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

OR

 

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.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

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

 

i


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.

ii


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.

1


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.

 

2


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.

3


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.

 

4


 

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