VBI Vaccines Reports Full Year 2023 Financial Results

CAMBRIDGE, Mass.–(BUSINESS WIRE)–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 year ended December 31, 2023.

“Over the last 12 months, we’ve seen continued progress across all of our lead programs – with increased use of PreHevbrio and an ever-expanding access and distribution network in place, as well as positive clinical data announcements from all lead pipeline programs, we are helping to make great strides in the fight against GBM, hepatitis B, and coronaviruses,” said Jeff Baxter, VBI’s President and CEO. “In the face of a challenging financial market for biotechnology companies, we’ve taken steps to improve our financial stability, including strengthening our balance sheet through equity offerings and business development collaborations, as well as executing on a plan to significantly reduce our debt liability. With a number of near-term milestones expected, we are focused on managing our operational expenses and capital to fuel sustainable growth and value for key stakeholders – patients, healthcare providers, and shareholders.”

Recent Key Program Achievements and Projected Upcoming Milestones

PreHevbrio^® [Hepatitis B Vaccine (Recombinant)]

• Product revenue, net of $3.1 million in 2023 compared to $0.9 million in 2022, a 234% year-over-year increase
• Preliminary 2024 PreHevbrio U.S. sales demonstrate substantial outpacing of 2023 on a volume basis – through early March 2024, U.S. sales volume totaled approximately 65% of 2023 full year volume
• Market segment contracting platforms continue to see growth across Integrated Delivery Networks (IDNs) and large hospital systems, national and regional pharmacy networks, multiple large military and federal facilities, prisons, and independent and public health clinics:
  • A top-five national health system converted to PreHevbrio in early 2024 with contracting efforts underway to secure additional IDN partners
  • Retail usage supported by strong ordering from national chains, including Walmart, along with key regional pharmacy networks
  • PreHevbrio is also available for purchase through the CDC Adult Vaccine Contract
• Ex-US – PreHevbri^®:
  • Exclusive licensing deal with Brii Biosciences (Brii Bio) announced for the development and commercialization of PreHevbri in the Asia Pacific region (APAC), excluding Japan
  • An update to the hepatitis B chapter of the Green Book, a resource for healthcare providers with the latest information on vaccines in the UK, was published in April and included detailed information about PreHevbri
  • PreHevbri became available in Sweden at the end of 2023, and VBI expects that PreHevbri will be made available in certain additional European Union countries in 2024 through its partnership with Valneva

VBI-1901: Cancer Vaccine Immunotherapeutic Candidate – Glioblastoma (GBM)

• September 2023: First patients dosed in the randomized, controlled Phase 2b study of VBI-1901, an FDA Fast Track and Orphan Drug Designated cancer vaccine candidate, in recurrent GBM patients
• April 2024: Encouraging early tumor response data from Phase 2b study in recurrent GBM presented at World Vaccine Congress 2024:
  • VBI-1901 Arm: 2 stable disease (SD) observations among patients eligible for evaluation at week 12 (n=2/5), achieving a 40% disease control rate, consistent with 44% disease control rate observed in the Phase 1/2a portion of the study
  • Control Arm (carmustine or lomustine chemotherapy): No tumor responses have been observed to date (n=0/6; 0% disease control rate) – all evaluable patients experienced a 2-8x increase in tumor size by week 6 and have been taken off study protocol
• Mid-Year and Year-End 2024: Additional interim data expected from ongoing randomized Phase 2b study in recurrent GBM patients, subject to speed of enrollment

Novel mRNA-Launched eVLP (MLE) Technology Platform

• October 2023: Expansion of proprietary virus-like particle (VLP) platforms announced, supported by preclinical data that demonstrated significant immunologic and manufacturing benefits
  • MLE technology enables the manufacture of particulate vaccines, capable of driving polyfunctional B-cell and T-cell activation, on accelerated timelines, similar to other mRNA vaccine production timelines
  • Multiple animal studies have assessed MLE presentation of target antigens compared to mRNA expression alone – studies conducted include target antigens for cytomegalovirus (CMV), Epstein-Barr virus (EBV), and coronaviruses
  • Breadth and quality of immune response expand the potential for the MLE platform across indications
• April 2024: Announced expansion of strategic partnership with Canadian Government to advance the development of the MLE technology platform, supported by the CAD$28 million funding award remaining under the original agreement
• Throughout 2024: MLE technology under evaluation by potential partners

VBI-2901: Multivalent Pan-Coronavirus Vaccine Candidate

• September 2023: Initial data from Phase 1 study of VBI-2901 reported – the first clinical data from a pan-coronavirus vaccine candidate, demonstrating vaccine benefit represented as boosting and/or greater durability of neutralizing antibody titers
• 2024: Additional data expected from Phase 1 study

Corporate Updates

• February 2024: Announcement of agreement to sell manufacturing capabilities, certain related assets, and enter into new license agreement with Brii Bio – VBI to receive up to $33 million in consideration, subject to achievement of certain activities, which will be used to reduce VBI’s loan obligations due to K2 HealthVentures (K2HV), for:
  • VBI’s manufacturing capabilities and certain related assets at Rehovot manufacturing facility
  • Intellectual property for VBI-2601, VBI’s hepatitis B immunotherapeutic candidate
  • Exclusive Asia Pacific (APAC), excluding Japan, license for development and commercialization of VBI-1901, VBI’s GBM immunotherapeutic candidate
• Following completion of all transactions, VBI expects its total debt principal with K2HV to be significantly reduced from $50 million to $17 million
  • In connection with the transactions, certain covenants in VBI’s loan agreement with K2HV have been amended
• To date in 2024, the Company has raised approximately $3.6 million in aggregate gross proceeds from the issuance of its common shares and warrants, and the exercise of previously issued warrants

Financial Results for the Twelve Months Ended December 2023

• Cash Position: As of December 31, 2023, VBI had $23.7 million in cash as compared with $62.6 million in cash as of December 31, 2022. Cash position at December 31, 2023, does not include approximately $3.6 million gross proceeds from registered direct offering of common shares and warrants, warrant exercises, and sale of common shares through VBI’s at-the-market facility subsequent to December 31, 2023 and through early April 2024.
• Revenues, net: Revenues, net for the full year 2023 were $8.7 million as compared to $1.1 million for the same period in 2022. The revenue increase was a result of an increase in product sales of PreHevbrio in the U.S. and of PreHevbri to VBI’s partner, Valneva, in Europe, in addition to the license revenue and R&D services revenue associated with the agreements with Brii Bio.
• Cost of Revenues: Cost of revenues was $12.5 million for the full year 2023 as compared to $11.3 million in 2022. The increase in the cost of revenues was due to increased sales and increased outsourced testing costs during the year ended December 31, 2023.
• Research and Development (R&D): R&D expenses for the year ended December 2023 were $9.3 million as compared to $15.5 million in 2022. R&D expenses were offset by $8.3 million for the year ended December 31, 2023, and $8.9 million for the year ended December 31, 2022, due to government grants and funding arrangements. The decrease in R&D expenses is primarily a result of decreased development expenses for VBI’s pan-coronavirus and GBM candidates, VBI-2901 and VBI-1901, due to timing of ongoing clinical studies of each candidate.
• Sales, General, and Administrative (SG&A): SG&A expenses for the full year 2023 were $42.1 million as compared to $56.1 million in 2022. The decrease in SG&A expenses was mainly a result of the April 2023 organizational changes that reduced our internal workforce and operating expenses.
• Net Cash Used in Operating Activities: Net cash used in operating activities for the full year 2023 was $60.9 million compared to $73.7 million for 2022. The decrease in cash outflows is largely a result of non-cash reconciling items, mainly impairment charges and unrealized foreign exchange loss, and the change in operating working capital, most notably in inventory, other current assets, accounts payable, deferred revenues, and other current liabilities. As a result of the organizational changes announced in April 2023, operating cash outflows in the second half of 2023 were $20 million as compared to $36.3 million in the second half of 2022, representing a 45% reduction.
• Net Loss and Net Loss Per Share: Net loss and net loss per share for the full year 2023 were $92.8 million and $6.03, respectively, compared to a net loss and net loss per share of $113.3 million and $13.16 for the full year 2022, respectively.
• Net Loss and Net Loss Per Share, Excluding Impairment Charges and Foreign Exchange Loss: Net loss and net loss per share, excluding impairment charges and foreign exchange loss, for the full year 2023 were $61.7 million and $3.96, respectively, compared to $85.8 million and $9.97 for the year ended 2022, respectively. See “Use of Non-GAAP Financial Measures” 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 charges and foreign exchange loss for the full year 2023 were $24.6 million and $6.5 million, respectively, as compared to none and $27.5 million in 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.

Use of Non-GAAP Financial Measures

Net Loss and Net Loss per Share, Excluding Impairment Charges and Foreign Exchange Loss, are non-GAAP financial measures and are defined as net loss excluding foreign exchange loss and impairment charges. Net Loss and Net Loss Per Share, Excluding Impairment and Foreign Exchange Loss, are not intended to replace net loss or net loss per share or other measures of financial performance reported in accordance with generally accepted accounting principles (GAAP).

VBI’s management believes that the presentation of Net Loss and Net Loss per Share Excluding Impairment Charges and Foreign Exchange Loss are 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, and impairment charges, which are non-recurring items, 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.

GAAP to Non-GAAP Reconciliations

The following represents a reconciliation of Net Loss to Net Loss Excluding Impairment Charges and Foreign Exchange Loss and Net Loss per Share Excluding Foreign Exchange Loss.

About PreHevbrio [Hepatitis B Vaccine (Recombinant)]

PreHevbrio is the only 3-antigen hepatitis B vaccine, comprised of the three surface antigens of the hepatitis B virus – Pre-S1, Pre-S2, and S. It is approved for use in the U.S., European Union/European Economic Area, United Kingdom, Canada, and Israel. The brand names for this vaccine are: PreHevbrio^® (US/Canada), PreHevbri^® (EU/EEA/UK), and Sci-B-Vac^® (Israel).

Please visit www.PreHevbrio.com for U.S. Important Safety Information for PreHevbrio [Hepatitis B Vaccine (Recombinant)], or please see U.S. Full Prescribing Information.

About VBI Vaccines Inc.

VBI Vaccines Inc. (“VBI”) is a biopharmaceutical company driven by immunology in the pursuit of powerful prevention and treatment of disease. Through its innovative approach to virus-like particles (“VLPs”), including a proprietary enveloped VLP (“eVLP”) platform technology and a proprietary mRNA-launched eVLP (“MLE”) platform technology, VBI develops vaccine candidates that mimic the natural presentation of viruses, designed to elicit the innate power of the human immune system. VBI is committed to targeting and overcoming significant infectious diseases, including hepatitis B, coronaviruses, and cytomegalovirus (CMV), as well as aggressive cancers including glioblastoma (GBM). VBI is headquartered in Cambridge, Massachusetts, with research operations in Ottawa, Canada, and a research and manufacturing site in Rehovot, Israel.

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