that have made the switch to PreHevbrio, with a 46% increase in average order size from Q1 to Q2 2023 among such accounts
● Contracting platform across multiple market segments continues to grow, including with retail partners, Integrated Delivery Networks (IDNs) and large hospital systems, military and federal facilities, prisons, and independent and public health clinics
● U.S. coverage rates continue to be strong for PreHevbrio-specific Current Procedural Terminology (CPT) code across Medicare, commercial, and state Medicaid plans
● Throughout H2 2023: Additional European market launches expected through partnership with Valneva
● H1 2024: Availability expected in Canada under brand name PreHevbrio [3-Antigen Hepatitis B Vaccine (Recombinant)]
VBI-2601 (BRII-179): HBV Immunotherapeutic Candidate
● July 2023: Announced exclusive global licensing agreement with Brii Bio for the development and commercialization of VBI-2601
○ This expanded partnership adds VBI-2601 to Brii Bio’s HBV portfolio, which, through a series of strategic investments and partnerships is among the most advanced in the chronic HBV field
○ VBI will continue to share in the success of VBI-2601, with the potential to receive regulatory and commercial milestone payments, in addition to potential double-digit royalties on global sales of VBI-2601
● Additional data from the two ongoing Phase 2 studies in China and Asia Pacific are expected to be announced by Brii Bio in H2 2023
Glioblastoma (GBM)
VBI-1901: Cancer Vaccine Immunotherapeutic Candidate
● Q3 2023: First patients expected to be dosed in Phase 2b study of VBI-1901, an FDA Fast Track and Orphan Drug Designated cancer vaccine candidate, in recurrent GBM patients
● Q4 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 primary GBM patients
COVID-19 & Coronaviruses
VBI-2901: Multivalent Coronavirus Vaccine Candidate
● Q3 2023: Interim data readout from Phase 1 study of VBI-2901 expected – VBI-2901 is a multivalent, broad-spectrum eVLP vaccine candidate that expresses the SARS-CoV-2 (COVID-19), SARS-CoV-1 (SARS), and MERS-CoV (MERS) spike proteins, and was designed to increase breadth of protection against COVID-19 and related coronaviruses. VBI-2901 has been developed in collaboration with the National Research Council of Canada (NRC) and is supported by funding from the Canadian Government’s Innovation, Science and Economic Development’s (ISED) Strategic Innovation Fund
Second Quarter 2023 Financial Results
● Cash Position: VBI ended the second quarter of 2023 with $20.8 million in cash as compared with $62.6 million in cash as of December 31, 2022. Cash position at June 30, 2023 does not include $15 million upfront payment, including $3 million equity investment, from the expanded Brii Bio partnership or $20.5 million gross proceeds from the underwritten public offering, both of which occurred in July 2023.
● Revenues, net: Revenues, net for the second quarter of 2023 were $0.7 million as compared to $0.3 million for the same period in 2022. The revenue increase of 108% was a result of an increase in product sales of PreHevbrio in the U.S., in addition to initial European product sales of PreHevbri to our partner, Valneva.
● Cost of Revenues: Cost of revenues was $3.5 million in the second quarter of 2023 as compared to $2.5 million in the second quarter of 2022. The increase in the cost of revenues was due to increased product sales, direct labor costs, and inventory related costs for the Company’s 3-antigen HBV vaccine.
● Research and Development (R&D): R&D expenses for the second quarter of 2023 were $3.3 million as compared to $5.6 million for the second quarter of 2022. R&D expenses were offset by $2.3 million in the second quarter of 2023 and $1.0 million in the second quarter of 2022 from government grants and funding arrangements.
● Sales, General, and Administrative (SG&A): SG&A expenses for the second quarter of 2023 were $10.9 million as compared to $15.1 million for the same period in 2022. The decrease in SG&A expenses, partially offset by government grants and funding arrangements, was mainly a result of recent organizational changes that reduced our internal workforce, as announced in April 2023, and the redefined deployment strategy of our U.S. commercial field force and activities related to PreHevbrio.
● Net Cash Used in Operating Activities: Net cash used in operating activities for the six months ended June 30, 2023 was $40.9 million compared to $37.4 million for the same period in 2022. The increase in cash outflows is largely a result of an increase in net loss, offset by non-cash reconciling items, mainly impairment charges and unrealized foreign exchange loss and the change in operating working capital, most notably in other current assets, accounts payable and other current liabilities. As announced on April 4, 2023, VBI continues to implement 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 second quarter of 2023 were $44.6 million and $5.18, respectively, compared to a net loss and net loss per share of $45.7 million and $5.31 for the second quarter of 2022, respectively.
● Net Loss and Net Loss Per Share, Excluding Impairment Charges and Foreign Exchange Loss: Net loss and net loss per share, excluding the non-cash impairment and foreign exchange loss, for the second quarter of 2023 were $18.7 million and $2.17, respectively, compared to $23.8 million and $2.77 for the second quarter of 2022, respectively. See "Non-GAAP Financial Information" below for additional information regarding this non-GAAP financial measure, and "GAAP to Non-GAAP Reconciliation" for a reconciliation of this non-GAAP financial measure to net loss and net loss per share.
○ Impairment for the second quarter of 2023 was $20.0 million as compared to $0 for the second quarter of 2022.
○ Foreign exchange loss for the second quarter of 2023 was $5.9 million as compared to $21.9 million for the second quarter of 2022. Certain intercompany loans between the Company and its 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.