Vaxcyte's stock soars 42% to record high after trial shows positive data for pneumococcal vaccine

By Ciara Linnane

Mizuho analysts welcome 'best-case scenario' data and say vaccine could displace Pfizer's and Merck's vaccines

Vaxcyte Inc.'s stock soared 42% Tuesday to a record high above $115, after the vaccine maker reported positive results from an early-stage trial of its 31-valent pneumococcal conjugate vaccine candidate in adults aged 50 and older.

The stock was on track for its second-biggest one-day gain, after it rose 60% on Oct. 24 of 2022.

The vaccine called VAX031 is designed to prevent invasive pneumococcal disease, or IPD, which includes such illnesses as meningitis and bacteremia, as well as non-invasive PD, which includes pneumonia, otitis media and sinusitis.

The company (PCVX) said it plans to move to a Phase 3 trial of the vaccine for use in adults in mid-2025 with topline data expected by 2026. It will also launch a mid-stage trial for its use in infants in the first quarter of 2025.

San Carlos, Calif.-based Vaxcyte said the Phase 1/2 study evaluating the safety and immunogenicity of VAX0-31 involved 1,051 adults aged 50 and older. VAX-31 was well tolerated and showed a safety profile at all doses through a six-month period that was similar to Pfizer Inc.'s (PFE) Prevnar 20, a vaccine that has been approved for use against 20 different strains of the bacteria that cause pneumococcal pneumonia.

The company used low, middle and high dose formulations in the trial with all three showing superior titers compared with Prevnar 20 for all serotypes.

VAX-31 showed "robust opsonophagocytic activity (OPA) immune responses for all 31 serotypes at all doses studied," the company said in a statement.

"We believe the positive safety, tolerability and immunogenicity results from the VAX-31 Phase 1/2 study affirm the potential of our site-specific, carrier-sparing platform to deliver the broadest-spectrum PCVs that provide protection against both currently circulating and historically prevalent strains," said Grant Pickering, chief executive and co-founder of Vaxcyte, in prepared remarks.

Mizuho analysts said the results were a best-case scenario and reiterated that the stock could trade north of $100 on positive data. Analysts led by Salim Syed said they expect total addressable market peak sales for all PCVs combined is about $88 billion and that $24 billion of that is up for grabs.

"VAX-31 has the potential to displace Prevnar 20 (and one could argue even MRK's (MRK) Capvaxive (PCV21), though we generally think ACIP may prefer having some redundancy in the system)," the analysts wrote in an early note to clients.

Merck's Capvaxive won FDA approval in June for the serotypes responsible for about 84% of IPD in adults aged 40 and older.

"Recall, as well here, the Street has historically only under-modeled and undervalued this stock, only to realize this six months after the fact," said the analysts, who have an outperform rating on the stock, the equivalent of buy.

IPD is associated with high fatality rates, antibiotic resistance and meningitis. Pneumococcal pneumonia results in an estimated 150,000 hospitalizations each year.

The stock has gained 82% in the year to date, while the S&P 500 SPX has gained 18.4%.

-Ciara Linnane

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09-03-24 0939ET

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