SEC Filing - Vaxcyte, Inc.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

View:

Download DOC

Download PDF

Download XLS

Download XBRL

pcvx-10q_20200630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ____________

Commission File Number: 001-39323

VAXCYTE, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	46-4233385
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
353 Hatch Drive Foster City, California	94404
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 837-0111

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

PCVX

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 11, 2020, the registrant had 50,923,883 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
	Condensed Balance Sheets	1
	Condensed Statements of Operations and Comprehensive Loss	2
	Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)	3
	Condensed Statements of Cash Flows	5
	Notes to Unaudited Condensed Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 3.	Defaults Upon Senior Securities	75
Item 4.	Mine Safety Disclosures	75
Item 5.	Other Information	75
Item 6.	Exhibits	76
Signatures		77

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” or “would,” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

our expectations regarding the potential benefits, spectrum coverage and immunogenicity of our vaccine candidates;

•

our expectations regarding our preclinical study results potentially being predictive of clinical study results;

•

our belief that our pneumococcal conjugate vaccine candidates could receive regulatory approval based on a demonstration of non-inferiority to the standard of care using well-defined surrogate immune endpoints rather than requiring clinical field efficacy studies;

•

the timing of the initiation, progress and potential results of our preclinical studies, clinical trials and our research and development programs;

•

our ability to advance vaccine candidates into, and successfully complete, preclinical studies and clinical trials;

•

the commercialization of our vaccine candidates, if approved;

•

estimates of our total addressable market, future revenue, expenses, capital requirements and our needs for additional financing;

•

our ability to compete effectively with existing competitors and new market entrants;

•

our ability to establish and maintain intellectual property protection for our products or avoid claims of infringement;

•

our manufacturing capabilities and the scalable nature of our manufacturing process;

•

potential effects of extensive government regulation;

•

the pricing, coverage and reimbursement of our vaccine candidates, if approved;

•

our ability and the ability of our third-party contract manufacturers to operate and continue operations in light of the COVID-19 pandemic;

•

our ability to hire and retain key personnel;

•

our ability to obtain additional financing;

•

the volatility of the trading price of our common stock; and

•

our expectation regarding the time during which we will be an emerging growth company under the Jumpstart Our Business Startups Act.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section entitled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

iii

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements

VAXCYTE, INC.

Condensed Balance Sheets

(in thousands, except share and per share data)

(unaudited)

	June 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	410,046		$	58,976
Prepaid expenses and other current assets		3,011			2,747
Total current assets		413,057			61,723
Property and equipment, net		2,753			3,391
Other assets		438			584
Total assets	$	416,248		$	65,698
Liabilities, Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)
Current liabilities:
Accounts payable	$	2,556		$	3,376
Accrued compensation		731			414
Accrued manufacturing expenses		26,285			5,777
Accrued expenses (including related party accrual of $102 and $15 as of June 30, 2020 and December 31, 2019, respectively)		3,297			1,305
Deferred rent — current portion		25			19
Lease liability — current portion		—			161
Total current liabilities		32,894			11,052
Deferred rent — long-term portion		8			17
Redeemable convertible preferred stock warrant liability		—			450
Other liabilities		136			242
Total liabilities		33,038			11,761
Commitments and contingencies (Note 5)
Redeemable Convertible Preferred Stock
Series A redeemable convertible preferred stock, $0.001 par value; 10,502,804 shares authorized at June 30, 2020 and December 31, 2019; no and 6,225,719 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively, liquidation value of $0 and $26,887 at June 30, 2020 and December 31, 2019, respectively		—			24,967
Series B redeemable convertible preferred stock, $0.001 par value; 11,449,515 shares authorized at June 30, 2020 and December 31, 2019; no and 6,786,896 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively, liquidation value of $0 and $60,150 at June 30, 2020 and December 31, 2019, respectively		—			55,151
Series C redeemable convertible preferred stock, $0.001 par value; 12,545,824 and 14,010,043 shares authorized at June 30, 2020 and December 31, 2019, respectively, no and 7,377,480 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively, liquidation value of $0 and $85,000 at June 30, 2020 and December 31, 2019, respectively		—			80,192
Stockholders' Equity (Deficit)
Common stock, $0.001 par value — 66,000,000 and 52,000,000 shares authorized as of June 30, 2020 and December 31, 2019, respectively, 50,881,698 and 4,059,909 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively		54			7
Additional paid-in capital		539,965			2,967
Accumulated deficit		(156,809	)		(109,347	)
Total stockholders' equity (deficit)		383,210			(106,373	)
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)	$	416,248		$	65,698

The accompanying notes are an integral part of these unaudited condensed financial statements.

VAXCYTE, INC.

Condensed Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)

(unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Operating expenses:
Research and development (including related party expenses of $98 and $(217) for the three months ended June 30, 2020 and 2019, respectively, and $315 and $112 for the six months ended June 30, 2020 and 2019, respectively)	$	18,178		$	9,968		$	42,493		$	22,595
General and administrative		3,046			2,264			6,327			3,580
Total operating expenses		21,224			12,232			48,820			26,175
Loss from operations		(21,224	)		(12,232	)		(48,820	)		(26,175	)
Other income (expense), net:
Interest expense		—			(11	)		(7	)		(24	)
Interest income		44			181			179			418
Grant income		1,036			—			1,365			—
Foreign currency transaction losses		(176	)		(53	)		(179	)		(231	)
Change in fair value of the redeemable convertible preferred stock tranche liability		—			1,450			—			1,676
Total other income (expense), net		904			1,567			1,358			1,839
Net loss and comprehensive loss	$	(20,320	)	$	(10,665	)	$	(47,462	)	$	(24,336	)
Net loss per share, basic and diluted	$	(1.72	)	$	(2.90	)	$	(5.99	)	$	(6.62	)
Weighted-average shares outstanding, basic and diluted		11,803,778			3,682,897			7,926,818			3,677,032

The accompanying notes are an integral part of these unaudited condensed financial statements.

VAXCYTE, INC.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share data)

(unaudited)

	Series A						Series B						Series C						Series D															Total
	Redeemable Convertible						Redeemable Convertible						Redeemable Convertible						Redeemable Convertible										Additional					Stockholders’
	Preferred Stock						Preferred Stock						Preferred Stock						Preferred Stock						Common Stock				Paid-in		Accumulated			Equity
	Shares			Amount			Shares			Amount			Shares			Amount			Shares			Amount			Shares		Amount		Capital		Deficit			(Deficit)
Balance — December 31, 2019		6,225,719		$	24,967			6,786,896		$	55,151			7,377,480		$	80,192			—		$	—			4,059,909	$	7	$	2,967	$	(109,347	)	$	(106,373	)
Exercise of stock options		—			—			—			—			—			—			—			—			28,837		—		49		—			49
Issuance of common stock related to early exercised stock options		—			—			—			—			—			—			—			—			14,819		—		—		—			—
Vesting of early exercised stock options		—			—			—			—			—			—			—			—			—		—		128		—			128
Issuance of Series D redeemable convertible preferred stock, net of issuance cost of $125		—			—			—			—			—			—			8,220,242			109,875			—		—		—		—			—
Stock-based compensation expense		—			—			—			—			—			—			—			—			—		—		372		—			372
Net loss		—			—			—			—			—			—			—			—			—		—		—		(27,142	)		(27,142	)
Balance — March 31, 2020		6,225,719			24,967			6,786,896			55,151			7,377,480			80,192			8,220,242			109,875			4,103,565		7		3,516		(136,489	)		(132,966	)
Conversion of preferred stock		(6,225,719	)		(24,967	)		(6,786,896	)		(55,151	)		(7,377,480	)		(80,192	)		(8,220,242	)		(109,879	)		28,610,337		29		270,161		—			270,190
Conversion of common stock warrant		—			—			—			—			—			—			—			—			30,278		—		—		—			—
Conversion of preferred stock warrant		—			—			—			—			—			—			—			—			16,591		—		—		—			—
Warrant liability write-off		—			—			—			—			—			—			—			—			—		—		629		—			629
Issuance of common stock upon initial public offering, net of issuance costs of $3,296		—			—			—			—			—			—			—			—			17,968,750		18		264,061		—			264,079
Exercise of stock options		—			—			—			—			—			—			—			—			152,177		—		297		—			297
Vesting of early exercised stock options		—			—			—			—			—			—			—			—			—		—		12		—			12
Issuance of preferred stock		—			—			—			—			—			—			—			4			—		—		—		—			—
Stock-based compensation expense		—			—			—			—			—			—			—			—			—		—		1,289		—			1,289
Net loss		—			—			—			—			—			—			—			—			—		—		—		(20,320	)		(20,320	)
Balance — June 30, 2020		—		$	—			—		$	—			—		$	—			—		$	—			50,881,698	$	54	$	539,965	$	(156,809	)	$	383,210

The accompanying notes are an integral part of these unaudited condensed financial statements.

VAXCYTE, INC.

Condensed Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(in thousands, except share data)

(unaudited)

	Series A				Series B				Series C
	Redeemable Convertible				Redeemable Convertible				Redeemable Convertible								Additional					Total
	Preferred Stock				Preferred Stock				Preferred Stock				Common Stock				Paid-in		Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		Capital		Deficit			Deficit
Balance — December 31, 2018		6,225,719	$	24,967		6,786,896	$	55,151		3,688,740	$	37,692		3,757,403	$	6	$	1,339	$	(59,073	)	$	(57,728	)
Vesting of early exercised stock options		—		—		—		—		—		—		—		—		20		—			20
Stock-based compensation expense		—		—		—		—		—		—		—		—		266		—			266
Net loss		—		—		—		—		—		—		—		—		—		(13,671	)		(13,671	)
Balance — March 31, 2019		6,225,719		24,967		6,786,896		55,151		3,688,740		37,692		3,757,403		6		1,625		(72,744	)		(71,113	)
Exercise of common stock options		—		—		—		—		—		—		889		—	2			—			2
Vesting of early exercised stock options		—		—		—		—		—		—		—		—		20		—			20
Stock-based compensation expense		—		—		—		—		—		—		—		—	278			—			278
Net loss		—		—		—		—		—		—		—		—		—		(10,665	)		(10,665	)
Balance — June 30, 2019		6,225,719	$	24,967		6,786,896	$	55,151		3,688,740	$	37,692		3,758,292	$	6	$	1,925	$	(83,409	)	$	(81,478	)

The accompanying notes are an integral part of these unaudited condensed financial statements.

VAXCYTE, INC.

Condensed Statements of Cash Flows

(in thousands)

(unaudited)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(47,462	)	$	(24,336	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		739			596
Stock-based compensation expense		1,661			545
Change in fair value of redeemable convertible preferred stock warrant		179			(9	)
Change in fair value of redeemable convertible preferred stock tranche liabilities		—			(1,676	)
Loss on disposal of assets		16